Tubegraph

Market trends and economic forecasts for 2024

9 min read

From: allin

The “All-In Podcast” hosts shared their predictions for 2024 across political, business, and economic landscapes, reflecting on 2023 outcomes and offering a cautious yet dynamic outlook for the year ahead [00:04:03].

2024 Predictions Overview

The new year brings a focus on various sectors and trends, with hosts sharing their individual forecasts for key political, business, and market developments [00:04:05].

Political Predictions

  • Sachs: Vladimir Putin [00:04:29]
    • Putin stabilized Russia’s economy in 2023 after Western sanctions [00:04:37] and gained the upper hand militarily in Ukraine [00:04:53].
    • 2024 is predicted to be a year of consolidating gains in Ukraine [00:04:56], exposing the “stalemate narrative” as a lie [00:05:07].
    • Putin’s stance against the West has made him more influential in the Global South and BRICS countries [00:05:20], which oppose American dominance [00:05:29].
    • Sachs clarified this is a prediction, not an endorsement, lamenting the war as a “gigantic mistake by the West” [00:06:54] that put Putin in this position [00:07:00].
  • Friedberg & Chamath: Independent/Third Party in the US [00:08:00], [00:08:50]
    • A poll showed over 60% interest in a third party [00:08:04].
    • The candidacy of RFK Jr., who recently joined the Utah ballot [00:08:57], could lead to a meaningful, long-lasting change in American politics [00:09:00].
    • Many former Republicans and Democrats no longer identify with their parties [00:09:07].
  • Jason: Darkhorse Presidential Candidate [00:09:27]
    • Prediction that a darkhorse candidate will beat Trump and Biden [00:09:30] in a rematch nobody wanted [00:09:37].

Biggest Political Losers of 2024

  • Chamath: The “Copes” (Old-School Republicans) [00:14:52]
    • Largest spenders in Republican politics, consistently indicating negative value [00:14:55].
  • Friedberg & Sachs: Ukraine & The Collective West [00:15:30], [00:16:45]
    • Attention shifting to the Middle East, coupled with growing unpopularity of US funding for the Ukraine conflict [00:15:35].
    • Ukraine’s shot at NATO may fade, leaving the country behind [00:16:03].
    • Ukraine faces demographic decline and potential collapse, with lost soldiers and millions having fled [00:16:12].
    • The “collective West” will be a big loser, as its “huge bet” in challenging Putin has “completely crapped out” [00:16:52].
    • Israel’s invasion of Gaza is not going well, creating a massive humanitarian crisis and international condemnation [00:17:05].
    • Europe is facing recession due to losing cheap Russian gas, particularly Germany [00:18:30].
  • Jason: Netanyahu [00:18:57]
    • Major Israeli polls suggest desire for him to step down, with Vox putting odds of his ouster at 75% [00:19:04].

Biggest Business Winners of 2024

  • Friedberg: Commodities Businesses [00:20:35]
    • A “big commodities boom” is coming due to underinvestment relative to demand [00:20:43] and a need to rebuild inventory [00:21:00]. Cash is flowing back from treasuries as yields decrease [00:21:06].
  • Chamath: Bootstrapped/Profitable Startups [00:21:31]
    • Underestimation of how cheap it will be to copy existing businesses in 2024 [00:21:46].
    • AI models will get 10-100x better, and compute/energy costs will get 10-100x cheaper [00:21:56].
    • Companies can be created very cheaply to attack existing businesses, as GPTs can replicate processes for “essentially free” [00:22:20].
  • Sachs: Anduril (Roadrunner Product) [00:22:55]
    • Roadrunner is a drone interceptor for ground-based air defense [00:23:02].
    • It addresses the asymmetric warfare problem where cheap drones are shot down by expensive missiles [00:23:27]. The Roadrunner system is reusable and autonomous [00:23:49].
  • Jason: Training Data Owners (NYT, Reddit, X, YouTube) [00:24:59]
    • Language models are quickly hitting parity, and the real value lies in the training data [00:25:08].
    • Proposing a market-based solution: users federate their subscriptions (e.g., NYT) with ChatGPT for enhanced tiers [00:25:34].

Biggest Business Losers of 2024

  • Chamath: Vertical SaaS Companies [00:32:39]
    • These companies will be hit by cheap code-writing tools and co-pilots, enabling enterprises to build custom applications at low cost [00:32:51].
    • Companies are already moving off vertical SaaS to homegrown solutions [00:33:16].
  • Sachs: German Economy [00:33:43]
    • Loss of cheap Russian gas has crippled Germany’s industrial model [00:33:46].
    • The German car industry is severely impacted by a glut of cheap cars from China [00:34:10].
  • Chamath: Professional Sports Valuations [00:34:48]
    • Factors like the Liv Tour vs. PGA merger talks [00:35:09], Saudi Arabia’s investment in soccer [00:35:29], the explosion of NIL in NCAA [00:35:44], and increased churn among streamers [00:36:06] (the only ones who can afford high sports rights) point to a “Tipping Point” where acceleration of values slows [00:36:27].
  • Jason: Smartphone Manufacturers [00:36:43]
    • Facing a major slowdown as consumers skip generations of phones [00:36:46].
    • Apple struggles to get people to upgrade [00:36:56].

Biggest Business Deals of 2024

  • Sachs: FED’s BTFP Replacement/Extension [00:38:26]
    • The Bank Term Funding Program (BTFP), used to bail out regional banks, expires in March/April [00:38:36].
    • Regional bank balance sheets are not healthy enough to survive without continued liquidity [00:38:49].
    • The FED will need to replace or extend the program to keep banks liquid until the yield curve de-inverts [00:39:03]. This relates to market trends and FED policy.
  • Jason: TikTok IPO/Spin-out [00:39:56]
    • TikTok will face pressure from political factions to remove CCP influence from its board [00:39:59].
  • Friedberg: Generative AI Licensing Deals [00:40:25]
    • Expect “Blockbuster deals” where rights holders (e.g., Disney) license chunks of their library for generative AI [00:40:28] to create on-demand video games, content, or merchandise [00:40:35].

Most Contrarian Beliefs of 2024

  • Chamath: OpenAI Enterprise Value Goes Down [00:42:09]
    • Based on high latency of AI tools making production-quality code impossible [00:42:38].
    • The cost of a million tokens on platforms is “economically untenable” and “extremely expensive” [00:43:00].
    • Capitalism will drive arbitrage, leading to cheaper, faster cloud services (10-20 cents per million tokens) with proprietary hardware [00:43:21]. This will cause open-source models to proliferate, putting proprietary models under pressure [00:43:58].
    • Existing economics will be reallocated, making it hard for current winners like NVIDIA and OpenAI to maintain high multiples [00:44:07].
  • Friedberg: Increased Probability of Nuclear Weapon Use [00:46:01]
    • This is conditioned on declining military supplies and appetite for traditional conflicts [00:46:11].
    • A tactical, low-yield nuclear weapon could be used if someone is “backed into a corner” [00:46:28].
    • He estimates a 1-2% chance, which is 10x higher than five years ago [00:46:47].
    • Also, a risk of Turkey being challenged to leave NATO due to siding with Hamas [00:47:04].
  • Sachs: Soft Landing Gets Very Bumpy [00:49:13]
  • Jason: Apple Making Huge Gains in Generative AI [00:50:57]
    • Prediction that Apple will become a significant player in AI by the end of 2024, possibly rebooting Siri [00:50:59].

Best Performing Asset of 2024

  • Friedberg: Uranium ETF (URA) [00:52:01]
    • Driven by inevitability, ESG demand, and conflict-driven demand [00:52:10].
    • China building 450 nuclear power stations, and global deregulatory efforts for nuclear power [00:52:25].
  • Chamath: Public Tech Software Index (Long), Private Late-Stage Tech Software Companies (Short) [00:53:34]
    • Public market valuations are resetting, and growth rates aren’t there for private companies [00:53:50].
    • Private companies will experience dilution due to stock-based compensation, even if revenue doubles [00:54:14].
  • Sachs: Energy Stocks [00:54:47]
  • Jason: Consumer Comfort Services (DoorDash, Airbnb, Uber) [00:56:09]
    • Consumers are maxed out financially, leading to austerity measures [00:56:14].
    • People will opt for “small luxuries” and great experiences [00:56:21].

Worst Performing Asset of 2024

  • Sachs: The “Magnificent Seven” (Spread Trade: S&P 493 over Mag 7) [00:57:18]
    • What goes up must come down, and the hotter they are, the harder they fall [00:57:21].
    • The S&P 493 are expected to catch up [00:57:31]. Huge gains by the Magnificent Seven were story-based (AI), but AI’s role will extend beyond them [00:57:49].
  • Jason: LLM Startups [00:58:10]
    • Massively overvalued; open-source models are making an “incredible run” at them and hitting parity [00:58:13].
    • Too many players and too much parity makes prices “no sense” [00:58:24].
    • Valuations expected to fall by 50-80% [00:58:29].
  • Friedberg: Vertical SaaS (Short), Cloud Providers with AI Tools (Long) [00:58:46]
    • Vertical software companies will be hurt by enterprises building custom applications cheaply using AI tools on cloud platforms [00:58:51].
    • High-cost vertical SaaS (e.g., $5k/seat/year) will be replaced by homegrown solutions built at low cost [00:59:31].
    • This is a “big macro trend” towards price compression and deflation [01:04:32], as the “SAS business model is really a temporary phenomenon” between the internet’s ubiquity and AI’s development [01:03:48].
  • Friedberg: Predictive Models (AI-driven Discovery) [01:08:54]
    • AI-driven discovery of novel molecules, materials, and production methods in biofarma and chemical engineering [01:08:58].
    • New drugs and materials are coming out of software, not brute-force wet lab discovery [01:09:10].
    • These tools will introduce new products, reduce manufacturing costs, and lower environmental footprints [01:09:27].
  • Chamath: Bitcoin Mainstream Adoption [01:09:59]
  • Sachs & Jason: Efficiency through AI Advances and Outsourcing [01:10:46], [01:11:24]
    • The exponential pace of AI advancement will continue, leading to more mainstream consumer innovations [01:10:59].
    • High salaries and remote work preferences in the US are forcing companies to build robots, AI, and software for efficiency [01:11:31].
    • Startups are increasingly outsourcing work to other geographies at a third of the price due to the work-from-home paradigm [01:11:51]. This relates to major business and technological trends of 2022.

Overall Sentiment for 2024

The hosts noted the political situation where Republicans might force temporary budget cuts, leading to a “1% cut across the board on discretionary spending” if a new budget is not agreed upon [01:25:51].

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