January 10, 2025 – What are the big forecasts being made for the US stock market and economy in 2025? In today's Big Picture segment of the Financial Sense Newshour, Jim Puplava and Cris Sheridan look at what market strategists and economists (the "consensus") expect for this year: sustained growth without a recession, with inflation cooling and interest rates falling. Jim and Cris also cover the biggest potential surprises and "outrageous predictions" from Saxo Bank, Doug Kass, and elsewhere. This is one show you won't want to miss!
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Transcript
Cris Sheridan:
When it comes to making money, we have long stated that markets move and are impacted by three main factors. There's the fundamentals, the technicals, and the politicals. Never has this been made more clear since the beginning of this decade. Going back to Covid, government shutdowns drove the economy into recession, and then government stimulus brought it back from the abyss, followed by Fed money printing, flooding the markets with liquidity. Much of what has happened this decade has been the direct result of government fiscal and regulatory policies, not to mention Fed monetary policy as well. For much of this year, we believe, will also depend on what happens in Washington, particularly by the U.S. government and by the Fed as well. Welcome, everyone, to our forecast for 2025. Today we're joined by our founder and president, Jim Puplava of Financial Sense Wealth Management, where we are going to go through what the consensus is looking at for the market and the economy. And then we're also going to look at some of the outrageous predictions and potential surprises from the likes of Saxo Bank, Doug Kass, and elsewhere.
Jim Puplava:
Well, Chris, why don't we begin with the economy because that's going to drive a lot of what happens in the markets this year. And we had pretty strong growth in the economy in the fourth quarter. So if you look at what they're predicting for this year and next year, 2024, economic growth came in around 2.7%, a little bit less than 2023. What they're predicting for this year is the economy slows down. It's still growing, but not as fast. They're predicting 2.1% growth for this year and 2% for 2026. Now, if you look at some of these components, whether it's consumer spending that's expected to decline a bit, government spending is expected to decline. I don't know if that's a reflection of Trump and the budget. Private investment is expected to be less, exports are less, and imports are less as well. And industrial production, the one bright spot, Craig was talking about in the first hour; he was talking about industrial stocks. The PMIs are starting to pick up. So that bodes well for industrials. Industrials are expected to be 1.1% this year and 1.7% in 2026. So not a bad read on the economy. So no recession in sight, at least according to most economists. It would take, I would say, some kind of an exogenous event at this point to throw the economy into recession. We'll talk about that later on and next week when we get to our own view. Now let's take a look at something also important. Craig talked about inflation, and he thinks that the bond market has got this wrong. CPI is expected to decline to around two and a half percent for this year and 2.7% picking up in 2026. And that's in contrast for 2024 when the CPI was running about 3%. Housing is down in 2025 and also up in 2026. And that's one of the things that I think you're going to see in this kind of recovery. Typically, when the Fed starts to lower interest rates, you're coming out of a recession, the economy picks up, and it's led by housing. Obviously, a drop in interest rates translates into lower mortgage rates, which translates into higher real estate sales. I don't think you're going to see that. And that's reflected very much in what they're predicting in terms of what's going to happen to the economy. Now here's one: the unemployment rate is expected to inch up to 4.3% and then drop back down to 4.2% next year. So the unemployment rate basically is expected to tick up, but not by much. So the other good news is hourly earnings, and this is reflective of a very strong labor market and it's also somewhat inflationary. Hourly earnings are expected to grow at 3.7% this year, 3.5%. So good news for workers. And here's something that is debatable. What's going to happen here. But they're predicting the government deficit will end up being about six and a half percent of GDP, 6.6% in 2026.
Cris Sheridan:
And just for clarification, these numbers are coming from a Bloomberg survey where they look at a large range of economists, a number of which we actually do speak with on our show, and strategists who provide these numbers. So this is again the consensus outlook for 2025. But Jim, so far it sounds like with these numbers that you've given out, it's somewhat like a Goldilocks economy. A continued decline in the inflationary backdrop with a still somewhat steady economy.
Jim Puplava:
Yeah, and the other thing too, and here's sort of key factors Craig and I were talking about, maybe one of the headwinds and one to keep an eye out for is what is happening to interest rates. We've got the 10-year at roughly four and three-quarters. We've got the 30-year bond just slightly below 5%. If that starts going over 5% and we're at 5.5% or even 6%, we're in trouble. But right now, that's not what they're forecasting. They're forecasting that the fed funds rate will get down to three and three-quarters in 2025. It'll drop down to three and a half roughly in 2026. Now some bad news. If it continues in this trend for savers or people that are looking to, let's say, interest rates to live off their investments, whether it's the bond market or whether it's in treasuries or even CDs, the three-month T-bills are expected to get down to three and a half percent, down to almost three and a quarter in 2026. The two-year is getting down to about roughly three-seven, three and a half next year. And here's one we're really going to watch: the 10-year they're predicting will end the year at 4.1%. Now that's, gosh, almost three-quarters, not quite three-quarters less than where we stand today because right now, ever since September when we were at about 3.6%, we have now moved up 110 basis points or 1.1% because we're over four and three-quarters. So they're saying 4.1 this year and we'll end up next year at 4%. Now another factor that Craig and I talked about, and this could affect a lot of the large-cap stocks, you heard Craig talk about, maybe the smaller-cap stocks because three-quarters of the earnings of our S&P 500 companies, your Dow stocks, they're international companies. They get a large percentage of their sales overseas, companies like Coca-Cola and others; the dollar is expected to remain strong at roughly 105 this year and 108 next year. So that could impact a lot of the S&P earnings. But you take a look at this consensus of all these economists; what are they basically saying in their forecast: no recession, lower interest rates, lower inflation, and a bit higher unemployment.
Cris Sheridan:
So that's the economy and the consensus outlook again for the economy. How does this translate to the stock market for 2025?
Jim Puplava:
Well, as Craig was talking about, his prediction is around 6600. The average for the stock market, the S&P 500, is 6614, which would imply a 12 and a half percent gain. Now remember, the stock market closed at 5881, and it was up 23% in 2024. A lot of that coming from the MAG 7. So right now, 6600 is the consensus or the average, the high for the year. As Craig talked about, a couple of companies, Oppenheimer, Wells Fargo, and Deutsche Bank, have the S&P going up to about 7,000. Oppenheimer's the largest at 7,100. And we hope to have Ari Wald from Oppenheimer on the show here this month. So if that was to play out, Chris, we would have another 20% year in the market. There'll be three years in a row of 20% gains. That would almost have to harken back to the 90s when you saw from almost '96 all the way to the year 2000 stock market gains at 20% a year. So if these guys are right, this would be three in a row at 20% gains, which would be an incredible market return. Now, the low for the year: the bears in the camp are Cantor Fitzgerald. They predict that the S&P will end up roughly about 6,000, a 2% gain from where it ended last year. And what they're all saying is, if you take a look at what's happened in the stock market over the last two years, most of the gains in the market came from an expansion of PE multiples. In other words, people were willing to pay more for a dollar of earnings. As PE ratios are extremely elevated at this point, it's expected this year the driver of the market is going to come from corporate profits. No PE expansion, but increased profits are what they're basically saying is going to drive the market. Now, this is interesting because if we take a look at the returns, the S&P right now has a dividend yield of roughly a little over one and a quarter, and has a PE ratio of 27.14, which is very, very elevated. Likewise, the NASDAQ dividend yield is one and a quarter, and the PE on the NASDAQ is roughly about 34 and a half. The Dow Jones Industrial Average has a little bit more yield there, 2.18%. And a PE multiple, even for the Dow, is roughly 26 and a half. So stocks, in my opinion, Chris, are in a bubble, and they carry bubble-like valuations. But one of the things I've learned about bubbles in studying them over my career is bubbles can get bigger and expand longer than you could remain short. And so a lot of short people came into the market; they got killed on the short positions. And so valuations remain very elevated. In fact, one of my favorite people, Warren Buffett, has been selling stocks nine consecutive quarters in a row. They've got roughly a third of Berkshire's market cap is now in cash. So. And another individual that I follow, Howard Marks at Oaktree, he believes we've got all the makings of a bubble. We'll talk a little bit more about that next week when we take a look at our own views on the market. But right now, stocks are elevated with very, very high PE multiples. So it's going to take a tremendous amount of corporate earnings to drive the market this year because it would be really hard, you know, maybe if the Fed really started to monetize the debt or something and inject vast amounts of liquidity into the market, you could see PE expansion. But for the consensus, it's going to be earnings that are going to drive the markets this year.
Cris Sheridan:
So Jim, those are the consensus forecasts for the stock market. As you said, when it comes to the Mag 7, the median forecast for the S&P 500 is 6600. The low at 6000, that's a 2% gain by Cantor Fitzgerald. Again, not forecasting a loss in the market, but just a very slight meager gain there. One of the areas that we do cover each year is the Dogs of the Dow. That's the top 10 highest dividend-paying stocks. Why is it important to look at this area, and what are some of the yields that we're looking at for the Dogs of the Dow in 2025?
Jim Puplava:
Yeah, one of the reasons we cover the Dogs of the Dow is if you take a look at over the last five or six decades, the Dogs of the Dow have generally outperformed the Dow itself. Now, that hasn't happened in the last couple of years, and we'll get to that in just a second. But overall, the Dogs of the Dow are the top highest-paying dividend stocks of the Dow 30 stocks. The overall yield this year is 3.53. Chris, that's about a drop of a full percentage point from where we were last year at this time. The top five highest dividend-paying stocks in the Dow 10 have a yield of 3.86%. So let's take a look at who these companies are for 2025. Top of the list is Verizon. That has a yield of 6.8. Chevron has a yield of four and a half. Amgen has a yield of almost 3.7. Johnson & Johnson, 3.4, and Merck, three and a quarter percent. So a lot of the top five, we've seen a pullback in oil, we've seen a pullback in telecommunications, and we've seen the pullback in the drug stocks, especially with worries over RFK. So it's not surprising you're seeing a few more drug stocks. Now, let me see the other bottom five: Coke at 3.1, IBM at 3. And here's a good example, Chris. Last year, the dividend yield at the beginning of the year for IBM was 5%. It was probably one of the highest dividend-paying stocks. But IBM went from 130 all the way up to 230, so almost a 100-point gain. So the dividend yield on IBM is a little over 3%. Cisco at 2.7, McDonald's at 2.44, and Procter & Gamble at 2.4%. So even the Dogs of the Dow have come down almost a full percentage point from where they were, let's say, a year ago at this time, reflecting the upward move that we saw last year in the S&P, the Dow, and even the Nasdaq.
Cris Sheridan:
So Jim, over the past five to six years, we've seen the Dogs of the Dow underperform the Dow itself and the S&P 500. What do you think could change that this year?
Jim Puplava:
Well, let's take a couple of assumptions. Let's assume that the consensus is right and by the end of the year, interest rates come back down. Maybe inflation doesn't heat up as the market is anticipating. As Craig talked about, there's two interpretations of rising interest rates. One is inflation is going to pick up, so the market's reflecting that, reflecting deficits and things of that nature. The other aspect, or another interpretation, is yields are rising because economic growth is expected to accelerate or be stronger. And usually when the economy takes off and expands, interest rates start to rise as demand increases for credit. So there's a couple of interpretations, but let's assume by the end of the year that rates are down, and let's say the markets are a little bit more volatile. You might see people looking at, "Hey, I don't want to pay 40, 50 times earnings for the Mag 7 or 80 times, depending on what Mag 7 stock you're looking at. Maybe I want something that's reasonable, predictable, and a little bit safer given all the uncertainties, especially I think, Chris, this will be a year where politics will be the number one issue that will dominate much of what happens in the economy and the markets." So given that, you know, given these yields, you might have the Dogs of the Dow may be more attractive. One reason that they have underperformed. And this gets back to the roaring 90s when we had the tech bubble. When you have things like the tech bubble, the Dogs of the Dow underperformed the market because everybody was going into Internet stocks. Well, what's happened over the last two or three years, everything has been going into AI stocks. We talked about how the AI or the Mag 7 has really dominated the markets this decade. So for that reason, it's another reason why the Dogs have underperformed. But if you take a look at the yield on the Dogs of the Dow, it's three times that of the S&P. The S&P is a little over 1% and the yield on the Dow is a little over 2%, and the Dogs are about 60% above the dividend yield on the Dow. So that may be more attractive, especially if interest rates come down. And we've seen if that happens with short-term rates where a lot of people have been parking cash in money market funds or three-month T-bills. If that starts to come down by mid-year, then people that are living on income, let's say retirees or even pension funds, are going to be looking for a predictable return. High-dividend-paying blue-chip stocks may become attractive.
Cris Sheridan:
So we've talked about the consensus, but many times the consensus also gets it wrong. Which is why we like to pay attention to some of the contrarian or outside-the-box forecasts and predictions. So let's start off first, Jim, with Saxo Bank's outrageous predictions. Typically, this would be done by Steen Jakobsen, but he has actually left Saxo Bank now at this point. So here is a clip from one of their analysts talking about their first and main outrageous prediction that they're making for 2025, and that is a blow-up in the US dollar.
Interviewer from clip:
Let's start with the most provocative predictions. President-elect Donald Trump triggering a seismic shift in the global financial landscape, including quote, "blowing up the US Dollar." Now, despite being outrageous, this prediction couldn't be more timely, especially after Trump's weekend remarks threatening 100% tariffs on BRICS nations if they pursue plans to replace the US Dollar as the world's reserve currency. In a post on Truth Social, Trump declared, quote, "The idea that BRICS countries are trying to move away from the dollar while we stand by and watch is over." He added that we require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US dollar. Otherwise, they should expect 100% tariffs and say goodbye to the wonderful US economy.
Saxo Bank's Ole Hansen:
There are attempts being made to circumvent the dollar, and we just have to remind the viewers that our outrageous predictions are obviously predictions that we don't expect to happen, but we're trying to provoke the thought, "What if they did happen?" Then obviously, it could have quite a profound impact on the particular markets, but also the world in general. And this one is basically playing with the thought that this trade war, where we are seeing a polarized world with China on one side and the US on the other side, both scrambling for trading partners and trying to split the world among them, will lead to this intensified focus on an alternative currency.
Jim Puplava:
So that's their number one prediction as Trump 2.0 blows up the dollar. A lot of this is going to depend on not only tariffs but also the efforts to reduce government debt. This disrupts the global US dollar system, sending crypto markets to US dollars 10 trillion and devaluing the US dollar by 20% against major currencies. If the US was to devalue the currency by 20%, you would see gold in the $4,000 to $5,000 range. Second one, this is interesting: Nvidia balloons to twice the value of Apple. I mean, Apple is almost 4 trillion right now, and they're predicting it goes to 5. Nvidia's new Blackwell chip drives a 25-fold increase in AI computing performance, catapulting Nvidia to become the most profitable company globally with its shares trading well north of US$250. If that was to happen, if we even hit $250, that would imply an almost 85% gain for Nvidia this year. I mean, that would become like the super stock of this decade. Number three, China unleashes a 50 trillion stimulus to reflate the economy. A massive fiscal initiative, much of it directed via digital currency to consumers to boost leisure consumption and family formation. This reflationary wave strengthens the renminbi and elevates emerging markets. Let me see. This one is going to be interesting because we cover health on Lifetime Planning. The first bioprinted human heart ushers in a new era of longevity. A groundbreaking bioprinted human heart sparks rapid growth in biotechnology and 3D printing sectors with a surge in innovation and IPO activity. Next, electrification boom ends OPEC. Declining oil demand due to EVs drives OPEC into irrelevance, causing a steep drop in oil prices before the market balances. Next, the US imposes an AI data center tax as power prices run wild. Power prices spike, forcing local authorities to tax data centers, pushing a massive boom in U.S. power infrastructure and doubling long-term natural gas prices. You know, we've discussed this with various guests on the show. These data centers need dependable energy. You're not going to get that in a nuclear plant, which takes 10 to 15 years to build. We may get that in modular plants. We're probably three to five years away. The answer is kind of what Elon Musk did when he built his data center. He put in two natural gas plants, and he did that within three months. So natural gas could be another area that looks very good. This year we're into natural gas and really like this. A natural disaster bankrupts a large insurance company for the first time. And folks, you just have to look at California right now. The latest estimate is there's $156 billion of damage in LA, and it's still going. My nephew is a firefighter there, and he, it's really tragic. He sent me a couple of videos. They were at this one neighborhood with the house on fire. They went to hook up the hose to the fire hydrant. No water. So the fires are still ongoing in LA. That number could climb to as high as $200 billion. And if you're an insurance company, have to replace that. That would be enough to bankrupt. So that, that is one you could clearly see. And finally, the last one, the pound erases post-Brexit discount versus the euro; sterling rises to a pre-Brexit level due to constructive UK fiscal policy and floundering Eurozone economies.
Cris Sheridan:
So that's Saxo Bank and their 10 outrageous predictions that they're making. Again, they don't think that these are highly likely. These are low-probability events, but if they do happen, they will have a large impact. Let's move to Byron Wein. Again, this has been taken over by Hudson Value Partners. 10 surprises. What is it that they are saying for 2025?
Jim Puplava:
Yeah, just to point out, they've taken over from Byron Wein, and this comes from their research desk. And when they put in a surprise, this is an event that has maybe a 50-50 chance of actually playing out. Yet only one in three are even considering. So predictions about the future are notoriously difficult. But they're hoping that, you know, this sparks some thoughts. Number one on their list, the much-heralded Department of Government Efficiency will have a national impact, basically bringing down the debt. Two, Nvidia. This is funny. Compared to Saxo, Nvidia will face a meaningful challenger in AI chips. Investors will reassess their market share expectations. Number three, Ukraine will not join NATO or the EU. A demilitarized zone will emerge as continued conflict proves too costly for all sides. Trump has already said he wants to end that war; Putin wants to meet with him. And I think if Trump basically says, hey, we're not going to allow Ukraine to join NATO, which was the real big reason that concerns Russia. And that's something that the Biden administration would not do, but, you know, we could see an end of the war there. Number four, an unexpected company will emerge as a leader to help businesses implement AI tools because right now there hasn't really been any profitable app or something that's come out of AI that would really drive profits. Number five, tariffs, however they are enacted, will not have a consensus impact. Not sure what they're meaning there. Number six, corporate governance reform will help Japanese stocks, but the Bank of Japan will face challenges raising interest rates. Number seven, politicians will stay focused on China, but investors will increasingly look to India for opportunities for growth. Number eight. Now this one's interesting. The streaming wars will end with Netflix and YouTube winning, and a merger will occur among the least two of the also-rans. So, you know, that's an interesting thing, Chris. I don't know, most people, and this is a concern for movie theaters because there's so much streaming that you see today. Like I was able to get Gladiator 2 within one month after it came out into the theaters. And think of all these series that you see, whether it's on Netflix or you're seeing it on Amazon Prime or Paramount or other streaming venues where you get these series like Bosch and Reacher and some of the others that have become quite popular now. Number nine, the media will realize that Gen Z and Millennials actually have an attention span and learn from successful long-term podcasts and interviews designed to share viewpoints rather than make sound bites. And number 10, private equity ownership. The continued rise of legal gambling and publicly traded teams will continue to make sports a more widely held asset class. So a couple of interesting ones there. The ones it's kind of interesting because Saxo thinks that Nvidia will be more valuable than Apple. And here we have Hudson Partners thinking that they will face a meaningful challenge in AI chips, which could bring down expectations for that stock. Rather interesting and contrasting two different views of one stock.
Cris Sheridan:
All right, so let's move to Doug Kass. He's got 15 surprises for 2025. Surprise number one, I think this is very interesting. Another attempt on former President Trump's life occurs early in his term.
Jim Puplava:
Yeah, that's amazing. There's been two attempts on the President's life, and he's saying, hey, another one could be coming. Surprise number two, the other romance between Trump and Musk doesn't make it past the spring of 2025. Number three, the Trump-Vance administration is far more successful in carrying out its campaign promises than Trump one or really any recent president, starting with immigration. The US Southern border is simply shut down at the beginning of his term, and at least two and a half million undocumented people are deported. There's a high-profile crackdown on employers. Jobs for the undocumented become harder to secure. Further, the various federal support and benefit programs for illegals become unavailable. Fewer jobs and benefits and the constant risk of being deported causes an additional one and a half million people to self-deport.
Cris Sheridan:
Yeah, another part of that surprise number three, in terms of the Trump-Vance administration being more successful than people think, he has a contrarian take on that as well, in that President Trump is actually going to be taking back his "drill, baby, drill" campaign promise. And then he writes that US oil production continues to fall. And then he says that one of the surprises that we could see for this year is the price of oil rising to $85 a barrel by mid-2025, adding to inflationary pressure. So, yes, although he's saying the surprise could be that the Trump-Vance administration is very successful in cracking down on illegal immigration, taking away those incentives, he's not saying that on the "drill, baby, drill" campaign promises. And that's something that Adam Rosenzweig on our program that you've talked about, looking at the shale basins, how they're starting to hit lower and lower levels of productivity. And Adam Rozencwajg, you know, he's making a pretty big prediction that 2024 will go down as the year that shale peaked.
Jim Puplava:
And we'll talk more about that next week. Number four, relating to tariffs. While there are continued threats of robust tariffs directed at specific trading partners, they mostly serve as negotiating positions and do not get implemented. Number five, amid weakening domestic economic growth, plans for austerity measures and reduced fiscal spending support recommended by the Department of Government Efficiency are unsuccessful and abandoned. That's one that's going to take a lot of unity in Congress to support these cuts, especially when you're going to be cutting agencies like the Department of Education or even going after the Defense Department in terms of its wasteful spending. Number six, President Trump grows more moderate in tone and policy and surprisingly moves away from his MAGA base. Boy, that would be a switch. Number seven, AI-related equities are adversely impacted by two factors: the inadequacy of supply of electricity, a concern of ours, and the absence of a killer app or related income stream. Another issue related to bubbles. Because right now, there is no killer app that you can say, "Hey, with AI this, we created this app, and it does all these wonderful things," and people start moving in companies and individuals. You just don't see that. Number eight, AI headlines are replaced with quantum computers.
Cris Sheridan:
Yeah. And on that note, we are going to do a deep dive into quantum computing next week on FS Insider. So if you want to hear that deep dive with Woody Preucil at 13D Research and Strategy where we talk about the recent breakthrough by Google with their Willow chip and some of the companies that are also involved, including quantum computing ETFs and other things that you can keep on your radar for why this may be a big thing for 2025, be sure to tune into that interview airing next week.
Jim Puplava:
Okay, let's move on to number nine. In 2025, the S&P index falls by about 15%. The technology-laden Nasdaq drops by over 20%, but the equal-weighted S&P index only declines by 5%. And that's once again the concentration of the Mag 7 in the S&P accounts for almost 35 to 40% of market cap and gains. Surprise number 10: there's peace throughout the world. The Ukraine war is settled, and there's peace in Israel. Israel and Saudi Arabia announce a new and friendly accord. Okay, now he's got an additional five. Number 11, climate change strikes the US in a 500-year rain and flooding event. Well, we just got an event like that with fire in LA. Though it's turning out now, a lot of it was started by arsonists. Number 12, private equity first acquires college football franchises, and then some investors plan to purchase entire private universities. That'd be something. Number 13, the US government intensifies its antitrust cases against big tech and initiates legislation aimed at regulating the shadow banking and private equity industries. I can see that coming. Number 14, Warren Buffett's corporate curtain call is the acquisition of Boeing Co. In 2025, the largest acquisition in Berkshire Hathaway history. Surprise number 15: surprises in the sports world abound. In 2025, the LA Dodgers and New York Yankees meet again in the World Series. Yankee Global Enterprises sells a portion of the New York Yankees to Blackstone. Bill Belichick never coaches the University of North Carolina football team as he is offered and accepts an NFL coaching position. So a lot of surprises that we can see. But it's interesting to see the perspective from all three of these. They kind of make you think about certain things. Like Saxo Bank: Nvidia becomes the most valuable; Hudson Partners, they get competition. So a big strong contrast in views, and you know, our own view that we look at is this will be a year of volatility, a correction, and finally a peak in the markets. And that's also shared by one of the recent guests that you've had on the program, Chris.
Cris Sheridan:
Yeah, that's right. So that was what Felix Zulauf was forecasting for 2025. And here's what he had to say when we just recently spoke with him on FS Insider about what he's expecting for this year.
Felix Zulauf:
I think the US stock market is in a bubble. When you look at the valuation, it compares to previous bubbles that we have had, be it in 2000 or end of 2021 or so. And out of the last 140 years, this is one of the three most ever-valued overvalued markets that we see. And depending on what yardstick you use, we are in that range that is bubbly. And bubbles have a characteristic of usually going further than you think, further than rational analysis would dictate. And bubbles usually break when liquidity dries up or when an exogenous event arrives, or when all of a sudden something unexpected happens in the economy, and the economy tanks. I do not know what will trigger the pricking of the bubble, but I think the bubble will end and turn the market down sometime in 2025. Usually, at the end of a bull market, in the four-year cycle, you usually have up to three, two to three years of up markets and a good one-year down market. That's the pattern of the four-year cycle. And it started in the fall of 2022, and we are up now over two years. We are in the third year, and sometime in 2025, we will see a peak. The current forecast of the experts, so to speak, is somewhere between 5,500 to 7,000 next year. I think the end of the year will probably be outside of that. But we could see, we could see the market at some point trading below 5,000 and at some point trading above 7,000 this year. So I, in 2025, so I expect a lot of volatility because I do believe the liquidity that has been driving this bull market is beginning to dry up.
Cris Sheridan:
And that's one of the things that we follow closely and obviously discuss on our show, Jim, is when you're looking at liquidity and the impacts that that has on the markets and the economy. Michael Howell, who we've also spoken with on our weekday show, talking about how that is the secret sauce of the market, and so if we do see a turn in liquidity for 2025, that is going to be a big risk-off signal and is something, of course, that we follow very closely following Michael Howell's work, in addition to our own proprietary liquidity indicators, which do closely follow and lead the economy and market movements. So that is going to be a key thing to watch when it comes to how this year plays out.
Jim Puplava:
In conclusion, if you want to take a look at what the consensus is, whether it's on the economy or the markets, we can boil it down to this: no recession, lower interest rates, lower inflation, a bit higher unemployment, and a booming stock market. Again, when you're talking about at least gains of 12%, that's a very good return for the stock market, and it's above its long-term historical return of 10%. We'll be back again next week with our own view on things. Our theme for the year is volatility, correction, and then a peak, and we'll be talking about that next week. In the meantime, on behalf of Cris Sheridan and myself, we'd like to thank you for joining us here on the Financial Sense NewsHour. Until we talk again, we hope you have a pleasant weekend.
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