It’s time to forget central scenarios and think about improbable but possible outcomes. Aristotle said “probable impossibilities are to be preferred to improbable possibilities”, meaning that we find it easier to believe in interesting impossibilities (B52s on the moon, say) than in unlikely possibilities. In this year’s Aristotle List, Paul Jackson aims to seek those unlikely possibilities -- out-of-consensus ideas for 2024 that he believes have at least a 30% chance of occurring (whether or not they fit with our central scenario). The concept was unashamedly borrowed from erstwhile colleague Byron Wien, who sadly passed away during 2023. Markets finished 2023 in bullish mood, so the list of surprises errs to the negative. Despite the optimism, Jackson believes there’s a chance the US suffers a recession, that the S&P 500 finishes the year lower than it started and that global government bonds outperform global equities (see chart).
On a more positive note, he believes Chinese and Colombian stocks could have a good year and that USD/JPY could go below 125 as the Bank of Japan (BOJ) starts to normalise.
Politics and geopolitics could bring volatility. For example, South African general elections may bring a coalition government but, in the US, Jackson thinks the Democrats will do better than currently suggested by opinion polls.