Top Global Investment Opportunities in 2025

The TD Cowen Global Best Ideas for 2025 report is a treasure trove of top investment recommendations put together by our analysts from various sectors and regions. In addition to a keen market outlook from our Strategy team, you’ll find a comprehensive political and legislative outlook from our Washington Research Group.

Let’s dive into some of the key insights from our experts:

U.S. Deficits: Buckle up for the Ride
The upcoming U.S. budget debate is expected to be quite the rollercoaster as it juggles competing interests. Deficits are set to keep climbing for a few reasons:

– The aftermath of a Trump victory is likely to see deficits rise even more with the extension of the 2017 tax cuts.
– Despite current interest rates, interest expenses are expected to increase significantly over time, reaching 3.9% of GDP.
– Discretionary outlays have been on the decline, making deficit reduction increasingly challenging in the face of mounting interest expenses.

Tariffs Galore
President Trump’s stance on tariffs remains unpredictable, making it hard to foresee his next move. While we can try to decipher his intentions, it’s more practical to have a general framework to guide us. Here’s a rough estimate of the temporary impact of tariffs on U.S. headline inflation:

– 60% tariffs on China could raise inflation by 0.7 percentage points after a year.
– 10% tariffs on countries excluding Canada, Mexico, and China might increase inflation by 0.5 percentage points after a year.
– A 25% tariff on Mexico and Canada combined could bump up inflation by 0.6 percentage points after a year.

China: Trading Blows
The U.S.-China relationship is anything but warm, yet China remains a likely candidate for a deal with Trump. Although retaliatory measures from China are expected post-U.S. tariffs, the broader economic impact is likely to be manageable, with minimal repercussions.

Europe: Caught in the Middle
Expect the EU to navigate choppy waters between the U.S. and China. With the EU-U.S. relationship strained under Biden, the EU may cautiously welcome Trump as a change agent. Shifting focus towards China, the EU risks ruffling U.S. feathers, complicating negotiations and potentially unsettling the delicate balance between the two global giants.

In conclusion, 2025 promises to be full of twists and turns in the global arena. Stay informed, stay vigilant, and always keep an eye on the bigger picture to navigate these challenging times.