SVET Reports
What’s Up With 2025?
Investment banks have started to publish their 2025 “investment outlooks.” Here’s how it goes.
Saxo Bank stands out with its “Outrageous Predictions” among which are: “Trump 2.0 blows up the US dollar,” “China unleashes CNY 50T stimulus to reflate the economy,” “A natural disaster bankrupts a large insurance company,” and “Pound erases post-Brexit discounts versus the Euro.”
Regardless, Citibank remains upbeat: “The global economy has ‘broken the rules’ by growing despite usually reliable recession signals. We believe this expansion can continue in 2025 and 2026…” It is supported by HSBC, which states: “Cyclical support for portfolios should principally come from earnings growth and continued rate cuts…” Barclays simply says: “The macro backdrop is attractive.” Smaller banks, like NatWest, also fall into that narrative: “We have been leaning into ‘risky’ assets… such as stocks and high-yield bonds…”
Two banks, BNP Paribas and Deutsche Bank, put America first. BNP: “Our regional preference remains the US. Enthusiasm for artificial intelligence was the primary driver of rising earnings in 2024…” Deutsche Bank: “… the U.S. will remain the center of gravity.”
UBS sounds more cautious: “A key question is whether political change might extend or end the Roaring 20s. The upside scenario would see lower taxes, deregulation, and trade deals… The risk scenario is that trade tariffs, excessive fiscal deficits, and geopolitical strife will contribute to higher inflation, weaker growth, and market volatility.”
Overall, however, the tone of almost all “outlooks” I have read so far is overly optimistic. It seems that corporate “analysts” are overcompensating for their “inflation-stagnation” type projections of 2023–24. Therefore, it is almost certain that those “rosy” scenarios are unlikely to be realized.
I stand by my already expressed opinion that in the epoch of a global, once-in-a-century generational shift, the only viable strategy is to play volatility. Importantly, though, this volatility might be stupendous.
Merry Christmas and a Happy New Year!
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