Bitcoin’s price may stall in 2025, but the good news is that the risk of a recession is low, one strategist says

Jason Trennert, Chairman and CEO of Strategas, spoke with Quartz about the latest installment of our “Smart Investing” video series.

Watch the interview above and check out the transcript below. The transcript of this conversation has been edited slightly for length and clarity.

Andy Mills (AM): Given the excellent market performance this year, how do things bode for 2025?

Jason Trennert (GT): The good news from an economic perspective is that I would say the chances of a recession next year are very low. Labor markets are tight, corporate profits look strong, and credit spreads are tight. So all these things are good. From a market perspective, I would say that this year is going to be a tough act to follow in 2025, simply because you are starting with very rich multiples. I would say that it is probably very difficult at this point to see a significant, exponential expansion based on lower long-term interest rates or even significantly lower short-term interest rates. So I have a feeling that the market will perform more in line with what earnings are doing, and we expect earnings to rise about 9% next year. So this is kind of our base case, and this is where we start our base case.

AM: Given the low risk of recession, what is your biggest fear for 2025?

JT: My really biggest fear for 2025, which is part and parcel with some of the structural changes that we’ve seen in the economy, is that there’s a chance, and this was true no matter who wins, of a second wave of Economic inflation This is partly because what we found is that historically, once you had one wave of inflation, the chances of a second wave were about nine in 10. This is also because in the first wave of inflation, workers tend to fall behind. Their demand for higher wages thus continues long after the first wave of inflation.

AM: We see that now.

JT: Well, you see, Boeing mechanics make 38% over four years or Longshoremen receive 62% over six years. This is an indication that their standard of living may have deteriorated over the past four years and companies must compensate for this. This makes it difficult. If your goal is 2% inflation, it is difficult to do that when large segments of the population are getting large wage increases. Then of course we have a massive deficit, a deficit of 6 to 7% of GDP when you’re at full employment, which is very unusual. So this is important because if we don’t, if we have another bout of inflation, that could cause long-term interest rates to rise significantly. And what we found, at least for the stock market, Once interest rates get close to 5% on 10-year Treasury bonds, that’s when the stock market gets into a lot of trouble. Now we’re probably around 4.50, something like that. It’s manageable. At 5%, I think it becomes a little difficult to be a stock investor.

AM: There’s a lot to watch for in 2025. Bitcoin has had an amazing yearEspecially after the elections. People think Trump will be pro-Bitcoin. Do you see? Bitcoin price Keep going up and up in 2025?

JT: Not at the pace that has been caught up. In my opinion, the reason we have seen a significant increase in the value of Bitcoin since the election is because the regulatory risks have greatly diminished. So they are unlikely to be banned or made very difficult to purchase. So more people will be able to buy it. What’s bad, in my opinion, but I think good for the country, is that the dollar is likely to be a little stronger, in my opinion, if the Trump administration succeeds, especially when it comes to things like the financial crisis. Government Efficiency Department. If he is good at reducing the deficit, these are the things that will strengthen the dollar against other fiat currencies. There will not be as much long-term need or interest in altcoins like Bitcoin. Hence, in theory, Bitcoin and gold should move in roughly the same way. I know they’re probably young people who think this is crazy, but in my opinion, gold has a 5,000-year trademark to protect against inflation, while Bitcoin has a 15-year trademark. They both do a pretty good job, but there are a lot of people around the world who don’t have access to buying Bitcoin. It’s a little trickier. So I don’t expect this kind of price increase to continue. And in some ways, if you really, I mean it’s only one thing if you’re making money through speculation, you want that. But as an American citizen, you probably don’t want Bitcoin to rise so quickly because that says bad things about the financial situation in the United States and the value of the US dollar.

AM: Gold vs. Bitcoin. Which one do you put your money into?

JT: I’m more interested in gold now and I will say I own it so I don’t own Bitcoin much to my chagrin. I wish I did, obviously. But maybe I’ll buy some. We should get some if you’re in this business. I’m long gold, but I’m less excited about it than I was before the election to be honest because I see the actual fiat US dollar doing a little bit better.