{"text":[[{"start":8.85,"text":"The US stock market is on a roll. "},{"start":11.379,"text":"The S&P 500 index closed 2024 up 23 per cent, marking its second consecutive annual gain above 20 per cent. "},{"start":19.122,"text":"This year, the average forecast on Wall Street is for around a further 10 per cent rise. "},{"start":24.189,"text":"Households are bullish too: the share of Americans expecting equity prices to rise is at its highest in decades. "}],[{"start":31.310000000000002,"text":"The exuberance is jarring for two reasons. "},{"start":34.089,"text":"First, a majority of economists expect president-elect Donald Trump’s “Maganomics” agenda to have a negative impact on America’s economic growth, according to the Financial Times’ annual poll. "},{"start":44.132000000000005,"text":"Second, US asset valuations are already pretty lofty. "},{"start":48.062,"text":"Excluding the peak of the dotcom bubble, cyclically adjusted price-to-earnings ratios for stocks are near their most expensive in over a century. "},{"start":55.592,"text":"Optimism over artificial intelligence is largely behind the surge. "},{"start":59.284000000000006,"text":"So can US equities really sustain their bull run in 2025? "}],[{"start":64.21000000000001,"text":"It is possible. "},{"start":65.68900000000001,"text":"For starters, though economic growth and stock market performance are related, they do not always neatly align. "},{"start":71.644,"text":"Vibes matter. "},{"start":72.837,"text":"American equities jumped following the November election. "},{"start":75.94200000000001,"text":"That partly reflects a belief that a business-friendly Trump administration would not put the market rally at risk. "},{"start":81.497,"text":"Next, even if economic activity weakens this year, investors still want exposure to AI, given faith in its transformative potential. "},{"start":89.37700000000001,"text":"If both the Trump and tech optimism pan out, then stocks could keep rising. "}],[{"start":94.71000000000001,"text":"Economists’ forecasts also appear to be placing more emphasis on the cost-raising and inflationary effects of Trump’s tariff agenda, relative to his plan to cut red-tape and taxes, which would support companies’ margins. "},{"start":106.177,"text":"If, however, the president-elect’s zeal for import levies turns out to be more rhetoric than reality, then the economic backdrop could support financial markets. "},{"start":114.769,"text":"The US Federal Reserve may be able to cut interest rates further and faster (albeit depending on how much fiscal policy is loosened). "}],[{"start":null,"text":"
"}],[{"start":122.77000000000001,"text":"But how can investors have any conviction about what Trump will actually do? "},{"start":126.74900000000001,"text":"On Monday, markets see-sawed after the president-elect rebutted an earlier news report that claimed he would water down his tariff plans. "},{"start":133.829,"text":"He has a tendency to shoot from the hip on major policy decisions, via social media. "},{"start":138.78400000000002,"text":"His plans for financial market deregulation could also foment stability risks. "},{"start":143.17700000000002,"text":"Cryptocurrencies have surged since the election. "},{"start":145.894,"text":"The booming private capital market — which has concerned regulators for its opacity — is hoping to lobby the incoming administration for more widespread investor adoption. "}],[{"start":155.51000000000002,"text":"Signs of fragility are also appearing across US markets. "},{"start":159.22700000000003,"text":"Equity and corporate bond valuations are stretched, and investors are taking on more risk. "},{"start":164.18200000000002,"text":"Last year, Wall Street’s appetite for returns sparked the largest frenzy for complex debt products since the run-up to the financial crisis. "},{"start":171.437,"text":"The concentration of investment in high-returning AI-linked equities is also a concern. "},{"start":176.14200000000002,"text":"The weight of the S&P 500’s top 10 stocks is at a historic high. "},{"start":180.43400000000003,"text":"AI earnings may continue to be strong but just one weaker-than-expected quarterly tech result could still cause an outsized upset. "}],[{"start":188.22000000000003,"text":"In a speech on Monday, Fed governor Lisa Cook warned that financial markets may be “priced to perfection and, therefore, susceptible to large declines, which could result from bad economic news or a change in investor sentiment”. "},{"start":200.54900000000004,"text":"The release of non-farm payrolls data on Friday will be the first big test for traders this year. "},{"start":205.76700000000002,"text":"It will not be the last. "},{"start":207.35900000000004,"text":"The combination of Trump’s capriciousness and frothy-looking markets is a recipe for volatility. "},{"start":212.38900000000004,"text":"Even investors with a determinedly optimistic outlook should prepare for a bumpy ride. "}],[{"start":216.96000000000004,"text":""}]],"url":"https://creatives.ftmailbox.cn/album/187609-1736303171.mp3"}