Summary
- We are very pleased with an exceptional +25.0% total return in 2024 for U.S. large cap equities after an outstanding +26.3% total return in 2023.
- S&P 500 earnings growth consensus forecasts are +9.9% in 2024, +12.5% in 2025, +13.2% in2026. We forecast a below average 15% chance of recession in 2025.
- The highest interest rates in over 17 years mean excellent income opportunities for tax-exempt municipal bond investors… and unfortunately hardships for firms that borrowed too much money.
- The new Fed rate-cutting cycle will be elongated because CPI inflation keeps falling (now 2.7%),unemployment is gradually rising (now 4.2%), and the U.S. economy continues to outperform expectations.
- We think the tailwinds to markets that predominated in 2024 will continue in 2025
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