Now that the election is over, what will the Trump administration prioritize in the new year that may impact the markets?
As investors, here are a few things we’re watching in the months ahead:
The debt ceiling debate may reignite in early 2025.
The debt ceiling, the cap on the total amount of debt the U.S. can hold, has been suspended as part of a deal made in the last Congressional fight.1
When the cap returns in January, it may kick off a fresh round of debates and draw attention to the more than $35 trillion the U.S. holds in debt.2
Will lawmakers take action to stem deficit spending? Or will they continue to kick the can down the road?
We’ll have to wait and see.
Tax cuts may be extended past 2025.
A number of popular individual and small business tax breaks (created under TCJA) are scheduled to expire at the end of 2025, which would trigger higher individual income tax rates and increase estate taxes. The Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, signed into law by President Donald Trump in 2018.3
President-elect Trump may extend these tax breaks or make some or all of these provisions permanent as part of his 2025 priorities.
However, tax cuts lead to lost revenue for the federal government, which would end up adding to the national debt.
It’s hard to know how lawmakers will square these competing priorities, but we’re keeping a close eye on it and will keep you informed.
Tariffs could become a key issue for businesses.
The new administration has announced plans for broad tariffs on imports, especially on goods from China.4
Tariffs can impact inflation and business earnings by increasing the cost of goods and supplies from overseas.
If trading partners respond by adding their own tariffs on U.S. goods, it could hurt overseas demand by making our products more expensive.
How deep or broad those tariffs could be is a big source of uncertainty going into the new year.
However, it’s likely that any new policies would come with many rounds of debate, so the actual impact of tariffs may be much less than the worst-case scenarios.
We’ll keep you updated.
Markets may become volatile with uncertainty.
While the uncertainty of the election has faded, new uncertainty around policy priorities has replaced it.
We’re expecting volatility ahead as analysts digest reports and adjust their positions ahead of the new year.
Investors are also watching data for hints about where the economy is headed next.
The bull market is now over two years old. Should we be worried that a bear market is around the corner?
Probably not.
The chart below shows you the average age of recent bull markets.
While the past doesn’t predict the future, we can see that two years isn’t historically long for a bull market. In fact, the longest bull market on record lasted more than 12 years.5
A sudden turn to a bear market is not likely at this point. Don’t quote me on that! 😉 Just sayin’ historically speaking it’s not likely.
On the other hand, there are a lot of risks in this environment that could shake things up.
If geopolitical issues flare, inflation rebounds, or the business environment starts to look dicey, we can expect markets to correct.
We’re carefully watching trends as we enter the final weeks of the year and thinking about what the new year could bring.
Sources:
1. https://bipartisanpolicy.org/blog/debt-limit-2025-treasury-cash-on-hand/
2. https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/
3. https://tax.thomsonreuters.com/blog/what-to-know-about-tcja-expiration/
4. https://www.yahoo.com/news/trumps-proposed-tariffs-raise-prices-205300785.html
5. https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/10-things-you-should-know-about-bull-markets.html
Chart sources: https://finance.yahoo.com/news/the-bull-market-is-2-years-old-heres-where-wall-street-thinks-stocks-go-next-100050648.html?guccounter=1
*Current bull market as of 11/20/24
Concerns or questions about how your investment portfolio will hold up in the current market environment? Contact Financial Synergies today.
We are a boutique, financial advisory and total wealth management firm with over 35 years helping clients navigate turbulent markets. To learn more about our approach to investment management please reach out to us. One of our seasoned advisors would be happy to help you build a custom financial plan to help ensure you accomplish your financial goals and objectives. Schedule a conversation with us today.
More relevant articles by Financial Synergies:
Blog Disclosures
This content, which may contain security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own financial advisors as to legal, business, tax, and other related matters concerning any investment.
The commentary in this “post” (including any related blogs, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Financial Synergies Wealth Advisors, Inc. employees providing such comments, and should not be regarded as the views of Financial Synergies Wealth Advisors, Inc. or its respective affiliates or as a description of advisory services provided by Financial Synergies Wealth Advisors, Inc. or performance returns of any Financial Synergies Wealth Advisors, Inc. client.
Any opinions expressed herein do not constitute or imply endorsement, sponsorship, or recommendation by Financial Synergies Wealth Advisors, Inc. or its employees. The views reflected in the commentary are subject to change at any time without notice.
Nothing on this website or Blog constitutes investment or financial planning advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. It also should not be construed as an offer soliciting the purchase or sale of any security mentioned. Nor should it be construed as an offer to provide investment advisory services by Financial Synergies Wealth Advisors, Inc.
Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Synergies Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
Any charts provided here or on any related Financial Synergies Wealth Advisors, Inc. personnel content outlets are for informational purposes only, and should also not be relied upon when making any investment decision. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Information in charts have been obtained from third-party sources and data, and may include those from portfolio securities of funds managed by Financial Synergies Wealth Advisors, Inc. While taken from sources believed to be reliable, Financial Synergies Wealth Advisors, Inc. has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. All content speaks only as of the date indicated.
Financial Synergies Wealth Advisors, Inc. is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Financial Synergies Wealth Advisors, Inc. and its representatives are properly licensed or exempt from licensure. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
See Full Disclosures Page Here
What Will The Trump Administration Do First?
Now that the election is over, what will the Trump administration prioritize in the new year that may impact the markets?
As investors, here are a few things we’re watching in the months ahead:
The debt ceiling debate may reignite in early 2025.
The debt ceiling, the cap on the total amount of debt the U.S. can hold, has been suspended as part of a deal made in the last Congressional fight.1
When the cap returns in January, it may kick off a fresh round of debates and draw attention to the more than $35 trillion the U.S. holds in debt.2
Will lawmakers take action to stem deficit spending? Or will they continue to kick the can down the road?
We’ll have to wait and see.
Tax cuts may be extended past 2025.
A number of popular individual and small business tax breaks (created under TCJA) are scheduled to expire at the end of 2025, which would trigger higher individual income tax rates and increase estate taxes. The Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, signed into law by President Donald Trump in 2018.3
President-elect Trump may extend these tax breaks or make some or all of these provisions permanent as part of his 2025 priorities.
However, tax cuts lead to lost revenue for the federal government, which would end up adding to the national debt.
It’s hard to know how lawmakers will square these competing priorities, but we’re keeping a close eye on it and will keep you informed.
Tariffs could become a key issue for businesses.
The new administration has announced plans for broad tariffs on imports, especially on goods from China.4
Tariffs can impact inflation and business earnings by increasing the cost of goods and supplies from overseas.
If trading partners respond by adding their own tariffs on U.S. goods, it could hurt overseas demand by making our products more expensive.
How deep or broad those tariffs could be is a big source of uncertainty going into the new year.
However, it’s likely that any new policies would come with many rounds of debate, so the actual impact of tariffs may be much less than the worst-case scenarios.
We’ll keep you updated.
Markets may become volatile with uncertainty.
While the uncertainty of the election has faded, new uncertainty around policy priorities has replaced it.
We’re expecting volatility ahead as analysts digest reports and adjust their positions ahead of the new year.
Investors are also watching data for hints about where the economy is headed next.
The bull market is now over two years old. Should we be worried that a bear market is around the corner?
Probably not.
The chart below shows you the average age of recent bull markets.
While the past doesn’t predict the future, we can see that two years isn’t historically long for a bull market. In fact, the longest bull market on record lasted more than 12 years.5
A sudden turn to a bear market is not likely at this point. Don’t quote me on that! 😉 Just sayin’ historically speaking it’s not likely.
On the other hand, there are a lot of risks in this environment that could shake things up.
If geopolitical issues flare, inflation rebounds, or the business environment starts to look dicey, we can expect markets to correct.
We’re carefully watching trends as we enter the final weeks of the year and thinking about what the new year could bring.
Sources:
1. https://bipartisanpolicy.org/blog/debt-limit-2025-treasury-cash-on-hand/
2. https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/
3. https://tax.thomsonreuters.com/blog/what-to-know-about-tcja-expiration/
4. https://www.yahoo.com/news/trumps-proposed-tariffs-raise-prices-205300785.html
5. https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/10-things-you-should-know-about-bull-markets.html
Chart sources: https://finance.yahoo.com/news/the-bull-market-is-2-years-old-heres-where-wall-street-thinks-stocks-go-next-100050648.html?guccounter=1
*Current bull market as of 11/20/24
Concerns or questions about how your investment portfolio will hold up in the current market environment? Contact Financial Synergies today.
We are a boutique, financial advisory and total wealth management firm with over 35 years helping clients navigate turbulent markets. To learn more about our approach to investment management please reach out to us. One of our seasoned advisors would be happy to help you build a custom financial plan to help ensure you accomplish your financial goals and objectives. Schedule a conversation with us today.
More relevant articles by Financial Synergies:
Blog Disclosures
This content, which may contain security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own financial advisors as to legal, business, tax, and other related matters concerning any investment.
The commentary in this “post” (including any related blogs, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Financial Synergies Wealth Advisors, Inc. employees providing such comments, and should not be regarded as the views of Financial Synergies Wealth Advisors, Inc. or its respective affiliates or as a description of advisory services provided by Financial Synergies Wealth Advisors, Inc. or performance returns of any Financial Synergies Wealth Advisors, Inc. client.
Any opinions expressed herein do not constitute or imply endorsement, sponsorship, or recommendation by Financial Synergies Wealth Advisors, Inc. or its employees. The views reflected in the commentary are subject to change at any time without notice.
Nothing on this website or Blog constitutes investment or financial planning advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. It also should not be construed as an offer soliciting the purchase or sale of any security mentioned. Nor should it be construed as an offer to provide investment advisory services by Financial Synergies Wealth Advisors, Inc.
Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Synergies Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
Any charts provided here or on any related Financial Synergies Wealth Advisors, Inc. personnel content outlets are for informational purposes only, and should also not be relied upon when making any investment decision. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Information in charts have been obtained from third-party sources and data, and may include those from portfolio securities of funds managed by Financial Synergies Wealth Advisors, Inc. While taken from sources believed to be reliable, Financial Synergies Wealth Advisors, Inc. has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. All content speaks only as of the date indicated.
Financial Synergies Wealth Advisors, Inc. is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Financial Synergies Wealth Advisors, Inc. and its representatives are properly licensed or exempt from licensure. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
See Full Disclosures Page Here
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