(With apologies to Henry Wadsworth Longfellow)

Listen my children and you shall hear
Of the twists and turns to come this year
Let’s look through to Christmas time, Ought Twenty-Five
At which point, I trust, we’re all still alive
To learn what’s robust, and what is austere
 
To start out this tale, the ‘conomy’s first
Will Trump bring us growth or disaster?
The former, my friends, percent three at worst
Though inflation will start rising faster
In fact, by year end, alas you will find
That prices have risen, instead of declined
Perhaps four percent, or just less
For Powell, t’will be quite a mess
At least, as of now, that’s my very best guess
 
With this for context, let’s turn now to rates
A subject, on which, we’ve many debates
The Chairman wants to keep cutting
But that window appears to be shutting
As he’s hemmed in by those dual mandates
In fact, ere this year comes to a close
As neither growth nor inflation slows
The Fed will turn tail and be forced to raise
Fed funds, a result that’s sure to amaze
 
Through summer, before those hikes arrive
Prices for bonds will keep falling
Investors will start caterwauling
As yields climb to levels not lately seen
Think 10-year’s a half-point o’er five
And 30’s at six percent, stalling
With calls that Chair Jay intervene
 
Come solstice, yields will have reached their peak
Then Powell and friends will respond
At which point you’ll want to buy the bond
As we are overwhelmed by Fedspeak
Inflation will once again be Job One
And Powell, this mandate, will not shun
So, Fed funds will start to be raised
And Powell, by hawks, will be praised
But President Trump will be miffed
And his response will be sure and swift
With Tweets, many see as half-crazed
 
As rates and yields rise, what, now, of stocks?
How will they fare in this brave new world?
Seems likely sectors will be swirled
Industrials healthy, tech with a pox
Thus, indices, pressure will feel
As FOMOers soon start to squeal
This is one move they’ll want to miss out
Although I don’t foresee a great rout
Investors will then face a true paradox
Do rates matter more or growth, for stocks?
And will foreigners all lose their zeal?
Come year end, the Dow is likely to drift
Toward 40K in a modest downshift
Though Tech is another story
With the Q’s at four hunge, pretty gory.
 
Attention, now must, to Europe we turn
A region, which lately’s been a concern
Governments falling and growth, oh so weak
This is a place investors will spurn
As profits, returns and value they seek
The ECB mandate, inflation alone
Will suffer as weaker growth they bemoan
Thus Madame Lagarde, much further will cut
Which leads to a case, quite open and shut
As interest rates slide, back to, Percent, One
The euro, itself will, too, come undone
‘ Neath Parity when, December, we look
The euro will trade, as it’s been forsook
And don’t be surprised if Sterling, as well
Falls down to One-Ten, by hook or by crook
As Starmer and Labor face a death knell
 
In China, though Xi is certain to try
His best to attain real 5% growth
When push comes to shove hist’ry shows he’s been loath
To help demand rather than add to supply
And adding to troubles, a falling birthrate
Is just one more thing that will, Xi, frustrate
As such, come December, a Yuan below Eight
Is likely with further rate cuts coming nigh
 
Japan is our next discussion to nourish
Ishiba is anxious for growth there to flourish
As such, raising rates is highly unlikely
His bet will be paychecks are greater than ‘flation
If not, he will be condemned to damnation
And soon lose his job, on that we agree
 
The upshot for FX seems clear
The yen will struggle to find support
And so, come the end of the year
We’ll see levels not seen in decades
One Seventy’s likely where it trades
As yen’s weakness, Ueda can’t thwart
 
Let us turn now to EMG
Whose moneys all tumbled throughout Twenty-Four
When looking ahead I foresee
Troubles ahead, though perhaps not as bad
As last year’s distress, though still quite sad
Ten percent falls or more, you’d agree
Are signals investors, these moneys, deplore
 
Let us start south of the border
Where last year, pesos fell 20%
For Ms. Scheinbaum t’will be a tall order
To soothe Donald Trump and maintain her smile
When fighting inflation all the while
As Banxico, last year’s hikes do augment
This won’t be enough to arrest its fall
Though it won’t fall to Covid lows
Next winter we’ll all be in thrall
When Twenty-Three on your screen shows
 
And finally, Brazil, the land of the Samba
Is likely to see its currency bomb-a
Inflation has bottomed, and is rising
While Lula has nought enterprising
The central bank, rates, will certainly raise
But t’wont be enough, the real to praise
Come Christmas, the real, to Seven will jump
Though that is no way to make friends with Trump
 
These forecasts rely on the Fed
Adjusting their story as prices won’t sink
But if Powell cuts, we must rethink
‘Cause things will be very different ahead
The dollar will suffer, commodities soar
Investors, T-bonds, will say issue no more
While stocks will rise sharply, say Dow 50K
But truly, that strikes me as widely astray
In sum, please remember that I’m just one man
And though I attempt to weave a strong thread
Oft times things don’t go according to plan
Dear readers, I hope, that I’ve not misled
 
For all of you who have stuck with me through the gyrations past, and perhaps will do so for the gyrations future, thank you for giving me your time and consideration.
I truly appreciate your thoughts and feedback on each and every note.
Have a very happy and prosperous 2025
Adf