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Incredibly important.
Somebody said, like ten billion dollars or some ginormous NUMBERD is a ginormous excellence. Julian Emmanuel joins as chief Equity and quand strategist Evercore ISI with a definitive note. What's distinctive about your daily research note that your team writes for you? We know you don't write it, But what's distinctive about the note now versus the other previous quarters? OMG earnings are better than we thought.
That's the headline, Tom, and the reality is it's broader than you might have thought. I'm balance right. We know Tech's going to beat. Tech has beaten, it will continue to beat. But one of the more malign sectors, energy is also showing very consistent beats, as is financials, which was the story that started us off on what is likely to be double digit earning.
Squirrel, you bring it over all. The heritage of Edheimen. Evercorn Frankly, you know Isi and frankly, Evercore.
Is this just because GDP was better than we expected?
I mean, is this just a real or even nominal GDP pop is helping out broad earnings?
Well, that's certainly part of it.
It's also this idea that the stress from tariffs has sort of dissipated through the system in unseen ways. But again, it is the story of what it's been, certainly the three years of this bull market, and going back further than that, is that every time you think the corporate America can't find a way to make margins you know better or at least stable at these high levels, productivity tends to happen.
It tends to happen.
You're right, I mean, don't underestimate the corporate entity out there or the consumer. Where do we go here from the stock market? I'm guessing a lot of the questions you get from your clients is, boy, it feels rich here.
How do we think about it? Where do we go from here?
So it does.
And frankly, when you think about the wall of worry, we like that because that means there is.
A wall of worry. I will say in the last week or so.
The fact that September and October were as positive as they were have gotten people very, very bullish, and almost rightly so, because seasonality tends to be good in November and December. But when you think about all this event risk, geopolitical, monetary earnings, elections, etc. There may be a step back in here. But again, the story of the long time story, the AI driven bull market, as we've seen by the news flow in the last twenty four hours, is largely on track.
What do you make of gold? What a run that was? Is pullback that was?
That is?
I don't know? What do you make of gold?
We think, actually so a lot of our conversations this summer in the fall have been about bubbles in the market, in the stock market. We think you're a long way from that in the s and P. Five hundred and in the AI story. But gold could be the bubble that has burst in our view, because if you think about it, the same reasons that people were buying gold, fear of inflation being more permanent, that is not coming to roost. It it's still too high, but it is
on track to come down in twenty twenty six. And then this whole idea of the debasement trade. Ye, the quote unquote debasement trade. We'll call bunk on that because if you think about it, A the dollar has been very stable the last several months.
B yields our law.
That's right, we're going to go Julian Emmanuel with this, folks at evercore Isi here to set up the earning season. Let me take the sixty thousand macro view. I'm looking to the screen this morning and I see a jump condition, and it's because of Donald Trump. He's over in Asia, he's getting, as he would say, deals done. I have a three day jump condition in ren Minby's strength. I
got Sterling flat on their back as well. Some of the evercore Isi view into your earnings belief for Q one of next year, for Q two, does this every ninety day idiocy olmng earnings. We thought they'd be terrible, they're doing phenomenal. Do we just continue this bad habit?
Look, we think high single digit earnings growth is in our future for twenty twenty six. And you know, frankly again to your point this morning in Asia, go back to w when the President was in the Middle East, deals were getting done, Deals are the lifeblood of what's powering the economy and specifically the AI shop.
So do you take your terminal value out farther? What are the rooms today? Google?
Meta, Facebook, Facebook, Ye Facebook? Do you take your terminal value out for Fortress Zuck? Do you take it out instead of three years? Find your study? Are you because of this juggernaut economy? Do you take it up to seven years?
Well, you have to be careful because the counter veil here is again we remember twenty twenty was a low in global bond yields, and likely at some point we are going to move higher in global bond yields, particularly since deficits around the world continue to expand. So that's that's part of the offset. But on balance, when you think about it, you hear the potential for productivity you're gains from AI. You're only starting to see it, but that is part of the long term story that causes us.
In our view, you don't get full AI adoption until twenty twenty eight, so we're certainly looking out to there.
We got lots of obviously earnings today, but we also have to fit today here.
What are you going to be listening for?
From our chairman so this one seems kind of easy, and you know, we're going to get the twenty five cut. We're going to get a sort of no promises data dependency or lack of data dependency for December. But the bottom line is is that the burden of proof is on the data to be either too hot in inflation or you know, too hot in terms of job growth to not cut another twenty five And.
You know, maybe we're not even going to get any more data.
So I don't know, maybe it's just recency bias. With the headlines. It seems like they've seen a lot of job cuts out there.
Don't if it's material, I don't know, if it's yeah, yesterday was a wow day. I mean, I don't know if this is AI related, if this is just seasonal, or if this is anecdotal. How do you guys think about the labor market or how do you think the Fed thinks about the libor market?
So it's incredibly challenging.
You know, first of all, if you go to immigration policy, we don't know what the break even monthly payroll adds is to keep the unemployment rates steady. It was one hundred and twenty thousand last year. Our people think it's closer to sixty thousand. But if you assume that migration is actually that negative, that number might be twenty or thirty thousand.
So that alone is an incredible problem.
I mean, folding yesterday, what was it, Paul, we had thirty four thousand and fourteen thousand.
I can there's at math matth is old news.
If we have AI layoffs at these big companies, how does that change something as prosaic is given the shutdown, we don't know non farm payrolls or the un deployment rate.
So here's the flip side of this. Tom and David Weston did an amazing interview a few days ago with the head of Arizona State University. Is that the transformative power of AI in the education field. Imagine this. We have a chronic shortage of doctors, the chronic shortage of healthcare professionals because half the time they just don't want to commit to the payback period that it takes. Could AI actually shorten that payback period?
Absolutely?
Could AI make it more enticing for teachers where the attrition rate has been enormous in recent years, to go back into those areas. It's the economy transforming, you know, creative destruction, and you don't want to be on the destruction side. But it is how economies advanced.
Get one more in here, folks. So you know Lisa Matteo, Paul Sweeney yesterday at BAM mutual Oh yeah, driven by AI, exactly right, Julian.
Is there something that screens well for you guys right now, whether it's sectors or factors, what do you, guys, what gets your attention these days?
So we actually think that.
This is the week where you're seeing the end of mutual fun, tax laws selling, and from our point of view, when you think it is particularly in a year this strong, but there are lots and lots of stocks that are down on the year. A number of them are in the healthcare sector. Healthcare is at very depressed valuations, and healthcare is the focus of the shutdown.
Twenty seconds ed Iiman and your team their recession call.
No recession, that they were firm about it during February, March and April. They continue to be firm about it. The call is for one and a half percent growth next year. In my mind, that risk es to the upside.
Julian, Manuel, don't be stranger we'll see you Monday morning, seven am as well. He's with Evercore i EI, their chief equity and quantitative strategists. He lifts some market futures up nineteen with our news.
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We need to get brief right now.
Thomas Simmons joins US now chief feel as Economists at Jeffries as well. I love the bottom of your note where AIAI and all this caught to the chase and Jeffries is you know, there's sort of like a hip ferm.
They're like involved in all this texture.
How much is AI scaring the young kids or the older kids as well, the sixty year olds. Is it a revolution like nineteen ninety five in the Internet.
I think eventually will be, although I'm not particularly sure that it's there just yet. I think that it's an easy kind of scapegoat to look at AI and say, oh, all of these firms are probably not hiring young college graduates because they have chatbots that do their job, or they have coding resources that you know, replace all of
these IT focused majors and whatnot. I think it's actually significantly more risky for older folks, right, So, like if you were, for instance, a professional who did a lot of photo editing. I mean that's been a pretty democratized technology in terms of how AI has been kind of put in your pocket with your cell phone. So I think it's more in terms of like consumption of services on the consumer end, we see less demand for very
specialized services. And I imagine that you know, as people progress through their careers and they get kind of close to the end of them, then the issue is more so that they kind of, you know, they're runways a lot shorter in terms of whether when you know, sort of how much more big time they thought they had before retirement and that sort of thing.
So given that background, they're on the labor market, there are obviously FED focuses on the labor market, focuses on price stability, inflation.
How do you think they're going to proceed here?
What do you think the message FED Chairman JPAW would like to get across.
Today, I think that the message is pretty much unchanged really from where it was after Jackson Hole. I mean, I think that there was a c change in the sort of perception of how healthy the labor market was.
You know, you refer to this curious balance of how surprising it is that sort of demand and supply and the labor market come down at the same time, and then very shortly afterwards you see data that suggests that, well, maybe it isn't quite as imbalanced as it maybe appeared to be earlier in the year, And nothing that we've seen since then has really, you know, kind of challenged that narrative.
You know.
I think that it's one thing to kind of look at the labor market and say, well, we're not in the midst of some sort of collapse, some sort of like really you know, spiraling weakness. However, I do think that if you look at the history of labor market data, economic data in general, equilibria tend not to last forever, right, So,
like it's nice that we're at this balance point. Is the risk that from a very balanced point you reaccelerate to something quite strong or is it probably more balance towards the downside where things kind of start to sling.
We Robert Kaplan and yesterday of Harvard Business School, of gold and Sax the former president of the FED, and we spent a good amount of time talking about retraining in this bargain that we blew it on clothing industry, the clothing industry the Carolinas decades and decades ago at Jeffries. Do you see a dislocation of labor now and coming forward?
Jeffrey's sensor run pretty lean.
So fortunately, I think that our you know, kind of corporate culture is aimed at making sure everybody is kind of utilizing technology as much as possible. We're pretty careful about it, I imagined most other competitors of ours are as well. You know, obviously there's information security issues that you want to make sure you have buttoned up before you just kind of dump out this technology to everybody.
But you know, it's it's always a risk, right, I mean, whenever we've had relatively or you know, revolutionary changes in technology, part of the problem is that it looks like it's going to be this huge productivity boom that you get
from it. Eventually, in the long run, you more or less do get that, But in the meantime you have this kind of messy period where people waste a lot of time kind of trying to figure out how to use it, and it ends up being kind of an investment in productivity, whereas down for a little bit before it comes up. So I don't get the sense that we're necessarily looking at this as like, oh, we will
never need to hire more people. I think that that's going to be a monstrous mistake if businesses actually do that, because you know, it's just a kind of law of the universe that your labor force ages every day and you need a talent pipeline to continue to fill in for people who are moving on for all sorts of different reasons, whether that's retirements or pivots to other things.
How are you viewing inflation out there? I think a lot of folks, myself included, are pleasant surprise that we haven't seen higher level inflation that may have resulted from terrorists.
Right, I haven't really seen it in the numbers here.
How do you guys view that, I, you know, early on was really confused about how to interpret the whole tarif. I think that you know, most of folks in my profession were you know, either suffering for some righteous indignation about how silly and kind of you know, misdirected the policy is. But that's not for us to debate or really it's just trying to figure out what the what the impact is. And you know, we've seen a lot of price increases in a lot of different goods and
services for many years. I think a great example of something that's really kind of illustrative of the whole situation is in auto and home insurance. Right, if your auto insurance rates rise, you are pretty much immediately going to switch.
You don't get utility.
From like the service that one of these you know, insurers provides you on a day to day basis. You need them maybe three or four times in your life, hopefully fewer than that. So there's a first mover disadvantage amongst the insurers to raise their rates, right, like they would say, we'll try to capture market share from people who are getting away from the companies that are kind of forced to move with prices. I think that we're
going to see that with goods too. I mean, like they're very substitutable across a number of different vectors and you know, to this point, we haven't really seen much in the inflation data that's shown that prices have risen significantly. I think it's kind of crazy to look at one hundred plus percent tariff rates on China and then say a nine tenths increase in like window coverings is the result of of that.
The heart of the matter is, are we in the phrase that I'm using more and more now is a decline in purchasing power among a huge body of Americans?
Okay?
Within the tariffs and the debate, how do we withstand prices? And the research so far is we're accepting higher prices, right.
I think there is enough of the consumer base that is accepting higher prices, right. I think that we focus a lot of people who are struggling appropriately, so there's policy action needs to be taken to try to help people out. But like anyone who bought a home or refinance their mortgage before twenty twenty has not suffered any shelter inflation in five years, right, They've actually had their purchasing power.
Increase over that whole time.
And I think that that's one of the key reasons why we've seen the consumer writ large done so well here, And I think that businesses will probably focus on that and say, hey, if I'm charging a lot for a frivolous option on a car, for instance, maybe I can bump the price of that quite a lot while keeping the base price lower so the broad consumer doesn't suffer the same kind of inflation pressure as the ones who are sort of better able to accept this price.
How much of.
This consumer boom that we have, you know, I don't even know if they're doing Atlanta GDP now, but let's call it two point five percent plus real GDP now almost four four point four, four point eight, whatever it is. How much of that do you calculate as a wealth effect?
A lot?
I do think that it's Lisa, A lot doesn't cut it.
I don't want a number eighty five ninety Yeah, No, I pop is wealth effect. When folks ask me what my biggest sort of concern downside risk thing that keeps me up at night sort of thing, is my concern is that we're going to get some sort of big decline in asset prices that I think will crush the consumer in the aggregate overnight. Right Like, I do think that there's reasons why we see kind of weakening participation
amongst different groups in the labor market. Part of that is because they've made enough money or they have enough assets that they can retire early or reduce their work load or that sort of thing that changes very quickly if prices kind of you know, enter into a very nasty sort of negative spiral. So it's not so much that I think people are saying like, oh, my portfolio went up x percent overnight, I can spend that much more. It's more so like, how comfortable am I such that
I can make some more? You know, I have more flexibility in my spending choices because of how well I'm doing with my assets.
What's your GDP twelve months for real GDP?
Turish, I'm a little higher than that. I think we're closer to like two and a half. I think that, yeah, well, I mean, have.
We ever seen apatanism from Jefferies? I've always been an optimist.
I've am more amongst the most optimist economists mystic economists out there, I would say, but I think that it's underappreciated on a couple of different fronts. One, wealthier households are actually going to get a tax break with the big increase in salt deductions. Yeah, everybody in this room, I think, is you know, kind of aware of that. But I also think it's underappreciated that we actually have much more certainty on fiscal policy now than we would
in previous years. Oh, tariffs are Yeah, they're kind of in the rear view mirror, like I think the kind of range of outcomes is narrower. But also just the investment incentives and the tax structure. It's not that long ago several years in the recent past where the IRS was like reprinting tax forms on New Year's Eve because some tax law had just been passed at the eleventh hour.
We've known the kind of broad strokes of what the policy is going to look like since Independence Day, and that's I can't remember the last year we've had something like that where there's been enough time for business planning for next year. So I think that we'll get some dovetailing between stronger consumer and also business investment.
Thank you, Thomas Simms.
I really appreciate the break with Jeffreys aer or real Dosa optimism moving forward, and we do that on this FED day as well. Stay with us more from Bloomberg Surveillance coming up after this.
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Eleven thirty is John Murray.
The last time he was in was really interesting about his Texas and you know, just the boom that's out there as well. How do you respond to people who say it's not a boom, it's not a technological productivity driven moment that we're in in.
Are you talking about Texas or are we talking about the stuff mona Texas?
Right, don't New Jersey.
I mean to me, there's a lot of people out there doubting what we're living.
Well.
I think that, you know, if you look at what's going on in the markets, a lot of things are being driven by earnings and that creates stability. I think that's been one of the biggest reasons we've seen some of these mega compounders continue in the marketplace today. And I think that China is a really interesting component of this because it has a lot of these mega compounder companies trading at much lower multiples. And fun fact, we're
almost at Halloween. Since Halloween of twenty twenty two when the market bottomed, the Chinese index is beating the S and P five hundred. That's within Nvidia doing everything it's done. So I think there's some really interesting opportunities out there, and I want to talk about a handful of them.
But I also want to talk a little.
Bit about a QT at some point today, because that's a literaryropical.
I mean, that's something all I care about is what the FED is going to do with rates, but it is what are they doing with their balance sheet as well?
How are you thinking about it?
Yeah, let me say I was actually thinking about coming on air today and I was going through things I wanted to discuss, and it occurred to me that we have a third mandate for the FED, and the first two unemployment and inflation. But the third mandate is inherited, and that is managing balance sheet liquidity. Post the GFC, they entered into this new world era where they have to continually monitor what they're doing on their balance sheet,
and this is really a new mandate for them. And if you look at what happened in nineteen, those reserves on the federal balance sheet dipped lower below that three trillion mark, and that created real scares in the repo market. We're seeing the similar thing today. Why is the Fed all of a sudden stopping QT. What is the reason for that? Well, it has to do with the ability for banks to lend money in that repo market, and that reserves on their balance sheet close to that three
trillion mark is a big deal. So the reason I say this is because because we live in a world now where defense always going to be focused on what is on their balance sheet and how much and if they're doing q E or QT, I think that creates a real dynamic at play in the financial plumbing and in the financial markets. And one reason I like regional banks they will benefit with QT coming to an end because that will make it easier for them to lend money and that will produce a pop in their nims.
It is a general statement the banks are behind, right, and this melt up the banks.
Oh yeah or behind? Oh yeah? How behind is behind?
They're really behind? They're flager date the.
I know, but on a p or book price to book, you know, the stuff you look at, measure the behind that they are.
Tom.
You can get regional banks on a price to book basis at the same level that they were in May of twenty twenty three when you had the SVB and our.
First public blow up. They're cheap.
So what's the catalyst to make that look in video like?
Aha? Well, three things.
The first I would mention, I think that the stopping of QT is a real tailwind.
Deregulation.
That's a big component with what's going on with the Trump administration, so they want to continue that. We're seeing him in the activity already. So you know, you've seen Cadence get purchased recently so by Huntingdon Bank shares, so I think they'll see more M and A. But I think the main driver is two big pieces valuation and
earnings growth. You've got earnings growth coming out of these banks in the high teens sometimes even twenty percent, so stepergield curve, low valuations, fast earnings, deregulation and then the stopping of QT. All those things coalesce into a pretty interesting basket.
Jack Murray with his chief investment officer at NFJA. We welcome all of you across America. We welcome at you in Texas where he is from, and we say good morning on YouTube as well worldwide.
Good one.
We're on the Pacific Rim where Tyler Kendall is in Korea, good morning and good night, I should say, in India as well. Thanks for your attendance on a daily basis on YouTube. Subscribe to Bloomberg Podcast.
Paul Sweet Johnny, you mentioned China here, and we've got President Trump meeting with President She tomorrow, presumably in South Korea. What is your China call here? So we've been very bullish on China. We got very bullish, as I mentioned back in twenty twenty two. We've stayed long China.
I think actually in our international and our Emerging market funds, we might be the top allocators within that region in China gues, So we're really bullish there. You know, what I would say is that the fact that they're meeting is a real positive. There's definitely been you know, some hand gar and aids thrown back and forth between the two. I think that the last time they met was back in two thousand and nineteen. That was for a brief period in Japan. And before that it was at mar Lago.
They're not going to meet in Korea without some positives to share for the market. The reality is President she knows that he needs to continue the strength in his economy. He wants to open up some of the pathways for communication. So I think that there are real positives that could come out of this EVS or one thing they're going to tackle.
Rare earths are another.
The rare earth thing is funny because they're actually not rare as we know.
They're just refined in China.
But these are real levers and the reality is we need the two superpowers to work together. So I think this could be a real catalyst. But to be quite candid, I think the main catalyst is you've got a lot of earnings growth coming out of China, really low valuation, and they're a sleeper in the AI trade.
And if you look at.
What's going on in the US, I mean, Jensen Wand came out this summer and said that Deep Seek and Tencent and Bobby he said their models are as good as ours. And I don't really think that Americans are fully pricing that in and I think there was a lot of scare you know, maybe several months back about delisting at eight RS. You know that has not come to fruition. I do not think that would be good
for either country. The reality is China wants capital. She wants money to flow into China, and he wants investment from the US. And Trump knows that he needs to work with you to find a path here. Finanall is the big wild card. If they find a way to talk about that and restrict some of that coming to the US, that'd be a big win. So this is probably the beginning of meetings. I would expect they meet again,
hopefully around Christmas time, maybe mar Lago. Maybe we get another meeting in Florida between g and Trump.
Do you model and the prison here for John Murray folks is Texas, which we all agree is it's a unique separate and I mean I needed a passport to get through the George Bush Airport in Houston.
Yeah sure, yeah, you know, customers, I think it's the ninth largest economy in the world.
Is thank you.
Yeah, yeah, it's really big.
So if we do this China Ai thing and all the happy talking Trump and G and all, that, does that mean the Chinese economy actually lifts up and they get back to a real consumption that's been missing.
I think it's very possible. I really do.
I think that if you look at what's going on, you know, Jack maw coming back was a big deal. Pony Moss come out, he's the CEO of Tencent in support of some of the moves that G is making. So I think that she can take a page from the playbook of Trump that you need to be working with your top leaders of the biggest companies, the biggest employers in order for the country to thrive. So I think that G is doing that. He did clean house
in his cabinet recently. That's an interesting move that he made, so he definitely has stacked it with people that are aligned with him. But if I'm being honest, it's no different than generally what we see here in the US, people trying to put people around them that they think are aligned with them.
So I do think that we have some upside here.
Well, now, emmy learning China, well program.
Note on that Elizabeth Economy with us here recently, and you know she's so subtle.
Time shut up and read this book. Sure, I mean, she's so gentle about it.
Yep, And I'm actually reading a book on the Chinese milllitary because doctor Economy said a stupid read it. Absolutely, I don't have a report on it yet, but you know, like you say, they replaced generals.
And yeah, aderals as.
Such, Mike proxy for China has always been Ali Baba and the stocks up one hundred and ten percent a year to date. So my boy Joe Sai getting it done there at Ali Baba. You guys are value investors. How do you define value? So we look at value through a few dimensions. The first is based on evaluation relative to a company's history, the market, and peers. But I will tell you that the peer group is the real crown jewel of our research because peers are not homogeneous.
Think about the housing market, for example, if you look at homes you know in New York or California, you really have to create homogeneous peer sets to determine if a house is expensive or cheap. It's not just you know, every house on your block is not a comp. So if we take regional banks, you can't say that they're all comps because some have wealth management, some are tied to interest rates. So you need to really have a statistically tight group and.
Single best buy. Are you allowed to say like this is our single best buy.
Well, that would be if I do the single best buy it. I have a one stock portfolio, so we run diversified. But I will tell you that Ali Baba is our top weight in our international So it's nice.
Paul's really on top of this. Well, give us twenty seconds, Ali Baba.
Go okay, So Ali Baba.
First thing I'll say is they have they have made a commitment to do over fifty two billion in cloud infrastructure over the next three years. That's an enormous commitment to AI. You're trading at some of the lowest valuations on EVA to EBITDA basis over the last decade. We have a long way to go. They've been increasing their dividend and they now pay a dividend. Ali Baba went from a growth stock to a value stock. So you've got dividing growth, You've got tons of cash in the
balance sheet, big investments in AI. I think the future is really bright for these guys. This is a combination of Amazon in VideA. You have all these components tied together within the Baba infrastructure. Cloud infrastructure Chips Models Retails that covers it.
You guys, I see you. You're on with Robin Hood right now. Absolutely.
I belong to Joe Sigh for a long time.
Tell me one thing about quick qick quick. Taiwan is the big wildcard. What is going to happen with Taiwan? If we looked at the playbook for Hong Kong, they took it back, and they did it slowly, but they did take it back. I think that that's going to be the play very slowly.
John, Thank you John Mowery with his Chief Investment Officer NFJ there.
Stay with us.
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In two thousand and six, they found a tree which is growing to the sky. It's out in California. It's a redwood. It's a secret where it is. They want to keep the idiots away from it. It's over a football field tall, which is nuts. It's our example of trees to the sky. Alicia Levine knows that earnings revenues the stock market in Nvidia, it doesn't grow into the sky.
Head of Investment Strategy and Forest Wisdom at BNY Wealth joins us this morning, how close are we to redwood height in this stock market?
So I don't think we're at redwood height, because I do think the earnings are delivering and coming in better than expected. And the multiple that we're at today now we're at twenty three times, but for most of the year we were at twenty two times forward earnings, which is where we were a year ago when we worried about expensive markets. It's the earning that are driving this market. And so I don't see redwood to the sky. I see a very careful path upward, climbing that tree.
And now the fedor doing differential equations today, Okay, let's look at a quadratic glide path. Sure, we're spending all this money on CAPEX. There's another curve line which is someday it's going to pay off as well. Where in the X access do we learn if AI pays off? If you've got quadratic glide pass crossing at some point.
Look, it's a great question, I would say as a market matter, I'd say I'd say you need to have visibility into the next eighteen to twenty four months here, right, Like it can't.
Be five years.
Right.
If it's five years, you're.
Going to wind up with a market that's going to reset at the top here. So I think it has to be eighteen to twenty four months. This is how we invest our client capital. We do twelve to eighteen months forward. That's probably the right time horizon. That's why we use far forward earnings on the S and P, not the trailing. I think the trailing is irrelevant. It's the forward. It's always looking forward. So if you have a monetization of the cap X within the next eighteen
months or so, then the market's fine. Then you're opening.
You don't hear that in the conference calls, Yeah, Carol on timblebeyond, like do we go down on down?
Do we go down four thousand points?
So it's no, I mean it's I don't think it's today. I don't think it's the earnings call. It's forty eight hours is so let's call it rich. It's a rich forty eight hours, it can be up for two days straight just on what could affect the markets. It's not today, but it has to be some visibility. And as you know, some of the companies that have actually shown to monetize some of their investments earlier have done better than others,
and where there was a question about it. I can't talk about specific names, but you saw the stocks languish for a year or eighteen months because there's investment with no payoffs. So it is very clear that there has.
To be some.
ROI here.
Coming down to the bottom line, how do you.
Think about the one Big Beautiful bill.
A lot of folks are saying that's going to be a real driver for growth in twenty twenty six.
We're worried about tariffs in the short.
Term, but how about in twenty twenty six with some of the legislation that has passed.
So I think it's a huge driver. It largely offset the drags for tariffs on the corporate sector in the aggregate. And I'm saying that slowly and clearly because not every company, for instance, a furniture company, is going to feel the effects of the One Big Beautiful bill. But overall, the tax consequences and the cash flow nature of investing offsets the drag for tariffs. It's enormous on the corporate sector, which is this year, which is why earnings are so strong.
We don't see the effects of tariffs. And in the first quarter of twenty twenty six you have the consumer support coming from the tax code, so refunds from the IRS February, March, and April. So you're supporting the lower end of the consumer that are available to get these refunds while you're supporting corporates.
It's huge.
Well, Paul, to me, that's the question of the day that you asked.
I mean, to me, it's been underanalyzed. Yep, it's been under It's not in the zeitgeist here as well. And you just look at it as one big stimulus, I mean, the big beautiful stimulus.
I think is I think the more important point here is when you think about modeling this, it's been very univariable. What are the effects of tariffs on an economy? Well, that's fine, everything else being equal, but everything else is not equal. It's a dynamic model. There's fiscal policy as well, coming with the unusual trade policy for the country, and actually it's offsetting it and encouraging capex twenty seconds.
If we get lower interest rates, there's a univariable ambiguity there. We can have a positive construct with lower rates.
Camera absolutely, absolutely, I do.
Okay there, I'm pretty I'm just reading Forbozi here, trying to keep up.
Look, you know we are lower rates, higher market, everything else being equal, as long as inflation doesn't get to four percent. Okay, so the market's accepting three. The Feds restarted the cutting cycle at inflation at three percent.
Michael Barr's taking notes. Alicia Levine, thank you so much. With Bny there on the lift in the market.
Let us make notes. She has said participate in equities. She has been correct.
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