Happy New Year! A new year is a great opportunity to reflect on the past and look forward to the future. Perhaps you are already working on some new goals or are revisiting some past goals that didn’t quite progress as you’d planned.

Have you made any new resolutions for 2024? I really don’t understand why people would wait until the start of a new year to resolve to do something different in their life, especially if they have known for some time the need for a change. If you recognize anytime in the year that something needs to change in your behavior, why wait? Get it done and be the person you know you should be in 2024.

I know we have been writing a lot about the Federal Reserve lately. Like it or not, the Fed is the single most influential financial entity on the planet. Period. No other central bank comes close to the sheer scope and global impact of the Fed. What they do and how they do it shapes virtually all global financial markets.

Of the tools the Fed has at its disposal, the most esoteric (and that is saying something) and most stimulative, is the balance sheet. But what is it?

I must first disclose I have never been to a fortune teller. But I understand there are some who are fascinated by the art of tasseography or identifying symbols and interpreting messages found in the shapes formed by tea leaves at the bottom of a cup.

Some might say the famous “dot plot” made by members of the Federal Open Market Committee (FOMC) is the economist’s version of reading tea leaves. Take a scoop of economic data, add them to a cup of prognostication, swirl three times, then close your eyes and pick your dot location. I’m sure it’s far more complicated and intentional than that. At least I hope it is.

The FOMC released its quarterly Summary of Economic Projections (SEP) last week, which includes the “Dot Plot” used by the Federal Reserve to communicate its policymakers' economic projections and expectations for the future. This chart provides a visual representation of individual committee members' forecasts, helping market participants, economists, and the public to gauge the central bank's outlook on key economic indicators. Today we will take a look at what the FOMC dot plot is, how to interpret the latest chart and what the FOMC is predicting for the economy.

You may already be retired, so you might not think this article is for you. You already have your investment plan in place and what could go wrong anyway. Well politicians change, policies change, laws change, social norms change and the economy changes.  Your health also changes. In my life getting older hasn’t been the problem, it is the side effects. For those not retired yet, hopefully these topics will help you in planning your retirement.

From Investopedia, “Seasonality is a characteristic of a time series in which the data experiences regular and predictable changes that recur every year. Seasonality can affect different aspects of a business or economy based on the seasons, such as consumer spending, inventories, staffing and growth.”

That’s a bit dry, even for me. Another way to think of seasonality is that there are some months that are better for investment returns than others. Seasonality is present in individual stocks, sectors, sub-sectors and the broader markets. Each may have similar or wildly different seasonality characteristics. For this discussion I am focusing on the S&P 500 (SPX) over the last four market cycles. A market cycle is a five-year period. Seasonality data is available going back decades.

This is definitely the week for news on fossil fuels production. OPEC+ members meet this week – delayed until this Thursday – to decide policy on oil production into 1Q 2024. Also, the 2023 United Nations Climate Change Conference, or Conference of the Parties of the UNFCCC – more commonly referred to as COP28 – begins Thursday in Dubai. But OPEC+ members are secretly using the conference to seal big oil and gas deals, a clear conflict of interest.

And the big news is the US is now producing more crude oil than ever—13.2 million barrels per day, per the US Energy Information Administration (EIA), topping the pre-Covid peak of 13.1 million. That amount is nearly double the volume from a decade ago, making the US a net exporter of domestic crude.

Oil prices have slumped recently due to robust crude supplies, despite OPEC+ cuts in production and reduced Russian exports. In light of all this, we’ll take a look at the outlook for oil and gas prices into 2024.

Beginning in 2023, the SECURE 2.0 Act raised the age that you must begin taking RMDs from age 72 to age 73 (it is now age 73 if born 1951-1959 and age 75 if born 1960 or later). If you reach age 72 in 2023, the required beginning date for your first RMD is April 1, 2025, for your first RMD in 2024. You will use the ending value of your IRA on 12/31/2023 for this calculation. The SECURE 2.0 Act changed some of the rules governing Required Minimum Distributions (RMDs). However, much remains the same. Here’s where things stand as of 2023.

It is with profound sadness that we announce the passing of our founder, Gary D. Halbert. After a prolonged illness, Gary departed this world on November 15, 2023 and now rests with his Heavenly Father.

The Fed was a completely different animal in the 1970s. Notable bond trader Richard Stuttmeier wrote,

“It's a different world than in 1972. When I began my career as a bond trader at one of 12 primary dealers, Arthur Burns was the Fed chair. Fed policy at the time was much more direct, but considerably less transparent.

Policy changes were handled in secret, with tactics implemented through the Open Market Trading Desk of the New York Federal Reserve Bank, which bought and sold securities through primary dealers to achieve the desired federal funds rate.

Rate decisions weren't announced publicly after each meeting of the Federal Open Market Committee, so traders had to pay attention to the market. When the Fed bought securities, it increased the amount of money in the banking system, which tended to bring the rate down. And vice versa.”

Think about that as compared to how vocal the Fed is today. I like to think of these past years as the Fed’s good old days.

I’m taking some time off to recover and get my legs back under me. Until then, I’m working with my staff to select the topics and write the economic news you have come to enjoy in my Forecasts & Trends E-Letter. Every week they have been instrumental in helping me choose topics and think through the analysis I write.