Where is the stock market and the economy heading? I believe it is going to go up

 I haven't been actively looking at the stock market as heavily as I have been in the past. I remember having some conversations with Paul(someone I used to talk to who has fallen off the radar, I forgot his number and can't reconnect). If I could remember some of the conversations I'd want to put in in my blog. Haha.

I remember watching a video by this guy, Tom Lee from Fundstrat, who has an uncanny ability of spotting market trends, it may very well be because he seems to be perpetually bullish on the stock market. He doesn't expect the current run to end any time soon, his been on record expecting the run in some of the AI stocks to last until 2035. 

There is a lot of hype surrounding AI and some of the other technology disrupting certain sectors. I think I saw a video where Jeff Bezos was talking about it, it's like a layer of technology that will apply very broadly at a thin level on everything that we will be doing. I can't really wrap my head around it, but I have tried using Chatgpt and it is truly mind blowing some of the things that the AI can produce.

Anyway, I am more in the camp of Tom Lee, I expect the current run in the stock market to be longer and higher than most people expect, interest rates are likely to come down, as inflation ebbs away and the economy starts slowing down. There doesn't seem to be a major economic event coming in the future. Although there are a lot of worrying trends. Like the retirement crisis in the US and most of the developed world.

Here's my old thesis on inflation, I had it almost 3 years ago and even the timeline was fairly spot on. I recall there being 4 reasons the inflation wouldn't last(Demographics, population growth, technology and the unprecedented stimulus). The US had their demographic boom, the Baby boomers in the 70's and 80's, the population explosion as well as the young demographic meant higher demand for goods and service, contributing to inflation. We are at the opposite end of the Baby boom demographic for the developed world, with an ageing society and falling population growth rates. The digital age and its technology has shown that newer technology adoption rates are almost always faster than older technologies. Technology is deflationary as technology reduces the effort it takes to do things. The last period of stimulus was unprecedented as money was injected directly into consumers hands. It likely won't be a repeat of the 70's and 80's.

China's real estate market seems to be coming back. Although S&P Global and some other financial institutions expect the market to come back only at late of 2025. It looks kind of like it's coming back right now. I have a news article that I will put here. The chart is especially telling. YoY sales of houses for the month of December is flat and is against the fall seen in the earlier part of the year.

The article is here.

"(Dec 31): China’s residential property sales in December were flat on-year, avoiding a downturn seen much of 2024 and reflecting signs of market stabilisation after the government’s stimulus blitz.

The value of new-home sales from the 100 biggest real estate companies for the month remained unchanged from a year earlier at 451.4 billion yuan (RM276.08 billion), compared to a 6.9% on-year drop in November, according to preliminary data from China Real Estate Information Corp. Sales gained 24.2% from a month earlier. 

For all of this year, sales from the top 100 builders slumped 28.1%, compared to a 16.5% drop in 2023. 

China unleashed its strongest package of policies to boost the residential market in the past three months. The government cut borrowing costs on existing mortgages, relaxed buying curbs in big cities and lowered taxes on home purchases. It also trimmed purchasing costs for people seeking to upgrade dwellings in some big cities. 

The residential market in so-called first-tier metropolises like Shanghai “may turn more active in the short term”, said Chen Wenjing, a research director at China Index Holdings. “Should the enthusiasm continue, it may help stem the decline in home market nationwide.”

China’s economic outlook for next year and beyond is uncertain. The government reaffirmed it’s on track to hit this year’s official growth target of around 5%. Many economists expect the government to set a similar goal for 2025. 

Investors are closely watching whether China’s longest housing slump shows signs of ending. For now, the fragile recovery shows the sector remains a troubled spot for the economy, with smaller cities struggling. 

Morgan Stanley expects China real estate sales to drop 12% next year, and home prices to decrease by high single digits in percentage terms from November’s level. Fitch Ratings said prices could fall by 5% in 2025 and new-home sales to decline 10% by area. 

"