The Big 2025 Market Outlook
Our founders Tonia Zimmermann and Luba Schönig Share Their Predictions for 2025 in the Latest Episode of "What Your Bank Doesn’t Tell You"
In the latest episode of "What Your Bank Doesn’t Tell You" our founders, Tonia Zimmermann and Luba Schönig, had a conversation about the big market outlook for 2025 and reflected on the key events of 2024. From Europe’s economic challenges to the rise of tech powerhouses in Asia, and the growing concern over global credit risk, this episode is a must-listen for anyone looking to navigate the coming year’s market landscape.
The Evolving Economic Landscape: 2024 and Beyond
Luba and Tonia begin by reflecting on the whirlwind year of 2024, which saw elections in 70 countries and major shifts in global economic strategies. Central banks made significant moves, especially in the U.S., where the Federal Reserve lowered interest rates in response to market volatility.
Key Takeaways:
- Interest rates: While they were rising over the last years, they’ve started to come down in 2024.
- Inflation concerns: Inflation is still a pressing issue, but the 2% target seems increasingly unrealistic, with the long-term equilibrium possibly moving to 3%.
- Housing & healthcare: These sectors are feeling the effects of inflation, especially with rising prices that affect our daily lives.
Technology Driving Economic Change
One of the most striking parts of the podcast is the focus on the technological revolution. Luba and Tonia discuss how artificial intelligence (AI) and quantum computing are not just shaping the economy—they are revolutionizing it.
Highlights:
- AI is making waves with improvements in data storage, processing, and visualization. But the real game-changer? Quantum computing.
- Quantum leap: With quantum computing, problems previously considered unsolvable could soon be tackled, opening doors to even more profound economic changes.
- The hosts also discuss the growing divide between economies (driven by tech) and traditional sectors, with the latter growing at a more modest pace of 2-3%.
The Role of Central Banks & Government Debt
Luba and Tonia emphasize the pivotal role central banks play in maintaining market stability. When market conditions get shaky, central banks often step in with liquidity to prevent major corrections. This leads to the interesting dynamic between inflation and government debt.
Important Points:
- Central banks are key to keeping the financial system stable, especially with high levels of government debt.
- Inflation helps governments reduce the real value of their debt without directly addressing it—benefiting those in charge of managing national finances.
- While inflation is nowhere near the 7% levels of two years ago, it’s still an ongoing concern that affects savings and economic stability.
Stock Market Outlook for 2025: What to Expect
As we look toward the future, Luba and Tonia remain cautiously optimistic about the stock market in 2025. While they predict higher stock prices by the end of the year, they note that the sectors leading the charge could shift depending on the political landscape.
What’s in Store for Stocks:
- Healthcare: With potential changes in U.S. government policy, healthcare stocks might see increased demand.
- Tech sector: The information technology and semiconductors industries could experience shifts, particularly with new government dynamics in place.
- Bull market or correction? Historically, the third year of a bull market can be volatile, but on average, these markets last about 6.5 years, which could signal buying opportunities if nothing major disrupts the global scene
What’s Next? The Future of the Financial System
Wrapping up the discussion, Luba and Tonia note the importance of understanding the broader financial system. The central banks, governments, and markets are all deeply interconnected, and any significant disruptions could lead to unpredictable results.
Looking Ahead:
- The 2025 market may face some choppy moments early in the year, but by the end, stock prices could rise, with different sectors emerging as key drivers.
- Technological innovation, particularly in AI and quantum computing, will continue to disrupt traditional industries.
- The shift towards a higher inflation equilibrium might become a permanent feature, impacting everything from savings to investments.
As Luba and Tonia remind us, it’s all about keeping a close eye on the forces shaping the economy—because what we don’t know can make all the difference.
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