10 things that could be in store for 2024

As we close 2023 and look to the year ahead, we’ve gathered some of our team’s predications for what could be in store for 2024. Ranging from strong market convictions, to wishful thinking or ‘could be’ unexpected plot twists that take us by surprise, find out what the Q·Advisers Team thinks could unfold next year!

1.Egg Prices Soar beyond 2022 Highs

Last time this year, ‘eggflation’ had taken the world by storm with the USDA reporting that the average shell-egg price was 210% higher in the week leading up to Christmas than it was during the same time the year prior. Why did egg prices soar across the globe?  On top of inflation, the global egg market experienced an Avian Flu outbreak that depleted commercial flocks who were hit hard by the virus, and in turn, reduced available eggs on the market. While in the EU the price of eggs did not leap as high as US prices and somewhat stabilized in the first half of 2023, it is possible that another – even worse –  outbreak of Avian Flu hits the global market. An unexpected but beneficial impact of this could be faster market adoption of sustainable egg alternatives, such as EVERY, who are already beginning initial commercialization of animal-free egg protein, potentially offering a stable supply of egg that is immune to many market volatilities associated with current livestock.

2. Interest Rates in Free Fall

2023 has seen one of the steepest rises in financing costs since the 1970’s. It has crashed activity and business conditions in many areas of real estate, private equity, venture capital and other long duration investments. House prices have also slowed. 2024 could see the fastest fall in financing costs. Estimates for Q4/2024 show European EURIBOR at 2.50% (from 4.00 % in Q4/2024) and US LIBOR at 4.00 as GDP growth slows worldwide. Additionally, the US FED has already committed to interest rate cuts in their December meeting. That could lead to an unexpected stop in falling European house prices in Q2 and later also propel increased activity in private equity and venture capital by end year 2024. The opportunity to buy real estate at distressed levels will likely arise only in Q1 2024.

3. Optimists beat Pessimists

For many investors 2023 has been a tough year. Despite listed Equities and bonds rebounding toward the end of the year, direct investments, real estate, private equity and venture capital suffered under low demand, rising costs and tough financing conditions. 2024 could see a catch up on direct investments performance, however perhaps more driven by optimism rather than better economic facts, as many studies show that fear of loss and less income can drive demand in a much greater extent than real economic numbers. Rising stocks, bonds and lower interest rates could be the catalyst for revival of demand and a rebound for direct investments during 2024.  Thus, we could see the trough in Q1 followed by the growth of optimism. All that to say, Q1 could be the time to take advantage of opportunities.

4. Ozempic is Just the Beginning  

While the BioTech market has cooled and the XBI Index is still well below its 2021 peak, perhaps the commercial success of new drugs such as Mounjaro from Eli Lilly, and Wegovy / Ozempic from Novo Nordisk may usher in a new enthusiasm in the sector. While originally developed to help manage Type 2 diabetes by regulating blood sugar levels, the drugs have experienced meteoric success due to their ability to aid in weight loss management. However both Eli Lilly and Novo Nordisk are expected to release new data that could show other potential health benefits of their drugs beyond weight loss and diabetes management. For instance, initial trial results show that Novo Nordisk’s Wegovy reduced the risk of serious cardiovascular complications in people with obesity and heart disease by 20%. Thus, in 2024, we expect that the commercial success of Ozempic is just the beginning, and there will be even greater research, and competition, within the space.

5.Trump or Biden Pulls out of the US Presidential Election

Right now the world is gearing up for another Biden – Trump rematch.  Considering the age of each of the candidates it is not unimaginable that one might have to pull out for health reasons, nor is it unimaginable that one has to pull out for various other reasons considering the numerous legal challenges and actions Trump is facing, or Impeachment inquiry Biden faces. Yet it seems that in spite of the messiness of it all, the deeply divided US population has not rallied around an alternative candidate for either party and thus a rematch almost feels inevitable. If either Biden or Trump pulled out, markets would certainly experience some volatility in the uncertainty, but could it open the door for someone new who could unify the deeply divided country? Perhaps less a prediction, and more wishful thinking.

6. The hushed up NFT boom slowly awakes, but this time with REAL assets thanks to Security Tokens

As unprecedented as the NFT boom of 2021 was, as unprecedented was its failure. NFTs (non-fungible tokens) are used to create and authenticate ownership of DIGITAL assets such as music, video clips, pictures, virtual art and so on. The two underlying problems with DIGITAL assets are that ownership is relatively valuable due to the possibility of perfect duplications on the market, and that the creation of DIGITAL assets is infinite which floods the market with supply. Applying the same logic and technology to REAL assets, however, could be the next big thing for financial markets in 2024 and beyond. The NFTs of REAL assets are called Security Tokens, which are used to create and authenticate ownership of REAL assets such as real estate, private equity, art and so on.  With a growth in market adoption of Security Tokens, we may see a further democratization of wealth management as Security Tokens offer a new tool in which the general public has the opportunity to own a piece of an iconic building, solar farm or a part of a private firm that was previously inaccessible.

7. A soft landing of the U.S. economy is in sight, but maybe it is just the calm before the storm

In the last FOMC of the year, Jerome Powell signaled a potential victory of the FED’s fight against inflation. The FED’s short-term U.S. interest rate hikes from 0% to 5.25-5.50% over the past year has slowed economic growth, tightened lending, and eased inflation as expected. Another consequence of the FED’s policy is that the yield curve inverted in October 2022, reaching levels not observed since the early 1980s and showing an ominous sign. Since the yield curve shows the spread between long-term and short-term interest rates, an inversion means that the math doesn’t work out for banks anymore, because they borrow short-term money at higher rates than they can lend it out in long-term. Historically, this has always preceded an economic recession with a time lag of typically 12-18 months. Thus, if the indicator is keeping up with its past performance, we could see an economic downturn in the first half of 2024.

8. Present economic climate will push the rental market in Austria

For most people, buying their home is the biggest financial transaction of their lives. For many, this dream of owning their own home unexpectedly became more distant from one day to the next – namely when the Financial Market Authority imposed stricter lending rules. In 2021, there were an average of 4,500 transactions of condominiums per month, in 2023 there were an average of 2,650 properties, a decrease of 40% percent. As a result, many property developers have put their projects on hold. The combination of stricter lending regulations, high interest rates and the massively declining number of purchases seemed too risky to them. The decreasing number of building permits also speaks for itself: -25% in the 2nd quarter of 2023 compared to the same quarter of the previous year, according to Statistics Austria. In the coming years, a significant reduction in new construction output (completions) is therefore to be expected. The consequence is that it is becoming more expensive again due to the shortage of supply, which is only partially offset by the current oversupply. At the same time, the demand for rental properties is increasing, even though rents are rising. After all, you have to live somewhere. Landlords are definitely the beneficiaries of the market changes and interest rate crisis.

9. X will follow Twitter and disappear in 2024

Since Elon Musk has acquired Twitter and taken it private in October 2022 for 44bn USD, he has revamped the company significantly. Not only was the boardroom reshuffled completely, but also half of the workforce were laid off and in June 2023 the well established ‘brand was ditched and the company rebranded to “X” resulting in an outrage amongst users as well as countless departures of users to other emerging platforms. Various controversial measures and ideas Musk announced and introduced led to further deterioration of usage and user experience. Since the takeover roughly 50 of the 100 largest advertising customers like Disney, IBM, Apple, VW or Coca-Cola, have either reduced significantly or withdrawn completely from X resulting in massive revenue losses and consequently, the company’s valuation. An estimation from late October 2023 sees the company valuation at 19bn USD down from the 44bn USD purchase price. With a continuation of the weird and random actions of Elon Musk and his reactions to, for instance advertising clients taking a decision to withdraw, it could be feasible that the company formerly known as Twitter will dwindle further throughout 2024 and might even disappear completely. X going out of business would be a significant loss for Musk but as several alternatives are not only in infancy but actually already up and running, there will be a new home for both users and advertisers. Watch the space.

10.Three Gen AI predictions for 2024 for the price of one

According to Statista the global AI market is expected to reach $1,847.5 bn by 2030, from $95.6bn in 2021, growing at a compound annual growth rate of 39%. Gen AI is a branch of artificial intelligence in which AI models are trained on huge amounts of data and are able to generate new content such as text, code, images, music or videos from learned patterns. The models neither understand the generated content but create it on the basis of calculated probabilities.Since this probability is always greater than zero, an output is always generated, even if it is complete nonsense in terms of content (“hallucination”). GenAI is behaving here like a drunk who is slurring his words and holding on to the bar.

My predictions for 2024 are as follows:

1. 1. In contrast to the current forecasts, I do not believe in a significant decline in hallucinations, but rather at least one insurance company will offer a special AI risk hallucination policy.
   2. Many predictions assume that as Gen AI (and AI in general) advances, the need for legislation will also grow. The EU proved to be a pioneer in this respect and reached an agreement on the EU AI Act in Dec 2023. This makes AI the first technology on EU soil for which there is legal regulation but no significant applications developed here. The noise protection regulations have been issued, but the music is playing somewhere else.
   3. The Singularity, where AI surpasses human intelligence, will not come in 2024 or 3024. If it comes, it won’t be because artificial intelligence is getting smarter, but human intelligence is getting dumber. However, there will be a social rift in society between those who understand and develop AI and those who only consume it.

If I am wrong, especially on point 3, the next predictions for 2025 will be made by a GenAI robot while I am stuck in the matrix.