Hello,

Now that the election is over, what will the new administration prioritize in the new year?

Here are a few things we’re watching in the months ahead:

The debt ceiling debate may reignite in early 2025.

The debt ceiling, the cap on the total amount of debt the U.S. can hold, has been suspended as part of a deal made in the last Congressional fight.¹

When the cap returns in January, it may kick off a fresh round of debates and draw attention to the more than $35 trillion the U.S. holds in debt.²

Will lawmakers take action to stem deficit spending? Or will they continue to kick the can down the road?

We'll have to wait and see.

Tax cuts may be extended past 2025.

A number of popular individual and small business tax breaks are scheduled to expire at the end of 2025, which would trigger higher individual income tax rates and increase estate taxes.³

President-elect Trump may extend or make some or all of these provisions permanent as part of his 2025 priorities.

However, tax cuts lead to lost revenue for the federal government, which would end up adding to the national debt.

It’s hard to know how lawmakers will square these competing priorities, but we're keeping a close eye on it and will keep you informed.

Tariffs could become a key issue for businesses.

The new administration has announced plans for broad tariffs on imports, especially on goods from China.⁴

Tariffs can impact inflation and business earnings by increasing the cost of goods and supplies from overseas.

If trading partners respond by adding their own tariffs on U.S. goods, it could hurt overseas demand by making our products more expensive.

How deep or broad those tariffs could be is a big source of uncertainty going into the new year.

However, it’s likely that any new policies would come with many rounds of debate, so the actual impact of tariffs may be much less than the worst-case scenarios.

We'll keep you updated.

Markets may become volatile with uncertainty.

While the uncertainty of the election has faded, new uncertainty around policy priorities has replaced it.

We're expecting volatility ahead as analysts digest reports and adjust their positions ahead of the new year.

Investors are also watching data for hints about where the economy is headed next.

The bull market is now over two years old. Should we be worried that a bear market is around the corner?

Probably not.

The chart below shows you the average age of recent bull markets.
  

While the past doesn’t predict the future, we can see that two years isn’t historically long for a bull market. In fact, the longest bull market on record lasted more than 12 years.⁵

A sudden turn to a bear market is not likely at this point.

On the other hand, there are a lot of risks in this environment that could shake things up.

If geopolitical issues flare, inflation rebounds, or the business environment starts to look dicey, we can expect markets to correct.

We’re carefully watching trends as we enter the final weeks of the year and thinking about what the new year could bring.

Have questions or concerns about what these issues could mean for your portfolio?

Let us know. We’re here to answer questions and offer reassurance.
 
Sincerely,

Your Eagle Wealth Team

The Week on Wall Street

Stocks posted solid gains over a short and busy holiday week as investors parsed fresh economic data, comments on potential future trade policy, and a few Q3 reports from technology companies.

The Standard & Poor’s 500 Index gained 1.06 percent, while the Nasdaq Composite Index advanced 1.13 percent. The Dow Jones Industrial Average rose 1.39 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, added 2.02 percent.^7,8

Rally Extends

Stocks staged a broad-based rally to start the week as investors reacted to the nominee for Secretary of the Treasury. Small-cap stocks continued their month-to-date surge as the Russell 2000 Index rose to an all-time high. News that consumer confidence rose in November appeared to contribute to gains.^9,10

Then stocks took a pre-Thanksgiving pause as investors digested economic data. Also, disappointing Q3 updates from two computer hardware manufacturers weighed on the tech sector in pre-Thanksgiving trading.¹¹

Semiconductor stocks rallied on Friday, pushing all three averages higher for a second straight week. The Dow cracked 45,000 for the first time, and the S&P 500 hit a new record high—with each index closing out its best month of 2024.¹²

Tariff Talk

Some of the post-election rally has been driven by investor expectations for less regulation and lower corporate taxes proposed by the incoming administration. One area of concern has been the economic impact of proposed tariffs.

Some market observers believe that the markets have already priced in the impact of these tariffs. In contrast, others see a new Treasury Secretary as a potential buffer in the tariff talks.¹³

<sup>Source: YCharts.com, November 30, 2024. Weekly performance is measured from Friday, November 22, to Friday, November 29. TR = total return for the index, which includes any dividends as well as any other cash distributions during the period. Treasury note yield is expressed in basis points.

Past performance is not a guarantee of future results. Any companies mentioned are for informational purposes only, and this should not be considered a solicitation for the purchase or sale of their securities. Any investment should be consistent with your objectives, time frame, and risk tolerance.</sup>

<sup>1. https://bipartisanpolicy.org/blog/debt-limit-2025-treasury-cash-on-hand/
2. https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/
3. https://tax.thomsonreuters.com/blog/what-to-know-about-tcja-expiration/
4. https://www.yahoo.com/news/trumps-proposed-tariffs-raise-prices-205300785.html
5. https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/10-things-you-should-know-about-bull-markets.html
Chart sources: https://finance.yahoo.com/news/the-bull-market-is-2-years-old-heres-where-wall-street-thinks-stocks-go-next-100050648.html?guccounter=1
*Current bull market as of 11/20/24
6. CMS.gov, September 19, 2024
7. The Wall Street Journal, November 29, 2024
8. Investing.com, November 29, 2024
9. The Wall Street Journal, November 25, 2024
10. CNBC.com, November 26, 2024
11. The Wall Street Journal, November 27, 2024
12. The Wall Street Journal, November 29, 2024
13. CNBC.com, November 26, 2024

Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.</sup>

^{The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.}

^{The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.}

^{The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.}

^{U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.}

^{International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.}

^{Please consult your financial professional for additional information.}

^{This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.  Copyright 2024 FMG Suite.}