As the U.S. prepares for a new presidential inauguration on January 20, 2025, Citi has downgraded its equity outlook for the S&P 500 (SPX) from +2 to +1, citing rising tariff uncertainties and potential inflationary pressures. According to Citi's Global Asset Allocation report, the U.S. economy is expected to outperform, but the risk/reward profile for equities is less favorable than in 2024. "2025 is likely to be much choppier," Citi analysts note, emphasizing the potential impact of broad tariffs on global growth and inflation. The report highlights that while the U.S. may face less direct negative impact from tariffs, the Federal Reserve may delay rate cuts until May to manage inflation risks. Citi maintains a preference for U.S. small caps, anticipating a boost to the manufacturing sector, and remains overweight in tech and banks, sectors expected to benefit from potential deregulation.