By seeking to stimulate domestic growth, the United States and China are creating a market environment that we anticipate will be marked by increased appetite for risk.
The decisive red sweep in which the US elections ended heralds a phase of deregulation and tax cuts, all measures traditionally favorable to businesses. By seeking to stimulate domestic growth, the United States and China are further creating a market environment that we anticipate will be marked by increased appetite for risk.
Although they are often considered inflationary, tariffs are inherently deflationary. The rising costs they induce reduce demand and destroy it, much like when high oil prices dampen driving habits. Multinationals are therefore preparing to prioritize domestic production in the United States in order to minimize the risks associated with customs duties. Central banks, for their part, should continue to reduce interest rates, but at a more moderate pace. Certain policies – such as economic recovery and tighter labor supply resulting from stricter immigration policies – could exert inflationary pressure.
A wind of change
After the election of Donald Trump as President of the United States, the market mood has set the stage for a dynamic economic outlook as 2025 approaches. The decisive “red sweep” heralds a phase of deregulation and reductions in taxes, all measures traditionally favorable to businesses. This political evolution of the world’s largest economy coincides with a whole wave of recovery measures initiated by the world’s second largest economy. By seeking to stimulate domestic growth, the United States and China are creating a market environment that we anticipate will be marked by increased appetite for risk.
Tech giants have pumped more than USD 200 billion into artificial intelligence (AI); this wave of investments is expected to continue next year and could even accelerate.
This year, in addition to public efforts around the world, tech giants have pumped more than USD 200 billion into artificial intelligence (AI); this wave of investments is expected to continue next year and could even accelerate. On their own, these corporate spending programs, reminiscent of the scale of the Apollo4 space program, should fuel economic momentum.
At the same time, investors are concerned about the potential impact of tariffs on US trading partners, particularly their effect on prices and the US Federal Reserve’s easing cycle. Although they are often considered inflationary, tariffs are inherently deflationary. The rising costs they induce reduce demand and destroy it, much like when high oil prices dampen driving habits. Multinationals are therefore preparing to prioritize domestic production in the United States to minimize tariff-related risks and ensure fluidity in a politically tense business environment. In the wake of previous tariff cycles that forced a reassessment of global supply chains, many companies have already made such strategic adjustments. This trend is expected to inject more capital into the U.S. economy.
Central banks, for their part, should continue to reduce interest rates, but at a more moderate pace. Certain policies – such as economic recovery and tighter labor supply resulting from stricter immigration policies – could, however, exert inflationary pressure. These are the strong lines of next year’s macroeconomic picture, the contours of which will be defined by stimulus measures, business strategies and political developments.
In China, policymakers have also discussed further stimulus measures. After a series of rate cuts in October, the People’s Bank of China (PBoC) maintained its key rates in November. We believe Beijing will likely assess the impact of its current stimulus measures before providing additional support.
In this issue of Investors’ Outlookyou will find details of our outlook for the year ahead, our analysis of the equity markets, as well as recent changes to our asset allocation.
All the elements are in place for the opening of a new chapter. We are ready to face the future.
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