High interest rates and geopolitical conflicts could weigh on markets in the new year.
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00:00So tell me, what are your overall expectations for the stock market overall in 2025? Do you
00:06expect another year of growth? I know we're like double digits with S&P 500. What's still like 20%
00:12up year to date so far? Yeah, I would expect that to slow down somewhat, especially if interest
00:19rates can't be tamed. If the bond market, like I said, takes control of the long end of the yield
00:23curve away from the Fed and prices, I don't know, five year debt out the 30 year debt appropriately,
00:30well then of course that's going to slow the economy down because then corporations won't
00:35be able to service their debt as cheaply. They won't be able to roll over as much of their debt.
00:40They'll actually have to pay it off. The same would be for the US government unless they put
00:44out all their debt in 30, 60 and 90 day treasuries, which is kind of ridiculous. But that's the only
00:52way the Fed could control their borrowing costs. I know they're supposed to be independent.
00:56They would not be independent if they were doing that for the federal government.
01:00But because of these factors, I think that if borrowing costs can't be contained
01:06moving forward, that will obviously slow down corporations and it will obviously slow down
01:10government spend. Tell me, what then is the biggest risk facing the market in 2025 in your view?
01:18The largest risk would be a hot war involving the United States. If the United States were to
01:26be sucked into a war in Asia with China, which is another superpower, or if they would be somehow
01:32drawn into this war in Eastern Europe due to NATO being an alliance where they all have to defend
01:39each other, or if the United States gets sucked into combat back in the Middle East where we've
01:44been for so long, we're finally out of, I think that would be a black swan event. If the United
01:50States got into a hot war with somebody that could punch back, I think that would be a devastating
01:58blow to the US economy and to the market.