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Twenty twenty four was a year full of twists and turns and shakeups with huge global implications, the biggest global election year in history. How much you think the vod's going to have to cut rates? Has Balla confirming that yet another senior military commander has also been killed.
Take a look at what happened.
The assassination attempts on the former US president.
Of course, this afternoon, President Joe Biden changing course, ending its re election bid.
Donald Trump is the President of the United States of America.
Twenty twenty four.
Is bitcoin pierced one hundred thousand dollars right now? The NYPD has identified a person of interest in the killing of the United Healthcare CEO. News events can move markets in real time, but they can also shift how Wall Street thinks about the future, and for years, Sam Potter, a senior editor on Bloomberg's Markets team, has led an effort to burrow through piles of these outlooks and predictions to surface trends.
This is what these people are talking about in house, this is what they're talking about with clients. So for me, I like to bring it all together. See what the big picture is where the all the calls are falling.
This is the big take from Bloomberg News. I'm David Gerra. Today on the show, we look back at what Wall Street predicted for twenty twenty four and look ahead at what it expects in twenty twenty five. Going into the holiday season, when things were winding down a bit at work, Bloomberg Sam Potter was burning the midnight oil sifting through a tall stack of outlooks for the year ahead from banks and financial services firms all over the world.
Yeah, it has become something that takes over my life in December every year. It was never intense to be that way. I started five or six years ago just gathering what I felt with the most interesting calls, and it kind of snowboard and has now become an annual Bloomberg tradition that I works through them, and I harvest the most interesting calls and put them all together in one place so that people can analyze and compare them.
For folks who aren't in the city or on Wall Street. What is the utility of these year ahead outlooks? How are they used in finance?
I think chiefly we have to acknowledge that a lot of this is about marketing. I think all of us realistically who work in this industry know how difficult it is to predict what's going to happen next week, next month, let alone in the year to come. And you know, repeatedly we see Wall Street calls turn out to be
way off. But still the institutions come forward, largely because they're trying to communicate to clients the way they're approaching the year, what they think a client should do with their money, and try to demonstrate a little bit of their expertise, experience and their read of what could happen. I suppose there's always the long shot that they might be proved right, and at the end of the year
they can crow about it. But really, I think it's a natural, it's a human thing for us all to be looking ahead when that day on the calendar comes around and we have a fresh start, fresh year ahead of us.
Before we look ahead, could we look back to what was predicted for twenty twenty four And I'm just curious sort of how much of those kind of broader predictions that you surfaced from those outlooks actually came to pass.
There was a lot probably above average inaccuracy in the outlooks for twenty twenty four. A lot of people felt that as the FED was and other central banks have been raising interest rates, that some kind of landing was going to occur, in economic landing. By that, we mean the business cycle was going to slow down. There were
lots of people fretting about recession and eventual recession. In the event, what we got in twenty twenty four was a kind of remarkable performance from the US in particular US assets particular. We ended the year with stocks not far from all time records. We ended with credit spreads at incredibly high levels. We ended with even cryptocurrencies hitting records.
So that landing softer or otherwise never really materialized. And I think that as I look back, as I think back to twenty twenty four, not many people called that, not many people expected that, And then, of course the election, so the year proved anything but predictable last year.
So now let's look forward to twenty twenty five. What are the trends that you found as you went through these hundreds of predictions.
So the top line that really stood out was the Trump factor. Essentially, the outlook for twenty twenty five everything marked with the words unpredictable, unpredictability, uncertainty, largely stemming from Donald Trump. Now, there is a lot of optimism as well. It should be said, I've seen that in asset prices since the election. He is seen as pro business generally, despite being quite protectionist in terms of global trade. He's
expected to look at deregulation in various sectors. Lower taxes, particularly corporate tax is what people are looking for. So there's a lot of optimism, but also a lot of unknown because he does tend to talk a very tough game. Everyone expects tariffs to come, but no one's quite sure at what level he will set them. Trump brings with him this air of unpredictability, and it makes it extremely difficult to say what's going to happen, what's he going to do, and how's that going to play out.
That's what everyone's everyone's talking about. Am I right?
That there is this sense that uncertainty begets opportunity On Wall Street?
Yeah, they always tend to say that. One of their favorite things is always are investors this year will have to be nimble, Active managers will be required, obviously, that is most often that is Wall Street and associate firms talking their own book. You know, they're in the business of managing your money for you, so they're going to
talk up the need to. But certainly, I think those institutions that enter twenty twenty four with quite a downbeat or a cautious outlook, only to see the S and P five hundred posts twenty plus percent gains, I think on one level, the risk they see is being left out.
After the break in twenty twenty four, no one wanted to be left out of the AI frenzy? Does Wall Street think that'll continue? And analyst views on Trump's proposed tariffs will be right back? Bloomberg. Sam Potter read hundreds of pages of predictions from market strategists and Wall Street economists to get their outlooks for twenty twenty five, and a common thread in them is President elect Trump's promise
to impose more tariffs on imported goods. What is the consensus from these outlooks on whether the President elect is actually going to implement these teriffs when he becomes the president. Are there enough folks kind of making bets on that for it to be interesting to you?
Yeah, it stands out very clearly that pretty much all the firms expect some form of tariffs to come in He's going to do it. I can't think of one institution who didn't think that tariffs would happen. The debate is about to what extent they'll be applied. Overall, I think the consensus is that, yes, tariff's are coming. They may be implemented quite fast, but they won't be as tough or necessarily as wide ranging as Trump has threatened.
A number of the firms suggested it's a negotiating tactic and that if the likes of Europe are responsive, then he won't go fully aggressive. The exception to that, I have to say is China. Trump, you know, is no friend of China, and everyone is expecting that China is going to get hit with tariffs and there's not much they can do about it.
So Sam, obviously what happens with tariffs and trade policy is a big risk for markets. What else is on Wall Street's mind that could potentially cause some trouble in your head?
The thing that stood out to me that came up time and again was the theme of bond vigilantes. We have seen global governments running high deficits now for a while, a lot of big fiscal spending. So far, the bond markets have kind of gone along with that. They've been okay with it. But one of the fears, one of the significant fears, I would say, is that this tolerance
of the bond investor is not infinite. While there is little appetite within governments for them to tighten their belts, if they keep going like they are, the bond vigilantes may appear. Yields could get considerably higher, and that would be potentially interests for so many economies.
May maybe I can have you pivot from predictions about the global macro environment to sort of what we're seeing in terms of expectations for certain sectors. And I feel like for a couple of years now, I've talked so much about the prospects of artificial intelligence, and we've certainly seen that minted out in sort of how well it's done. Going into twenty twenty four, I think a lot of people were wondering if the AI bubble was going to burst.
Lo it hasn't.
Yeah, what are the expectations for st of where artificial intelligence goes from you're into twenty twenty five.
Yeah, AI is one of the one of the sort of bigger themes as well. Beyond Trump, AI, as we know, has been a major feature of the market now for a couple of years. There is some debate still, as we know, as we all know, about exactly how valuable.
The AI revolution is going to prove.
Is it going to justify these incredible run ups in the valuations of the megacap text docs that we've seen.
In the US.
The view seems to be, well, there's two interesting things about it. One is that AI has not yet reached its full potential. So there is definitely a view emerging that other parts of the market, other companies are going to be able to adopt AI, and they're going to get better at adopting AI in their own industries, so.
Away from tech.
So there's one school of thoughts sort of recommending look for the places this is going to happen, the areas of the market that can really benefit from AI. I think healthcare is one that's mentioned. And then there's this other school of thought that one thing we all know about AI now is it's incredibly demanding in terms of energy and in terms of processing power, and a lot of the views from the outlooks suggest that the energy and infrastructure needs and not yet being met. We need
power stations, we need data centers. Companies are going to have to be paid to build this stuff. So there's a real dual opportunity seen in AI. So definitely, the takeaway I had was that the AI boom, the AI revolution is still ongoing and has room to run. There were one or two firms, it must be said, who floated the idea that, rather than this being on the cusp of a revolution, what if it's just nineteen ninety nine and we're heading for another dot com style crash.
That was more a risk that they had in their heads than something that they would predicted would happen. I don't think anyone wants to stand in front of the AI train at this point.
My last question is you talked about how this is kind of a marketing exercise for a lot of these firms, But what's the takeaway from looking at this kind of constellation of outlooks for the area D What do you take away from it? What do you think that readers can take away from looking at these various predictions, sort of seeing what the consensus is, general consensus is and also seeing what those outliers are.
I think it's a good place to get a feel for what might impact the year ahead. As mentioned, we have seen time and again that the actual predictions can prove very far from the reality. But it is always interesting to see where consensus forms because this is also where a lot of the money's going to be steered. Right If we looked at it, I'm sure we would see that a lot of the investment flows are following the patterns that are laid out in these in these outlooks.
More broadly, I think of it's a way to connect with the financial wealth. You know, this is what these people are talking about in house, this is what they're talking about with clients, and it gives me a.
Sense as we go into the new year that Okay, I know life.
Is unpredictable, the world's going to be unpredictable, but I have some starting point. We know where we are, we know where we think we could go, and I find that incredibly useful.
This is the Big Take from Bloomberg News. I'm David Gurra. To read Sam's full report on the twenty twenty five market outlook, heads to Bloomberg dot com or follow the link in our episode notes. This episode is produced by Alan Tie. It was edited by Aaron Edwards. It was mixed and sound designed by Alex Sagura and fact checked by our editorial team. Our senior producer is Naomi Shaven. Our senior editor is Elizabeth Ponso. Our executive producer is
Nicole Beamster. Bor Sage Bauman is Bloomberg's head of podcasts. If you liked this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow with the third episode in our series on the global fertility industry.