10 Bold Predictions for 2025 (Uncut) 01-23-2025
10 Bold Predictions for 2025: A Must-Watch Macro Outlook – Alan Hibbard w/ Laurent Lequeu
And I did see your 2025 crystal ball. You have 10 bold predictions not to ignore for the upcoming year. So I wanted to go through them.
I thought it was very well researched and very well written. So kudos to you. And there’s 10 of them.
So maybe we could spend a couple minutes on each one. But first, can I get your view on the overall macro landscape? Like what are you seeing in the world as we go into 2025? Hello, GoldSilver family, Alan Hibbert here with another video. And today I wanted to sit down with the macro butler, Mr. Laurent Lequeu, and get some of his predictions for 2025.
Laurent, thank you so much for sitting down with me today. How are you doing? It’s my pleasure to be on GoldSilver. Well, if we look at the situation of the world, as of the end of 2024, the US economy is still in an inflationary boom.
So I look at the world through the lens of the business cycle and looking at different major economies in the world. The US is in an inflationary boom. Japan, Europe and China are already in an inflationary bust.
And the risk for 2025 is that the US joins the other major economies into an inflationary bust. OK, yeah, that makes sense. So really, the US being a driver and inflation being a driver, is that fair? Well, I think that the driver for the US to move from an inflationary boom into an inflationary bust would be the decision that would be taken by President-elect Trump and the consequences for the rest of the world.
I think that what people must understand is that the world is interconnected. So if the major economies of the world are in a stagflation, it’s very difficult for the US not to be in a stagflation as well, especially if the US puts pressure on other countries to tariff. It makes sense.
All right, fantastic. Well, let’s get into the first prediction you have here. The Federal Reserve will resume rate hikes before the end of 2025.
Obviously, there’s been a lot of talk about rate cuts. And if we went back just a few months ago, there was an expectation of having three cuts throughout 2025. But you think, as I do, that the Fed is going to resume rate hikes before the end of the year.
Can you talk a little bit about that? Well, it’s quite simple. I mean, the Fed cut rates in September while the US was still in an inflationary boom. So there were no reason for the Fed to move rates lower.
And in fact, if we look back to history in the 1970s, when the US experienced its worst inflationary bust in history, in fact, the Fed had to reverse its first rate cut. So I guess that this time will not be very different. The Fed will have to dial back on its Fed fund rates and raise rates probably in the second half of the year when we see the first impact of the tariff implemented by President Electrum in the first half of the year.
Yeah, I definitely agree with you. And I decided to pull up a chart of the Fed funds rate. And just so people can see, if we zoom out, we’re looking at 1955 until today.
And we can see this long-term rising cycle and then a long-term cutting cycle. And it would appear like we’re in another long-term rising cycle that has just begun. So I don’t know if you feel the same way.
Are you expecting, you know, another 10 or 15 years of generally rising rates or not so much? Well, I think it is difficult to forecast for this kind of long period. I would say that at least until the end of the mandate of the 47th president, we should expect interest rates to be higher. And so the Fed will have to move up again, first in the second half of 2025 and further in 2026.
After 2026, it will all depend on how the midterm election turns out. That’s fair. I like it.
All right, let’s move on to point number two. You predict that the Dow will outperform the Nasdaq in 2025. Why do you think that’s the case? Well, clearly, if you look back at history, when an economy and when the US economy moved from an inflationary boom into an inflationary burst, in fact, you can see a massive rotation of growth stocks into more value stocks.
So this is why in 2025, as the US economy moved into a stagnation, investors will go back to the Dow. Outside this, also the Dow will benefit from external inflows, meaning international investors will still focus on the US, since the US is still the less dirty shirt in the laundry basket. And of course, institutional foreign investors are buying the Dow rather than the Nasdaq, because the Dow are kind of the blue chip that everyone feels comfortable to own over the long term.
That makes sense. OK, so you’re expecting that rotation. Yeah, it definitely could be the case.
And why do you think that’s going to happen in 2025 as opposed to maybe 2026 or on a longer timescale? Well, I think that the reason that we have this shift in terms of from Nasdaq to the Dow is because we are back in a rising interest rate environment. We are back in a rising yield environment. And all this is favorable for the Dow stocks versus the Nasdaq.
So I think that here, once again, history will repeat itself. If you remember 2022, I mean, it was a bad year in terms of stock investment, but you were better off in the Dow stocks rather than in the Nasdaq. Very nice.
Thank you. All right, let’s move on. Number three, the US energy sector will outperform the Magnificent Seven.
So this is a bold claim. So you think energy is going to do better than the Mag Seven. Why is that? Well, it is, I would say, a consequence of the outperformance of the Dow versus the Nasdaq.
I think that there are a lot of positive triggers for the energy sector to outperform. First, it’s underwhelmed. Second, it is undervalued.
Third, it has been unloved by most investors over the past four years because most of the investors were focused on ESG. And I think that in 2025, a lot of these factors are changing. We have seen a bottoming out of the oil price.
We see a rotation from growth into value. And the US energy sector is the value sector by excellence, while the Magnificent Seven is the growth sector by excellence. Hmm.
And also, do you think that the incoming Trump administration is going to be a large factor in the growth of the energy sector? Well, I mean, President-elect Trump talked about the drill, baby drill. The issue for drill, baby drill is that no oil and gas company wants to drill at current oil price below $80 per barrel. It is very risky for a lot of oil companies to drill.
For these companies, in fact, today it’s cheaper to buy oil on the New York Stock Exchange floor, meaning that it’s better to do M&A rather than go exploring the Permian. And also, in this context, and I think that a lot of energy companies are still worried about the regulation that could come post the midterm election or post 2028. So all of these come in an environment where I guess there’s not a lot of incentive for US oil and gas companies to drill.
And clearly, this brings back to the valuation and the value factor of the energy sector is a value play. Hmm. Interesting.
Yeah. I mean, it will be interesting to see how it plays out in the coming one year, four years and so on. So, yeah, I’ll keep an eye on this prediction.
Number four, the US 30-year yield will rise above 6%. So we’re around 5% right now. You think it’ll go above 6%.
Why do you think that’s the case? Well, you know, there are two factors. First, the US government needs to refinance almost $10 trillion this year. There’s clearly less demand from foreign investors because most foreign investors are still scared about the US dollar weaponization.
So the demand is not here if we have a return of inflation and the move of the US economy from an inflationary boom into an inflationary boom. There’s clearly no incentive for nobody to buy a long-dated yield at current level. So I would think that 6% on the 30-year yield is very probable.
I would say here my disclaimer is that we will never know that the Fed could implement a kind of deep curve control at some point because, of course, higher long-dated yield will be a threat for the US banking sector. So I guess we could see maybe 5.5% rather than 6%, but I think that we will see higher long-dated yield even from here. Yeah, definitely.
I mean, 6% is a pretty high benchmark, but it’s certainly possible, of course. But I agree with you, it is trending upward, no doubt. Well, I think if I may add, I think if you look at the long-term chart of the 30-year boom here, in fact, it’s pointing to this 6% level in the next 12 to 18 months.
So I’ve been a bit presumptuous to put this prediction for 2025, but if it doesn’t happen in 2025, unless the Fed implements yield curve control, I think that it will be a 2026 prediction. Yeah. Yeah, sounds good.
I’ll let that slide, even if it happens in 2026. I think that’s still a good prediction. Excellent.
Number five, the US dollar index, the DXY, will reach new century highs exceeding 121. So you think, sort of like the dollar milkshake theory, you think the dollar is going to attract all the capital from around the world? Yeah, I think that once again, I mean, the Fed will be forced at some point to raise rate again. Long-dated treasury yields are moving higher.
Tariffs are in fact very bullish for the US dollar in a way that this will stimulate a capex from foreign companies into the US. So more foreign companies, we have to invest to start building factories at some point in the US. It means it’s a big tailwind for the US dollar.
And on the other side of the pound, I mean, you can only see a lot of political uncertainty in Europe, in the UK, in Japan, and elsewhere in the world. So I guess that all this push the dollar much higher than it is. I know that the consensus is that President-elect Trump is bearish for the dollar.
I think it’s a misconception. And I think that he cannot fight the flows and the flows are in favor of the US dollar versus all other fiat currencies in 2025. Yeah, I could see that for sure.
And this whole notion of tariffs, I mean, it’s, you know, Trump says it’s his favorite word, the most beautiful word in the English language is tariff, which is a bit of a stretch. But, you know, it will be interesting to see how tariffs affect the US economy and the economies broadly, because it’s not necessarily just a win-win situation. It’s definitely win-lose.
So yeah, I hope it does spark CapEx spending from abroad. But we’ll see, you know, it depends on the timing and the severity of the tariffs, I think. Well, if I may add something, it depends if Trump and the US is ready to strike a deal with a foreign investor.
And here it also depends if foreign investors have the trust into what Trump can promise them in return of investing in the US. I think that the big issue of the last four years is that a lot of trust has been lost between the US and the rest of the world, and especially between US and Asian countries. So even that if Trump invites more investment from foreign investors into the US, this could be a threat.
And also we need to see all China and other major US trade partners will react to this implementation of tariffs. Yeah, definitely. And hopefully we do get all those, you know, bilateral trade deals and so forth, because countries that trade together do not go to war together.
And I think we all want to see that prevented. So that’s the whole point of the mercantilist global source. I mean, in fact, people may not know, but the whole philosophy of the global source and the BRICS is to trade together to avoid to have war between each other.
So, I mean, we will see if Trump buys into this mercantilist idea that is coming from the global source. Yeah, yeah, we will see very soon. All right.
Number six, the yen will trade above 200 against the dollar. So that’s a pretty big move. It’s around 150, almost 160 right around now.
So moving to 200 is pretty significant. Why do you think it will move so much? Well, I think that here are two things. The first is that the BOJ will be forced at some point to come back with yield curve control.
It will be unable to raise rate. And if you have the Fed raising rates, you have long dated US Treasury yield moving much higher. In fact, this will push the yen much, much weaker against the dollar.
And so I think that the yen will come back to be a carry trade funding currency. And this time, in fact, investor will use the yen carry trade to buy ExxonMobil or Chevron rather than Meta or Palantir. Interesting.
Yeah, that connects to the rotation you were talking about earlier. Yeah, I mean, that seems plausible to me. I guess we’ll see to what extent that happens and if it’s enough to move all these different metrics to the numbers you’re talking about.
But I do think those trends are plausible. Fantastic. OK, number seven.
Uh-oh. Physical gold will outperform Bitcoin. Scandalous.
OK, go ahead and explain your point here. Well, if you look at the Bitcoin to gold ratio, in fact, it has always peaked at the same time as the Nasdaq. In 2021, it was the case.
End of 2024, we had a peak in the Bitcoin to gold ratio at the same time that we had the peak of the Nasdaq. So, I mean, in the view that we have this big sector rotation from gold into value, from Mach 7 into energy, in fact, we will have this rotation from Bitcoin into gold. And that’s why at the end of the day, 2025 is the Jubilee year and it will be remembered by another massive outperformance of gold.
I think that we could see again a 20 plus percent performance of gold in U.S. dollars. Yeah, I definitely think 20 percent is plausible. Do you think that Bitcoin will do well because of the incoming Trump administration and the proposal of a national Bitcoin strategic reserve? Or do you think that’s not going to happen or it won’t be a factor in moving the price? Well, I think that what is moving Bitcoin is the risk environment.
So in my theory, 2025 will be much more risk off than risk on than 2024 and 2023. And in that context, I guess it’s a headwind for Bitcoin. And as I said, it’s part of this rotation from the growth stocks into the value.
In fact, you can see that Bitcoin is the growth asset versus gold, which is the value asset. Interesting. Yeah, I can see how people would view them differently in that way.
It’s not how I personally view them. But anyways, maybe we can have you back for another video and we can talk about gold and Bitcoin in the future. Sure.
I wrote a whole newsletter about gold and Bitcoin the past week. So I’m happy to come back and discuss that more in detail. OK, amazing.
That sounds great. Beautiful. OK, number eight, the Eurozone will implement capital controls.
OK, so what type of capital controls are you thinking and why do you think they would do that? Well, I think that if you look at all the world is shaping, I mean, the situation in Europe is a complete political mess and you still have a war at the doorstep of Europe with the war between Ukraine and Russia. And I think that contrary of what President-elect Trump told us during the campaign, he will not be able to end the war in 24 hours, as promised. So I guess that in these circumstances and I guess you will see a much more rising yields, government bond yields in Europe as well than in the US.
You have already seen this in the UK over the past few weeks. And in this process, in fact, the Eurozone to protect its banking sector will not allow its citizens to move assets outside the Eurozone. What I call about capital control, for those who remember the Asian financial crisis, that’s what Asian countries like Thailand, Indonesia imposed in 1998 during the financial crisis.
I don’t think that Europe will do different things. In fact, I think that Europe is on the verge of a sovereign debt crisis. And to delay this sovereign debt crisis, they will just impose capital control, meaning that investors will not be able to move capital out of the Eurozone.
Do you have a sense of where the cracks in the foundation might be or where we might see that sovereign debt crisis pop up first in Europe? Well, I think that France is the prime candidate for this. There has not been, I would say, a functional government for now almost a year. And there’s no hope for a functional government to be implemented in the near future.
So we have to wait at least in the summer for another potential election in France. And I think that the situation of the French deficit is so bad that, in fact, I won’t rule out that we see the IMF around the Champs-Élysées before Bastille Day. Wow.
OK, well, I guess we’ll see, right? It’s a bit bold prediction, this one. It is bold, but it’s something to watch out for. We can’t say we weren’t warned.
All right. Very nice. Number nine.
This one really caught me by surprise. A volcanic climate lockdown will be enforced. This is kind of sensational sounding.
Can you explain what you mean by this and why you think it will happen? Well, I think that, I mean, everything moves in two cycles. Outside the business cycle, there’s also a solar cycle. And in fact, at the end of 2024, we have entered solar minimum 25.
So it means that the solar activity is declining and, in fact, will bottom at the end of 2026, early 2027. And historically, this solar cycle and solar minimum has had an impact on the volcanic eruption, meaning that the volcanoes are also moving into a cycle, which is kind of in sync of the solar cycle. So I think it can sound a bit like science fiction.
But I mean, I think that this is really under the radar of everyone and especially of investors. And I think for investors, why is it important? It’s because when we have a volcanic eruption, this impacts the climate and this especially impacts the use of the crops. So this will have an impact on food prices and this will add to the pressure of prices that we receive from tariffs, from the global uncertainty in the world, the uncertainty in the Middle East.
So I would say for investors, the takeaway of this is that they should be ready to see much higher food prices and much extreme weather pattern like we are seeing currently in the U.S. with the cold wave around the eastern part of the U.S. Okay. So just to summarize, you’re talking about the sun, like the sun and the moon, right? That the sun actually changing basically the number of sunspots and the amount and type of energy that it will affect volcanic activity, which will affect crop yields, among other things. And so do you have a sense of any governments around the world who are already speaking about this and planning for it in one way or another? Or is this largely unspoken about? Do you think governments will be caught off guard? How do you think that’ll play out? Oh, I think that most of the people are caught off guard.
I mean, I’m doing, in fact, for now, some research on the impact of the solar cycle on the business cycle, because I think that there should be an impact. And this, of course, has impacts on investment. But to be honest, this has been a research that I started to do last year, because I find that it’s underrated, this impact of the solar cycle and the impact of the solar magnetic emission on Earth, in fact, is much more than most of everyone can assume.
And of course, also, it will have an impact on everything in terms of telecommunication and satellite communication. So when I say a volcanic lockdown will be implemented means that there will be a lot of disruption in the supply chain from telecommunication to supply chain of food and basic needs of everyone. And that could translate into rationing of some kind, you know, in various places.
That’s highly probable. I mean, I’m not a prep person, but I think that this is something that everyone needs to be aware of and the risk. I mean, we have also seen over the past few months, a lot of climatic events like Hurricane and so on.
And I think that everything is interconnected. And the culprit, you can say, is the solar cycle. Yeah, I agree with you in general that, you know, the celestial bodies, the sun, the planets should have some impact on what we do on planet Earth, the business cycle, you know, and others.
And, you know, as a kid, I remember hearing all of that lumped into astrology and then being laughed off and dismissed as silly. But, you know, as I’ve come to think of it, it’s, you know, there should be some effect. I don’t know what it is and I haven’t studied it, but there should be some effect.
So I’m very interested to see your research on that, on solar cycles and the business cycle. So, yeah, looking forward to that. Well, I would say also for Asian, it’s not very disrupting because, you know, that the Chinese mythology is based on the cycle and the calendar, in fact, in China is more based on the moon rather than on the Western calendar.
So I guess that the chance that I have is that I live in Asia and I started to understand all these cycles related to the environment we live in. Hmm. Yeah, that’s a nice advantage of living over there.
Beautiful. OK, last but not least, number 10, a new proxy war between NATO and the Global South will erupt on the Korean Peninsula. So this one also caught me off guard.
I was not expecting this. Can you explain what you mean here and why do you think it will happen in 2025? Well, I think that if we dial back to the past year, NATO has tried to extend into Asia and has been looking to integrate Japan and South Korea into the alliance. I think that here it’s related also to the fact that I don’t think that President Elect Trump will be able to end the war in 24 hours, as he promised.
And in fact, we are going into a rising war cycle in a way that the world will be disappointed by what is decided by the new president for the world. So I guess also here, I mean, if you follow the news, there has been more and more connection between Russia and North Korea. So I guess in this environment of extending NATO to Asia, the likelihood is that the tension on the Korean Peninsula has been underestimated for many years.
And in fact, again, living in Asia and having contact with Chinese, I think that the US is too focused on the Taiwanese problem. It’s not really a problem per se. And on the other hand, the real point of tension in Asia is on the Korean Peninsula.
So I would think that if there’s a new evolution in the war cycle in 2025, it will happen in Korea. Wow. Okay.
Well, I’ll definitely keep my eyes and ears open. The Korean Peninsula is something I really haven’t paid a whole lot of attention to. So maybe I will start now.
So thank you so much. So Laurent, this has been awesome. 10 really bold predictions.
I really appreciate it. How are you personally positioning yourself financially to take advantage of these 10 predictions that you’ve made? Well, if you look at where we stay in the business cycle and all to invest across major asset classes accordingly, there’s one asset class that you must avoid at all price is bonds. You shouldn’t hold any bonds.
Any bonds with a maturity of more than one year is a risky asset. It’s not a safe asset anymore. So this is the first asset to avoid.
And I would say that in 2025, it will be all about risk management rather than return. So in this environment, our position, the portfolios is I’m clearly overweight, physical gold. I think that everyone should own between 30 and 40 percent of his portfolio in physical gold.
And for the rest, I would say I’m in equities. I mean, high quality equity companies, more tilted towards the dojo style of companies and to manage the cash activity. In fact, you can own an investment grade bond portfolio of with a maturity of less than 12 months.
So this gives you like a five plus percent U.S. dollar return with no duration risk and very low credit risk. So I would say this is kind of the conservative way that I approach 2025, since I think that in 2025, it’s all about managing risk and minimize drawdown. Yeah.
More a bigger concern on the return of capital rather than a return on capital. Yeah. So I guess that’s right.
That’s right. In fact, this is always the conclusion of the newsletter is that the priority is the return of capital rather than the return on capital. I think that if we if the world move into a stagflation, if we deliver three to four percent real return on top of inflation, that would be a very good year in 2025.
Awesome. Mr. Laurent Lequeu, the macro butler. Thank you so much for joining me today.
I really appreciate this discussion. Thank you very much.