Despite ongoing challenges, financial markets demonstrated remarkable resilience in 2024. Concerns about a potential "hard landing" recession, political uncertainty, and corporate profitability have proven unfounded in light of strong global economic growth. Corporate earnings exceeded expectations, fueled by advancements in AI, government support, and decreasing inflation.

While the current economic strength is encouraging, we have concerns as we approach 2025 for two reasons. First, U.S. market valuations are stretched, based on several valuation metrics. Second, if not addressed, rising budget deficits and interest rates could further strain the economy, stoke inflation and potentially trigger a debt crisis.