Latest / Paramount Wealth Perspectives / What We Expect for 2025 - 12/16/24

Transcript

What We Expect for 2025 - 12/16/24 · Paramount Wealth Perspectives

• 0:00
  Chris Coyle: Intro song game on.
• 0:12
  Chris Coyle: Hello, everyone.
• 0:13
  Chris Coyle: Welcome to paramount wealth perspectives.
• 0:15
  Chris Coyle: Your go-to podcast for the latest updates on global markets and current economic events.
• 0:21
  Chris Coyle: This is your host, Chris Coyle.
• 0:23
  Chris Coyle: Each week we strive to bring you expert analysis on market trends, economic shifts.
• 0:28
  Chris Coyle: And key financial developments from around the world.
• 0:32
  Chris Coyle: Whether you're an investor business leader.
• 0:34
  Chris Coyle: Or simply curious about the global economy.
• 0:37
  Chris Coyle: Our podcast is here to keep you informed and ahead of the curve.
• 0:41
  Chris Coyle: Now let's dive into the markets and explore what shaping the world of finance today.
• 0:46
  Chris Coyle: Here with us today.
• 0:47
  Chris Coyle: We have Scott Tremlett chief investment officer and managing partner at paramount associates, wealth management.
• 0:53
  Chris Coyle: Scott.
• 0:54
  Chris Coyle: Looking back to last week.
• 0:56
  Chris Coyle: What are some major events you would like to highlight?
• 0:59
  Thank you, Chris.
• 1:00
  Last week, most major indices were lower.
• 1:03
  The Russell 2000 was the under-performer while the NASDAQ outperformed and was supported by big tech.
• 1:11
  It's been an interesting two weeks and Friday was the 10th straight session where more S and P 500 stocks actually declined.
• 1:19
  Then advanced.
• 1:21
  This was also the S and P first weekly drop since mid November.
• 1:25
  In fact, the Dow Jones industrial average as a Friday has dropped seven straight days.
• 1:31
  The dollar strengthened for the week and gold was up marginally.
• 1:35
  The defensive tone of the markets may be stemming from stretch valuations.
• 1:39
  That means that prices have risen faster than actual earnings growth.
• 1:44
  But the market seemed to be waiting for the federal reserves announcement on rates this Wednesday.
• 1:49
  The market is now pricing in nearly a hundred percent odds that the fed will lower rates by a quarter point.
• 1:55
  Odds increased after consumer inflation was in line with expectations.
• 2:00
  Well, inflation did rise quicker.
• 2:03
  Than in the past four months and the year of a year figure did see a slight uptick.
• 2:08
  The most notable highlight was the deceleration in shelter inflation.
• 2:14
  Turning to producer inflation.
• 2:16
  The producer price index did increase by more than expected.
• 2:19
  Both the month over month and the year of a year numbers came in hotter than first anticipated.
• 2:25
  We also saw small business sentiment, jump.
• 2:28
  The NFI B small business sentiment index posted its biggest monthly gain on record in November.
• 2:34
  And best print since 2021.
• 2:37
  Snapping a 34 month streak of record high uncertainty.
• 2:42
  Elsewhere.
• 2:43
  China pledged more support to their economy.
• 2:46
  And South Korea is parliament voted to impeach their president.
• 2:49
  Following this unexpected declaration of martial law.
• 2:54
  Thanks Scott, it's fascinating to see how mix economic signals.
• 2:58
  And global developments are shaping market sentiment.
• 3:01
  Ahead of the feds, highly anticipated rate decision this Wednesday.
• 3:05
  What are you hearing about expectations for price targets around the us equity markets?
• 3:10
  Everything I'm reading these days, Chris.
• 3:13
  Includes an expert opinion for 2025.
• 3:16
  And the targets are in for most large firms and there are wide variety of opinions.
• 3:22
  I think much of the disparity stems from the unknowns of tariffs.
• 3:27
  Deportation and immigration.
• 3:29
  Taxes.
• 3:30
  And potential deregulation.
• 3:32
  Keep in mind, the S and P 500 is now up over 70% since it's October 20, 22 low.
• 3:40
  Those analysts expecting markets decline in 2025 point directly to valuations and one research department, warns of a quote unquote.
• 3:51
  Major global trade war.
• 3:53
  Pushing markets down some 25%.
• 3:57
  Now that one report is an outlier to the downside.
• 4:00
  However, we really don't know what is going to happen.
• 4:03
  With policies, markets or economics.
• 4:06
  Until it really happens.
• 4:08
  Well, Scott, you make it clear that the uncertainty around policies and global dynamics is driving a wide range of market predictions for 2025, which to me highlights just how critical active management will be.
• 4:24
  Can you please explain what is contributing to these expectations?
• 4:28
  Or if there are any positives.
• 4:31
  We've gone through some of the negatives, Chris.
• 4:33
  But those analysts with a positive outlook for markets next year, see corporate profits jumping, double digits revenues increasing in a rise in animal spirits.
• 4:44
  Let's not forget that us households are sitting on record wealth.
• 4:49
  Of nearly$165 trillion.
• 4:53
  And at the same time, overall sentiment is improving.
• 4:57
  Two major firms just updated their expectations for 2025 from ending the year in the red.
• 5:03
  To expecting double digit gains for the us stock market.
• 5:07
  The consensus is for increased volatility during the year.
• 5:12
  And there are several reports illustrating a great first half of the year.
• 5:16
  Possibly overshooting to the upside.
• 5:19
  And then for the market to give back some of the gains in the latter, half of the year.
• 5:24
  That makes sense, Scott, and it's interesting to see how improving sentiment and record household wealth.
• 5:29
  Are driving more optimistic forecast.
• 5:32
  Though the expectation of increased volatility.
• 5:35
  Underscores the need for cautious optimism heading into 2025.
• 5:40
  Now, where do you stand on these different targets?
• 5:43
  Chris.
• 5:44
  My opinion.
• 5:45
  Is somewhere in between both extremes.
• 5:48
  First.
• 5:49
  Let's keep in mind that industry analysts on average have overestimated market gains by almost 7% per year.
• 5:57
  During the previous 20 years.
• 5:59
  If I take that number into consideration markets should only be up two to 3% next year.
• 6:06
  Looking a little further under the hood.
• 6:08
  Analysts overestimated the final value 13 of the last 20 years.
• 6:13
  Uh, leaving seven years, the analyst underestimated markets.
• 6:17
  It's interesting that analysts have underestimated the final value in four of the past five years.
• 6:24
  What does all that mean to me?
• 6:27
  Not much, really.
• 6:28
  Those that know me, understand that I'm always forward-looking.
• 6:31
  And what happened last time?
• 6:33
  It doesn't hold much weight to me.
• 6:35
  So for me, what do I expect in 2025?
• 6:39
  I believe that we will see positive markets.
• 6:42
  I believe broad markets will be up over 5%, but will not end the year in double digits.
• 6:48
  I do believe that there is something to be said for a stronger first half of the year.
• 6:53
  And I also believe that there will be an opportunity next year.
• 6:57
  To outperform by reducing risk.
• 7:02
  After the animal spirits.
• 7:04
  Begin to fade.
• 7:05
  I'm with you on this Scott.
• 7:07
  While history provides some perspective forward-looking fundamentals matter most.
• 7:12
  And a positive, but modest market gain with opportunities to reduce risk later in the year.
• 7:18
  Sounds like a very balanced.
• 7:20
  And realistic outlook.
• 7:22
  So, what are you most interested in this week?
• 7:25
  This week, the big event of the week, Chris is the federal reserves announcement on Wednesday.
• 7:31
  I think they will cut this week.
• 7:34
  I do agree that there is a case to be made to not cut rates this week.
• 7:38
  Although markets are expecting it.
• 7:41
  And considering we are at or near all time highs.
• 7:44
  The markets need the cut this week.
• 7:47
  What the fed says about the path going forward will be the market moving news this time around.
• 7:53
  Personally, I think they should Telegraph less cuts for next year.
• 7:58
  As the economy continues to run strong.
• 8:00
  Inflation seems to be sticking around.
• 8:03
  And it has come down.
• 8:04
  But the next leg down may take more work than what was needed to get us to where we are now.
• 8:10
  Outside of this, we have the ever important retail sales in the U S tomorrow.
• 8:15
  Along with industrial production and home builder sentiment.
• 8:20
  Housing starts and building permits are on Wednesday.
• 8:23
  Final third quarter GDP and existing home sales on Thursday and Friday, we had the Fed's preferred inflation gauge PCE.
• 8:32
  Along with the university of Michigan's consumer sentiment report.
• 8:35
  Uh, overseas, we have the bank of Japan's rate announcement on Thursday.
• 8:40
  Where they are expected to hold rates.
• 8:43
  We also have the UK, Sweden, Mexico, Norway, the Philippines and Taiwan.
• 8:49
  Announcing monetary policy moves.
• 8:52
  Us earnings are light this week.
• 8:54
  But we have FedEx, Nike and Accenture on Thursday.
• 8:59
  Well, we will certainly have to keep on the lookout for those reports and trends.
• 9:04
  And I'm sure we will have plenty to discuss next Monday.
• 9:07
  For now stay informed.
• 9:09
  Stay ahead.
• 9:10
  And join us next week for more key updates shaping the global economy.
• 9:15
  Thank you for tuning into paramount wealth perspectives.
• 9:19
  We hope you all have a fantastic week.