The AmplifyME Market Maker Podcast: 2025 Outlook

Hello and welcome to the final episode of the Market Maker podcast. We've got all three of us on. So our two main talking heads, Stephen on the Deal Room and Piers Curran going toe to toe somewhat here in talking about the top themes to look out for next year. But look, I know you two kind of, you know, listen to each other's show every now and again. So I feel like this is like a prize fight Almost, and we're at the press conference. Who wants to go first with the mic to send some shots?

I want to go first. Well, on our podcast that we recorded earlier this week, and you started firing some shots across my bow saying that the audience tended, A, to find Piers more attractive than me, which I thought was a bit mean, and B, they left a lot more comments on my videos and on my Spotify. Episodes, which again implies that I'm not explaining things well enough. So I feel I've got a bit of a point to prove here. Piers is on top, but you know what? Like Nvidia, there's only one way that can go.

Even higher.

Any words in response, Piers, before the big fight begins?

Well, look, you know, all I'll say is I fight dirty, so, you know, let's go.

All right, well, look, just to give a bit of a teaser, uh, we are going to cover 5 topics. So M&A deals, and there's a big figure which Stephen's going to kick us off with in a moment. And then watch the rest of the US, he says, to the extent, or to extend the rest of the world and catch up with the Mag 7. So can The Mag Seven obviously is such a big feature of the markets, always has been. So we're interested to see what he has to say about that. Then we're going to talk about my outlook for the S&P 500, and we're going to talk about some of the Wall Street estimates of this time 12 months ago and some of the rationale behind what we could expect going forward. Then we're going to talk US debt, and also there's a surprise. So, so as ever, as you might have heard me explain in our regular shows. Stephen, very diligent, very consistent with his podcast prep. Piers just said to me 5 minutes before he puts out, you know, he puts his neck on the block for a full year call. He goes, and all you need to know is it's going to be a surprise. And, uh, so yeah, buzzing for that one. We'll wait to see whether that lives up to the hype.

I can actually see Piers researching his surprise right now. That's the key. You can say that it's coming later on, researching it whilst the podcast is happening, which I think is, is pretty impressive.

That's good. I mean, it's going to be an epic surprise. That's all I'm going to say. You'll have to wait and see.

So M&A deals, Stephen, over to you.

All right. So I do the Deal Room podcast. So we're going to talk, we're going to talk all things IBD and My 2025 prediction number 1 is that M&A in terms of deal value globally is going to exceed $4 trillion. Now this is a bit of a benchmark number that we haven't hit since 2021. And even though M&A deal value this year is, is looking like in 2024, it's going to be up about 15% on 2023. We're probably going to hit about $3.3, $3.4 trillion this year. I reckon it's going to hit at least $4 trillion next year. And there are a load of reasons behind this. I'm going to give you the justification for this number. So what influences M&A deal value? What influences deals getting done? Well, firstly, there needs to be an increased demand for transactions. And a recent Ernst Young survey showed that more than 90% of US-based CEOs will do some kind of deal in 2025. Why? Well, gotta think about interest rates. Interest rates influence cost of capital. The lower the interest rate, the more attractive more deals look. And interest rates have gone down from 5.5% to 4.75% and may well continue. You know, in inverse, well, with an asterisk, may well continue to go down. There are, there is a lot of dry powder slash cash on balance sheets slash more purchasing power across companies. So it is estimated that there's over $2.5 trillion of global private equity dry powder, i.e., funds that have been committed but have not yet been invested. Or put towards buyout. So there's all of this money pent up, ready to go when the market environment becomes more conducive to acquisitions. Companies have also built up a lot of cash on their balance sheets, and because the S&P 500 and similar indexes are up nearly 30% in 2024, a more expensive share price gives you more leverage with regards to acquiring companies. That's why there's going to be more demand. We've mentioned more CEO confidence and I don't know, a more stable macroeconomic environment. I don't know if you guys, well, do you guys agree with that? This is kind of more your domain. Uh, or is Trump going to rip up the rule book and it's going to be a total disaster? What do you think, Piers?

I mean, well, my, one of my hot topics for '25 that I'm going to get to is a bit of a negative scenario. So, um, let's see. I mean, I think that's the contrarian view at the moment. Everyone's going into '25 thinking the Trump wave is, you know, just getting going and it's going to be super positive. But yeah, so as long— if that's true, then, then yeah, I mean, I think you're right. There's loads of deals out there that have been sitting on the sidelines waiting to, waiting to be done.

So I think, yeah, yeah, I mean, yeah, there are the potential, you know, headwinds of tariffs, trade wars, reflation, which is a word that's going to get increasingly mentioned over the next few months. But I think the fundamental dynamics of the M&A market— increased demand and then increased supply. We've spoken about on the Deal Room podcast, there's loads of companies that are up for sale. So Bain has reported that buyout funds are sitting on 28,000 unsold companies, 46% of which have been held for over 4 years. So this, these companies need to get sold or they need to IPO or something needs to happen.

What was that? 28,000 companies. Yeah. Wow.

Yeah. It also suggests that, that private equity just owns too many companies full stop. We haven't really kind of spoken about just the oversized influence of private equity owning, you know, almost every company type imaginable from chains of nurseries to, to old age care homes and things like that.

So what do you think then about, well, I got two questions. Um, one's geographically, you know, so I think you're implying here, obviously the US is well placed to see a big pump up in deal flow next year, but what about outside US?

Yeah, I would say, and I think that leads to my second 2025 prediction. I think that we are so focused on the US because it's been such a singular unique economy and it's super, super interesting to talk about, but the rest of the world exists as well. And obviously I could give you a US dollar strength related US company buying foreign company argument, but that would still be USA deal flow. So I'll try and remove myself from that. I think that M&A deal volume and value will go up across the world, because the dynamics are the same, just to maybe slightly not so extreme an extent. Uh, so I, you know, I, so I think that in the UK, deal volume and deal value will go up. I've actually been speaking to a few people in the corporate finance space over the last few days that are starting to get more calls, more inbounds, you know, more people saying, all right, you know, more CEOs going, all right, I think 2025 is the year to do something. Uh, I spoke to someone me earlier on today. He was like, usually I get a pretty quiet Christmas, but this Christmas it's not quiet. I've got 2 deals that have just launched, just launched in the middle of December. So that is when you know— and this is in the UK, by the way— so that is when you know things are starting to switch in your favor. 2024 was a pretty average year for most countries, even more so outside of the, outside of the US. The last reason, by the way, that I'm going to be bullish on M&A deal value and volume— I've spoken about the demand side, spoken about the supply side. Obviously, where those two meet from an IBD perspective is valuation. And one of the issues with M&A deal values, uh, with M&A volume over the last couple of years is that there's been this valuation gap. The sellers want too much money. And the buyers aren't willing to pay it. And that gap has started to close over the last 12 to 18 months so that these conversations that previously were ended with a 'thanks, but no thanks' are now starting to be like, 'All right, okay, we'll meet you in the middle. There could be something to work out here.' So you can have all the supply in the world and all of the demand in the world, but if the valuation gap's not nice and close, deal values don't happen. So that is why I think we're going to go Over 4 trillion. You've heard it here first.

Okay.

Well, uh, Piers, you did briefly mention there that you, uh, and I would like to have a little insight into the, the current world here. It felt like you spent several months of the year being quite upbeat and then something must have happened. I don't know, maybe, maybe your regular coffee bean delivery changed or or something like that, but you turned bearish. It feels like a few months ago, but perhaps with some of that bullish vibes Stephen was giving off there, you could sober him up a little bit with this conversation of US debt.

Yeah, let's see that. I mean, look, I'm naturally, I'm definitely, I mean, you would probably say a raging bull. Glass, uh, not even half full. I like glass 110% full optimistic. That's kind of my kind of default position. But yeah, I don't know. You, it's when you look at years like this, you know, we've got a couple of weeks into the end of the year. We're gonna talk about S&P in a minute, but you, you just look at that S&P chart on the one hand and you just think, wow, you know, it's just, it's just been a sensational year, you know, 30% upside for the big index, and you just think it's hard to just add on to that again next year. You know, it's, it's, that's, that's, it's a very unscientific sort of comment, but it's just a vibe, a feeling that it's going to be hard to kind of push on. Um, now you obviously, under the bonnet, we're going to talk about the Mag 7 and fine, you know, it's been a very narrow, uh, rally, which again is not particularly healthy for the sustainability of that rally. So look, when I'm coming into a new year off the back of this raging bull market, you're just thinking, right, what could happen to trip this up? And you would say that downside potential is greater than upside potential, um, just because it's done 30% up in 12 months, right? So what are the things— I mean, And look, it often— obviously Trump's the big wild card here, and you know, it's going to be interesting and exciting, and he's going to keep you on your toes. That's pretty much the only thing that can be guaranteed. Now, what he gets done and how quickly he gets it done, and then the impact, you know, the unknowns are, right, inflation. Okay, it's been such a massive thing for years now in this kind of post-COVID world, and You know, we've got a Fed, uh, meeting in 2 days, the last one of the year, and we're expecting another cut, right? Great. That's, that's priced in. That's done. Now what about 2025 and, and what happens to inflation? And obviously some of Trump's policies are inflationary on, you know, on paper. So does some of his stuff feed through to preventing inflation from dropping? Dare I say even pushing it back up? Then you've got your big problem. Right? Because at the end of the day, the cost of capital is king. And if the Fed can't cut next year, currently we're kind of pricing 4 cuts. What happens if they can't cut? Then what are the kind of big risks? What are the ticking time bombs? And it's the US debt situation. That is, I mean, it's the biggest ticking time bomb, you know, in the history of mankind. It's just, look, if the Fed can cut and the US economy continues growing really strongly, then fine, um, the debt can be managed. It's just that there's no room for error now. And some of the stats, right, the problem is in the kind of post-COVID era, um, and, you know, Trump's coming in, but the spending side of the government has kind of got a bit out of control. So I've got some stats for you here just to kind of— and when we talk about government debt, we're kind of talking about actually deficit and debt, Okay, so deficit, this is looking at your, your, let's say, a 12-month period, and just very simply, right, how much money have we got coming in, and then how much are we spending, and right, what's the difference? And then, okay, if you've spent more than you've got coming in, well, that's a deficit, so you got to plug that gap by borrowing money, right? So, um, in the fiscal year 2024, the US government spent $6.75 trillion. Their incomings, like from tax receipts and and so on, was $4.92 trillion. So they have a deficit of $1.83 trillion. Okay, that just happens to be basically the biggest deficit in the history of the US outside of a recession. And in fact, it's only the COVID years of 2020 and 2021 where the US have ever had such a big deficit. Now you can understand that in a major economic crisis because obviously tax receipts collapse. and then the government comes in, fiscal stimulus, that's kind of the defibrillator for the economy. But let's spend, spend to get this thing back on its feet. And okay, right, then normally post-recession, once you have a recovery, it's time to kind of, right, let's get our deficit back down, let's essentially pay for, you know, everything we spent there in that crisis, let's kind of earn that back, right? But that's not happened this time. And, you know, you can spend hours explaining why, but ultimately you know, Biden's spending plan has sent this deficit super high now. So the problem is the US had a high, uh, kind of overall debt situation anyway, and if you've got a large deficit, it just means you're adding on to the debt every year, and it's building and it's building and it's building. Right now, debt-to-GDP ratio is 122%, okay, which again is like wildly higher than, than its kind of normally been. And you kind of got to go back to the Second World War to kind of find the last time that debt levels in the US were at this height, uh, relative to GDP. So what does this all mean? Well, they've got a lot of interest payments to make is what it means. And what controls interest rates? Well, it's the government— sorry, it's the central bank's, um, you know, policy rate. And ultimately, as we know, rates have been super high. Now this is progressively feeding into an ever-increased interest payment scenario for the US. Because look, they borrow money, but they borrow money over different durations, right? So it's not like if the Fed hike rates immediately, all of the US debt interest rates go up. That's not true, of course. You know, if they issue 5-year government bonds now today, well, they're locking in that interest rate for 5 years, right? So it actually doesn't matter what happens to interest rates. But the point is, the longer interest rates stay high, that debt that is maturing— well, they borrow more money to then pay for this maturing debt, right? So we're— they're always rolling over their debt. Um, the longer rates stay higher, then the higher the average interest rate on their total debt pile becomes. And because the debt pile is massive, then this is going to quickly become a problem. And two, 2 numbers for you. So in 2024, um, the US government spent just on interest payments, debt interest payments, $892 billion. That was the 4th largest line item on the US government's budget spend. Okay, uh, what were the— what was higher than that? Social Security, $1.45 trillion. Medicare, $900 billion. National defense, um, well, actually, national defense was basically the same amount as interest, right? That was this year finishing. Now, obviously, forecasting and things might change, but if rates stay high-ish and they kind of continue on this kind of spending trajectory, then this is how quickly things are going to change. In 2025, we're currently predicting that their payments are going to be— hang on, let me get this— that $1.26 trillion. So it's going to go from $890 trillion— sorry, billion— in 2024 to $1.26 trillion in 2025.

Gosh, what— so what's the endgame here? So, you know, so, so the kind of the, the counterargument to, uh, the counterargument to everything related to the US is US exceptionalism, dollar exceptionalism, you know, it's global reserve currency, etc. So I mean, is the US going to default? What Where does this thing end up?

Well, I mean, no is the answer. The US will not default. Um, well, at least not in the, you know, you know, the foreseeable future. I mean, look, I think if, if inflation goes up and rates can't come down, and then we go into 2026 in the same scenario where the government is still— the deficit is still what it is. Then like in 2026, we're talking about, I don't know what it'll be, $1.75 trillion just on interest payments. And it just—

it—

we're now right at that moment where this is becoming rapidly unsustainable. I think it's— everyone's always thought, well, hang on, this isn't sustainable, and we felt that for a few years, but it's accelerating now. And I— you can't go on like that. Now obviously Trump's gonna bring in Elon Musk and his Doge crew are going to try and radically cut spending, right? Will they be successful in that? Question mark. Now what, Musk wants to trim what, $2 trillion off the government's spending? So they spent, remember, $6.4 trillion in, in this fiscal year just finished. So he's gonna Is he going to cut that by $2 trillion? If he does, well, amazing, fine, the deficit's going to shrink and maybe they go back to surplus. But if they're going to cut spending so rapidly, surely that leads to, well, certainly the brakes being hit on the economy, right? And the economic growth momentum may well be derailed. And so that then feeds back into, well, hang on, less tax receipts for the US government. So actually, you know, that deficit situation maybe doesn't get corrected. And so there's a lot of moving parts here. And all I'm saying is the longer it goes on that the deficit is what it is and interest rates can't come down, then this is gonna become the big story. And I reckon by the end of next year, this will be the only thing anyone's talking about. That's huge.

That's huge. So 2026. IMF bailout of the US?

Anyone?

I was going to say stranger things have happened, but maybe not.

I feel, Piers, you're old enough and wrinkled enough to remember that in the world of markets, don't you feel like what you've just described has been said exactly as you've described both post the financial crisis in '08 post the sovereign crisis in Europe. It's like this, you sound like a broken record.

Well, no, because there's one thing different. Interest rates aren't zero. That's, that's the difference. Loads and loads of debt, borrow all you want when it's free. When interest rates are zero, go ahead.

So the other thing then, not to be too conspiracy theory, but Stephen, pulling you in, PE would suffer immensely from that scenario, uh, given the multi-layered cake we've talked about before. And so would those powers that be allow such an incident to occur?

Yeah, I think, I think we have to think about the vested interests and the people that are closest to Donald Trump, which tend to be extremely wealthy people that would like to see interest rates go down and these types of scenarios not play out. So let's just take the, the most immediate thing on the docket for Trump, which is tariffs. Yes, he talks a big game, but if that has any chance of having a significant reflationary impact and therefore not continuing to drop interest rates, and dropping interest rates would benefit the entire private equity community. He's probably not going to do it because he'll just get a tap on the shoulder and go, come on, Donald, here we go. Let's play around at golf and get this thing squared away.

Yeah, we'll get to that. Him and Xi, best buddies, obviously, in reality. But okay, well, let me talk a little bit about the S&P then, just because I think, Piers, you talked about there probably a little bit of a difference between 2025 and 2026. And I think that that is important as far as how the S&P might behave over the period of Trump. And if you think of a game of 4 quarters, then it's probably going to play out somewhat similar. Trump's always quite, quite quick out the gate as a guy who wants to make an impact, just to kind of make a, make a stamp on his authority early in the administration. So a couple of stats, so just to get us in the Christmas spirit, because I know you mentioned the Santa rally, and I just found some stats about that. December seasonality, the past 45 years, what do you think the median return is? So December S&P return over the past 45 years.

Well, I mean, I know it, I'm pretty sure I'm right in saying it's the best month, I think. I think January's also on average pretty good, to be honest. But I would say on average, uh, I'm going to be pretty punchy. I'm going to say 5%. Yeah.

I'm going to go 4%. 4.5%. 4.5% just to cover anything below Piers.

Well, well, Piers's pint is severely overflowing with optimism because it's, uh, it's 1.5.

Oh, wow.

Okay. But interestingly, even if you break down another layer, if you like, all of the rally comes pretty much the second half of December. And the index has had a positive return 73% of the time, December, out of the last 45 years. So that's Christmas over. The targets, yeah, I wanted to talk about targets for a few different reasons. One, to look back retrospectively and and look at just how woefully short Wall Street was of where we've ended. Then also talk about— I read an interesting piece in the FT and it was talking about, so why do banks do this? And wanted to get your both your thoughts because they're obviously very bad at it. So what purpose does it serve? And they've listed out a few and I wanted to get your take on whether you think that there's merit behind what what the FT is saying. And then we can look at— gonna be a bullish case for, for 2025 and a few points of note there. So at the moment, the S&P, we're trading just above 6,000. And taking a look at the average of what Wall Street banks were looking at, what do you think that— can you even remember what they were looking at as an average forecast, bearing in mind we're above 6,000 at the moment?

Oh, 5.2.

Oh, I think that's a— yeah, I think that's—

I know that's punchy.

I remember JP Morgan were— weren't they at 4,200? Wasn't JP— they were basically calling a recession and they were at 4.2. I, I think 5.2, that's like— yeah, that's probably about right. I'd go with that.

Yeah, I think the JP Morgan head of quant or systematic strategies after being a lifer at the bank, got the tap on the shoulder. I'm sorry, your 4,200 is not up to JPMorgan standard, uh, and he, he's departed. So they were one of the worst, in fact, on the street, uh, the world's most preeminent bank, as Stephen referred to them in our previous episode. Um, but the average was 4,861, so it was a, it was a sub-5. was the case. If you remember this time last year reading those notes, everyone was talking about, uh, elections around the world and a lot of instability that might come of that. US obviously being the headline act, but they were also talking about lackluster earnings growth, rising geopolitical risks, uh, and that all leading to a downside bias is what they were going for. So had a look at what is the average then for what Wall Street's expecting for the year ahead. And so what does that average look like, do you reckon?

Well, they've probably been too— they were too— they were too bearish last year, so I reckon they've just gone too bullish for this year. So I think that they will be— so last year, remember, at the beginning of the year it was basically 4,800. So last year they were basically saying It's not going to change, except it's up 28%. So this year they're probably going to go, oh, we got it too wrong, like, too bearish last time, let's go bullish. So I reckon, I reckon 6,300.

Stephen, any finger in the air here?

I think it's going to be more than that. I think, I think your logic is right, but I think they're going to be more bullish, and I think maybe there's a, um, there's a very recent hindsight bias. You know, everything's getting great guns, all the good stories. I'm going to go 6.6.

Oh, Steve, Steve, that's crazy.

6,539. Get me on the market maker. Off you go, Piers. The time is up.

So the most bullish is Oppenheimer. They're 7,100. DB and Wells Fargo, 7,000. So they're right up there at this point. But yeah, looking at this FT article, there's a couple of things then. So I think you just said the stat there, Piers. So was it 28%? Yeah. In terms of the current price.

So far.

How far? So far. Don't forget the second two weeks of this month is when we kick on. So let's just round it at 30%. They're off the mark there. So they've missed the archery board entirely. With their shots. So question then, why do they do that? And here's the thesis of why they put these out. It generates investment ideas. It sets or contributes to the setting of consensus expectations. It gives employees of a bank or asset manager something to talk about with their clients. Sounds like a lot of work to pick up the phone, but It's an introductory calling card for analysts and strategists to gain access to important people. It offers investment advisor sites to talk about with clients. It disseminates the same trading idea among groups of investors. So works a little like a pump and dump. What? Sorry, a pump and dump strategy. And it gives investors a scapegoat for when trades go wrong. Quite like that one. And then it's just pure, it's just a marketing exercise. What do you think of that?

That sounds, I mean, that sounds, you say that's FT? That's the FT? You think the FT was using ChatGPT? That sounds like a ChatGPT answer. I mean, realistically, it's just marketing, isn't it? Yeah. You know, it's just marketing. You know, there's content to be put out and there's content to be referenced and there's things that you put out in the ether so that people speak about you more. I think all the rest of it is by the by, quite frankly.

So when you, when you see the collection of notes, both of you, is there any particular one that you would set aside some time to have a look at, or do you just save it for the main FT to just give us a summation of what people are looking at?

Well, I think as I've got older, That the older I get, the less of them that I read. And that's just because I guess I know that it's there, it's a, it's a one analyst's opinion, right? And I guess in the end, I'd like to think that I can kind of come up with my own opinion, you know, like looking at from first principles and going through the analysis myself, if I'm going to, you invest, then I want it to be based on my analysis. I think it's interesting to see what other people are thinking, and you might go, okay, what's the bull case? What's the bear case? So I might be reaching for, you know, the, the top and bottom of the spectrum there to see why they think X or Y. Um, but yeah, I mean, and then, and then secondly, probably just historically, it's kind of your favorites. I grew up on a on a guy called Jim Reid, um, at UBS. Uh, hang on, UBS?

Deutsche Bank.

Deutsche Bank, sorry. Wow. Um, anyway, um, I grew up on his stuff. Like, when I was a junior trader, he used to send out an email every morning, the Early Morning Reid, uh, Reid, R-E-I-D. Um, and that was, that was my bread and butter. So I would say for that, you know, habit more than anything. I'll reach out for his.

You do know you have to pay €15,000 now for that same document that you used to get land in your inbox for free.

Yeah, used to be free.

Oh, regulation, hey?

Yeah, bring back Donald.

Um, yeah, I mean, one of the big cautions, uh, I don't think as much a surprise because after back-to-back 20% plus annual gains for US stocks, obviously people will look at Like you said, look at the S&P chart, the hockey stick. It's looking like you could get your paint overlay on there. But a couple of things. So the new administration's expected policy mix: modest tax cuts, deregulation, initially targeted tariffs. I think what's important there is the sequencing of events. So I know we talked briefly tariffs earlier. But I think it's within interest for those to become later down the line, so he can focus a lot of the time and attention on those aforementioned ones. That then is about what is the state of relations between the US and China. I don't know if you've seen that in the last couple of weeks, the bromance is back on. So, so they're back on after being off, and they're back again. Uh, that being that President-elect Trump has invited him. This is an unprecedented invitation, so Xi's going to be at the inauguration. I mean, that's pretty big.

Well, is he going? I know he's been invited. Has he accepted?

Well, that's yet to be seen. From Xi's side, he's expressed a readiness to work with Trump in terms of where it's at. Unspecific in terms of details at this point.

I've heard that there's an even more important individual that's going to be, um, at the inauguration, a certain— our very own Stephen Barnett, reporter on the ground.

Absolutely, I'm there when the hot, hot news drops. Uh, yeah, I will be there. Quite, quite not unconnected to, uh, to the inauguration, but I'll probably pay a little bit of a visit. I'll Yeah, get my MAGA cap out and give it a go.

Stephen, what do you think about— I read a couple of banks that were talking about the benefit of AI adoption shifting from semiconductors and hardware towards software providers. So the adoption of generative AI moves past the infrastructure phase, and then that shift would mirror trends that have played out in the last development cycles of the internet decades ago and so on. Is that a 2025 thing, or are we not there yet, you think?

Yeah, I'd say probably we're coming into that phase and it's one of those really, you know, you could take both sides of this argument and both of them are equally valid. So the first is, all right, we've put in place the infrastructure and that's been phase one of this boom in markets, Nvidia, et cetera. And now here comes phase two where we're going to see revenues grow because amazing new products are launched and people are paying for them, and we're going to see costs decline. So our earnings base grows, and this is absolutely fantastic. The flip side is that quite a lot of that might well be priced in to the overall buoyancy of the S&P, et cetera. And as we all know, if we take a startup analogy, you tend to raise your money at the beginning on a dream. You know, this is what the world will look like. And then actually it's much harder to raise that second round of money when the reality has hit and it's not quite as, not quite as good as we were saying it was going to be when it wasn't really a thing. So, so maybe this 2025, again, I don't have enough, I don't have enough of a crystal ball, but this can go both ways. It can be the year that AI lands like an absolute rocket ship in terms of every company adopting it and improving their top line and their bottom line, or it can fall like a bit of a damp squib and we're all left thinking, gosh, that was a lot of infrastructure spend for the outcome that we've realized. Probably that will probably take a few years to play out. But yeah, it's a very, very good thing to be thinking about.

And then Piers, The final point here was Deutsche Bank, because I was quite interested to see what their perspective was, given that they're one of the most bullish. And they were talking about demand-supply perspective. The US equity market remains solid with the drivers of the last two years— large inflows and strong buybacks. Is that going to change?

Uh, I, I think that— I think the strong buybacks will continue from those massively cash generative. Well, if you think about the Mag Seven, I mean, they are going to be buying back, um, make no mistake about it. Um, that's 100% happening. Um, as to US inflows, I mean, that goes back to that point of US exceptionalism, and it's been a huge theme for this year finishing, and the gap between the US and just, just say Europe is basically the widest it's ever been. And so does that continue? Um, I saw— well, at the moment you look at Europe, I saw France got downgraded today, didn't they? So, um, obviously a lot of political uncertainty, you know, around their budget for 2025. And so, um, their debt rating has been downgraded. So just a kind of quite emblematic of the fact that Europe is still struggling to sort itself out. And so as long as that's, as long as that's the case, then yeah, I mean, the US will continue to be exceptional when they're compared to a bunch of crap.

I was gonna say, be careful, careful with your language here, PG-13.

Yeah, so yeah, that— I think that whole American exceptionalism can continue. It doesn't necessarily mean the S&P is going to go up though. How about it just means the S&P goes down less than others? That's still outperforming.

God, you need to get out. You're very bearish.

Jesus. This is not what I signed up for.

Well, yeah, look, he's just dampened my positivity I was trying to put on everything there. I don't know if I want to hear the surprise now or not. I got a feeling it's going to be a some sort of disaster scenario or something. I should just hop out to the supermarket, the Costco, and load up before you speak. But, uh, but look, for the, for the sake of time, maybe we can jump to, to that. So hit us, Piers.

What is it? Well, it's, it's a good fun surprise. Don't worry. I'm, I've taken off my doom and gloom hat and, um, all I'm going to say is, and so you guys got, you've got no idea what I'm going to say here, which, which I love. I feel like I've got A lot of— holding a lot of power here. Um, 26th of December, 2024, other than it being the day after Christmas Day, is the day that Squid Game Season 2 lands. Now, this is going to be epic. This is Netflix's, uh, most popular show in the history of Netflix, and actually in the history of mankind. No other show has been watched like this one, and, uh, season 2 is coming. So what does that mean for Netflix? And actually, a few stats I got, like a few fun sort of end-of-year quiz actually for you. Are you ready? Um, so top 5 most popular Netflix shows of all time. I've already told you Squid Game was one, right? That got 1.65 billion hours of view, view time. 1.65 billion hours. Um, in the first 28 days, 142 million member households watched Squid Game. Um, it reached number 1 in 94 countries. Um, I think one of my favorite stats is that the sales volume of the, uh, the Van slip-ons That's the sneakers, you know, the brand Vans, uh, the sales volume, because that's the slip-ons that the guy wears in the— or they're all wearing in the Squid Game show. It went up 7,800%. Uh, anyway, that's Squid Game's number 1. Give me— name me one of the other top 5.

Stranger Things.

Stranger Things Season 4 is number 2. Yeah, that clocks in. The Crown is not in there.

Bridgerton.

Uh, Bridgerton isn't either, actually.

And stop listing your favourite TV shows. This is getting embarrassing here. Gosh. Friends?

No.

I thought maybe across the human genome.

I'm surprised at these next 3, I have to say. Or I'm surprised at 2 out of the next 3. I, I was like, I'd kind of double take, but I'll give you these 2. Uh, in number 3 spot, Wednesday. That's the Wednesday Addams. It's like a supernatural horror comedy series, um, that clocks in at 1.23 billion hours worth of viewing. Dahmer: Monster, the Jeffrey Dahmer story, basically about a serial killer, 856 million hours viewed. And then number 5, which I thought would be in there, was Money Heist, um, which is like that Spanish, um, heist thing. But yeah, there's your top 5. But look, Squid Game's coming right now, um, Netflix, because like Netflix share price— the only problem is if you're thinking, right, quick, let's buy Netflix shares because this is going to bring viewership figures, you know, they're going to, they're going to see their, their kind of daily, monthly, weekly, whatever, active users just go through the roof here. However, the stock price of Netflix is trading at an all-time high And in fact, it's, it's kind of— so the 2021 high is something we always reference when we're thinking about tech stocks because there was a bit of a bubble, um, 2021, right? Like Tesla, for example, has just broken its 2021 high. Same for Netflix, right? Back in 2021, it topped out at $680. Well, it broke that, um, in just at the— in the summer, around about August, $6 $680, right? It's now trading $920. So it's basically 50% above the 2021 high already. So I think, um, unfortunately you might, you might have missed this one, um, in terms of trying to buy Netflix to profit from it. But yeah, but that's what I'm going to be doing on my, uh, Boxing Day. I'm all over it.

You're going to be watching Squid Game back to back?

Yeah, binge.

I just feel fearful.

That's a horrible Boxing Day thing to do.

I'm just fearful of Squid Game 2 is going to be so lame.

Well, it's a high bar. It's a high bar.

Because I think they delayed the script and I'm not sure who actually ended up writing it. If the original guy did.

It's the original guy.

Yeah. Because I think a lot of pressure because I think he signed it already. Hadn't written it. Got delayed. Yeah.

Well, he's got an audience. Uh, he's got, there's 282.7 million subscribers to Netflix as it stands at the end of Q3. Uh, so that's up from— it's actually, their user growth isn't that amazing, which is why I'm interested in the stock price having popped 50%. But, um, because their user growth is only up 22 million year on year, right? So that's less than 10%, which doesn't strike me as being that exciting. So, um, this 50% pop on the share price, got— it's got to be front-running this, uh, Squid Game Season 2 thing.

And, and NFL Christmas Day. Oh, got Christmas Day NFL. I think if anything, that will be a— that would be a bigger deal.

Yeah, I think all the live sport, the docu-sport series.

And actually, advertising is now one of their revenue streams, finally. It's still, it's still very small, but, um, it, it's growing rapidly. I think it was up 65% in Q3 '24 year on year. Um, still small though, but, but yeah, they're finally figuring out that piece of the jigsaw, which I think, like, if you fast forward 10 years, it's probably their biggest revenue stream. Well, all right, maybe not biggest, but subscribers biggest. But yeah, anyway, it'll be meaningful.

Okay, so let's finish with some, some forecasts. Quick and sharp. We'll go S&P, Nvidia, and then Bitcoin. Just because we all know so much about Bitcoin, of course.

Can we say before we make these predictions, A, this is not investment advice. B, can you not ask why? I don't want any form of justification, partly because I haven't researched it. The gut feel of someone that's been around for a bit of time.

Okay, well, let's go S&P first. I'll kick it off. Okay, top of the street, 7.1. I'm going 7.5.

Whoa, are you absolutely bonkers, Anthony? Wow. Gosh, I don't want any— I don't want any tequila.

I know me and my crypto bros are gonna hang out, big party at mine. Piers isn't invited because he's such a sour grapes.

All right. Okay. Well, look, I'm looking at it. I am going to provide a justification for mine. I'm looking at a chart. There's only 2 times in the history of the S&P where price earnings have been higher than they are now. One was the dot-com bubble and one was COVID. So for that reason alone, I'm going 6.6. I think it'll be a gain, but I don't think, you know, just double digits, maybe double digits gain. Um, but 6,600.

Okay. Um, unsurprisingly, uh, I'm going lower. Look, we're trading 6,072 as I speak. I do think there may be some upside, but I think by the time we get to the end of next year, momentum will have reversed. I'm going to say we're going to go— we'll finish below 6,000 in the next year.

Oh dear.

Okay, got quite a nice spread then.

Yeah.

Okay. Let's just stick, sticking with, uh, equities then. NVIDIA. So we'll go reverse order. So Piers.

Yep. Uh, well, right now, actually NVIDIA is trading the lowest it's traded for 2 months. Um, right now, $131. Um, so we've been in a bit of a sideways range, which is kind of the range is on top of the double high from the summer. So the June and July tops that are around about $135. It looks like we're breaking that. Technically, I think we're going down. I also think it's just going to be tough. The revenue growth is slowing. So I think obviously that year-on-year comps are just going to get super hard and it's got to be perfect. Otherwise gravity will do its thing. I think it's going, I think it'll finish the year down, uh, not by a huge amount, but I'm going to say $120. You're on target.

You are such a Grinch. It's unbelievable. Who brought this guy on the podcast? It's really interesting the way that you analyse it relative to the way that I analyse it. I think it's going to take— it will take 12 months for the EV EBITDA multiple and the price earnings multiple to look extremely normal and ordinary if they grow by anything like 30 or 40% year on year, it starts to look like a normal valued tech stock. So I don't think it needs to grow double or 80% from a revenue or a profitability perspective next year to get anywhere near fulfilling its valuation. So I think it's going to have an okay, unspectacular, solid year. We're going to get 160.

Well, it being core to my 7,500 bull run, $1,000. $200 to finish. $200.

All right.

Okay. So a good spread. I think this is nice. We've got the bull and we've got the bear and I'm sitting in the middle.

Some would say this is intelligent diversification of you in one firm to cover all bases. So I'm just playing that side. But okay, Bitcoin finally. I'll go with Bitcoin. I think this year it will hit 200. Oh, and then I think it comes back year-end and it's going to finish pretty much where it is at the moment.

Oh, wild. Okay, that's going to be a hell of a ride.

Because, because I know nothing, I'm going to go 200. It gained, so it gained 100% this year. Well, well over 100% this year. And there's not a great deal of fundament— you know, there's not a great deal of fundamentals to it. You know, obviously if you've got the kind of the halvings and you've got the impact of interest rates and things like that, but why not $200K? It's a number.

Yeah. I mean, that's the thing with this kind of stuff, isn't it? You just pick a number and, you know, you can justify it somehow based on previous performance. We started the year on 43,000, rounding it up. So yeah, here we are at 106. So yeah, definitely more than doubled. Um, yeah, I mean, look, I think it'll go up. Uh, I don't think it'll hit 200 this year. I think that's a stretch. Um, I'm, I'm more of a, I'm more of a 130,000 kind of guy.

What, what a remarkable thing, by the way, for you to be saying that with a kind of a hint of conservatism. Imagine winding back the clock 2 years and just being, yeah, you know, it would definitely break, you know, definitely end up over 100. It's, it's quite remarkable how we can normalize this kind of stuff so quickly.

All right.

Well, look, we will wrap it up there a little bit longer than usual. So hopefully it was worth sticking around and you can hold our feet to the fire this time in 12 months when the S&P is true to Piers's form of trading down. 4,500 or something of that nature.

And can you put a poll on, uh, on Spotify and just say who, which of the three predictions do you think are the best? I just want to get a little bit competitive here.

Yeah.

I like it. Let's do that.

Indeed. All right. Thanks everyone. And thank you so much for everyone for, for joining us, uh, week in, week out, really super appreciated by all of us here at the team. Please drop us a comment. Anything you want to hear more or less of in the year ahead, do let us know. We would like to develop the show. And I am working on a couple of mini-series as well to drop in between the usual top and tail of a week that we have with corporate finance and global markets. But hope everyone has an amazing Christmas. Happy New Year and wish you all the health and happiness for 2025. Thank you.

Thanks a lot.

Thanks, guys. See you in 2025.