6 Key Things We Are Watching in 2025

6 Key Things We Are Watching in 2025

No doubt the number one question I get to start the year from clients is what do you think about the markets this year?  Sadly, I don’t have a crystal ball, otherwise, I’d likely be writing this from my private villa in Southern France.  That said, the best answer I can, and do, give is here are the things we are closely following this year.  Let’s face it, no one truly knows what will ever happen in the markets as they are fluid.  That said, knowing what to look for and keeping an eye on so we can react appropriately is truly the key to a well-thought-out investment strategy.

1. Fed Funds Rate- This shouldn’t be anything new, as the Fed has been extremely active in the past few years in combating inflation.  Going into 2025 the big question is where they will land.  Will there be 1,2,3 cuts this year and if so by how much?  This may be the biggest driver of what we can expect stocks and bonds to do for the year.  The big question is where are they targeting for their “terminal” rate, meaning the ideal permanent rate. 
2. Unemployment- The other day we had a very good unemployment report, which of course sent the markets downward.  We are currently at a very strong/low unemployment rate hovering in the 4.1%.  The reason this is critical, as we saw the other day, is that the stronger employment is the less of a rush the Fed is likely to cut rates. 
3. Inflation- I’m looking at you Mr. B (he always wants an inflation shout out).  That said you can start to see that a lot of these things are very interconnected.  Currently, inflation is in the high 2% to low 3% range, which is good.  The Fed targets 2% but anything that seems to suggest inflation is under wraps and hanging in that 2% range will hopefully tip the scale to their comfortability in lowering rates.
4. GDP Growth- We’ve been experiencing some solid GDP growth over the past few years.  The goal is for the economy to grow at least 2% a year.  We assume that it will stay the same over the next year, but lots of new policies are being talked about thus we will be keeping a very close eye on GDP growth.
5. Politics- Welp, doesn’t take a genius to figure this one out ha.  Specifically, where does President Trump land on tariffs, corporate and personal tax rates, regulations, fiscal policies, along with all other campaign promises?  Things are shaping up to be a very active first 100 days in office and we will be keenly tuned in to make sense of it all.
6. Earnings and Margins- Markets aren’t cheap right now, and that isn’t always a bad thing.  Assuming the sizeable growth being baked into today’s stock prices comes to fruition things should still look promising.  Additionally, how about the Mag-7 that has been dominating the markets, will it continue or will we see growth distributed more evenly? 

Other

Our investment team literally has dozens and dozens of micro and macro trends/data they continually sift through to get a read on the markets, economy, and how to best position our portfolios.  For this article, I wanted to make sure to highlight the biggest of those items that are garnering their undivided attention.  It is far from a complete list, but I figured it helpful in our promise to be transparent to share some of the biggest things we are following so you can follow at home too (or totally ignore it and let us do the heavy lifting 😊).  In any event, it promises to be an eventful year and we are honored to be entrusted with your hard-earned savings.

Here is to a 20% year in the markets, why not, and hope everyone stays wealthy, healthy, and happy.