High interest rates and geopolitical conflicts could weigh on markets in the new year.
Transcript:
CONWAY GITTENS: So tell me, what are your overall expectations for the stock market overall in 2025? Do you expect another year of growth. I know we’re like double digits with S&P 500. What’s still like 20% up year to date?
STEPHEN GUILFOYLE: So far. Yeah, I would expect that to slow down somewhat, especially if interest rates can’t be tamed. If the bond market, like I said, takes control of the long end of the yield curve away from the Fed and that and and prices. I don’t five year debt out to 30 year debt appropriately. Well, then of course, that’s going to slow the slow the economy down because then corporations won’t be able to service their debt as cheaply. They won’t be able to roll over as much of their debt. They’ll actually have to pay it off.
The same would be for the U.S. government unless they unless they put out all their debt in 30, 60, and 90 day treasuries, which is kind of ridiculous. But that’s the only way the Fed could control their borrowing costs. I know they’re supposed to be independent. They would not be independent. If they were doing that by the federal government. But because of these factors, I think that if borrowing costs can’t be contained moving forward, that will obviously start on corporations. And it will obviously slow down government spending even if the two candidates, whoever wins, want to be irresponsible.
CONWAY GITTENS: Tell me, what then is the biggest risk facing the market in 2025, in your view?
STEPHEN GUILFOYLE: The largest risk would be a hot war involving the United States. I mean, would if the United States were to be sucked into a war in Asia with China, which is another superpower, or if they would be sucked in, somehow drawn into this war in Eastern Europe due to NATO being an alliance where they all have to defend each other, or if the United States gets sucked into combat in the back in the Middle East where we’ve been for so long and we’re finally out of it, I think that would be a black swan event if the United States got into a hot war with somebody that could punch back, I think that would be a devastating blow to the U.S. economy and to the market.
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