This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
Through a month of 2025 outlooks, Wall Street’s consensus take on stocks in the year ahead is rather clear.
Strong growth in the US economy is expected to push stocks higher while policies from the new Trump administration drive another year of US “exceptionalism” over other global equities.
But of course, that consensus isn’t without risks.
Inflation remains above the Federal Reserve’s 2% target, and many believe this could keep the Fed holding interest rates higher for longer. Wall Street’s lone bear, Stifel’s Barry Bannister, explained a more hawkish Fed could prompt weaker-than-expected economic growth and weigh on equities as the S&P 500 ends the year in the “mid 5,000s.”
Bannister is on an island with his call for stocks to fall next year (17 other strategists tracked by Yahoo Finance see the rally barreling forward). But he’s not alone in the thought such a scenario could derail the bull market.
During a 2025 media roundtable on Dec. 9, UBS Asset Management’s head of multi-asset strategy Evan Brown admitted he’s currently positioned for a US exceptionalism scenario. But the broad consensus makes Brown “extremely uncomfortable” and he sees a few things materializing that “may mean that the US is less exceptional than everyone thinks.”
Many of them center around the flip side of President-elect Donald Trump’s policies.
For starters, Trump’s proposal of mass deportations would upend a solid flow of immigration over the last several years that many economists believe has been a key reason the labor market hasn’t seen a full downturn over the past years. BNP Paribas chief US economist James Egelhof argued during a 2025 media outlook that mass deportations denting the lower labor force growth could be inflationary — remember how much companies were paying up for talent when there weren’t enough workers in 2022 — and eventually lead to a more hawkish stance from the Federal Reserve.
Another part of the consensus reasoning for the US economy to continue to outperform relies on the US placing hefty tariffs on other countries where economic growth is already weak, creating further distance between US economic growth and the rest of the world.
And while everything about Trump’s rhetoric, all the way down to his famed catchphrase, screams America first, Brown argues Trump also doesn’t want to stoke an already sticky inflation situation. This could prove a key difference in Trump 2.0. Instead of an economy where Americans are looking for more growth like in 2016, this time around voters don’t want more inflation.
