As we enter 2025, the Vita Investment Committee remains committed to guiding clients through an evolving economic landscape marked by moderating inflation, strategic opportunities from deregulation, and the continued rise of digital assets like cryptocurrencies. This commentary highlights key market trends, including the Federal Reserve’s policies, the Santa Claus Rally’s historical significance, and the transformative potential of blockchain technology. By leveraging these insights, we are well-positioned to deliver customized strategies that capitalize on growth opportunities and drive financial freedom for our clients.
Table of Contents
Director of Marketing and Outreach
Vita Financial
2025 Economic Preview: Trends, Rates, and Opportunities
Observations as We Enter 2025
The Federal Reserve’s careful management of inflation in 2024 led to stabilized economic conditions. November’s Consumer Price Index (CPI) showed a 2.7% annual increase, with core inflation at 3.3%, primarily driven by shelter and food costs, while energy prices dropped 3.2% year-over-year. Producer Price Index (PPI) growth of 3.0% underscored mixed inflationary pressures, with notable rises in food-related commodities like processed poultry. These conflicting measures highlight the stubbornness in easing inflation. The Fed’s preferred inflation gauge, Personal Consumption Expenditures (PCE), came in lower than expected, offering a needed reprieve to markets on Friday, December 20th, and reinstalling confidence in 2025. Inflation trends and fiscal policies from the incoming administration will significantly influence 2025’s economic landscape.
The Federal Reserve’s 2024 incremental rate hikes helped cool inflation from earlier highs, drawing parallels to historic monetary strategies. With inflation metrics moderating, rate adjustments may level in early 2025, decreasing again later in the year, fostering a favorable investment climate. The Vita Investment Committee remains optimistic about market opportunities, particularly in sectors poised to benefit from innovation and infrastructure spending.
The Santa Claus Rally
The Santa Claus Rally, first identified by Yale Hirsch in the 1972 Stock Trader’s Almanac, describes a trend of rising stock markets during the last trading week of December and the first two days of the new year, occurring about 78% of the time since 1950. Factors like reduced trading volume, holiday spending, and investor optimism drive this phenomenon. Historically, major indices such as the S&P 500, Dow Jones, and Nasdaq Composite have risen approximately 80% of the time during this period, with average returns of 1.3%, 1.4%, and 1.8%, respectively. Traders also view this rally as a potential signal for the market’s direction in the upcoming year.
While December’s market performance in 2024 has been subdued—S&P 500 up 0.3% and the Dow down nearly 3%—historical patterns suggest reasons for optimism. December is rarely the worst-performing month for the S&P 500 and has a strong record during election years, with an 83.3% success rate. When the S&P 500 has posted double-digit gains by mid-election year, as in 2024, December has never finished lower. Additionally, with the Federal Reserve recently cutting interest rates and the recent PCE activity subsiding, stocks historically perform well in quieter periods, bolstering hopes for year-end gains.
Nicholas Benzor
Principal Planner and Chief Executive Officer
Benzor Capital Wealth
The Future of Finance: Deregulation and Blockchain Innovations
Domestic Deregulation on the Horizon?
The Trump Administration’s emphasis on deregulation has led to optimistic projections for the financial sector. Reduced government intervention is expected to create a favorable environment for financial equities, enhancing the overall market sentiment. Deregulation has also unlocked opportunities in mergers and acquisitions, particularly in the U.S., where both public and private markets stand to benefit. This evolving landscape signals a strong growth potential, especially for investors focusing on financial sector equities and transaction-heavy industries. Benzor Capital Wealth (BCW) and Vita Financial can strategically position their clients to leverage these opportunities, emphasizing tailored investment strategies that align with deregulation’s unique benefits.
Cryptocurrencies: A Paradigm Shift in Digital Assets
Cryptocurrencies have witnessed significant upward momentum, with key players like Bitcoin, Ethereum, Ripple, and Stellar (XLM) leading the charge. These assets are increasingly being viewed through two distinct lenses: as high-risk, high-reward investments and as potential stores of value in uncertain economic conditions. However, their inherent volatility often tilts the narrative toward their classification as risk-on assets.
Beyond their speculative appeal, the true transformative potential of cryptocurrencies lies in their underlying blockchain technology. Blockchain continues to revolutionize industries by offering decentralized and secure solutions, making it a pivotal innovation to monitor. For clients of the Vita Collective, diversification into crypto-assets and blockchain-related investments can offer both growth and technological alignment, particularly through alternative investment solutions that complement traditional portfolios.
Conclusion
Key Market Indices
*Market Indices as of 12/31/2024
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult a financial professional for your personal situation.
Past performance does not guarantee future results. Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Graphs provided by YCharts.
Key Market Indices according to Google Finance.
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