Tom Porcelli, Chief U.S. Economist at PGIM Fixed Income, shares insights on the Fed's potential actions in 2025, highlighting inflation challenges and labor market dynamics. Lori Calvasina, Head of U.S. Equity Strategy at RBC Capital Markets, and Cameron Dawson, Chief Investment Officer at NewEdge Wealth, delve into stock market predictions and investment strategies for 2025. They also discuss retailers' adaptation to changing consumer behaviors during the holiday season, emphasizing modest growth amid inflation pressures.
Experts predict mixed results for the stock market in 2025, emphasizing a focus on earnings growth amidst potential volatility.
Retailers must adapt to changing consumer behaviors by investing in engaging experiences to thrive in an increasingly frugal market.
Deep dives
Cybersecurity Challenges in Legacy Systems
Legacy technology is causing significant challenges for IT and cybersecurity teams, with 59% of security decision-makers feeling unprepared for the future. The increasing complexity of security systems often leads to a rise in security incidents, with organizations using ten or more tools experiencing an average of 14 incidents yearly. In light of this, experts suggest that companies should streamline their cybersecurity tools and focus on secure productivity software. This proactive approach can alleviate the burden on overworked IT and cybersecurity teams while effectively managing cyber threats.
The Federal Reserve's Focus on Inflation
The Federal Reserve has shifted its attention back to inflation concerns as they approach the end of the year, which could impact economic forecasts. Current inflation projections show a decline from nearly 6% to around 2.8%, indicating progress, albeit with challenges remaining. Experts emphasize the need for a balanced approach, focusing on both inflation and labor market stability, as a decline in wages could signal economic slowdown. Future developments may hinge on data-driven decisions, necessitating careful monitoring of incoming economic indicators.
Stock Market Predictions for 2025
Analysts predict that the stock market may experience mixed results throughout 2025, with expectations of potential volatility amidst high valuations. While one view suggests a 'talking heads market' resembling that of 2015 or 2018, another sees the potential for significant gains driven by further valuation expansion. The discussion anticipates a potentially tepid earnings environment, with investors advised to focus closely on earnings growth, which will play a critical role in determining market performance. Both experts highlight the importance of maintaining a selective investment approach amidst uncertain economic conditions.
Retail Trends and Consumer Behavior
As retail continues to evolve, the current landscape shows that consumers are increasingly discerning, spending a greater share of their budgets on experiences rather than traditional retail. Despite a modest 1% growth in annual sales, many retailers face challenges as consumer behavior shifts towards frugality, with rising numbers of shoppers relying on 'buy now, pay later' options. Experts suggest retailers should invest in creating engaging experiences to attract consumers, drawing attention to successful strategies employed by companies like Target and Kroger. The retail sector's future may depend on agglomerating experiential shopping and adapting to changing economic pressures.
In this Christmas Day special edition of Bloomberg Daybreak with Nathan Hager:
Tom Porcelli, Chief US Economist at PGIM Fixed Income, discusses what the Fed will do in 2025.
Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets and Cameron Dawson, the Chief Investment Officer at NewEdge Wealth, break down what we can expect in equities
Burt Flickinger, the Managing Director at Strategic Resource Group, brings us the winners and losers of the 2024 holiday retail season.