Julian Brigden: What Does 2025 Have in Store for the Markets?

Julian Brigden, Co-Founder, President and Head of Research at Macro Intelligence 2 Partners (MI2), joined the OPTO Sessions podcast at the beginning of December to discuss — among other things — Trump 2.0 and risks in the bond markets.

Last week, Bridgen spoke to OPTO once again to share his predictions for 2025.

Brigden has more than 30 years’ experience in financial markets, having previously served as the North American Head of Hedge Fund Sales at Crédit Agricole [CRARY], as well as holding positions at Medley Global Advisors and the Union Bank of Switzerland. MI2 is a global independent macroeconomic research company founded in 2011.  

Trump 2.0

Brigden stresses the importance of understanding Donald Trump’s policies. 

The emphasis of the Trump administration will likely be on championing US-based manufacturing and a broader domestic focus.

The reasons for this are twofold — firstly, in Trump’s view, US-based manufacturing will strengthen the US’ defense position, while it will also skew gains back towards the American worker.

However, this will not be entirely positive for corporate America. 

“I firmly believe… tariffs are going to be imposed,” Brigden says, and those tariffs will likely be inflationary, spelling trouble for corporate margins.

Ultimately, Brigden warns, both the US equity and bond markets are overextended and incredibly vulnerable.

So, what does 2025 hold? “A quite ugly correction.”

Is AI the Answer?

Brigden is optimistic when it comes to the artificial intelligence (AI) space — he cites the sector as a potential aid in the correction coming down the line. But he doesn’t think it will help just yet.

He cites Microsoft [MSFT] as an example: it takes time to teach customers how to implement cutting-edge technologies effectively. He also mentions the rollout of the internet, with the ultimate lesson being that these things don’t happen overnight.

When might we expect to see real gains from the generative AI boom? Experts suggest 2028 or thereabouts. 

In Brigden’s own words: “In markets, four years is a lifetime — four weeks can be a lifetime!” Thus, if AI doesn’t come through in the next year, we can’t expect the Fed to deliver rate cuts without a sizeable equity correction.

A Bleak Picture for Bonds

The outlook for bonds in 2025 is not a pretty one — that’s how Brigden sees it, at least. He points out that bonds have underperformed for the last 25 years, even against gold, a zero-yielding asset.

In Brigden’s words, “that’s just damning”. While a catastrophic dip in stock prices could make bonds look like a slightly more appealing option, as things stand Brigden is unequivocal: bonds are a bad place to be at the moment.

What’s Coming in 2025?

Over the next 12 months, Brigden recommends watching the balancing act between inflation and employment, both in the US and around the world.

Since the labor market drives core services, which in turn drives inflation, investors interested in the macroeconomic picture would do well to watch service inflation relative to the unemployment rate, Brigden suggests.

Of the last 12 landing cycles, only three have been soft in the US — and the country has never pulled off a soft landing from this level of unemployment.

Brigden also warns that labor markets around the world — including the UK and the US — are more fragile than many people seem to realize.

What to Watch in the Year Ahead

If Brigden is correct and we’re in the latter stages of US exceptionalism, he predicts a period of pain in the near term.

He suggests we’ll see a correction in equities, which would prompt an economic downturn before the Fed cuts rates and the dollar begins to weaken.

The tech sector, which has continued to go from strength to strength on very little real value, might be one key area to suffer in this pullback. Tesla [TSLA] is an example of a stock enjoying exponential growth without much to support its rise.

This is the situation Brigden believes investors will need to adapt to before large opportunities in a cyclical rotation begin to emerge.

These opportunities are likely to include commodities in unloved sectors like industrials, and Brigden predicts the rest of the world will begin to outperform the US.

Precious metals have a precedent for performing extraordinarily well in similar macroeconomic circumstances. 

In fact, Brigden reminds us that “typically, true bull markets in precious metals… are born out of bloodbaths in the equity market.” The 1920s, the 1970s and the dotcom bubble are all illustrative of this.

Fundamentally, it seems investors need to be prepared to weather a storm before they can begin to make the most of these market opportunities.

Conclusion

Brigden’s analysis suggests the next 12 months could bring a lot of change in the macroeconomic picture, both in the US and around the world. Some of these changes are likely to pose challenges and require investors to weather some uncomfortable stretches.

That said, there are likely to be opportunities in the cyclical rotation ahead. Brigden suggests currently unfashionable sectors, such as industrials and precious metals, could be a consideration for investors looking to the future.

To hear more from Brigden, check out his OPTO Sessions podcast episode.