Thursday, January 23, 2025

Understanding the Markets: Looking to 2025

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Real estate prices in Canada could fall

We don’t think house prices will fall in 2025, but we wonder if they may rise by 6.6% Canadian Real Estate Association (CREA) has predicted.

With rates of interest on 5-year and 10-year bonds not falling as quickly because the Bank of Canada (BoC) base rate, fixed-rate mortgages could fall as little as homebuyers hope. Given lower immigration targets and overall negative consumer sentiment, homebuyers are more likely to proceed to have a greater influence than sellers in major markets. This is very true with the flood of condos currently on the market available on the market.

Oil prices will remain below $75 per barrel

“Drill Baby Drill” was heard throughout the US election campaign in 2024. As the quantity of American oil exports has increased lately, it can be interesting to see whether countries belonging to OPEC (Organization of the Petroleum Exporting Countries) can be willing to cut back supply to maintain prices high. At some point, these countries will tire of seeing their market shares shrink and overall government revenues decline. If that happens, supply could quickly outstrip demand as global oil supplies are already fairly full.

With China’s growth showing no signs of returning to its former oil-dependent glory, we do not see where the increased demand will come from to take in all the additional oil the world is willing to dig up from the bottom .

BYD will expand its lead over Tesla

Last 12 months, we predicted that Tesla’s declining profit margins could meet up with its aggressive share price valuation. However, we didn’t expect Tesla CEO Elon Musk to turn into a central cog within the Trump machine.

No matter how much Musk has the ear of the brand new president, it is probably not enough to guard Tesla from electric competition outside North America. With Musk now dividing his time not only between his various corporate roles, but in addition as head of the brand new Department of Government Efficiency (DOGE), he’s – it’s fair to say – pretty far off the mark. It looks like he’s doing his best to destroy the enviable repute that Tesla enjoyed amongst environmentally conscious consumers. In addition, the US government may cut subsidies for electric vehicle buyers. Tesla could face tough times regardless of what.

However, that does not even bear in mind that the corporate freight train was on the move. Build Your Own Dreams (BYD) is one of the crucial interesting corporations on this planet. It has emerged from the extreme domestic competition for the EV market as a lean, mean electric machine. Add in the cash, influence and connections of BYD investor Warren Buffett, and it didn’t surprise us that BYD recently stated that one in five electric vehicles sold worldwide today does Manufactured by BYD.

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