hello my friends it's Christmas week and this is my markets outlook for 2025 now before we continue let's take a look to see how I did last year starting with equities so last year I gave an S&P 500 Target of 6,000 now at that time the S&P was trading at around 4,800 and there were all sorts of people dooming around on the internet but I insisted that we were going to crash up and looking at where the S&P is trading today you know I'm going to have to say this has been a tremendous call and
personally as someone who makes their living off the market it's my best year ever so I am happy with this now moving on to rates I thought the 10 year would be around 5% and I got that totally wrong we are nowhere close to 5% and lastly I thought gold would be you know 2400 we are trading notably above that so I think I that was a good call as well so overall two out of three I'll take it I'm happy with that and just to be clear again I offer my perspective and I can
be wrong all right now moving on to this year so as a reminder I think of asset prices the largest determinate of asset prices to be public policy now that could be what the FED is doing it could be what the treasury is doing it could be what uh Congress is doing and so forth so I try to figure out what the public policy will be and then see how that would impact uh the asset prices through an understanding of how the financial system works again the financial system very complicated and most importantly is always
changing right so if you look at markets sometimes good news is good news sometimes good news is bad news this stuff it's not an equation it will never be an equation it will always always be context and judgment with that being said let's start with how I think policy would turn out next year now of course the big big changes next year is that we have the return of President Trump to the White House now I've watched president Trump very carefully for for many years and I think of him as the most transformational leader uh
in the world in this generation now the policies that President Trump want to do are are very different from those of his predecessors now looking at domestic policy for example he basically single-handed dragged up the issue of illegal immigration and made it one of the cornerstones of of his administration and that's not something that anyone before him talked about he was basically accepted uh by both parties before him that we would just have just millions of illegal immigrants entering the country every year and under Biden it seemed like it was just turned to the max
so again he wanted to change this entire policy now looking at foreign policy again he also has very different visions of the world world he wants to have um less of a trade deficit so the US runs a chronic trade deficit with the rest of the world it's something that uh we've been doing for for decades and it's part of the IDE ideology that establishment parties had that is to say to have free trade now president Trump and is taking a departure from that perspective and wants to use tariffs as a tool uh to basically
have a more balanced trade relationship or another way to to put it is he doesn't like free trade he wants to reorder the global trade system another big way that President Trump differs from those before him is his views on foreign policy now I think over the past few decades both parties have been very active in foreign conflicts right not just Iraq uh but also things like Afghanistan and and so forth so these are things that both parties have were basically strongly supportive of but president Trump did want to do and of course makes it
a big part of his uh election platform right what are we doing in all these foreign countries these people have been fighting each other for thousands of years and also a corollary to that that has impact on our allies he's also very unhappy that you know the United States is playing Global policemen basically paying for the defense for many wealthy countries like euroland and like U Japan South Korea and so forth so he has a lot of ideas that are very different from those that came before him and that's I think what makes it so
transformational he has he's coming to office the second time uh with with a know different perspective now he also brought that same perspective to him his first term but admittedly at that time he was not very effective but after his first term he seemed to have reflected a lot as to what happened then and looking at his picks for cabinet this time around it seems like he learned that you know these guys who are part of the political system they can't be trusted and he kind of leans towards Outsiders this time for example with the
elevation of Bobby Kennedy with tossi gabard and of course a strong relationship with Elon Musk so it seems like this time around he is better equipped to carry out his different big policy change now sometimes politicians say one thing on the campaign Trail and do another thing in real life but looking at the at the issues of wars and immigration and trade these are things that he has literally been saying for decades you can find videos of him talking about trade uh in the 1980s so this is something that he really believes in and as
someone who will not be running for reelection this is his last chance to make his Mark and fix uh the fist the system as he perceives it so I fully expect this to be a very transformational presidency when you have big changes both domestically and in the global economic order now change is always very very disruptive right let's say that we do have a change in Immigration we got to have our later Market will have to adjust we do have a change in foreign policy now the political and Industrial Capac and military-industrial complex will have
to adapt um that's in the best case scenario but the thing is in the current existing order there are many people who benefit many interest groups and so changing a very established system is going to be very very difficult now I remember during his first term there was an obvious coordination between his political enemies in some aspects of law enforcement where they were basically accused him of being a Russian agent and the Legacy Media basically play that non-stop for years and years and today we know after a very careful Inspector General investigation that that was
all madeup nonsense and we also know for example that elements in the government coordinated with the social media companies in the 2020 election to censor news that was helpful perceived to be helpful to president Trump so you have a lot of people who don't like President Trump and a lot of people who stand to lose with his Ascension and they're going to fight to try try to make sure that uh none of this happens and that's just looking at this domestically know looking abroad let's say you're a big country like China well you kind of
like having a big Trade Surplus with the us maybe you don't want to change that and maybe there are tools that you have uh to try to um make sure that doesn't happen so there's going to be I think a lot of turmoil in at least the first couple years well at least next year for for um for when it comes to policy now in the US we have election Cycles whereas you know we have the presidential election Cycles every four years but we also have midterm elections and that's not until another two years so
between January and midterm elections Trump has basically two years to do the big changes that he wants without having to worry about the Electoral consequences and that tells me that everything will have to be done in a front-loaded manner you got to get hit the ground running and then later on you know you could uh as we get closer to election day we know maybe things will get better so again if you H if I have a view that things are going to be disruptive that has direct implications for for markets and so first off
thinking about what happened during from Trump's first term a whole bunch of tariffs whole bunch of trade Wars that was very Market negative and more importantly it also contributed to the FED low lowering interest rates again I remember in December of 2018 the Fed was all set to hike rates a few times in 2019 only to do a 180 and began cutting in part because of disruptions caused by ongoing trade Wars now looking at the market I think the most mispriced thing from my perspective is the path of fed policy thinking that there's just two
cuts next year now that totally doesn't make sense to me given the political disruption that we know is coming and also given by the fact that inflation is really for all intents and purposes at least for next year uh just not a problem anymore now Chow has been pretty clear that you know when you're looking at inflation on a month-over-month basis and all that a lot of it really is just lagging shelter and U things like imputed services and so forth now he doesn't think it's a problem and that means that he is going to
be inclined to cut the moment that we have some kind of economic disruption the moment that the unemployment rate is taking higher as it's been for the past year so that's very clear and I think that's a very clear tell to me that uh the likelihood is that we have a lot more rate Cuts next year than the two pric in now usually you'd think that would be positive for asset prices but in the current current context when rate cuts are because of economic concerns and at the same time you have foreigners loaded up into
the market uh basically at their highest exposure to us equities theyve ever had uh that's a recipe for a large outflow of foreign Capital because as the equity Market declines as the ruts come in they're going to be hit with a double whammy of lower Equity prices and also a depreciating dollar and that is something that could easily Avalanche into a more severe decline in the in Risk assets so then again now to be perfectly clear I think that the policy proposals you know to slim down the federal government to not have forever Wars to
have secure borders these are all great things for the future of America and to laying down the foundation for an ongoing bull market uh but again Chang is disruptive so I think next year is going to be a pretty volatile period so for the S&P 500 I think we will be around 5,500 at the end of next year and I think you know sometime in the year we're probably going to get notably below 5500 so I would say that we'd have a steep Decline and recover towards 5,500 at the end of next year corar to
that of course is rates like I mentioned before I think we're going to have a lot of rate Cuts so I think the 10e year will be around 4% next year and I think there will be months where it be notably below 4% and the trend I firmly believe is higher interest rates heading out through the decade but nothing goes in a straight line uh this would be a this would be one of the I think disruptions or potential growth growth scares that we'd have along the way and the last thing I want to talk
about is gold now gold had a really good year this year I think that continues and I think gold can go up to 3,000 at the end of next year I'm thinking that the weaker dollar and ongoing political uncertainty globally is going to put a steady continued bid uh in Gold not just by people who are anxious about the future but if you are a foreign Central Bank you know you are going to have to be hedging yourselves because as you go and you negotiate with with uh president Trump uh about how you're going to
remake the global order you know they have that huge sword hanging over you of dollar sanctions and your Reliance on the dollar so in order to put yourself in a stronger negotiating position in order to at least diversify a little bit away from Reliance on the dollar you're going to have to continue to buy gold and that's especially true for large countries like China which most recently we see that the pboc has resumed gold purchases um all right so those are my three targets for next year and I don't think we'll have a recession but
I do think though that growth will slow down uh notably next year again I think that again we are in a period of great change and it's going to make this country much much better um but change is disruptive so next year I think will be a tur turbulent time all right so that's all I have prepared um hopefully again I can be wrong and this is just my personal view thanks so much for tuning in guys and talk to you all soon
