Our Thoughts
Better than expected outcomes - Revisited
As we've highlighted in past outlooks, we firmly believe we are still in the midst of a long-term secular bull market that began in 2009 and was confirmed in 2013. This trend remains intact, and we believe it could extend into the early 2030’s — potentially even 2035—driven by macroeconomic and demographic tailwinds.
Better than expected outcomes.
For perspective sake, the trade war in 2018 was followed by a 20% pullback in the S&P500 and lasted 3 months top to bottom. Since that time the S&P500 has gained 141%.
Up and to the right?
There’s no doubt that 2025 will bring both expected and unforeseen risks. But on the flip side, there are also many promising opportunities ahead.
The current, administrations potential policies on tariffs, taxes, immigration, government spending, Business regulation, inflation, and views on interest rates do have potential positive effects.
Assuming they can all get done together and quickly.
However, if not, they can be considered foreseen risks in their own right. The unforeseen risks, however, are what we put our best foot forward to prepare for.
Recession Still on the table?
If the consumer is hurt, they spend less. When consumers spend less, the economy weakens and businesses reduce their capital expenditures leading to layoffs and spending cuts. Former New York Fed president, Bill Dudley, refers to this as a “feedback loop”.
Is the Bull Back on?
There are many positive developments taking place in the capital markets keeping market participants positive for the future outlook. Yet, at the same time there is equally enough negative economic data to keep institutions more cautious as they deem current valuations extended.
Will Spring Awaken The Bear?
The Fed does expect a "mild" recession in 2023 according to the recent Fed minutes. We can only hope that "mild recession" is not similar to the "transitory inflation" scenario the Fed touted in 2021.