Top of the Morning: Roaring 20s - Roaring at the Midpoint
At a Glance
The desk asserts that the current US economic momentum aligns well with conditions characteristic of a 'Roaring 20s' environment, as public sentiment grows increasingly positive. Per the full note from UBS, economic growth is tracking at approximately 3% for Q4 2024, potentially bringing full-year GDP growth to around 2.8%. This growth rate surpasses the defined threshold of 2.5% and indicates a regime marked by high inflation and rising rates. However, no significant economic calendar events loom, which could challenge this optimistic scenario.
Key Takeaways
- 01US GDP tracking at 3% for Q4 2024 indicates robust economic health.
- 02Conditions are emerging that may support a higher growth, higher inflation regime.
- 03The 'Roaring 20s' narrative is echoed in increased investor optimism and risk appetite.
- 04No significant calendar events on the horizon might dilute current positive sentiment.
Full Analysis
What the desk is arguing
The desk believes the US economy is on track for a Roaring 20s revival, characterized by strong growth and elevated inflation. Per the full note from UBS, expectations for Q4 GDP suggest robust activity, hinting at economic conditions that support higher-risk asset valuations.
The GDP tracking estimate of 3% for Q4 affirms that the US economy not only meets but exceeds the benchmarks UBS outlined a year ago, where a growth rate of 2.5% or higher was flagged as indicative of a roaring environment. Such growth bodes well for risk appetites in the market, given historical parallels drawn by UBS in their assessments.
The alternative perspective that declining consumer confidence or unexpected negative macroeconomic prints could derail this momentum remains on the fringe, as current indicators suggest a thirst for growth in financial assets across sectors.
Market Implications
Traders should monitor how the dollar responds to this economic optimism, particularly if it approaches the resistance near 1.10 against the euro. Additionally, attention to shifts in market positioning among risk assets may signal whether the current trend remains sustainable.
From the original
Jason and Paul rejoin in-studio to share their revised assessment as to whether the US economy is still on track to mirror a “Roaring 20s” scenario this decade, this as we’ve reached the mid-point of the 2020s. Featured are Jason Draho, Head of Asset Allocation Americas, and Paul
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The desk sees the current bullish momentum in equity markets, particularly characterized by the S&P 500's six consecutive weeks of gains, as signifying a robust underlying economic sentiment. Per the full note [source], this upward trend raises questions about market complacency amidst geopolitical tensions and mixed economic indicators. Jason Draho from UBS noted substantial gains in tech and semiconductor sectors, indicating sector-specific strength despite external uncertainties. With no high-impact calendar events on the horizon, the focus remains squarely on the evolving macroeconomic landscape and investor sentiment.