Deutsche Bank’s strategist Henry Allen predicts a strong year for stocks in 2025, highlighting the current favorable market conditions despite potential unpredicted shocks. He notes that equities could thrive, given the absence of an imminent economic downturn, the Federal Reserve’s anticipated rate cuts, and potential positive shifts in inflation. The outlook follows a remarkable gain of over 20% in the S&P 500 in 2024. Allen asserts that Wall Street has already factored in various risks, including tariffs proposed by President-elect Donald Trump and persistent inflation concerns. He emphasizes that macroeconomic conditions are stable, contrasting with the dot com boom of the late 1990s, which coincided with a recession. Key indicators suggest a reduced likelihood of a recession, such as the normalization of the yield curve and the Sahm Rule. Allen argues that the Fed’s rate cuts, occurring in a soft landing rather than in response to a recession, support his optimistic view. Moreover, he highlights that stocks could experience renewed upward momentum if inflation lowers. Stock prices recently rallied, particularly in the tech sector, fueled by encouraging news regarding Trump’s tariff strategy.
