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WAIT, HAVE WE ALREADY WATCHED THIS MOVIE?

Ahead of the last Federal Open Market Committee meeting of the year, Matt Rowe, head of portfolio management, cross asset strategies at Nomura Capital Management said that Fed officials, along with investors, are facing a lot of unknowns as they plan for the year ahead.

"Going into 2025, from a macro perspective there's a lot of uncertainty in the world geopolitically and from an idiosyncratic political regime stand point," Rowe said in a recent telephone interview.

"For example, France is going through some significant changes. The fall of Syria and the vacuum that leaves in the Middle East, the move globally to a more insular approach to economies, higher degrees of tariffs, more friction to trade and really the unwind of globalization."

But specific to the United States, both the Fed and investors have to make their plans in the company of an as yet unanswered question: whether or not the incoming administration will amp up trade tariffs to the extent that President elect Trump has suggested.

If we have higher tariffs "that's going to have a big impact on the market," said Rowe.

"There's always the difference between what is said in a political campaign and what actually turns into policy," he added, but noted that investors do have some history to fall back on since it will be Trump's second time in the White House.

"Past experience would lead us to believe that the tariff situation is real and that we'll see a real increase in tariff policy in the United States toward the rest of the world," he said. "That is intrinsically inflationary."

But still even with uncertainties abounding, investors seem to be standing firm.

"What we've seen is a market that's looking at the optimistic side of the story and continually buying risk across the board whether its equity or credit," said Rowe.

"Things are obviously expensive but most people in our business don't have the luxury of becoming un-invested or trading in and out of the market. It's more about long term holdings so we see a lot of continued investment even though valuations look rather stretched."

(Sinéad Carew)

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