2025 Outlook: Run It Back

The global economic landscape continues to evolve, and 2025 promises to be a year of adaptation and resilience. As the world adjusts to a structurally higher inflationary environment, the global economy is showing signs of slowing, albeit with surprising pockets of strength. Geopolitical and fiscal shifts are further reshaping market dynamics, making this a pivotal year for investors to navigate opportunities and risks with precision.

Headed into 2025 we maintain our conviction in backing winners. Our stance remains firm from 2024: U.S. equity markets will continue to outperform their international counterparts, led by the dominance of large-cap companies. As we enter the new year, our focus is on capitalizing on emerging investment trends while remaining cognizant of evolving macroeconomic headwinds. By focusing on key resilient themes, from booming infrastructure investments to the persistent growth of corporate profits, investors can position themselves to navigate the challenges and capitalize on the opportunities of 2025.

US Equity Commentary by Stu Strasner, CFA

As a long-time student of history, I often reference the book The Fourth Turning is Here, which eloquently explores long-term (multi-decade) historical trends in markets. Today, we face a level of uncertainty, both abroad and domestically, that rivals anything seen over the last four decades.

War has historically been a feature of major geopolitical turning points, and tensions in the Middle East continue to escalate. The potential for Iran to develop nuclear capabilities remains a critical concern for Israel and its allies. The new administration may provide strategic support to Israel while seeking diplomatic cooperation from Saudi Arabia to manage oil production and stabilize global markets.

The investment implications of these geopolitical dynamics are profound. Over the coming year, we are likely to experience periods of heightened volatility across interest rates, equity markets, and even commodities like gold. While volatility may eventually ease, addressing the fiscal deficit will likely require decisive action from Congress. Given the current geopolitical landscape, I encourage investors to reassess their risk tolerance and investment horizon. For those with shorter timeframes or an aversion to volatility, reallocating into the strategies outlined in this outlook may provide more stability and resilience.