Potential Market Influences in 2025

Investment bank Raymond James analyzed key policy actions that may affect the markets in 2025, irrespective of the US presidential election results.

Fiscal Tailwinds and Regulatory Changes

The report highlighted several factors expected to occur regardless of the election outcome, including:
– Strong fiscal tailwinds
– Reduced regulatory measures
– Energy permitting reform
– Continued tech restrictions

Infrastructure and Funding

According to the report, much of the funding associated with the Biden administration for infrastructure, semiconductor production, and energy transition remains unspent, with over 75% of allocated funds available until the end of September. The significant tax credits under the Inflation Reduction Act (IRA) are also largely unutilized, with estimates suggesting over $800 billion in funds and $500 billion in tax credits await economic impact. Analysts remain skeptical about potential IRA repeal attempts in the event of a Trump victory, asserting a strong fiscal tailwind will persist.

Energy Permitting Reform

Energy permitting reform is anticipated, bolstered by bipartisan support and rising demands from industries like AI. The upcoming debt limit discussion in 2025 could facilitate this legislative change, along with recent Supreme Court rulings that may streamline environmental reviews, expediting permitting processes.

Regulatory Landscape

Further, analysts predict reduced regulation across various sectors due to recent Supreme Court decisions that may limit regulatory power expansion. This shift could benefit heavily regulated industries over time.

Support for Critical Minerals

Support for critical minerals is expected to increase, focusing on reshoring supply chains and domestic mineral production. This initiative could gain traction akin to past semiconductor industry support from Washington.

Geopolitical and Defense Considerations

Regarding geopolitical risks, Raymond James foresees a rise in U.S. and NATO defense budgets irrespective of the election winner, driven by global threats necessitating robust defense spending.

Summary of 2025 Challenges

Moreover, looming fiscal challenges, such as the debt limit and expiring individual provisions from the 2017 tax law, are likely to dominate the 2025 agenda. The firm anticipates a likely increase in child tax credits and reinstatement of R&D tax credits and bonus depreciation following the passage of a tax package. Raymond James concludes that an increase in the debt limit is probable, with potential impacts on U.S. Treasuries to be monitored.