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🌎 This week our economists look at the return of Trump and the implications of a Republican sweep scenario: 1. Inflation, GDP and Fed Funds outlook: President Trump’s victory at the US elections and the likely full Republican control of the Congress do not change our forecasts for US GDP much but we now expect inflation to rise to 2.9% and 3.4% in 2025 and 2026. Fed Funds rates are expected to be stuck at 4.0% in 2025 and 4.25% in 2026. 2. Fiscal policy: We expect that President Trump will push through a fiscal package of around 0.5% of GDP by the end of 2025 (net of savings), as well as the full renewal of the Tax Cuts and Jobs Act of 2017, bringing the total fiscal package to 1.6% of GDP. 3. Trade policy: President Trump is expected to increase US import tariffs as early as Q2 2025 through an executive order, initially raising tariffs to 25% for Chinese imports and to 5% for imports from the rest of the world, excluding Canada, Mexico and critical goods. We estimate USD135bn worth of global exports would be at risk, equal to 4% of the projected global export gains for 2025-26. 4. Capital markets: The overall market response was more muted than in 2016 as much of the "Trump trade" had already been priced. Looking ahead, we expect US long-term interest rates to remain high, influenced by rising inflation expectations, less monetary easing and persistent fiscal deficits, and a small boost for US risky assets in 2024. Read the full report here: https://lnkd.in/ejKMpy3Q #Economics #Economy #USElections

🌎 This week our economists look at the return of Trump and the implications of a Republican sweep scenario: 1. Inflation, GDP and Fed Funds outlook: President Trump’s victory at the US elections and the likely full Republican control of the Congress do not change our forecasts for US GDP much but we now expect inflation to rise to 2.9% and 3.4% in 2025 and 2026. Fed Funds rates are expected to be stuck at 4.0% in 2025 and 4.25% in 2026. 2. Fiscal policy: We expect that President Trump will push through a fiscal package of around 0.5% of GDP by the end of 2025 (net of savings), as well as the full renewal of the Tax Cuts and Jobs Act of 2017, bringing the total fiscal package to 1.6% of GDP. 3. Trade policy: President Trump is expected to increase US import tariffs as early as Q2 2025 through an executive order, initially raising tariffs to 25% for Chinese imports and to 5% for imports from the rest of the world, excluding Canada, Mexico and critical goods. We estimate USD135bn worth of global exports would be at risk, equal to 4% of the projected global export gains for 2025-26. 4. Capital markets: The overall market response was more muted than in 2016 as much of the "Trump trade" had already been priced. Looking ahead, we expect US long-term interest rates to remain high, influenced by rising inflation expectations, less monetary easing and persistent fiscal deficits, and a small boost for US risky assets in 2024. Read the full report here: https://ow.ly/vaq750U24vj #Economics #Economy #USElections

🌎 This week our economists look at the return of Trump and the implications of a Republican sweep scenario: 1. Inflation, GDP and Fed Funds outlook: President Trump’s victory at the US elections and the likely full Republican control of the Congress do not change our forecasts for US GDP much but we now expect inflation to rise to 2.9% and 3.4% in 2025 and 2026. Fed Funds rates are expected to be stuck at 4.0% in 2025 and 4.25% in 2026. 2. Fiscal policy: We expect that President Trump will push through a fiscal package of around 0.5% of GDP by the end of 2025 (net of savings), as well as the full renewal of the Tax Cuts and Jobs Act of 2017, bringing the total fiscal package to 1.6% of GDP. 3. Trade policy: President Trump is expected to increase US import tariffs as early as Q2 2025 through an executive order, initially raising tariffs to 25% for Chinese imports and to 5% for imports from the rest of the world, excluding Canada, Mexico and critical goods. We estimate USD135bn worth of global exports would be at risk, equal to 4% of the projected global export gains for 2025-26. 4. Capital markets: The overall market response was more muted than in 2016 as much of the "Trump trade" had already been priced. Looking ahead, we expect US long-term interest rates to remain high, influenced by rising inflation expectations, less monetary easing and persistent fiscal deficits, and a small boost for US risky assets in 2024. Read the full report here: https://ow.ly/vaq750U24vj #Economics #Economy #USElections

Federal Reserve Governor Christopher Waller's recent comments about potential interest rate cuts in 2025 are crucial in today’s economic climate. As we face uncertainty from proposed tariffs, his cautious optimism highlights the Federal Reserve’s delicate balancing act: fostering growth while keeping inflation in check. Waller's confidence in declining inflation trends suggests we might see two rate cuts, although this remains contingent on evolving economic conditions. With tariffs potentially raising import costs, we're at a crossroads—lower rates could spur growth in sectors like real estate, but increased prices might squeeze consumers and businesses. What should stakeholders be monitoring? Labor market resilience, corporate earnings, and inflation data will steer the Fed’s decisions. As businesses and investors navigate these complexities, adapting strategies swiftly could be the key to thriving in 2025 and beyond. Let’s stay tuned!

The Trump contradictions: Donald Trump’s economic policies are often marked by bold promises and ambitious goals, but they also reveal significant contradictions. These inconsistencies reflect the structural challenge of the U.S. economy, which is the unsustainable trajectory of its debt. The following points highlight key contradictions in Trump’s policies and underscore why addressing the debt problem through deflating it may be inevitable: 1) Reducing the deficit from 6.5% to 3% of GDP while targeting a GDP growth rate of 3% would require cutting the primary balance deficit by more than 3 percentage points, a move likely to trigger a recession. At the same time, implementing significant tax cuts, particularly for corporations and high-income individuals, is intended to spur growth but instead would widen the fiscal deficit. 2) Deporting millions of illegal workers while expecting wages to decelerate to help lower inflation presents a contradiction, as labor shortages would likely drive wages higher. 3) Increasing oil production by 3 million barrels per day, a move that could bankrupt Middle Eastern nations, contradicts the goal of exporting defense materials and consumption goods to these same countries, which would require their financial stability. 4) Imposing universal tariffs on imported goods, which typically raise consumer prices, contradicts the expectation that inflation will come down. 5) Threatening BRICS nations with a 100% tariff if they adopt a new reserve currency contradicts the principles of reserve currency status. Such a sharp tariff increase would make imports significantly more expensive, undermining the reserve currency's role in ensuring a steady and affordable flow of imports paid with the reserve currency. 6) Pursuing the "America First" agenda sought to reduce reliance on global supply chains, but tariffs often hurt domestic businesses that depend on imported components, increasing costs and inefficiencies. 7) Frequently criticizing the Federal Reserve for not cutting interest rates fast enough to boost growth risks undermining the Fed's independence, potentially eroding market confidence and leading to a rise in long-term interest rates. Regards, Andre chelhot, CFA Prague Finance Institute Zelof & Partners LLP #trump #financialrepression #regimeshift #trade #tariffs #Fed

🌍Economic Outlook - What does 2025 have in store for us?🌍 The Trump administration is set to create significant growth 🚀 in the global ecomony in 2025 and it is expected that the US will outperform expectations, whilst the Euro area and UK won't be too far behind in respect of GDP growth - a great time for investors. Worldwide GDP is forecasted to grow 2.7% next year, with US GDP projected to increase 2.5% in 2025, 0.9% higher than previously forecasted. Forecasted GDP for the next 2 years: 🌍 Global - 2.7% in 2025, 2.6% in 2026 🇺🇸 US - 2.5% in 2025, 2.3% in 2026 🇪🇺 Euro - 0.8% in 2025, 1% in 2026 🇬🇧 UK - 1.3% in 2025, 1.3% in 2026 🏦 What could Trump's policies mean for the Fed and inflation? Whilst the new administration is going to result in increased tariffs on imports (as much as 60% in China and 10%-20% globally), lower immigration, fresh tax cuts and regulatory easing, the fact of the matter is at the moment, it is too early to tell how the Fed will react. We will have to wait and see what policies come out under the new Trump administration and we probably won't have a clear idea until Spril 2025 ⌛ It is however fairly likely Trump's changes will be inflationary, so we're unlikely to see a drastic reduction in rates over the next few years - there may well be a reduction in Q1 2025, then rate cuts may be at a slower pace. US core inflation prior to Trump's election was expected to slow to 2.4% in late 2025. With across-the-board tariffs being applied, it's now forecasted to be 3%. #MarketOutlook #Economy #Inflation Source: Goldman Sachs

The U.S. economy expanded at a 2.8% rate in Q3, driven by consumer spending and exports growth. Inflation is easing, but Trump’s proposed tariffs on imports from key trade partners could raise prices and impact future growth. Read more: https://lnkd.in/dZngBXpd #ConsumerSpending #USeconomy

📅 Yesterday's Market Activity: With a recent public holiday, the market showed minimal movement, with exchange rates and inflation data in Germany remaining stable. October's inflation rate in Germany was confirmed at 2.5%, matching preliminary estimates. 🇪🇺 ECB Interest Rates: While inflation rates are rising across Europe, the European Central Bank (ECB) is holding off on increasing interest rates, as current inflation levels (around 2.4%) aren’t high enough to justify a rate hike. 🇺🇸 US Midterms & Economic Outlook: With Republicans gaining control in both chambers, markets are optimistic, especially since Trump’s administration is expected to introduce tax cuts for big businesses, reducing regulations, and increasing fiscal spending. This fiscal expansion is anticipated to boost GDP growth and may lead to higher interest rates over time. 📈 US Dollar Strength: This political and fiscal outlook strengthens the U.S. dollar, with the possibility of reaching a parity level of 1.05 EUR/USD in the long term. 🌍 Tariffs and Trade Policies: Although Trump has promised tougher tariffs, especially on imports from Asia, European countries with significant U.S. investment ties (such as Tesla’s manufacturing in Europe) may avoid harsh tariffs due to mutual business interests. 🇵🇱 Polish Economy and Tariffs: Poland’s economy is well-positioned to offset potential U.S. tariffs, as domestic demand may absorb products previously destined for export. 🔍 Looking Ahead: We'll be monitoring U.S. inflation data for potential impacts on interest rates, as well as European GDP and industrial production figures later this week. Feel free to reach out if you have any questions! ProStream.com Polska #MarketUpdate #GlobalEconomy #USPolitics #Inflation #InterestRates #USDEUR #ECB #TrumpAdministration #TradePolicy #FiscalExpansion #PolishEconomy #Forex #Investing #EconomicOutlook #FinancialNews

Pre-market index futures are mixed as investors wrestle with the implications of tariffs. As noted, the big macro news of the day arrived Mon evening with Trump’s tariff threat, but US equities are taking the news in stride, both because investors don’t entirely believe the levies will wind up being implemented and as the headlines are counteracted by favorable year-end seasonality and decent earnings. Aside from tariffs, it was a quiet evening/morning of macro news, and none of the earnings reports last night alter the broader equity narrative. Treasuries are seeing some weakness following the big Mon rally, w/yields up ~2bp across the curve. The odds of a Fed cut on 12/18 are still in the 50-60% range. Investors dusted off their trade war playbooks, confident their portfolios were better-prepared for Trump this time after he took to social media and pledged new tariffs on Mexico, Canada and China. Best to remain alert and very, very nimble. #Investing #Markets #Economics

Pre-election, the Fed was balancing the tight rope between cutting rates too quickly (spurring inflation higher) & cutting rates too slowly (constricting the job market). With the GOP ('Grand Old Party' as I came to learn today - a long standing name for the Republican Party) taking office in January, their presence is preceded by plans of widespread tariff enactment on trade imports which many economists foresee higher inflation as a result. Jarome Powell said himself “We don’t guess, we don’t speculate, we don’t assume” what policies will get put into place". Rather, they (the Fed) react to the economic data and steer the ship given its climate. If Powell wont speculate, I will. I predict inflation to sputter upwards given supply pressures from Trump's spending policies and implemented tariffs in FY25Q3. By this point, the neutral rate will likely be within grabbing distance, and 1 or two more 25 bps cuts will have been made making money in the economy cheaper. The short-term impacts of the tariffs and gov't spending will push inflation higher causing Powell and the Fed to slow cuts or potentially increase the rate before any counter-inflationary measures (corp. tax cuts) can make an impact. There are of course many variables in play: * how long until the tariffs are enacted? * what premium will be placed on imported goods (x<20%>x)? * what will be the impacts of other policies like the corporate tax cut have in counteracting inflation due to the tariffs? * will the tariffs be implemented at all, or will they go the way of "build a wall"? * if tariffs are implemented, at what rate will foreign governments enact counter-tariffs on US goods? The Fed announced today a quarter-point cut bringing the Federal Funds Rate to 4.5%-4.75%. https://lnkd.in/gNbhZ-E3