Weekend Edition: The Year That Was, and the Year That Will Be
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What were the biggest economic surprises of 2024 and how do they set the stage for 2025?
Well, it's the last podcast for the year. Time to look back at 2024. But more importantly, because anyone can do that, can't they? Let's focus on what's gonna happen next year, knowing what we now know, with the whole morning call crew, no exceptions. Welcome along. The morning call from NAB with Phil Dobby.
The weekend edition.
Well it's been a year of surprises, a year of US exceptionalism that's seen growth there push ahead while most other parts of the world are seeing their growth somewhat subdued. The US dollar as a result rose five and a half percent this year against a seven percent fall in the Aussie, with the NASDAQ repeatedly hitting new highs and up thirty-four percent so far this year. Bitcoin is up a hundred and fifty-one percent. Now all of that might be helped by the US election. That was of course a big surprise, and all the talk of protectionism, uh that agenda no doubt helped equities on the dollar uh since the result of that election. And central banks are cutting just about everywhere, except of course the RBA.
Uh some like the Fed have surprised a little with their big fifty basis point cuts. But no one is completely clear exactly where they're heading for, what is the neutral rate they are looking for. That seems to have bounced about a fair bit this year. And then there's China. Slower growth, stimulus measures that haven't really met the mark, striving to create that domestic demand that just doesn't seem to be happening as people struggle with housing debt and now falling house prices. So that's where we are. What next? Well, we've got the whole morning call crew with me today for this special last edition of twenty twenty four. So grab yourself a coffee or a beer or two, 'cause it might take a little while.
We've got Sally, Skye, Gavin, Ray, Rodriguez. Rodrigo, Tapas, Taylor, Ken. Or if you prefer that in alphabetical order, uh we've got Gavin, Ken, Ray, Rodrigo, Sally, Sky, Tapas, Taylor. That's one way of getting Gavin in there first. Uh but let's start in the middle, shall we, with uh with Sally, uh, who is, by the way, going to be Nab's chief economist next year, just in case you missed that bit of news. So that's one prediction we can safely make for twenty twenty five. Uh but Sally, uh as far as the US economy, is this Is exceptionalism going to continue into next year?
Yeah, good morning, Phil. So Definitely happened this year. If we look back at the beginning of 2024, the consensus thought that the U.S. economy would really just grow a little bit over one percent. And if we look at how that forecast has evolved through the year, that number is now two point seven percent GDP growth for calendar twenty twenty four. So material upgrades. So you know the US economy has done better than everyone thought, and I think that's really been a story of resilience in profit market. margins, you know, have had really benign credit conditions, pretty healthy corporate and household balance sheets, and, you know, obviously a strong wealth effect from the big rise in US equity markets.
Um and so the question around US exceptionalism, which is this idea that, you know, US growth is relatively stronger than the rest of the world, rates are relatively higher, US equities outperform, as does the US dollar, that That's really something that I think has become quite entrenched in markets, particularly in the back half of the year. But also as we're heading into twenty twenty five, I mean that's that's basically the expectation. So it's been a story around what's actually happened, but also people's expectations that going forward, the new Trump administration is going to deliver policies that are very strongly pro US growth. Um and so I think um you know this is sort of an interesting
Set up as we move into 2025 because we're sort of starting the year with what I would call pretty minimal mac macro anxiety. So if you look at consensus expectations around chance of a recession, it's basically one in five or twenty percent, which is well below where we were this time last year.
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Chapters
8 chapters
1
What were the biggest economic surprises of 2024 and how do they set the stage for 2025?
0:01–4:34
2
Is U.S. exceptionalism likely to continue into 2025 and what does it mean for the dollar and equity markets?
4:34–10:36
3
Will President Trump revive tariff threats in 2025 and how could they reshape global trade?
10:36–14:55
4
What are China’s domestic stimulus challenges and how might they affect the CNY and the Aussie dollar?
14:55–19:52
5
Where are central banks heading in 2025 and what is the consensus on neutral interest rates?
19:52–24:52
6
Could the Australian dollar fall below 60 US cents next year and what factors drive that risk?
24:52–30:15
7
How will rising government bond supply worldwide impact yields and the bond market in 2025?
30:15–36:03
8
What is the outlook for asset allocation in 2025 – U.S. equities, Aussie equities and credit?
36:03–40:42