In
early 2024, I published a market outlook for the first quarter. I called a long-term recovery. I quoted four of the biggest names in
finance. Almost three years later, I
have graded every forecast. Mine are
first.
My
Forecasts
Forecast: recovery
and a recession-free year. I said we
were at the start of a long-term recovery and that the worst of the inflation
was over. Outcome: right, with a
caveat. The US avoided a recession in
2024 and 2025. The Federal Reserve now
projects 2026 growth of 2.3 per cent and unemployment of 4.1 per cent. The caveat is inflation, which has returned.
Forecast:
the Federal Reserve starts cutting in the second half of 2024, slowly. Outcome: right, then reversed. The Federal Reserve cut in the final months
of 2024. It held through the first half
of 2025, then cut three times to 3.50 to 3.75 per cent. Kevin Maxwell Warsh, Chair of the Federal
Reserve, then raised rates on 16th September 2026 to 3.75 to 4.00
per cent. That was the first hike since
2023. The vote was 12 to 0. Sixteen of 18 officials expect another hike
this year. The next meeting is on 27th
and 28th October.
Forecast:
US inflation settles between 2 and 2.5 per cent. Outcome: right for a few months, then
wrong. US consumer prices rose 2.4 per
cent in the year to January 2026. Then
the war with Iran drove oil higher.
Inflation hit 3.7 per cent in September.
Core inflation was 2.6 per cent.
Gasoline prices rose 9.1 per cent in September alone.
Forecast:
wage growth cools below 5 per cent from over 7 per cent. Outcome: right, and now a problem. Wages for the typical American grow about 3
per cent. Inflation is at 3.7 per
cent. That is a pay cut.
Forecast:
cash underperforms most asset classes. Outcome:
right. The S&P 500 returned 25.0 per
cent in 2024 and 17.9 per cent in 2025, including dividends. The three-month Treasury bill yields 4.2 per
cent today. Cash lost again.
Forecast:
US aggregate bonds return 5 per cent or more over 10 to 15 years, with a
quarter of equity volatility. Large-capitalisation stocks return 7 per cent. Outcome:
early on bonds, wrong on stocks. The
Bloomberg US Aggregate returned 1.25 per cent in 2024 and 7.30 per cent in
2025. It has lost 2.6 per cent in 2026
through September. The 10-year yield hit
5.29 per cent on 30th September, its highest since 2002. The Aggregate’s yield to worst is now 5.51
per cent. The 5 per cent income I
promised is on offer today, not in 2024.
US stocks returned about 17 per cent a year, not 7.
Forecast:
slight overweight on US equities and bonds, with healthcare and technology as
growth areas. Outcome: a half
pass. Equities returned about 68 per
cent since the start of 2024, by my calculation. Bonds returned about 6 per cent over the same
stretch. Technology delivered. I have no fresh data for healthcare.
J.P.
Morgan’s Global Investment Strategy Group
Forecast:
a growth slowdown in the first half of 2024, no recession, an S&P 500
target of 4,200 with a downside bias, and earnings growth of 2 to 3 per cent. Outcome: right on the recession,
hopeless on the index. The S&P 500
closed 2024 at 5,881.63. That is 40 per
cent above the target. It closed at
7,659 on 16 October 2026. The “downside
bias” produced a score of zero.
Forecast:
a 60 per cent chance of a soft landing and a 25 per cent chance of recession. Outcome: the soft landing arrived. I will give the group that one.
Forecast:
favour higher-yielding credit. Outcome:
right. The ICE BofA US High Yield index
returned about 8.2 per cent in 2024 and 8.5 per cent in 2025, according to
Fidelity.
Forecast:
a bumpy start for emerging markets. Outcome:
right. On 5th August 2024,
South Korea’s Kospi fell 8.1 per cent before trading halted.
BlackRock
Forecast:
quality and lower-beta stocks lead, and market breadth widens. Outcome: breadth narrowed. The Magnificent Seven were 29.6 per cent of
the S&P 500 in October 2023. They
are about 34 per cent now, a US$22 trillion bloc. In 2025, they returned about 27.5 per cent on
average and supplied about 42 per cent of the index’s total return. The top ten companies are over 40 per cent of
the index. Breadth did not widen. It shrank.
Goldman
Sachs Research
Forecast:
no recession, earnings up 5 per cent, a price-to-earnings ratio of 18, the Federal
Reserve finished hiking, and Treasury yields peaked. Outcome: right on the recession, wrong
on the rest. The forward P/E was 19.6 on
28 August 2026. The Federal Reserve has
hiked again. Treasury yields have set
new highs. Goldman Sachs now forecasts
2026 earnings of US$340, up 24 per cent.
AI infrastructure beneficiaries drive about half of the growth.
Forecast:
cash at 5 per cent stays competitive with equities. Outcome: wrong. See the S&P 500’s 25.0 per cent.
Forecast:
the TOPIX gains about 13 per cent to 2,650 by the end of 2024. Outcome: right after a detour. The TOPIX fell 12.23 per cent to 2,227.15 on
5th August 2024. The Nikkei
fell 12.4 per cent, its worst day since 1987.
The Bank of Japan had raised rates, and the yen carry trade
unwound. The index recovered and
finished 2024 above the target.
Morgan
Stanley
Forecast:
2024 is a good year for income investing, with high-quality fixed income and
government bonds as bright spots. Outcome:
half right. Credit paid. Government bonds did not. The Aggregate returned 1.25 per cent in 2024.
China
and Asia
Forecast:
no consumer boom in China, property cut from almost 30 per cent of GDP,
short-term pain, and a long-term pivot to manufacturing capacity. Outcome: right. China produced about 30 per cent of global
manufacturing value added in 2025, worth US$4.85 trillion. The United Nations Industrial Development
Organisation projects 45 per cent by 2030, with the United States at 11 per
cent. BYD sold 762,478 battery electric
vehicles in the third quarter of 2026.
Tesla delivered 486,532. China’s
DeepSeek then wiped a record US$589 billion off Nvidia’s market value on 27th
January 2025. Nvidia recovered. The point stood.
Forecast:
Asia supplies 60 per cent of global growth in 2024, and Bangladesh and ASEAN
accelerate. Outcome: unproven. I have no fresh data for the 60 per cent
figure. Bangladesh did not follow the
script. Sheikh Hasina Wazed, then Prime
Minister, resigned on 5th August 2024 after weeks of protests. The Straits Times Index is up 22.9 per cent
in 2026, to about 5,711. That part
worked.
Policy
and Themes
Forecast:
AI lifts productivity, and the Bipartisan Infrastructure Bill, CHIPS Act, and
Inflation Reduction Act drive manufacturing.
Outcome: AI delivered; industrial policy did not. Goldman Sachs puts AI at about half of
S&P 500 earnings growth in 2026. The
federal EV tax credit expired on 30 September 2025. US manufacturing is 10.3 per cent of GDP,
against China’s 24.9 per cent. The
Supreme Court struck down the “Liberation Day” tariffs in February 2026. Donald John Trump, President of the United
States, rebuilt them under other statutes.
The US trade deficit was US$903.5 billion in 2024 and US$901.5 billion
in 2025.
Forecast:
commodities and the carbon tax push prices up.
Outcome: right. Oil jumped
with the Iran war. Gold is near US$4,350
an ounce. Singapore’s carbon tax is S$45
a tonne in 2026.
The
Bank Run
I
called Silicon Valley Bank’s failure a regulatory indictment and a liquidity
failure. I stand by it. About 89 per cent of its US$175 billion in
deposits was uninsured. The FDIC
absorbed US$16.7 billion of losses.
Fifteen banks have failed since March 2023, the latest in September
2026.
The
Shocks Nobody Forecast
No
forecaster above predicted the Nikkei crash, the DeepSeek rout, the tariffs, or
the Iran war. The strategists
adjust. J.P. Morgan cut its 2026 S&P
500 target to 7,200 when oil rose.
Goldman Sachs warned of 5,400 in a severe oil shock. Then the index surged about 13 per cent in
four weeks. J.P. Morgan raised its
target to 8,000. It admits part of the
earnings jump reflects gains on private-company stakes. Goldman Sachs estimates AI capital spending
is more than 90 per cent of the biggest spenders’ expected cash flows. I would call that circular.
Then
there is the refinancing wall. S&P
Global Ratings counts US$12.4 trillion of corporate debt maturing between 2025
and 2029. Reuters, using LSEG data,
shows US$4.3 trillion of US bonds maturing from 2027 to 2031. High-yield maturities jump from US$68.5
billion in 2027 to US$314.1 billion in 2029.
The
Outlook
Three
events will move markets before the year ends.
The Federal Reserve meets on 27th and 28th October. US midterm elections follow on 3rd
November. Third-quarter earnings land in
between. Strategists now target 8,000
for the S&P 500, about 4 per cent above Friday’s close. In October 1929, Dr Irving Fisher, the Yale
economist, said stock prices had reached “a permanently high plateau”. The market crashed within two weeks.
The
Updated Recommendation
I
recommended a slight overweight on US equities and bonds. I now recommend neutral on US equities,
capped on the Magnificent Seven, tilted to quality and equal weight. That is for the moment, despite my caution about
the debt cliff in 2027.
Overweight
intermediate bonds. The 5-year Treasury
yields 5.09 per cent and the 7-year 5.19 per cent. Add investment-grade credit. Avoid CCC-rated credit before 2027.
Hold
5 to 10 per cent in gold. Central banks
bought a record 288.9 tonnes in the second quarter.
Keep
Asia. Singapore’s real estate trusts
yield about 5.8 per cent and trade near book value. Hold USD and SGD cash with care. The six-month Singapore Treasury bill yields
1.90 per cent.
Review
after the October meeting. Then review
again in January.
Terence
Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The
Billionaire Cheat Code
