How We Would Allocate Capital in 2025
After five years of severe imbalances, global economies are converging on a reasonable state of equilibrium, a condition that is generally good for assets. Central banks, including the Fed, are responding to the stabilization of conditions by gradually cutting rates toward what they view as a neutral posture. Growth is running pretty strong, inflation is a touch high but tolerable. And AI technology has advanced to show real potential to enhance productivity over time.
If these were the only developments in the world, you should expect an era of stability and strong profits. Enter President-elect Trump and a team of aggressive interventionists. This political turn of events now fully entrenches the shift in the global world order from free market globalization to mercantilism, and creates significant uncertainty for economies and markets.