Year-End Check: Tariff Risks, Sticky Inflation, 2025 Prep

Newsletter — December 2024

Dear Clients and Friends,

The last month has certainly been interesting to say the least.  Pundits and analysts alike are trying to sift through the various policy implications of both a Trump administration and unified congress, and how that may ultimately impact the investment markets (where overall volatility remains subdued).  A perceived risk of increased inflation borne from the strong rhetoric surrounding tariff policy has given markets cause to re-evaluate the declining interest rate narrative which carried us into the fall.  At this point, the markets are only pricing in another 0.5% decrease in interest rates over the coming year. 

Inflation, as reported in the most recent reading of the consumer price inflation (CPI) index, remains a little sticky at current levels, although the long-term trend remains down.  Retail sales have been reasonably strong, underpinning some of the positive “hard” economic indicators, and business optimism has been stable for the most part.  Real wages are positive; however, consumer delinquencies have also picked up a bit.    

Expectations for profits and earnings heading into the new year are certainly optimistic, if not perhaps overzealous, and money flows into risk assets continue their positive trend.  Valuations for some areas of the market remain attractive, although other key areas of the market are likely overvalued.  Bottom line, I expect more volatility ahead.    

On our end, we are indeed looking at the opportunity set for investments as we prepare portfolios for 2025, taking into consideration the risk/reward analysis noted above, as well as further developments on the political front.   

As the year draws to a close, we first want to take a moment to express our sincere gratitude for your continued trust and support. We value your partnership and appreciate the opportunity to serve you.  This is an excellent time to review your financial situation and consider year-end tax planning strategies. If you have any questions or need assistance, please don't hesitate to contact us.

Please be advised that our office will be closed on Wednesday, December 25th, as well as Wednesday, January 1st.  Although we will likely have some team members traveling to see family during the end of the month, be assured that our staff is available if you need us for any reason during the holidays.  

We wish you a joyous and blessed holiday season and a prosperous New Year.

Sincerely,

Eric Boyce

President & CEO