While inflation remains and market divergences continue to mount, the “A.I.” narrative powers on.

As the gap between the “haves” and “have nots” widens, future promises like rate cuts or A.I. seem to be the market’s most valuable- and its most heavily mortgaged- asset.

With stocks full steam ahead and rates markets now expecting more cuts in 2024 than the Fed itself has suggested, the road ahead is becoming quite narrow for markets.

The 2022 bear market and the 2023 rally broke almost all of the rules of the downturns and recoveries of the last 30 years. With rate cuts now widely expected in 2024, markets are quickly approaching a major fork in the road.

With asset prices soaring in November and a soft or no-landing scenario now the overwhelming consensus for 2024, stocks seem to be fully pricing a happy ending to the steepest rate hike campaign in the last 50 years.