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We'll begin this sound with stock slower and Crewed rising as peace talks in the Middle East remain idle. Eric Cancer of Molus and Company writing, energy dependence and domestic production are key to insulating the US from global shocks. Eric Johns to now for more. Eric, good morning. It's good to see you. That's great to be here in the present. It's tough in the future. Things looking better.
Recording to financial markets, what's going to shake this market after such a powerful forward looking mindset?
You know, Look, if you think about where we are, and I know the discussion around the table this morning has been the incredible resilience of the American economy. And I think that if you look at it, a lot of it has to do with some shock absorbers that, frankly, the Trump administration in Washington has been put into place. You've just experienced big tax refunds that came out of
the one big, beautiful bill. You now have a shock absorber, if you will, that is going to be afforded to the corporate community in the terms of one hundred and
sixty billion dollar tairaff refunds. You've got actions on the part of this president said Hey, we're going to go and ease this oil crunch by releasing more strategic petroleum reserves, the waivers on the Russian oil, and ultimately you've got a very pro business administration in Washington, so you've got a regulatory construct that is much more constructive than we've had in the past. So I think all that helps when you see these earnings, helps explain where we are.
Do you think underestimating the momentum going into this war?
Well, I do think so, and I think that there's not been a lot of credit given to this construct, the policy construct we've operated in. Certainly, the liquidity that's out there with a high end consumer has not abated yet. But look, I don't think we've necessarily gotten to peak
shortage yet. And just as your guests have been discussing on the show this morning, I do think that we've got real uncertainty as to where and how you're going to see these oil flows were resumed so that you can get back to normal.
Blackstunge just came out with earnings, so they said this is going to be the year of the IPO. They still think it's going to be an unprecedented year for IPOs. We've heard that from a number of companies that mergers and acquisitions going incredibly strong. When you talk to companies given the uncertainty out there that you just reflected, how much are people willing to carry through with some of these plans given that things could change a lot in the next couple of months.
I think, you know, the market's clearly looking through the short term uncertainty in the golf I mean, there's no
question about that, and it's undergraded by the earnings. But you know, if you look at the forces that have been at work, and I talked about some of the policy forces, but if you see in the commercial world and where companies are with this technological revolution that we're experiencing with the AI boom, you know, companies are thinking how am I going to position myself boards and manage when are saying, hey, what do we have to do
to take advantage of this? And you've got that tailwind that continues to push forward in terms of people saying, hey, maybe we should transact, maybe we should accomplish more scale in order to take advantage of this situation. And then obviously in the world of private equity, you constantly have this need of recycling capital, You constantly have a need for return of liquidity to the LPs. That hasn't gone
away either. So in many ways, the structural pillars that have supported the environment to transact have not gone away either.
So you don't think that what we're seeing right now in the Middle East is going to deter the pace and frankly, the pipeline that people were talking about, which was unprecedented heading into this year.
Well, I mean, look, there's no question that there're going to be specific areas. I mean, individuals, entities in the Middle East are certainly not in the same state of mind as they were eight weeks ago. So there are going to be geographies, and they're going to be certain areas. I mean, with the AI situation and private credit and software, certainly that's going to have an impact right now. But that I think is a short term sort of thought.
That longer term, you've got these structural tailwinds that are continued to propel people's willingness to say, hey, we want to do something. Things are moving too rapidly.
So many people in this industry are incentivized to keep on bouncing. We could say three of the biggest ipis we've ever seen in the history of this country, Open Eye, an thro pick SpaceX Old in the next nine months, and.
It potentially could change the dynamic that we've seen in terms of assets in the US, where people were talking about a scarcity of stocks and the buybacks that have been going on for so long, and suddenly we're going to see the biggest expansion of US equities public equities that we've seen in many, many years. So there are a lot of structural questions that are facing this market later this year.
We've struggled with reality versus hype. I'd like your view on that. When I say everyone's incentivized to keep on bouncing, it's a little bit of snock in that as well. I think everyone's incentivized to things are maybe better than they are at the same time because they've once got to make some money later this year, particularly off those three big IPOs. Potentially, what is real and what is hypen What.
Is real is we are we have sort of an error of revolution right now. You think about sort of the geopolitical revolution, the trade revolution that's come into play with this present. You think about the technological revolution that we are experiencing all these forces are coming to bear. That really is the reality. People are trying to understand how the best position themselves, their capital, their companies to
take on these new times. And I think that is reality, and there is incentive for sure to try and benefit from a lot of a lot of the changes.
You call them forces. Other people might call it friction. And with that increased friction comes increased costs. What's your reaction to that, Well, I.
Mean, I do think it's increased costs if you do it the old way. If you're going to go in and try and embrace the new way, that's where everyone's trying to get to. And that's exactly the point. That's the dynamic. Whether you call it friction or whether you call it, you know, a tailwind or a force, that is the mechanism that is saying to people, hey, we need to stand up, look at where the opportunities are, otherwise we're going to be left by hand.
Which is why there is such an aggressive, forward looking mindset in this market right now. We spoke to Jim's out of Apollo in the last month several weeks ago. He sat in your chair and he said, we all need to take a walk, because in six months time, we won't even be talking about the crisis in the Middle least, we'll be talking about how wide open financial markets are,
how much dealmaking we'll we get getting done. I can't remember the full list from Jim, but it went something like that, you agree with that.
I one hundred percent agree with that. And again, I do think you've got a regulatory construct. You've got the SEC, You've got the FTC, the DOJA, You've got all these you know, regulators in Washington that are primed to want to help the growth in this economy.
Do you think that in this environment it's appropriate for the government to take a stake and say a struggling airline maker, like an airline operator like Spirit Given the fact that most people are saying this is a short term issue that you can look through.
Well, look, there's a difference between what this administration has has implemented its policy on critical sectors, you know, critical sectors, whether they be those that are central to the discussions with China. How do we go make our supply chain secure? How do we make sure we have a biopma supply chain here so the next time we've got a shortage or a pandemic. We're not relying on China for inputs
for our drugs. I mean, I do think that there is almost a bipartisan recognition that, hey, we got to do that. I'm not so sure that there is a bipartisan recognition that hey, we've got to step in and help whatever domestic industry there is. And you know, we'll have to see whether these discussions come to fruition and what the reasoning, what the reasoning is, mind.
I mean, what happened to the Republican pency?
Come on, listen right now, Jonathan's not a good topic with me because I just experienced in my state of Virginia a very very narrow loss in a very extreme partisan gerrymandering that the other side put into place. And I do think people are going to have a reaction and there will be a backlash to some of the extremity that's going on.
You think that'll showup in a bit sense.
Well, I hope so, because there was no question where the intensity was on the part of the two sides in Virginia on Tuesday. They were on my side because of the extremity and the just insane.
I don't know all the words, both parties guilty of that. Why was this Differentia, Well.
This one in Virginia. You have to get granular and specific, but it was thirty six changes to the law. There was a waiver of the constitution just four or five years so that they could go against Trump and respond to his alleged moves. I mean these things, most people are not living that partisan lens. And I do think allultimately people are going to be worried about how they
get ahead in their life. And I think this discussion about prices and gas pump prices, that's what is going to ultimately determine all of this as well as the outcome of the midterms. Is are we going to get these prices of the pump down?
Eric, it's going to see you, It's going to catch up. Thank you, sir, as always, Eric Cantade of Molus and Company.