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France's financial situation is under scrutiny as its debt reaches EUR 2,450 billion, with a rising risk premium on government bonds. Despite a budget deficit of 5.5% of GDP and a debt-to-GDP ratio of 112%, debt financing remains manageable, with interest expenses at 2.3% of GDP. The intense focus on France's debt reflects broader concerns about the eurozone's stability and the European Central Bank's role in maintaining investor confidence.
The Swiss National Bank (SNB) is expected to cut its key interest rate by 0.25% amid strong market speculation, with a 50% chance of a larger 0.50% cut. This move aims to weaken the Swiss franc, which remains strong due to global uncertainties. The SNB should adopt a less predictable approach to its monetary policy to avoid market disruptions.
At the St. Galler Kantonalbank investment forum, financial experts expressed a "cautiously optimistic" outlook for the economy in 2025, highlighting a potential decline in interest rates that could favor equities over bonds. While the US economy shows promise, the European market is weakening, particularly in France and Germany, though Switzerland's tourism sector remains strong. The discussion also emphasized the value of "hidden champions" in niche markets, such as Accelleron Industries, and addressed audience inquiries about silver's volatility compared to gold and the challenges in valuing Stadler shares.
The crypto industry is pushing for the establishment of a Strategic Bitcoin Reserve in the U.S. to help eliminate the national debt of $36 trillion. However, the proposal faces significant challenges, including the need to acquire 19% of Bitcoin's market cap, which would drastically inflate prices and complicate repayment demands from U.S. Treasury holders. Ultimately, the initiative appears more focused on speculation than on addressing the needs of the U.S. population or its fiscal responsibilities.
Thomas Stucki, Head of Investment at St.Galler Kantonalbank, remains optimistic about the US economy and equities, while expressing concerns about Germany's economic outlook. He anticipates no recession, low interest rates, and a gradual recovery in Europe, driven by Spain's economy. Stucki advises caution with emerging markets and suggests a small allocation to gold for security.
The St. Galler Kantonalbank forecasts further interest rate cuts by the Swiss National Bank, but not below zero, while emphasizing the attractiveness of high-dividend equities in a low-rate environment. Bitcoin is deemed a speculative asset unsuitable for strategic allocation, contrasting with gold, which remains a reasonable hedge. Geopolitical risks are acknowledged but viewed as short-term fluctuations rather than decisive factors.
St. Galler Kantonalbank forecasts further interest rate cuts by the Swiss National Bank, but not below 0%, while emphasizing the attractiveness of high-dividend equities in a low-rate environment. Despite the strong performance of gold and Bitcoin, the latter is deemed a speculative asset unsuitable for strategic allocation, with significant price volatility and high correlation to stocks.
In 2025, equities are expected to dominate investment strategies as falling interest rates diminish the appeal of bonds, according to St. Galler Kantonalbank. With a projected GDP growth of 2.3% in the USA and 1.5% in Switzerland, the focus will be on dividend stocks, which are anticipated to yield around 3%. Meanwhile, cryptocurrencies like Bitcoin are gaining interest but remain highly volatile and speculative.
St. Galler Kantonalbank anticipates low inflation and interest rates, a strengthening franc, and favorable equity prospects in 2025. Economic growth will vary regionally, with the USA leading, while equities remain attractive despite high valuations, and gold continues to be a reliable safe haven. In contrast, Bitcoin lacks the stability of gold, reacting more to macroeconomic shifts.
The euro has reached its lowest exchange rate against the Swiss franc since January 2015, with experts likening it to the Italian lira due to ongoing economic concerns in the Eurozone. Analysts attribute the euro's weakness to slower growth compared to the U.S. economy and suggest that reforms in tax competition and labor markets are necessary for improvement. Additionally, Germany's reliance on a weak euro may hinder its competitiveness, while broader issues, including France's economic struggles and geopolitical tensions, further complicate the situation.

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