Crystal ball, 2024

Good morning. This is our last edition of 2023. Thousands of you, dear readers, made our newsletters a daily habit this year. We thank you for supporting us, and promise to keep bringing you delightful reading material in 2024 too. In fact, there are new initiatives in the works that we will be excited to bring to you in the New Year. Meanwhile, keep reading and sharing. Our next edition will be on January 3. Until then, happy holidays and wish you a terrific New Year!

Dinesh Narayanan, Roshni Nair, Venkat Ananth and Adarsh Singh contributed to this edition.

2023 was a strange year indeed. For Indian investors, it began with a banger when US-based short-seller Hindenburg Research published an explosive report on the Adani Group. Yet, the 30-share BSE Sensex is ending the year with ~19% gain over 12 months. Share markets were the bright spots in otherwise sketchy performance by several major economies. Benchmark indices in the US and Asia notched up record gains. Expectations of a central bank-induced recession loomed in the US and Europe but ultimately the economies, especially the US’,  appear to be landing smoothly. 

Deal-making suffered globally with the total dropping below $3 trillion for the first time in a decade. High-flying venture funds such as SoftBank and Tiger Global were laid low by value erosion in their portfolios, killing their appetite for big deals. The startup and crypto industries unravelled with some major scandals and bankruptcies. Yet there were some big ones such as the energy deals by Exxon and Chevron, JPMorgan and UBS rescuing sinking banks, and Microsoft completing its purchase of Activision Blizzard. 

Global temperatures rose, literally and figuratively. It was the hottest year in history, yet the UN climate summit, COP28, in Dubai ended with mostly rebuffs and promises of actions in the distant future. At the G20 summit held in India though, nations agreed that it would cost trillions not billions to control and mitigate harmful climate change.

Although India hosted a successful G20 summit, its relations with Canada were marred by the latter’s insinuation that India carried out an assassination on Canadian soil. It was followed by the US alleging that India’s attempt on another individual in that country failed. War continued in Ukraine while new ones erupted in West Asia.

The conflict between China and the US intensified, beginning with the latter discovering high-altitude “spy” balloons over its territory. The rivalry upset global trade arrangements, investments, and supply chains. Towards the end of the year, however, Beijing and Washington tried to cool tensions with the presidents of the two nations having a four-hour sit-down in San Francisco. China’s stalled economy, particularly the crisis-ridden property sector, scared away global investors. 

While nations struggled, Taylor Swift, Beyonce and Lionel Messi created their own multi-billion universes. 

There were some massive strides in science and technology with generative artificial intelligence dominating headlines. The energy industry achieved net gain from nuclear fusion for the first time. Gene editing recorded significant breakthroughs. India successfully landed a craft on the South Pole of the moon. Spacefaring got new wind with billionaire investors pouring money into building more efficient rockets. 

Those were the highlights of what N Chandrasekaran, chairman of the Tata Group, called a tumultuous year. In a year-end message to employees, he also asked them to prepare for more disruptions and volatility in 2024. With 40 countries, including India and the US, headed for elections next year, uncertainty could become a dominant theme. Here is a peek into what to look forward to. 

Making it rAIn: Those fed up of hearing or reading about AI-this and AI-that will not look forward to 2024. If this was the year of the AI rat race, next year will be the year of taking things further. What a dramatic 2023 it’s been, starting with Microsoft’s additional $10 billion infusion in OpenAI this January to Sam Altman’s shock ouster-turned-reinstatement at the company he co-founded. In between there was US president Joe Biden’s AI executive order, the EU’s landmark AI Act, Meta emerging as a dark horse with its open source large language model (LLM) Llama, a spate of AI-powered enterprise offerings, and Google and Amazon playing catch-up with Microsoft-OpenAI in the AI chatbot frenzy. Phew. As The Information points out, we’ll see AI majors striking more deals with publishers (as one types this, The New York Times has sued OpenAI an Microsoft for copyright infringement), the rise of cheaper open source LLMs, intense lobbying with governments, and ways to communicate with LLMs besides text-based prompts. Oh, and more tension between Microsoft and OpenAI. We also wonder where AI regulation will be headed in India.

Werk it out: Workaholics will enjoy this Bloomberg list of 5 biggest trends from workplaces this year. On top is of course the enduring (and somewhat surprising) appeal of unions. The temple of capitalism, USA, had a rude awakening in store for this year. Employees across sectors banded together for better pay cheques and marched at picket lines to make their employers listen. The result was that unions registered a 6.6% raise on average in 2023 — the biggest bump in more than three decades. Consequently, workplaces also made changes to employee benefits. Bereavement policy, elder care, weight-loss drugs, etc., were just some of the items on the menu. These clear wins didn’t translate well into the muddy issues of work-from-home and ChatGPT; the jury’s still out on them. Lastly, companies and researchers alike seem to have finally realised the futility of ‘touching base’ on unnecessary things. Amen to that!

Science FTW: The year showcased remarkable scientific strides across various fronts. Derek Thompson, in this comprehensive rundown for The Atlantic, highlighted weight-loss drug Ozempic as a standout breakthrough. Yet, beyond this, significant headway emerged in other domains as well. A milestone arrived with the introduction of the first CRISPR-based treatment for sickle cell disease, along with the development of vaccines for malaria and respiratory syncytial virus (RSV). AI played a dual role: aiding scientific progress by mapping protein structures while being leveraged by Israel for targeted warfare. Energy sectors witnessed substantial advancements too. Initial strides were taken towards achieving sustainable fusion energy, while relentless pursuits continued for hydrogen and geothermal energy sources. And finally, a cancer-fighting facial paint and a life-extending drug for dogs had us brimming with positivity. 

Against the grain: That could well be big technology’s theme in 2024, at least according to The Platformer’s Casey Newton. He predicts that the Meta-owned text-based social network Threads could overtake X, mostly because of how rapidly the company has been shipping updates, besides a deeper integration with Threads’ parent, Instagram. Google, which has mostly lagged in the generative AI race, could catch up, and “neutralise GPT’s lead”, per Newton, not merely because of its abilities, but also product – something it could boil down to. And some more notable ones – synthetic media – while already flooding the internet in an election year, won’t break through “in any meaningful way”, and well, no dominant platform will have an impact in the 2024 elections, and instead, it could be “some amalgamation of all of them.” Also, in 2024 AI could have a “reckoning”, per the New York Times’ DealBook, with more regulators taking a closer look at a technology only getting smarter by the months and years. Do let us know what your predictions are.

Diplomatic tightrope: The hallmark of the Narendra Modi government’s foreign policy has been the increasing weightage for self-interest in its dealing with global powers. Even while it joined purportedly anti-China groupings led by the US, it withstood Washington’s pressure to stop doing business with Russia. It has gamely taken on criticism of its actions by publicly calling out western hypocrisy. New Delhi is also competing with Beijing to be the leader of the Global South, although it is finding it hard to counter the latter’s vast resources-backed Belt and Road Initiative. The Indian Express lists the major strategic and foreign policy challenges facing India in 2024. 

Rear view: Rare whiskies and sneakers fall in the category of unusual investment ideas. But that is mostly for individuals. For large institutions, off-ramp investment opportunities are created by circumstances and unusual confluence of factors. Turkish debt, for instance. A change of leadership at the central bank and consequent reversal in policies made its dollar bonds attractive and provided one of the best returns in any asset class. Similarly, cocoa is a commodity in which investors made a killing. That is because harvests in West Africa suffered due to climate change and disease. El Niño conditions will likely make it worse in 2024. The Financial Times took a look at unusual assets that made money for investors in 2023 and may continue to be good ideas for the next year as well.