NAB Morning Call Weekend Edition: The Year That Was, and the Year That Will Be
Dec 20, 2024
2024 has been a rollercoaster for the economy, showcasing surprising U.S. growth amidst global challenges. As markets soar with AI influences, concerns about Trump’s tariffs loom large. The discussion turns to rising inflation and its repercussions for central banks like the Reserve Bank of Australia. Predictions swirl about the bond market and fluctuating currencies, particularly the Aussie dollar. Strategies for navigating these uncertainties, especially around overvalued U.S. equities, formulating a defensive approach, close out the lively conversation.
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US Exceptionalism and Market Caution
- US exceptionalism, driven by Trump, tech, and AI, has boosted US growth and markets.
- However, high valuations in US equity markets warrant caution for investors in 2025.
Tariff Impacts and US Dollar Strength
- Tariffs are likely coming, potentially used strategically for decoupling from China and as leverage with other partners.
- This could strengthen the US dollar in the short term.
Inflation Outlook and Housing Impact
- Inflation's decline may level out, with tariffs posing a potential upside risk.
- The RBA and the Fed find some comfort in the expected slowdown of housing inflation.