Leitmotifs for 2025

Which subplots will matter in 2025

Always in the background, Uncertainty and the potential for nonlinear Complexity cascades have leapt to the foreground as Themes in 2025. The economic outlook, though still dominated by Localization and Being is believing, has become clouded by accelerating Global entropy and the Politics of Rage. President Trump’s agenda of radical reform has the potential to push an already stretched market prices to their breaking point by supercharging US Localization amid European intransigence and Chinese geopolitical economics. But it also has the potential to tip the US and Pax Americana into an irreversible Complexity cascade.

As noted in my Closing thoughts for 2024, volatility of volatility is likely to be the key feature of markets this year. I am working on new Insights on the best strategies for protecting long-only portfolios from high “vol of vol” and for hedging with (or profiting from) derivatives strategies. But with events evolving rapidly – maybe even acceleratingly – it seemed best to jot down immediately the Leitmotifs, or subthemes, that will determine the 2025 outlook.

I will release the ten Leitmotifs for 2025 over the course of the next two weeks. Many will look familiar from my Leitmotifs for 2024, either because they were proven correct and continue to be relevant, or because they haven’t yet manifest but I still anticipate them. Taken together, they map out not only the most likely direction of travel for the global political economy, but the jump in Uncertainty over that path. Over the next several months, I will be doing deeper dives into each of these Leitmotifs, including one important enough that it qualifies as a new Theme.