Interview, Press Conference, Fireside Chat
“Stocks Are Still Very Undervalued”
- The global economy faces uncertainty but is projected to show optimism in the intermediate term, avoiding a recession in H2 of the current year despite a potential 30% probability of a soft patch.
- The U.S. economy is expected to benefit from fiscal expansions of approximately 6% this year and 6-7% next year, alongside a potential credit boom driven by new legislation, AI, and robotics.
- Inflation is anticipated to accelerate and enter an upward trend by May or June of next year, following an initial phase of a credit boom that may drive home prices higher.
- Asset prices are forecast to appreciate in the intermediate term, driven by German defense-related fiscal expansion, a phase shift in currency trends, and the deployment of AI which is expected to add to GDP over the next five to ten years.
- Equity markets are viewed as undervalued, though tariffs on corporates may act as a one-time tax impacting stocks or consumption in the near term, with a specific historical "wobble" risk noted around mid-August.
- Capital expenditure is projected to rise further starting in early Q4 due to banking deregulation, while tax benefits including bonus depreciation and lower tip taxes are expected to become highly effective early next year.
- Federal Reserve policy is anticipated to involve few rate cuts, with a "wait and watch" approach in the coming months reducing the odds of cuts in the following six months, potentially reversing the dollar trend.
- The pricing for the rates curve through the end of 2026 is considered excessive, and the current market environment is characterized as an "effect story" rather than a "rate story."
- Real assets are expected to outperform fiat currency by approximately 6-7% annually, and if the Fed holds rates, the strong dollar trade may continue to be supported by Federal Reserve policy and the AI wave.