We fed AI 16 outlook reports. It crunched key takeaways, return expectations & contrarian calls

Sixteen major Australian & global research reports distilled into one tidy wire for your viewing pleasure!
Vishal Teckchandani

Livewire Markets

As the holidays approach, we know investors are preparing for the year ahead by seeking information about the key economic trends and opportunities likely to shape markets in 2025.

That's part of the reason why major investment banks and asset managers release their outlook reports for the coming year.

The catch? These reports tend to flood the media all at once, and combing through them can take far more time than you'd like (many are 30+ pages in length).

That’s where we come in. Using AI-powered analysis, we’ve cut through the noise, distilled the key takeaways, identified the common themes, and highlighted the most interesting and contrarian viewpoints.

We’ve done the heavy lifting so you can skip the reading and get straight to the insights - giving you more time for what really matters, whether that's your golfing or surfing game.

Let’s dive in!

who did we cover? what was the process?

We reviewed 16 reports that we could find from leading institutions, including investment banks like Goldman Sachs and JP Morgan, and asset managers such as BlackRock, Schroders, and Fidelity.

While most reports provide a global perspective, Morgan Stanley, UBS, Schroders and AMP offered valuable local insights specific to the Australian market.

We fed all the reports - available for download individually at the bottom of this wire - into a custom GPT and asked it to distil the following:

  • What do these reports say about the global, US, and Australian economic outlooks?
  • What are the key opportunities across asset classes?
  • What price targets and interest rate projections were given?
  • Which reports presented the most interesting contrarian/bold views?

Additionally, we had our AI tally how many of the institutions were bullish or bearish/neutral on key themes, such as the Australian economy, domestic and international equities.

Note: While AI has been used to analyse the data at scale, it can make mistakes. We have done our best to fact-check the contents below, but we recommend that investors review the underlying reports if they want to dive deeper into any of the ideas discussed below. Always do your own research.  

the 2025 outlook in a nutshell

"Moderate optimism" is how AI summarised the overall global outlook for 2025 based on the reports it analysed, with Goldman Sachs predicting another Goldilocks year across asset classes on the basis of stable growth, falling inflation and monetary easing on a global basis (see chart below).

"This backdrop would naturally create a favorable environment for risk assets, alongside US outperformance."
Source: Bloomberg, Bloomberg-Barclays, Datastream, iBoxx, ICE-BAML, Goldman Sachs Global Investment Research
Source: Bloomberg, Bloomberg-Barclays, Datastream, iBoxx, ICE-BAML, Goldman Sachs Global Investment Research

It's a party in the USA

The overwhelming view among the reports was that the US economy will keep leading the global recovery, bolstered by continued fiscal stimulus, AI-driven growth (which will bolster infrastructure demand), and a resilient jobs market.

The new Trump administration will play a crucial role in shaping the outlook. Reports from  Goldman Sachs, Fidelity, and Barclays highlight how Trump’s policies, including tax cuts, deregulation, and America-first trade policies, are likely to have a significant impact on the economy in 2025.

While some reports, such as those from Schroders and ING, caution about the long-term risks of high fiscal deficits (see chart below) and inflation in the US rising again due to Trump's tariffs tactics, others expect growth-friendly policies to continue supporting the economic expansion.

Source: Schroders Economics Group, Committee for a Responsible Federal Budget. 13 October 2024. Figures rounded to the nearest $50 billion.
Source: Schroders Economics Group, Committee for a Responsible Federal Budget. 13 October 2024. Figures rounded to the nearest $50 billion.

HSBC and ING highlight that US equity valuations have risen significantly above the long-term average. However, these elevated valuations may be sustained by the widespread expectation across reports that the Fed Funds Rate will end the year in the 3.5% to 4% range. 

Our handy robot aptly noted that this could continue to support equity markets, as lower rates make risk assets more attractive relative to fixed income!

A more subdued backdrop for Australia

The outlook for the Australian economy and equities is more modest, with some even taking a bearish view, such as Schroders.

With the Federal Election required by May, the government is likely to continue spending to drive economic growth, extending cost-of-living measures, as forecasted by Morgan Stanley and AMP. However, this spending is expected to slow down afterwards, with the potential for a minority government further restricting spending increases.

Despite this, rate cuts are on the horizon, and UBS believes that, amid rising US-China rhetoric, the Australian economy remains a bright spot, with listed companies set to benefit from US exposure and potential rotation opportunity away from banks.

AI kindly sifted through the reports to find what price & cash rate targets it could:

  • UBS: 8,850, with its sector positioning detailed below.
  • AMP: 8,800, forecasting rate cuts from February, and a year-end cash rate of 3.6%.
  • Morgan Stanley: 8,500, with three rate cuts in May, August, and November, with a year-end cash rate also of 3.6%.
Source: UBS
Source: UBS

While this presents a modest outlook for the Australian economy, Schroders' report offers a more bearish view, stating it is "negative on Australia."

"Australia is one of the most expensive markets outside the US. The Commonwealth Bank of Australia (CBA) has a higher price-to-earnings (PE) ratio than Google." - Sebastian Mullins, Schroders

I highly encourage downloading the Schroders report, as it articulates the stance further.

Europe in the doldrums (again)

The outlook for Europe is more cautious. Many reports, including those from BNP Paribas, Barclays and Schroders, point to anemic growth and ongoing challenges, such as high energy costs, political instability, and the uncertainty surrounding Brexit's long-term impact.

Europe is also vulnerable to trade disruptions, particularly in the wake of potential US tariffs. While some analysts expect a modest recovery, driven by easing inflation and rate cuts from the European Central Bank, the region faces headwinds from slow consumer spending and rising public debt.

India a bright spot in emerging markets, but China is a big worry

For emerging markets, the outlook is similarly mixed. On the one hand, the likes of Invesco, BlackRock, and Fidelity see India as a bright spot as consumption and investment growth keeps running hot.

However, China faces ongoing structural challenges, including an aging population, a slow recovery from the property sector crisis, and geopolitical risks related to trade tensions. While China's stimulus measures may offer some support, many analysts caution that its growth could be more modest than in previous years.

Overall, emerging markets are expected to experience divergent growth, with some countries, like India, poised for expansion, while others, including China and parts of Latin America, may face continued pressures.

Key Opportunities Across Asset Classes

In terms of asset class opportunities, there are a few standout themes:

  • Equities: The US equity market, particularly in tech, is favoured due to the growth of AI. Goldman Sachs, BlackRock, and UBS see strong potential, though investors should remain cautious of valuations. India is highlighted for its strong growth, especially in tech and manufacturing (Fidelity, BlackRock). Meanwhile, UBS and Morgan Stanley are betting on a rotation away from ASX banks into other parts of the market.
  • Bonds: The fixed income outlook remains positive, with moderate interest rate cuts expected globally. Goldman Sachs forecasts that long-term bond yields will rise as the economy strengthens. However, BlackRock and Fidelity are more cautious, highlighting the risks of inflation and trade protectionism pushing bond yields higher, particularly for US Treasuries.
  • Commodities: Gold and base metals are expected to see strong demand, with copper benefiting from global infrastructure investments. Oil remains volatile, influenced by geopolitical tensions and OPEC policies.
  • Private markets: Private equity and real estate are identified as attractive long-term opportunities. T. Rowe Price points out a massive opportunity in private equity investments in large companies before they go public.
  • Infrastructure: Infrastructure is consistently highlighted across reports, particularly as the AI boom drives demand for data centres.
  • Digital assets: Notably, BlackRock is the only firm to mention Bitcoin, positioning it as a diversifier in investment portfolios (more on that below).

Summary table: Investment Outlook Analysis

To give you a quick snapshot of how different organisations view key asset classes and economic factors, here’s a summary table of the outlooks for 2025. (Note: Only four reports spoke to the Australian economy).

Asset Class / Outlook Bullish Bearish/Neutral
US Equities 16 reports (General consensus) 0 reports
Australian Equities 2 reports (UBS, AMP) 2 reports
(Morgan Stanley, Schroders)
Global Equities 16 reports (General consensus) 0 reports
US Bonds 8 reports 8 reports
Rate Cuts Expected by US Fed 16 reports (General consensus) None
Rate Cuts Expected by RBA
 (Australia)
3 reports
(Morgan Stanley, AMP, UBS)
1 report (Schroders)
US Economy 16 reports (General consensus) 0 reports
Australian Economy 3 reports
(UBS, AMP, Morgan Stanley)
1 report (Schroders)

3 BOLD/CONTRARIAN VIEWS FROM THE REPORTS

1. Expect a 15% correction: AMP

Contrarian viewpoint: AMP anticipates more volatility in 2025, even though it forecasts positive returns of approximately 7% from global and Australian equities.

"Stretched valuations after two strong years, the ongoing risk of recession, the likelihood of a global trade war, and ongoing geopolitical issues will likely make for a volatile ride in 2025 with a 15% correction somewhere along the way highly likely." AMP's Shane Oliver 

Where it's found: Page 2 of AMP's report.

2. Bitcoin is the new diversifier portfolios need: BlackRock

Contrarian viewpoint: While many Livewire readers may be sceptical of crypto, when the world's largest asset manager, BlackRock, positions Bitcoin as a new potential portfolio diversifier alongside gold, their thesis warrants attention.

"Bitcoin’s potential as a new diversifier stems from its unique value drivers: the potential to appreciate over time when its predetermined supply is met with growing demand – and demand is based on investor belief in bitcoin’s potential to become more widely adopted as a payment technology." BlackRock's Chief Investment Officer of ETFs and Index Investments, Samara Cohen

Where it's found: Page 14 of BlackRock's report.

3. It’s time to look beyond the giants: Janus Henderson

Contrarian viewpoint: While many of the reports suggest going big on US tech, Janus Henderson urges investors to think small (small caps, that is; see graph below).

"Smaller stocks have demonstrated outperformance during historical periods of economic expansion and easing monetary policy. The average small-cap company issues 42% of its debt as floating rate (compared to 6% for S&P 500 companies), therefore, lower interest rates naturally improve profitability." 

Where it's found: Page 5 of Janus Henderson's report.

Source: Cycle graphic by Furey Research Partners (FRP), FactSet, Morningstar to 31 December 2023. Cycle performance based on JHI performance 
analysis of IA SBBI US Large Stock TR USD and IA SBBI US Small Stock TR USD indices, as of 31 October 2024. P/E data from Bloomberg, as of 31 
October 2024. “Large” = S&P 500® Index, “Mid” = S&P Mid Cap 400 Index, “Small” = S&P Small Cap 600 Index.
 Past performance does not predict future results
Source: Cycle graphic by Furey Research Partners (FRP), FactSet, Morningstar to 31 December 2023. Cycle performance based on JHI performance analysis of IA SBBI US Large Stock TR USD and IA SBBI US Small Stock TR USD indices, as of 31 October 2024. P/E data from Bloomberg, as of 31 October 2024. “Large” = S&P 500® Index, “Mid” = S&P Mid Cap 400 Index, “Small” = S&P Small Cap 600 Index. Past performance does not predict future results

reports & links

Links to the reports are below, with Australian-centric reads prioritised first.

  1. AMP - Goldilocks stayed for 2024, but what’s in store for investors in 2025? (Australian focus)
  2. Morgan Stanley - Outlook and implications for Australian investors (Australian focus)
  3. Schroders - Will growth trump inflation? (Australia focus) 
  4. UBS - Australian equity strategy 2025 outlook (Australia focus) 
  5. Goldman Sachs - Trading tails and tailwinds
  6. J.P.Morgan Asset Management - Out of the cyclical storm and into the policy fog
  7. Barclays - Time to deliver
  8. BlackRock - Building the transformation
  9. Invesco - After the landing
  10. BNP Paribas - Opportunities in a volatile world
  11. Fidelity - The divergence dividend
  12. Franklin Templeton - Getting portfolios right
  13. Janus Henderson - Investment outlook 2025
  14. T. Rowe Price - Making the most out of the 2025 transition
  15. HSBC - New growth engines for a changing world
  16. ING - Investment outlook 2025
........
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Vishal Teckchandani
Senior Editor
Livewire Markets

Vishal has over 15 years' experience in financial journalism and has a particular interest in exchange-traded funds (ETFs), investing strategy, and financial history.

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