One analyst sees a promising environment for risk assets like stocks and cryptocurrencies thanks to lower interest rates, easing inflation and rising corporate profits.
• Economic data and corporate earnings without negative surprises
• US interest rate policy in focus
• Analyst sees favorable environment for risk assets
Thomas Hainlin, senior investment strategist at US Bank Asset Management Group, said in a telephone interview that there had been no recent negative surprises in either employment data, inflation or corporate earnings, creating a favorable environment for risk assets such as stocks and cryptocurrencies , as MarketWatch reports.
No negative surprises
In November, the US economy added 227,000 new jobs, exceeding forecast. However, there were also warning signs: the unemployment rate rose by 0.1 percentage points to 4.2 percent in November. In addition, wages, which have an influence on general price developments and can increase inflation, rose by 0.4 percent month-on-month in November, more than expected.
The consumer price index for all urban consumers rose a seasonally adjusted 0.3 percent in November, after rising 0.2 percent in each of the previous four months, according to the U.S. Bureau of Labor Statistics. In the last 12 months, the overall index for all goods rose 2.7 percent, after rising 2.6 percent in the 12 months to October. The index for all items excluding food and energy rose 0.3 percent in November, as in each of the previous three months, while it rose 3.3 percent in the last 12 months.
US interest rate policy in focus
Jay Hatfield, founder and managing director of Infrastructure Capital Advisors, said that a few weeks ago there was “a lot of skepticism about a Interest rate cut in December”, but that people would “come back down to earth”.
The US Federal Reserve cut interest rates for the third time in a row on Wednesday. As expected in advance, this was a small interest rate hike of 0.25 percentage points. This means that the key interest rate is now in a corridor between 4.25 and 4.5 percent.
For the coming year, however, analysts expect the Fed to step on the brakes on further interest rate cuts, which is due, among other things, to the return of Donald Trump to the White House. According to experts, his plans, such as the introduction of far-reaching tariffs, could lead to higher inflation, which in turn could limit the US Federal Reserve’s room for maneuver to cut interest rates. Hainlin assumes that the Fed will make another interest rate cut in early 2025.
Favorable environment for risk assets
“We continue to like the combination of lower interest rates, easing inflation and rising corporate profits that are driving the entire spectrum of stocks, from large to medium to small and foreign stocks,” MarketWatch quoted Hainlin as saying. “We therefore advise our clients to structure their portfolios in a growth-oriented manner. Sell some of the core fixed income assets in your portfolio and add equities by the end of the year and the beginning of next year,” said the strategist.
Meanwhile, the oldest and largest cryptocurrency in terms of market capitalization, Bitcoin, has been able to gain significantly in the recent past and reach new record levels. On December 5th it broke the $100,000 mark for the first time in its history and climbed to over $108,000 this Tuesday. One of the main drivers of the rally in recent weeks was the election of Donald Trump as the new US President, as he is considered a supporter of cryptocurrencies. Crypto bulls hope that the regulatory environment under Trump will become friendlier for the industry and are already bringing new BTC price records into play. Bernstein analysts believe that Bitcoin will reach a price of over $200,000 by 2025, while crypto expert Bobby Lee expects a Bitcoin price of $250,000 next year.
Editorial team finanzen.net