Now that we’ve digested and expelled the hellish year of 2024, one has to ask just how much more fun can we have in 2025?
Dear God,
Please don’t answer that.
Love ya Big Guy.
Sincerely,
Everyone on Earth
The markets have become bigger casinos than they were before. Politics in the US went from being a blood sport into a poor Netflix remake of a Monty Python skit. And sports has turned professional at almost every level where as long as an oddsmaker is willing to create a line people can wager on, it’s considered legit. I should know, the local senior pickleball matches made me a fortune last year (just joking, lighten up Karens).
Thus we enter into the great unknowns of unknowns heading into 2025.
I. World Events
1. Russia completes the sweep of the four Ukrainian oblasts; Kherson, Zaporizhzhia, Luhansk, and Donetsk. An offer for a ceasefire is made and the US puts pressure on Kiev to accept. Zelensky accepts for the time being to keep receiving US military aid.
2. Syria’s Civil War accelerates with the Turkish invasion of eastern Syria and northern Iraq to eradicate the Kurdish problem (their words, not mine) after US troops leave the country in the spring. Media coverage in the West drops to nothing as Israel sets up a permanent buffer zone in Quneitra province up to Mt. Hermon in Lebanon and across to the Mediterranean Sea just north of Aaqbiyeh.
3. Pakistan and Afghanistan have an officially declared war starting in the northeastern party of the country after the Pakistan army invades in force. The Chinese government eventually mediates a settlement between the two countries.
4. The United States military organizes and joins with the Mexican military to engage in a cross border operation to eradicate two of the largest drug cartel paramilitaries near the US border.
5. The EU attempts to vote out several nations but the attempts are vetoed by those nations.
II. The Economy
1. Natural Gas surges higher, over $5.50, after a bitter and unusual cold snap which lasts from mid-January until mid-March.
2. WTI-Crude drops as low as $50 per bbl but bounces back strong to end the year near $75 per bbl.
3. Credit spreads begin to widen out as the Federal Reserve shocks the President and the markets with a hawkish statement in March followed by a 25 bps increase in the Fed Funds Rate in April as PCE inflation starts to surge and CPI as measured via the Atlanta Fed Sticky CPI advances closer to 5% by May.
4. As a result of another do nothing Congress, equity markets start to lose faith in the Trump agenda. Inflation is still sticky, other than Executive Orders, the renewal of the Trump 2017 Tax Cuts and work on other areas is stonewalled by a fight between the RINOs and Freedom Caucus who demand actual cuts to spending. The S&P 500 corrects 10% by February after a disastrous revision to the employment and inflation data. After the April Fed action, a massive move in the S&P 500 takes the index below 4,800. The “Spring Fling” crash or whatever they call it will result in political panic and the Trump spending and tax agenda barely passes both houses by the summer recess putting a floor under equity prices.
Year end target for the S&P 500: 5,800-5,900
5. US 10 year yield briefly touches 6% in the market before retreating to just below 5% by year end. Volatility is going to hit fixed income in spades.
6. 40 community banks will fail and be seized by the FDIC. The Trump administration will claim it’s cleaning up the mess let to them but in reality the commercial real estate crisis reaches a level where extend and pretend no longer works. One large regional bank is forced to merge with the weakest sister of the big 7 banks by the Treasury Department and Federal Reserve.
7. Fed Chairman Jay Powell announces he will not seek another term as chair.
8. Inflation, as measured by the Atlanta Federal Reserve Bank CPI never drops below 3.5% in 2025 and peaks just above 5%. Stagflation re-enters the mainstream and financial media’s vocabulary as well as a ton of stock footage from the 1970s.
9. Retail brick and mortar stores continue to shut down in large numbers.
10. Amazon acquires Walgreen’s in a stock swap plus cash agreement after the store closings are finalized. Boots will be spun off to UK investors to satisfy regulators.
11. The NBER finally announces in the summer of 2025 that the US has been in a recession since late July of 2024.
12. Last but not least, let’s see if I can top last year’s gold forecast with another home run. 2025 will be known as a transition year, a year of massive instability hence gold should finish somewhere between $3500-$3600 per ounce with a massive rally paralleling the rise in interest rates. Silver finally starts to roll finishing the year around $48 per ounce with a $20 range up and down from that target.
III. US Politics and Chicanery
1. President Trump nominates Mike Lee to replace retiring Supreme Court Justice Clarence Thomas in the summer.
2. Governor Ron DeSantis appoints Attorney General Ashley Moody to replace Senator Marco Rubio who is confirmed as Secretary of State on January 21st. This clears the path for Lieutenant Governor Nunez to run almost unopposed other than fringe candidates (Gaetz) in 2026.
3. Senator Mitch McConnell passes away in office from natural causes.
4. President Trump imposes a 25% increase in tariffs on almost all Chinese imported goods. Domestic inflation surges as intermediate producers can no longer absorb the costs.
5. Trump finally uses his executive powers and suspends all non-H1B immigration into the United States from February 1, 2025 until May 1st to execute a new plan to round up criminal illegal aliens inside of the country. The administration also declares numerous cartels and gangs in Latin and South America as terrorist organizations. In exchange for funding for his “newer, bigger, more beautiful wall” Trump agrees to amnesty for all DACA applicants prior to 2020.
6. The Freedom Caucus along with several more centrist Democrats propose repealing the Graham-Leach-Bliley Act and restore many parts of Glass-Steagall along with modernizing some aspects of that law. It is blocked by the GOP in the House and Senate.
7. Andrew Cuomo is elected Mayor of New York City in November. They never learn.
IV. Mother Nature Always Wins
1. Last season these pages predicted less activity so what did Mother Nature do? Yeah, longest eye I’ve ever sat through. Does America get a break this season? Despite the Climate Change alarmists and bed-wetters, yes and no. My prediction for 2025 is 18 named storms, 6 hurricanes, 3 major hurricanes including 3 of the six hurricanes hitting the United States.
2. Earthquake activity picks up again this time with one major quake in excess of 7.3 on the Richter scale hitting somewhere on the coast between Baja California north up to Vancouver, British Columbia.
3. A major solar storm disables parts of the US power grid causing widespread blakouts and creates panic as satellites are temporarily blinded for several hours.
4. Florida sees an small accumulation of snow south of I-10 some time in the winter.
V. Why Don’t We Get Drunk and Predict
Ah, you people have a filthy mind. So here goes your chance to lose money like myself by betting with our hearts some times and leaving our brains in the bottom of the bottle. This also means some really strange cultural predictions for those not familiar with these pages.
1. Kansas City wins one more Super Bowl. Travis Kelce retires after the game and announces his engagement to Taylor Swift. I understand if my readers take a break to vomit now.
2. A Canadian team finally wins the Stanley Cup this century. Just kidding I’m not that drunk.
It’s going to be Minnesota defeating Washington in seven games. This after a 7 game classic series between the Lightning and Capitals for the Eastern Conference final.
3. Disney finally sells ESPN to a private equity group which includes a coalition of NFL and NBA owners. To finish shedding their antiquated broadcast collection, ABC and Disney owned affiliates are sold to the CW (Nexstar Media group)along with PE investment removing all vestiges of the Warner brand and other outside investors.
4. X signs the Mountain West to a broadcast contract for all NCAA basketball and football games starting with the 2025 football season.
5. iHeart Media files for Chapter 11 bankruptcy again and sells 30% of its AM and FM terrestrial radio stations at bargain basement prices, mostly to local private capital groups. More layoffs in the AM and FM radio industry ensue.
With that series of predictions in the bag, and by the time I’m finished editing and cleaning up my errors so shall I be even further in the bag and bid you adieu. I wouldn’t invest or gamble on anything I say or predict, but by golly when I sober up who knows; I might finally hit that 10 leg parlay and tell all of you to take this job and shovel it.
Can you dig it?
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