Inflation

In 2024, we finally saw controlled inflation and falling interest rates for a month, as expected.

“The genie is back in the bottle,” Taylor said. “It’s back in range for most places, at 2-3 percent. That’s where they want it.

Maybe half a percentage point lower would be an improvement, but it was probably better where it was than staying at 1% as it was at the end of the last decade, he said. -he declared.

“I think the central banks have largely achieved their objectives.”

Another choice for 2024 was the acceleration of new market trends.

“That’s pretty much what happened,” Taylor said.

“I think one of the drivers of this phenomenon has been AI and its impact on markets in different sectors. Things are therefore changing a lot (more quickly) than in the past.

What to expect in 2025

US President-elect Donald Trump adds some unpredictability to market forecasts for 2025.

“There’s going to be a lot of statements coming out of the Trump well and it’s not going to be immediately clear whether these things are going to be implemented, whether it’s a throwaway comment, whether it’s a threatening comment,” Taylor said.

“So we can’t live off every word that comes out of his X account. We need to focus more on what is actually being adopted in terms of policy.

But we could expect that a lot of things would be signed quickly after the inauguration (January 20).

“The new rates will be the main ones,” Taylor said.

Markets

However, generally speaking, there has been much optimism about Trump’s policies to support the US economy.

“So the base case scenario is one of rising global stock markets, again led by the US, with very supportive market policy, regulation, etc. expected to be implemented next year .”

“I think the S&P 500 can definitely move up 15%, maybe even 20%, next year, pulling back this year, which would take it to 7,000.”

But that would make it quite expensive, he warned, with an earnings multiple well over 25 times – compared to other markets like Europe, which are almost half that.

“There’s definitely a possibility that this market could turn into some sort of mania,” Taylor said.

We saw this with Bitcoin, where Trump’s victory generated great support in the United States.

“People like me, all over the world, are including this in their asset allocations. So Bitcoin – call it around US$100,000 for now – I wouldn’t be surprised to see it trading as high as US$200,000 next year, simply based on the volume of support it has. he receives in the United States.

“If this is the case, we could find ourselves in a bubble in the rest of the stock market. If this happens, of course, we will ask you to be careful, without a doubt.

But Taylor hopes major geopolitical risks could ease next year.

“We had wars in the Middle East, Russia and Ukraine. I expect that we can have peace in the Middle East and also some kind of peace in Ukraine,” he said.

“If they succeeded, it would translate, you would think, into persistent bullish sentiment on Wall Street; remove one of the uncertainties that have weighed on the market for two years.

“I know the Trump administration has talked about it. So it would certainly be positive for the markets, and obviously for the inhabitants of these regions. »

THE Market monitoring The video show is produced in partnership with Pie Funds.

Liam Dann is general economics editor for the Herald of New Zealand. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.