UBS On-Air: Market Moves

Are the markets getting too frothy, and have investors become too exuberant? Jason weighs these concerns, along with takes inventory of tariffs being considered by the incoming US administration, along with the potential market impact of them. We also preview a busy week ahead for US labor market data, and Fed speakers. Plus, thoughts on how to position for the current environment. Featured is Jason Draho, Head of Asset Allocation, UBS Chief Investment Office. Host: Daniel Cassidy

US President-elect Trump has threatened to tax US consumers aggressively via tariffs, if countries “replace” the dollar. It is not clear what “replacing” means. The US dollar is only one international invoicing currency among many. Over half of Eurozone exports are invoiced in euros, for instance. Invoicing status is of limited importance.

The decade so far has been a “Roaring ‘20s” by many measures. Now, we’re getting set to navigate geopolitical uncertainty, lower interest rates, and transformative innovation in the years ahead. As we approach the midpoint of the decade, a key question is whether US political change might extend or end this “Roaring ‘20s” dynamic. To help you start the new year with confidence, join our global livestream where the Global Head of Investment Communications Kiran Ganesh and colleagues will outline our top ideas for 2025, share key investment insights, and provide strategies for achieving long-term investment success.

The French budget and bond yields are attracting attention, with the media ever eager to spot another Truss debacle. This weekend will (presumably) see some fevered politicking in Paris as politicians try to come up with a budget that will not scare markets, but will also not lead to a collapse of the government. France’s deficit is not sustainable, but the government is not actively seeking to make it dramatically worse; so Truss analogies are probably inappropriate for now.

US data on income and spending confirms that the US consumer has money and is prepared to spend it. There was not, perhaps, much doubt of the latter point. US living standards continuously reach new highs (at least as measured in economic terms). The personal consumer expenditure deflator offered no surprises with regard to inflation—though it did show that inflation was more driven by supply problems than demand (according to Federal Reserve analysis).

The Federal Reserve meeting minutes signalled a gradual series of rate reductions next year (a quarter point each quarter seems reasonable). A December rate cut is also plausible, bringing interest rate reductions in line with the decline in the inflation rate.

In this insightful discussion, Richard Bernstein, Founder and CEO of Richard Bernstein Advisors, teams up with Jason Draho, UBS CIO's Head of Asset Allocation Americas. They delve into the macroeconomic landscape as 2025 approaches, examining the U.S. economy's resilience despite inflation. The duo explores the impact of rising interest rates on markets, advocating for a focus on value stocks. They also debate gold versus cryptocurrencies, suggesting gold as a stable investment. Join them for a deep dive into strategic positioning in uncertain times!

The discussion dives into the intriguing implications of social media on governance. It highlights bold tax proposals from the US President-elect, including a 25% levy on imports from Mexico and Canada, plus a 10% tax on Chinese goods. These aggressive moves could drastically affect consumer behavior and international trade dynamics. The episode offers insights into the intersection of politics and economic policy, raising questions about the future of consumerism.

A holiday trading week sets the stage for a deep dive into market dynamics, sparked by the nomination of Scott Bessent as Treasury Secretary. Insights into the U.S. economy’s growth trajectory highlight risks like inflation and recession. The discussion contrasts Donald Trump's past economic policies with today's landscape and the potential impacts on treasury markets. As year-end approaches, investment strategies for 2025 are outlined, focusing on promising sectors such as AI, gold, and real estate amidst ongoing macroeconomic challenges.

The recent nomination of Bessent as treasury secretary has sparked positive reactions in the markets, highlighting the importance of predictable economic policies. Investors are relieved as Bessent's orthodox approach contrasts with the unpredictability of some candidates. The discussion also touches on consumer sentiment and the potential impact of political divisions. With trade tariffs as a bargaining tool, the implications for the economy are significant, particularly relating to upcoming retail events like Black Friday.