Morning Brew Daily
2025 Market Predictions: Tariff Impact, Crypto, Mega-Mergers and More
Tue, 31 Dec 2024
Episode 486: Neal and Toby chat with Brew Markets’ Ann Berry to preview potential market-moving stories to lookout for in 2025. Will the Fed keep cutting rates? Can Nvidia stay hot? And of course, how the incoming Trump presidency will shape the business landscape. Also, some insights on why crypto is here to stay and what mega-mergers can be expected. Listen to Ann's podcast, After Earnings: https://open.spotify.com/show/5I5q3LIg1ueDWoTM8AZsHQ Subscribe to Brew Markets: https://www.morningbrew.com/brew-markets/subscribe?utm_campaign=bm&utm_medium=podcast&utm_source=mbd Follow Ann and Brew Markets on social: X: https://x.com/brewmarkets Instagram: https://instagram.com/brewmarkets/ TikTok: https://www.tiktok.com/@brewmarkets YouTube: https://www.youtube.com/@brewmarkets Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What predictions are made for the stock market in 2025?
We broke it down with investing expert Anne Barry. It's Tuesday, December 31st. Let's ride!
Holy cow, it's the last day of the year. What a ride it has been. Tobi, favorite memory from 2024?
Wow, favorite memory from 2024. It's got to be that 3-wood I hit on 18. 265 uphill carry. No, I'm just kidding. Probably it is related to the podcast. Seeing Spotify Rap come out recently, that was a highlight. Doing the in-person trivia night we hosted in New York, that was a highlight. Too many to choose from, so I'm just going to say my favorite memory is doing the podcast every day with you.
Awesome. To wrap up the year, we are continuing our special holiday episodes with a show all about markets. The stock market had a banging year in 2024, but what should you be looking out for in 2025?
To help, we had a chat with the incredible Anne Barry, the host of the Brews' markets-focused podcast, After Earnings. Okay, Anne, thanks so much for joining us.
I'm ready to dig in, guys. This is going to be exciting 2025.
And we're about to dig in right now. One of the biggest themes for markets in 2025 is going to be the policies of the incoming administration, particularly Trump's signature policy proposal to enact sweeping tariffs.
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Chapter 2: How will tariffs impact the economy and stock market?
Just to recap for everyone, Trump has pledged on day one that he'll impose 25% tariffs on Mexico and Canada, the US's two largest trading partners, and an additional 10% tariffs on China. On the campaign trial, he also mentioned slapping across-the-board tariffs on 10% on all goods coming into the US, but we haven't really heard any more details on that.
And tariffs of this scale would provide a major shock to the economy, upending global supply chains and likely raising consumer prices for Americans. How should we think about the stock market's response to Trump's ultra-aggressive trade posturing?
I think we've already seen this dark market response, right? Because you remember, originally when he came out, he said, I'm going to slap 60% to 100% tariffs across the board on China. And guess what the market did? Well, we've just been going through all-time high after all-time high after all-time high. So I think people just really...
So you're saying investors are expecting the tariffs to not materialize? I think they were expecting some tariffs to materialize. I just don't think they expect to see it at the scale that's being thrown out there right now. And actually, I went back, I nerded out on this because I just love to nerd out on this stuff. I went back to see what happened under the last tariff program.
Came to around $200 to $400 impact per US household per year, which is not nothing. That's meaningful. But it wasn't, you know, as catastrophic as people thought. So people are saying we'll be okay.
Let's dive into some of the sectors though that could be most affected. Sectors of the economy like the auto market. A lot of auto imports come from Mexico and China. Same thing with fruits and vegetables. A lot of imports come from Mexico. Meat and dairy coming in from Canada as well.
I guess my follow-up though is, are there any specific investment opportunities that actually might arise as a result of these policy changes rather than just sectors that could be impacted by the tariffs?
Well, when it comes to fruit and dairy and food, I think that's a little bit tougher. I think it's hard to see opportunity there. And I think you just say, okay, we need to see how this shakes out. This could be tough. To go back to the policy thing, that's really interesting, though, that the agricultural community actually supported the tariffs. You remember at the beginning, last go around.
So, you know, even despite the economic pain, it's unclear what the reaction is going to be. Wenn es um Auto geht, aber auch um Elektronik mehr breit, haben wir diese öffentlichen Firmen-CEOs gesehen, die schon gesagt haben, dass wir zwei Dinge machen. Wir beginnen, unsere Importe von diesen Nationen zu akcelerieren, bevor Trump in die Offiziere kommt.
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Chapter 3: What is the outlook for NVIDIA in 2025?
I'm not sure it's going to be broadening out necessarily by sector, but I do think it's going to be broadening out by winners and losers within sectors. For example, all these folks have been talking about investing in AI and the promise that it's going to bring greater productivity. I think everyone in 2025 is going to be like, great, now show us the money. Where is it? Where are the results?
And if you don't have them, I think you start to see those share prices start to go down. But if you're actually delivering in the way that Salesforce is to pick a name out of the blue, I think that continues to pop.
Das war ein perfekter Einfluss auf meine nächste Frage. Du hast vorhin Salesforce-CEO Marc Benioff interviewt. Du hast seinen Anspruch auf AI bekommen. Und du hast ihn direkt gefragt, ob der AI-Markt in einer jetzigen Bubble ist. Zeig uns, was er als CEO von Salesforce gesagt hat, als CEO einer Firma, die viel auf AI bettet.
Aber was faszinierend war, ist, dass er es in zwei verschiedene Komponenten zerbrochen hat. Er hat gesagt, wir fangen mit dem privaten Markt an. Und so, wie in Salesforce, und auch in Nvidia, sind diese großen Venture-Capital-Firmen, weil diese großen Kooperationen in Start-ups investieren, wo sie echte Sichtbarkeit haben, wie diese Start-ups funktionieren können.
Und Mark hat gesagt, look, Salesforce hat gerade in Start-ups ungefähr 5 Billionen Dollar unter Management, und wir sehen eine wirklich tolle Aktivität im AI-Bereich. Die Leute brechen wirklich den Mold, es gibt echte Innovationen. He also called out companies like Inflection and said there was no there there.
And when there's no there there, the emperor is going to have no clothes and the market is going to start calling it out. So I think he said there has been a bubble in certain applications of an AI. He didn't name names in the public market. He did say that there are some now where the fundamentals are not proving out in the public companies. I happen to agree with him.
But I don't know that it's until maybe the middle of 2025 when we start really seeing who's been bluffing Not with mal intent, with hope as a strategy. And hope is not a strategy. And I think we start seeing that come to fruition next year.
Just to put you on the spot, are there any particular names that you think are bluffing or have maybe been talking a big AI game and will not be able to prove it out next year?
Ja, Top 5 Performer in der S&P 500. I'm still not 100% clear on the exact repeatable use of AI. So I'd like to see more evidence, but that's why I got it completely wrong. Like I thought that was hopes of strategy and Alex Cobb, again, if you're listening, come, has proven me sort of wrong. I do think that there are...
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Chapter 4: Is crypto going to maintain its momentum into 2025?
Starbucks changed, forced by an activist. Nike changed, forced by an activist. Boeing was different. There was a real crisis there.
And define what you mean by activists in this context.
Right. So you've got these big funds that have pots and pots of money. Folks like Bill Ackman, Nelson Peltz, funds like Elliott Management. And the specific mandate of these funds, Toby, is they look at companies that are in the public domain and they say, okay, What is the management team like? Are they doing their job to find us? Are they finding growth opportunities?
Are they finding cost reduction opportunities? They look at the strategies and say, how are these companies doing relative to their competitors? Do they have the right product lines? Are they too diversified? Are they not diversified enough? And what these activists do is they go out, they build positions, they buy the shares of these companies large enough dass sie reale Einfluss haben.
Sie schreiben oft sehr artikulierte, scharfe Wörter. Und oft erreichen sie den Punkt, wo sie sagen, wir werden eine Präsentation rausnehmen und sagen dem Management-Team, hier sind ein paar Dinge, die wir anders machen sollten. Please go do them. And if you don't, we're going to start shaking our sabers, rattling our sabers and shaking up your board.
Southwest Airlines, right, another one we saw this. The CEO survived. I think he's on borrowed time for what it's worth. But the board changed out. So that's what the activists do. Some mixed feelings about them. I've got a very specific view on them.
So one person you did mention is the new CEO of Starbucks, which is Brian Nickell. He's been described by some analysts as the LeBron James, the Tom Brady of the restaurant industry. Do you think that he has the ability to steer Starbucks in the right direction?
Starbucks befindet sich in vielen Wettbewerben, in China ist die Vergrößerung sehr niedrig, aber wie viel kann ein Geschäftsführer oder ein CEO wirklich verändern, die Rechte einer Firma, oder ist es mehr so, dass die strukturellen Probleme das sind, was sie sind und sie nur so viel tun können?
So, I'm going to give you a little bit of context for my answer. I've been a CEO of a company. There were 6,000 people. And I've sort of said this over and over again. Execution really is the key to driving performance. There's lots you can't control, right? Brian, he can't control what's going on in China. He can't control what's going on with his competitors.
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Chapter 5: What can we expect from the Federal Reserve in 2025?
I would want to have the chance to, just because I do love their products and have tried them out. So I think Nike is one that I could, just give me the reins, people. We could turn this puppy around.
Wait, wait, wait, we're not going to let you go. Yeah, no, let's needle Toby. We're needling Toby. But Under Armour, right, Kevin Plank, CEO, went over to China to go back to China, I think is leaning in there with Steph Curry, right? So is it Nike, the product, or is it Nike because you have this like nostalgic attachment to everything it represented with the NBA and other great, you know?
Well, I think they have a huge opportunity to regain their market share of the running market. I mean, Nike was like the thing that brought running back. to, or like, basically help create the running boom in America, but then they've lost their way. They have, these run clubs don't interact with Nike anymore. They've pulled back out of a lot of these wholesalers.
So I think there's a huge opportunity there for them to get back in touch with their roots and just say like, hey runners, we see you again. So I think there's a lot of opportunity there, even, and I'm not so worried about like the underarmors of the word like that, because they don't have like the heritage that Nike does.
So that's why, I mean, you put me on the spot, but that is genuinely probably the position I'd like to be in. Guck dir das an. Wir sind alle CEOs in diesen Tagen. Du und ich, Anne. Wir werden die Dinge umdrehen. Wir werden den Show beenden mit einigen Rapport-Fragen. Diese sind die Gammel. Und wir werden dich ein bisschen spekulieren.
Keiner von diesen Fragen ist finanzielles Hinweis, aber wir werden dich hier auf den Spot legen. Bist du bereit, diese Rapport-Fragen zu rippen?
Ich weiß nicht, meine Temperatur ist auf. It's a little toasty.
Alright, first question. Which of these private companies will go public first this year in your opinion? SpaceX, Stripe, Klarna, Coreweave or StubHub?
Klarna. Klarna is a buy now, pay later giant.
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