Last week, I joined Juliette Saly on Ausbiz to discuss the contrasting bull and bear market outlooks for 2025.

On the bearish side, concerns are mounting over a weakening global and U.S. economy. Bears point to falling earnings expectations, a decline in containership activity, cuts to U.S. capital expenditure plans, rising manufacturing costs, and deteriorating consumer sentiment. They also flag that the S&P 500’s price-to-earnings (P/E) ratio is now above 20 – though it’s worth noting that high valuations don’t necessarily lead to market declines.

On the other hand, the bulls argue that the market is looking ahead, not backward. They believe the worst of the Trump-induced volatility is behind us, with the most disruptive version of his tariffs soon to be replaced by a more palatable version – lifting investor confidence.

We also touched on the risk of a U.S. recession, which seems less likely now when compared to forecasts from earlier this year. The ideal backdrop for equities is positive GDP growth combined with disinflation. Growth remains positive for now – so the question investors are asking is: what will inflation do?