Five Stunning Developments in Less Than Three Months
Author: Greg Valliere
March 26, 2024
THE CONVENTIONAL WISDOM IS OFTEN WRONG, and that certainly applies to the mind-boggling first three months of 2024, which have produced surprises that virtually no one anticipated. Here are five blockbusters:
The U.S. and Israel Estranged: One of the certainties in Washington — strong ties between these two close allies — has been shattered. A deep freeze in relations between the U.S. and Israel shows no sign of thawing, as Democrats are eyeing the November election and have turned on Israel. Joe Biden and Benjamin Netanyahu rarely speak to each other.
The Fed on Hold: As this year began, analysts were confident that the Federal Reserve would begin rate cuts by spring. But with the economy growing at about 2%, which is trend growth, and inflation still not quite subdued, the new target for the first rate cut is in July. Will there really be two rate reductions in 2024? There certainly won’t be five or six, as some analysts predicted on New Year’s day.
House Democrats and Republicans Unite: No one thought there would be any bipartisanship in Congress this year, but a remarkable alliance has emerged between House Speaker Mike Johnson and Democrats. They just passed a budget, and in April probably will approve aid for Ukraine, Israel and other U.S. allies. Could hard-core conservatives oust Johnson? Unlikely, because he has a new weapon — Democrats who will support him.
Terrorism in Russia: Ukraine was reeling as the year began, but now prospects have improved for more military aid from the U.S. and the West. It’s too early to assess how the ISIS terrorism will affect Moscow, but it appears that the Russians may have to fight on two fronts, internal and external.
Robert F. Kennedy Jr. in double digits: The country desperately wants another choice in the presidential race, and here comes someone with a magical last name, a new running mate (to be announced later today) and polls that show him above 10% in some states. Could Kennedy win the presidency? No, his views are far outside of the mainstream. Could he scramble the race? You bet — look at what Ralph Nader did with just 4% in 2000.
WHO KNOWS WHAT WILL HAPPEN IN THE NEXT THREE MONTHS? Maybe it will involve the Chinese economy, a truce in Gaza, a health issue that alters the presidential race, a climate disaster, etc.
OR THE BIGGEST SURPRISE IN THE PAST YEAR may continue in the second quarter, as it did for the first three months: a Goldilocks economy in the U.S., with financial markets continuing to climb a wall of worry — a pleasant surprise which could persist.
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