The persistent battle against inflation seems to have reached a tentative victory, leading the U.SFederal Reserve to embark on a path of easing monetary policy starting September 2024. The initial cut of 50 basis points was followed by two subsequent reductions of 25 basis points in the following meetingsHowever, as the 2.0 era draws near, the specter of inflation has begun to re-emerge, causing expectations for continued interest rate cuts to dwindle sharplyThe once-hyped notion of 2025 being a year rife with rate cuts now appears to be slipping away.

Goldman Sachs recently issued a report adjusting its forecast for potential rate cuts by the Federal Reserve in 2025, reducing the expected reduction from 100 basis points to 75 basis pointsThe report indicates that the market may be overreacting to reports of a rebound in core inflationCore Personal Consumption Expenditure (PCE) inflation for the period of September to November 2024 saw an annualized increase of 2.5%, a slight uptick from the previous three months' 2.3%, yet still shy of the year-on-year increase of 2.8%. This data suggests that inflation levels are still on a downward trend.

Additionally, adjusted data from the Federal Reserve Bank of Dallas indicates an annualized PCE inflation of 2.4% for the same period, with November figures dropping to 1.8%, further corroborating signs of retreating inflation

UBS has indicated that the Federal Reserve may require a clearer decline in core inflation before more substantial rate cuts could be consideredThey anticipate that core inflation in the United States will ease to below 2.5% before the June 2025 meeting of the Federal Open Market Committee, potentially providing the Fed with the confidence needed for renewed cuts.

According to UBS, the frequency of rate cuts by the Fed remains limited, with predictions for the Swiss National Bank to cut rates by 50 basis points in December being above expectationsIt is likely that the Swiss National Bank will only reduce rates by an additional 25 basis points throughout 2025. Meanwhile, the Eurozone appears poised for larger cuts, with projections of a 100 basis point reduction in 2025. Despite the modest magnitude of these cuts, UBS notes that declining borrowing costs and resilient economic activity in the U.S., along with the broadening scope of corporate profit growth and increased monetization of artificial intelligence, create a favorable backdrop for U.S

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equities.

In light of these factors, UBS projects that the S&P 500 index could rise to reach 6,600 points by the end of 2025, suggesting that under-invested investors should capitalize on short-term volatility to accumulate U.Sstocks, utilizing structured strategies for better positioningAs the Fed indicates, economic data will play a crucial role in determining future monetary policyChairman Jerome Powell remarked that the Fed is positioned at a juncture or is nearing a point of moderating rate cuts, asserting that any decisions regarding rate reductions in 2025 will hinge on forthcoming data, indicating that “anything is possible” in terms of monetary policy.

Amid the speculation surrounding economic policy, noteworthy market activities have emergedWarren Buffett, the renowned investor, has continued to bolster his stake in Verizon CommunicationsBetween December 31, 2024, and January 3, 2025, Buffett’s Berkshire Hathaway acquired approximately 20,044 shares of Verizon stock for around $4.1 million

This marks the third such purchase of the company’s stocks since December 2024. Berkshire Hathaway has not confined its market activities to Verizon; during the week of December 16-20, 2024, the company executed significant purchases, acquiring stocks from Occidental Petroleum, SiriusXM, and Verizon, amounting to over $560 million in totalNotably, Berkshire invested $405 million to increase its holdings in Occidental Petroleum by nearly 8.9 million shares, lifting its ownership stake to more than 28%, and spent approximately $113 million on SiriusXM, acquiring about 5 million shares.

On a different note, Apple Increcently agreed to a settlement of nearly $70 million in response to a class-action lawsuit claiming that its voice assistant, Siri, infringed on user privacy rightsThe lawsuit alleged that Siri could unintentionally activate and send recorded private conversations to Apple, raising significant concerns over user data confidentiality.

In a separate but equally concerning development, South Korea faces an imminent risk of losing significant portions of its domestic vegetable supply due to climate change