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Macro Minute: Week of January 12, 2025

Written by Wes Johnson on . Posted in Market Commentary.

Last year provided lots of surprises and opportunities. If I had to give 2025 a name, I would call it “the year diversification returned”. A diversified portfolio had a good year driven by strong returns in international equities and precious metals. While the U.S. market had lots of volatility and ended up having a good year, both international and precious metals outperformed. This was fueled by a falling dollar. Global bond yields, primarily longer dated maturities, rose steadily throughout the year with U.S. yields bucking that trend and being more range bound.  

Another trend for the year was the global deficit spending. In a recent podcast, Louis Gave when asked about the state of the global economy, said that everywhere you look you have very easy fiscal policy. This includes China, U.S., and Europe. In Japan there is a new incoming administration that is promising to go heavy on the fiscal stimulus. All this leads to the potential for higher inflation. I am not predicting a rise in the stated inflation measures, but the risks are there. It is also indicative of higher GDP growth rates.  

To summarize, I expect the following: 

  • Recession risk to remain low 
  • Continued upward pressure on longer dated bond yields globally 
  • Growth stocks may lag 
  • International equities, real assets and managed futures to be an important part of a diversified portfolio 

Thank you for your trust and support. We will continue to stay diversified and focused on the long view with an eye on risk.

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