Monthly House View - January 2024 - Download here

Some major events happened in 2023. First, while we had been hoping for a lull or an end to the conflict in Ukraine, the war has dragged on and become normalised. With more than 650 days of combat behind him, Vladimir Putin has emerged stronger after quelling the Wagner group rebellion. We could also cite the new conflict between Israel and Hamas, as well as one of the deadliest earthquakes in 100 years in Turkey and Syria, which claimed more than 50’000 lives. 
Climate change is accelerating, with Brazil experiencing extreme temperatures of nearly 60 degrees in November. At the same time, flooding is increasing around the world and the unprecedented El Niño-related water level rises in Ethiopia, Kenya and Somalia have caused hundreds of deaths and left a million people displaced, according to a preliminary assessment for these three countries. 
Lastly, we note the historic forest fires, with more than 18 million hectares burnt in Canada, comparable to the area of Austria, Switzerland, Belgium and the Netherlands combined. 
The months from June to October were the hottest on record globally, and 2023 will likely break the 2016 record for being the hottest year ever. Evidence shows that the global average temperature exceeded the preindustrial seasonal average by more than two degrees for the first time in November. So, should we really have expected any miracles from a COP28 held in the land of oil? In the end, the Dubai conference did not bring about any major changes because, at this stage, there is no plan for a coordinated exit from fossil fuels. 
In this rather depressing environment, we can understand how certain populists who propagate reassuring and positive messages that cast doubt on these realities might reach the highest levels of power. This is true, most recently, for Javier Milei in Argentina and potentially for Donald Trump, who is running to win back the White House at the end of the year. 
There are, however, some reasons for optimism:

• The temperature acceleration curve is bending. We have moved from a trajectory of an increase of 4.3 degrees to 2.9 degrees by 2100 relative to the preindustrial era. 
• The year 2023 will mark a turning point for artificial intelligence (AI); while it does raise ethical questions, the ChatGPT revolution is disruptive and totally innovative, and will likely be a source of future productivity.
• Lastly, year-on-year inflation is normalising and stood at 3.1% for the United States and 2.4%for the Euro Area in November. The equity markets, with the exception of emerging markets, are ending the year with a bang. The S&P 500 has recovered the entire loss it suffered in 2022, which was its worst year in 10 years. This was especially true for tech stocks and in particular for the “Magnificent 7” which, after losing half their value in 2022, saw their share prices double in 2023.

The year 2024 looks to be full of challenges as well as promise. We see challenges ahead for the central banks, which will have to coordinate to steer their rate cuts through a maze of complexity to ensure global debt, which stands at 238% of GDP and is still above its pre-COVID levels, remains sustainable. There will also be political and geopolitical challenges, including between China and the United States, particularly if Trump is re-elected. Lastly, we have the challenge of climate policy, where Europe has long felt it is going it alone.
But 2024 also holds the promise of new technologies and the acceleration of artificial intelligence (AI) in all areas of society to benefit people and the planet, and this should provide some great investment opportunities. 
Happy reading and best wishes for 2024. As always, we will be available throughout the year to assist you with your investments.

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