Stifel Financial Corporation · NYSE:SF
Stifel Financial — Investor Presentation (January 2025)
33 slides from Stifel Financial's investor presentation, January 2025
Slide 1: Economic Outlook: A Resilient Economy, Sticky Inflation, and Aggressive Fiscal Policy Agenda
Economic Outlook: A Resilient Economy, Sticky Inflation, and Aggressive Fiscal Policy Agenda Limit Downside Potential for Fed Rate Relief January 2025 Lindsey M. Piegza, Ph.D. Chief Economist For Institutional Use Only
Slide 2: Economic Outlook 2025
Economic Outlook 2025 •Adjusting conditions warrant some further cuts in 2025 •The data do not indicate evolving softness •Tempered approach to policy Page 1
Slide 3: Consumer Remains Resilient
Consumer Remains Resilient 20 20 Personal Consumption % Stifel Forecast: Personal Consumption % Personal Consumption 4Q avg. % Stifel Forecast: Personal Consumption 4Q avg. % 15 15 10 10 5 5 0 0 2021 2022 2023 2024 2025 Page 2 Source: Bureau of Economic Analysis/Stifel
Slide 4: Average Hourly Earnings Still Positive
Average Hourly Earnings Still Positive 2024 average: 4.0% 2018-2019 average: 3.2% Page 3 3
Slide 5: Debt as a Percent of Income Still Near Record Low
Debt as a Percent of Income Still Near Record Low Page 4 4
Slide 6: Waning Business Investment
Waning Business Investment Page 5 5
Slide 7: International Risks and Uncertainty Muddy the Outlook for Inflation, Policy
International Risks and Uncertainty Muddy the Outlook for Inflation, Policy $6,000 170 Freightos Baltic Index* (left) Economic Policy Uncertainty Index (right) 160 $5,000 150 $4,000 140 130 $3,000 120 $2,000 110 100 $1,000 90 $0 80 Jan. 2023 Jul. 2023 Jan. 2024 Jul. 2024 Jan. 2025 *The index is a we
Slide 8: Impact of Artificial Intelligence (AI) on Labor Market
Impact of Artificial Intelligence (AI) on Labor Market Page 7 7
Slide 9: Labor Market Conditions Cooling but Still Solid
Labor Market Conditions Cooling but Still Solid 1,000 Change in Nonfarm Payrolls, Thousands Chang… 900 800 700 2021 avg: 604,000 600 500 2022 avg: 400 377,000 300 2023 avg: 251,000 2024 avg: 200 186,000 100 0 2022 2023 2024 Page 8 Source: Bureau of Labor Statistics/Haver Analytics 8
Slide 10: Housing Affordability Remains Low; Elevated Insurance Premiums Add to Rising Cost of Housing
Housing Affordability Remains Low; Elevated Insurance Premiums Add to Rising Cost of Housing State Cumulative Home Insurance Increase, 2019-2024 Arizona 62.1% Nebraska 59.9% Illinois 56.9% Utah 54.6% Texas 54.5% Colorado 50.7% South Dakota 49.7% California 49.4% Minnesota 45.2% Montana 44.3% Source:
Slide 11: Real Estate and Return to Office Rates
Real Estate and Return to Office Rates Page 10 10
Slide 12: Exposure to Financial Institutions
Exposure to Financial Institutions 78% held by <$250B Page 11 11
Slide 13: Monetary Policy Outlook
Monetary Policy Outlook •Positive outlook for domestic growth •Stubbornly sticky inflation •Finally concerns of a bloated fiscal balance sheet Resulting in •Limited downside potential for easing •Higher longer-run real rates •Normal shaped curve Page 12 12
Slide 14: January Federal Open Market Committee (FOMC) Statement
January Federal Open Market Committee (FOMC) Statement “Recent indicators suggest that economic activity has continued to expand at a solid pace.” “The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid.” “Inflation remains somewhat elevated.”
Slide 15: Significantly Higher Neutral Rate
Significantly Higher Neutral Rate 6.0 5.5 5.0 4.5 4.0 Potential Neutral Rate: 3.75% 3.5 Neutral Range 3.0 Federal Funds Target Rate % 2.5 Federal Funds Target Rate: FOMC December 2022 Neutral Projection % Federal Funds Target Rate: FOMC December 2023 Neutral Projection % Federal Funds Target Rate: F
Slide 16: Significantly Higher Neutral Rate
Significantly Higher Neutral Rate Page 15 15
Slide 17: Reinstating Price Stability is Far from a Foregone Conclusion
Reinstating Price Stability is Far from a Foregone Conclusion Dec-23 Jan-24 Jun-24 Sep-24 Oct-24 Nov-24 Dec-24 CPI 3.4 3.1 3.0 2.4 2.6 2.7 2.9 Core CPI 3.9 3.9 3.3 3.3 3.3 3.3 3.2 Supercore CPI 3.9 4.4 4.6 4.3 4.4 4.3 4.2 CPI: Housing 4.8 4.6 4.4 4.1 4.2 4.1 4.1 PPI 1.0 1.0 3.0 2.1 2.7 3.0 3.3 Core
Slide 18: Soft Landing Only Achieved by the Fed Once in Last Years
Soft Landing Only Achieved by the Fed Once in Last 60 Years Soft Landing Achieved When: • Inflation comes down AND • GDP remains positive (unemployment does not rise drastically) Page 17 17
Slide 19: Federal Reserve Likely to Move at a Controlled, Tempered Pace
Federal Reserve Likely to Move at a Controlled, Tempered Pace 6.0 5.5 5.0 4.5 4.0 3.5 Neutral Range 3.0 Federal Reserve's Current Neutral Rate: 3.00% 2.5 2.0 1.5 1.0 Federal Funds Target Rate % 0.5 Pre Sep. NFP Market Projections: Federal Funds Target Rate % Post Nov. Election & Jan. Fed Meeting Mar
Slide 20: Investors Likely to Continue to Reshape Expectations for Longer-term Yields
Investors Likely to Continue to Reshape Expectations for Longer-term Yields Page 19 19
Slide 21: Fiscal Policy: A Significant Wildcard
Fiscal Policy: A Significant Wildcard •Ongoing positive growth •Persistent above-target inflation •Growing budget strains Page 20 20
Slide 22: Trump's Policy Proposals
Trump’s Policy Proposals Trump's Policy Proposal Potential Consequences Not Inflationary: A onetime price increase lacks the “inflationary” implications some •Increase tariffs on Chines imports up to 60%. fear in terms of perpetual upward momentum in costs; Tariffs •25% tariff on Canadian and Mexica
Slide 23: Trade and Tariffs
Trade and Tariffs 0 -50 -$55B -100 -150 -$157B -200 -250 -$270B 2024 U.S. Trade Deficit ($B) -300 China Mexico Canada Source: U.S. Census Bureau Page 22 22
Slide 24: Tariffs: Benefits and Risks
Tariffs: Benefits and Risks Benefits Risks Negotiation tactic to potentially: •Potential price increase for consumers •Secure better trade deals •One-time increase lacks upward •Secure cooperation on ending momentum illegal immigration •Retaliatory tit-for-tat tariffs risks •Deter military conflict
Slide 25: Likely Extension of Tax Cuts and Jobs Act (TCJA)
Likely Extension of Tax Cuts and Jobs Act (TCJA) If TCJA is not extended, the rates and brackets will resemble their 2017 structure. A 2026 extension will largely reflect the current TCJA. President-elect Trump has proposed excluding overtime, tips, and Social Security benefits as well. Income brack
Slide 26: Potential Increase in Deficits
Potential Increase in Deficits Extension of TCJA potentially increases deficit by $2T-$5T Page 25 25
Slide 27: Government Balance Sheet and Potential Cuts
Government Balance Sheet and Potential Cuts Areas of Cuts/Reforms Expected Cuts Budget Federal Spending on Diversity, Equity, & Inclusion (DEI)* $124B $124B Reduce Federal Workforce Size Unspecified $293B Remove or Fundamentally Change Government Agencies Unspecified -- Internal Revenue Service Unsp
Slide 28: Job Openings Remain Elevated
Job Openings Remain Elevated Page 27 27
Slide 29: Immigration Reform
Immigration Reform 400,000 U.S. Border Encounters* Cost of Illegal Immigrants* ($B) 350,000 California 22.8 Texas 9.9 300,000 New York 7.4 250,000 Florida 6.0 589% New Jersey 3.9 increase 200,000 Illinois 2.9 Arizona 2.4 150,000 Georgia 2.3 100,000 North Carolina 2.3 Virginia 2.1 50,000 Source: Fede
Slide 30: Q&A
Q&A Page 29
Slide 31: Disclosures and Disclaimers
Disclosures and Disclaimers The Fixed Income Capital Markets trading area of Stifel, Nicolaus & Company, Incorporated may own debt securities of the borrower or borrowers mentioned in this report and may make a market in the aforementioned securities as of the date of issuance of this research repor
Slide 32: Thank you
Thank you Page 31
Slide 33: STIFEL
STIFEL | 23070.
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