Podcasts about Morgan Stanley

Our CIO and Chief U.S. Equity Strategist Mike Wilson explains that gains in the stock market are expanding to more sectors and why investors should position quickly.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley's CIO and Chief U.S. Equity Strategist.Today on the podcast I'll be discussing the changing equity market leadership.It's Tuesday, June 30th at 11:30am in New York.So, let's get after it.Something is happening in plain sight but still isn't fully appreciated by investors. The market's leadership is changing. And as usual, by the time everyone agrees that it's happening, the easier money will probably have already been made.Coming into this year, the primary differentiation to our view was that the economic and earnings outlook were much stronger than the consensus believed. That view was built around a few simple, but powerful ideas: easy comparisons after a three year rolling recession, lean cost structures, pent-up demand, fiscal support from capex incentives and tax cuts, deregulation for the banks, and a monetary backdrop that was increasingly supportive through the liquidity channel.Putting those together, the setup looked like a classic early cycle. Revenue growth returning on top of lean cost structures leads to strong operating leverage and well above trend earnings growth.Fast forward to today, and that's exactly what has happened. The median stock in the S&P 1500 is now growing earnings at a double-digit pace, the fastest since the post-COVID boom. Revenue growth has returned, with the median stock growing its top line by 7 percent. That is a rolling recovery showing up where many investors still aren't looking.For much of this year and particularly the past few months, most investors didn't want to hear that story. The Iran conflict pushed oil sharply higher. Rate-cut expectations turned into hike expectations. Faced with these headwinds, investors crowded back into the AI trade especially semiconductors and memory in particular. To be clear, the earnings revisions in semiconductors have been spectacular. The move wasn't irrational. But when something becomes the most owned, most loved, and most obvious area of the market, it becomes harder to surprise on the upside.That's where I think we are now. The hyperscalers have started to underperform, and that may be an early warning sign for semis, which are the key beneficiaries of the AI spending boom. Earnings revision breadth for semis is pressing against historical extremes. Again, this does not mean the AI cycle is over. But it does mean that the rate of change may be peaking, and when price momentum starts to fade in a crowded trade, it can lead to significant set-backs. It can also give other parts of the market room to breathe. In short, the broadening trade is back!The equal-weighted index and small caps are outperforming again. More importantly, the groups we have been recommending – Consumer Discretionary Goods, Transports, and Regional Banks – have already started to show relative strength over the past six weeks, even though positioning and sentiment remain neutral to negative. That's the kind of combination I like: better price action, improving earnings, and investors still skeptical.One reason I've been more constructive on the consumer than others is that I've also been more bearish on oil. That view was not dependent on a grand deal between the U.S. and Iran, although that obviously helps. The signals were already there. The Brent-WTI spread narrowed, and energy stocks began underperforming from the day the conflict started.The market was telling us something before the headlines confirmed it. And longer term, I think the conflict has put the world on notice: this choke point around the Strait of Hormuz must be solved. It's no longer a risk that the world is willing to tolerate. New routes, new supply, and new energy strategies are likely coming. Necessity is the mother of invention, and I would not underestimate the world's ability to adapt.A less problematic oil backdrop helps the broadening trade too. So does the Fed, at least on rates. The June FOMC meeting told us two things: forward guidance is going to be diminished, and the reaction function is now focused more squarely on inflation.My view is that falling energy prices, peaking tariff-related inflation, and contained services and housing inflation keep the Fed on hold rather than hiking this year. If that's right, lower than expected real rates could be a positive surprise for equities and another tailwind for the broadening of performance.The key variable to watch at this point is liquidity. This Fed is unlikely to be as proactive with balance sheet support, just as the real economy needs more capital for capex and the markets are dealing with more equity and credit supply. That's the near-term real risk, especially for popular momentum trades.Bottom line, the market may look choppy and even weak at the index level, over the next month, but the message underneath is improving. Earnings are broadening, oil is falling. The shift is already under way with crowded momentum trades wobbling, and the under-owned areas of the market starting to lead.Investors can either wait for it to become more certain – or position before it becomes obvious and fully priced.Thanks for tuning in; I hope you found it informative and useful. Let us know what you think by leaving us a review. And if you find Thoughts on the Market worthwhile, tell a friend or colleague to try it out!

Europe's equity rally has surprised many investors. Our Europe Head of Research Product Paul Walsh and Chief European Equity Strategist Marina Zavolock discuss potential outcomes of the broadening market.Read more insights from Morgan Stanley.----- Transcript -----Paul Walsh: Welcome to Thoughts on the Market. I'm Paul Walsh, Morgan Stanley's Head of Research Products here in Europe. Marina Zavolock: And I'm Marina Zavolock, Chief European Equity Strategist. Paul Walsh: And today, we're looking at whether European equities have more room to broaden – as markets assess the implications of a potential U.S.-Iran deal and a reopening of the Strait of Hormuz.It's Monday, June the 29th at 10am in London. Marina, it's always great having you on. And for our listeners out there, I think they'd be interested to hear that if we look at Europe's performance year-to-date, it's now on a par to the S&P. So, both indices are up somewhere between 7 and 8 percent year-to-date. So, Europe is starting to stage something of a comeback from the conflict lows. And so, what's driving this? And are we beginning to see inflows into Europe again? Marina Zavolock: So, I'm going to give a two-part answer to this. Firstly, Europe has a lot of the same exposure as the U.S., so that is part of the reason… I know that Europe has this kind of reputation for not having a lot of tech exposure; but we do have tech exposure… Paul Walsh: We do. Marina Zavolock: Not to the same degree as the U.S., but, let me just give you some numbers here. So, we have a number of sectors heavily exposed to the AI CapEx boom. These are led primarily by the semis sector in Europe, tech hardware, cap goods, and metals and mining; specifically, copper has a link to AI as well. And those sectors, let's say roughly they make up at this point about 15 percent weight of our index. And if you look at that year-to-date performance that's on par with the U.S., almost 90 percent of it is made up from these sectors.Paul Walsh: Yes. Marina Zavolock: So, these sectors have moved just as aggressively as many of the AI pockets within the U.S. That's the answer that's kind of similar to the U.S. The answer that's a bit different is that we get from time to time, over the years actually, but we had a very big one earlier this year. We get these waves of interest in Europe because investors start to think about diversification. So… Paul Walsh: That's right. The broadening. Marina Zavolock: Yes. So, they... And we've called for broadening recently on the back of this, Iran-U.S. MOU. But this broadening has other drivers as well. So when we felt this wave of interest in diversification, and we saw the flows coming into Europe earlier this year, the driver was initially because the Mag7 was kind of going choppy and sideways. So, that just drove diversification out of Mag7 and into equal-weighted S&P, but that also always benefits Europe. Or tends to benefit Europe. But also, we had this wave of interest in real assets earlier this year; and Europe has a higher share of real assets than the U.S. Now, at this moment, I am sensing that we are getting that pickup in broadening interest once again from my feedback with investors. You had this MOU, which was the initial trigger. You have oil prices, broadly, they're falling. That's helpful as well. But I think the biggest driver of what's driving this diversification interest at this moment is actually the volatility that we're seeing in the AI complex. Paul Walsh: Mm. Marina Zavolock: So, what a lot of the feedback I'm getting these days from investors that are coming back to Europe after focusing primarily on the U.S. is, ‘Look, I have a lot of AI in my portfolio. I like my AI exposure. I'm not looking to get rid of it or to sell it, but incrementally, I'm a little bit worried about this volatility. And I'm looking to broaden my exposure. What do you like in Europe to help me diversify away from this kind of volatility that we're seeing now?' Paul Walsh: And I think that's a great segue, Marina, to my second question, because with Europe having really kept pace with the S&P year-to-date, the question that really is going to be asked is the sustainability of that relative performance. And when we think about a backdrop here in Europe of pretty low economic growth, the market continues to be worried about rate hikes given recent inflationary dynamics. And as you've articulated there, tech has played a very significant role here in Europe as well in terms of driving markets higher. So, you've alluded to it in a few of your comments already, but how sustainable do we see this as being? Marina Zavolock: It depends on AI, to be honest with you. So, if AI starts to really move up at an aggressive pace like it was earlier this year, then it's hard for Europe to outperform given our exposure. But if that starts to move up at a more moderate pace, Europe has a chance to do very well. Paul Walsh: Mm. Marina Zavolock: I think there's a lot of misperceptions when it comes to European equities. And outside of AI, actually there's quite a lot of strength. So, misperception one, you've mentioned it, which is basically: Oh, look at our PMIs, look at our GDP growth. Why bother with European equities? I think this is maybe what some U.S. investors may think. But just like in the U.S., the equities market, and maybe even more so, the equities market in Europe – it is not the economy. Paul Walsh: Mm. Marina Zavolock: So, we just published our global exposure guide over this past weekend, which Morgan Stanley has been running 29 iterations of this guide. Europe's exposure to Europe is pretty much at historical lows over decades. Europe's exposure to Europe as a percent of revenues is now 45 percent of revenues … Paul Walsh: Yeah. Marina Zavolock: ... is European exposed. The rest is very global, including the U.S. Um, Europe, uh, Of that 45 percent domestic, a lot of that is banks, some defensive sectors. Only a very small sliver is actually consumer-oriented sectors that would see earnings downgrades on the back of ECB hiking, for example. So, I think people may also be surprised to know that consensus earnings growth for Europe this year is over 16 percent. Paul Walsh: Mm. Marina Zavolock: It's really healthy. Paul Walsh: It's pretty healthy. Marina Zavolock: I know the U.S. is over 20, but Europe is over 16 percent. These kinds of ideas of, you know – we have a shortage of energy and therefore our earnings are going to be down – they're misperceptions. Because actually, as long as oil doesn't spike to, I don't know, [$]150. If it stays within a healthy range, call it [$]70 to 90, that's actually a very good environment for Europe because we have a lot of real assets. We have the banks which benefit from higher inflation because they trade on the steepness of the curve. And we have some AI exposure. If you add up those three things, which all benefit from inflation, that's 60 percent of our earnings pie.Paul Walsh: Right. Marina Zavolock: Hence, Europe's actually doing really well. And I'll just mention one other thing. Earlier this year, we broke out of a structural downtrend discount; that range that we were trading in versus the U.S. So, for almost 10 years, Europe's discount was just going wider and wider and wider and wider. And as of January 1st, this year, on a like-for-like basis, so sector neutral excluding Mag7, we broke out of that structural downtrend, and we keep seeing a narrowing. Paul Walsh: Yeah. Marina Zavolock: So, if you're going to broaden, it actually makes a lot of sense to look at Europe, where we have these discounts, and we have value, and we have growth. Paul Walsh: Yeah. So, the point there being the relative valuation discount of Europe to the U.S. has been actually closing a little bit more recently. Final question from my side. You have obviously recently refreshed your sector model. We have talked about the broadening in our conversation today. What are you advocating to your clients out there in terms of relative sector preferences? Marina Zavolock: Yeah. So, we run a data-driven model. Just briefly, we look at things like earnings revisions breadth – works really well as a leading indicator in Europe; a leading indicator for future earnings as well. Consensus price target revisions breadth, balance sheet measures. We look at a number of different things, AI exposure. And basically, I'll just give you the top sectors in our model now. Semis number one, metals and mining number two, led by copper. Paul Walsh: Mm-hmm. Marina Zavolock: Banks number three. I think banks, for me, it's a key diversification play. Paul Walsh: Yes. Marina Zavolock: A big differentiator. And trading on 10 times PE with very high distributions, buybacks and dividends, low teens earnings growth upgrades. Front of the line on AI adoption and seeing that ROI coming through. Cap goods, number four, that's also led by AI exposure. Paul Walsh: Yeah. Marina Zavolock: And then I'll just mention lastly, utilities is an overweight as well. That's also a little bit AI linked, but very, very under-owned; lagging the trends we've seen in the U.S. And broader based in terms of the positives there because we also have this drive for renewables, which is coming back. Paul Walsh: Marina, always, we value your insights highly. Thanks as always for taking the time to talk. Marina Zavolock: Great speaking with you, Paul. Paul Walsh: And thanks for listening. If you enjoy Thoughts on the Market, please leave us a review wherever you listen. And please do share the podcast with a friend or colleague today.

Although markets may recalibrate to a different policy playbook under the new Fed chair Kevin Warsh, housing could remain in a holding pattern. Our co-heads of Securitized Products Research Jay Bacow and James Egan explain why.Read more insights from Morgan Stanley.----- Transcript -----Jay Bacow: Welcome to Thoughts on the Market. I'm Jay Bacow, co-head of Securitized Products Research at Morgan Stanley. James Egan: And I'm Jim Egan, the other co-head of Securitized Products Research at Morgan Stanley. Jay Bacow: Today, the glow has maybe worn off the championship of the Knicks, so we can talk about the impact of Warsh on the mortgage and housing market. It's Friday, June 26th at 10am in New York. James Egan: If we have to stop talking about the Knicks, we can stop talking about the Knicks. But Jay, I think one of the things, if we take a little bit of a step back in mortgage markets, in housing markets, in fixed income markets more broadly – from the beginning of the year to now, we've gone from the market pricing in 2.5 cuts from the Fed by the end of 2026, to the market pricing in roughly 1.5 hikes. 100 basis point difference in market expectations over the course of the past five and a half months. Now, that's happened at different times, with different levels of velocity and severity. But one of the key talking points we have now is – we have a new Fed chair. We had the first FOMC meeting and his press conference after that last Wednesday. What do you think that means for mortgage markets, for volatility? How are you thinking about this? Jay Bacow: look, Jim, it's a great question, and we've got asked that by a number of different investors. Chair Warsh has been pretty clear that he thinks people should do more of what they're good at and less of what they're not good at. And so, he's felt like the Fed should keep their communication on future guidance relatively short. And so, with less forward guidance from the Fed, the market has more uncertainty, and more uncertainty translates into more volatility. And more volatility is generally bad for the mortgage market, given that investors are short the option to the homeowner to refinance. Furthermore, shifting from expectations of the Fed cutting to expectations of the Fed hiking generally makes it a little bit less favorable environment for investors like banks and overseas investors to come to the mortgage market. James Egan: Alright. Now, we've been on this podcast several times this year where we've talked about, you mentioned banks... We've talked about deregulation. We've talked about Fannie Mae and Freddie Mac, the GSEs – them buying mortgages, that being constructive for our mortgage view.Is that still the case, or how are you layering that into your thought process? Jay Bacow: now? That's definitely still the case. Those things haven't changed. The deregulation is still flowing through the markets. That longer term should be supportive of bank demand in aggregate, although obviously there are a number of different regulations going through. The GSEs are still forecasted to buy 200 billion mortgages on behalf of President Trump's initiative. So, that's why we're just sort of tactically negative – those technicals are very strong in an environment where there really has not been much supply. Now, some of that supply is because mortgage rates are still in the context of 6.5 percent. Some of that is because with mortgage rates at 6.5 percent, there hasn't been that much housing activity. So, Jim, turning it to you, what is the outlook for the housing market in a world where they are expecting the Fed to hike and rates to stay elevated? James Egan: Right. So, the main thing that we focus on from a housing market perspective is less specifically Fed action and more the 5- and 10-year part of the curve.So, when you start to say something like you're tactically negative mortgage-backed securities here – how can I interpret that from a mortgage rate perspective? Jay Bacow: If we're tactically negative, it's more of a small move than some massive move. And as you said, and we've talked about on this call beforehand, realistically, the mortgage rate is a little bit less dependent on the Fed policy rate and more around the belly of the Treasury curve. And, you know, what's going to happen with the belly of the Treasury curve is going to be dependent on sort of market expectations along with what's happening in the geopolitical situation. So realistically, if you've written down that the mortgage rate is 6.5 percent right now, our view probably doesn't change things too much. James Egan: And if that's the case, then affordability in the housing market, as we've been talking about, is going to continue to be challenged. And what we think that means from a housing activity perspective is any upside that we really thought would have been there gets pretty significantly capped. But the same side of this token – or the other side of this token, if you will, we do think that the current level is well-supported here. There's some level of housing activity that has to occur regardless of where affordability is, and we think we found that. We're at 40-year lows from a turnover perspective. From the fourth quarter of 2023 through now, we've been roughly at the same level. That's 11 consecutive quarters now. We think this is the kind of base level for people that need to transact regardless of where mortgage rates are. So, the more that the rate environment remains challenged, the more that we kind of hang in this low to mid 6 percent mortgage rate environment. We just think that that continues to curtail upside. So, it's a housing market and a housing activity space that continues to very much just remain stuck in neutral. Jay Bacow: Alright. So, if we're in this new environment and the Fed might be hiking, it's not great locally for mortgage valuations. Housing market more broadly, probably kind of stuck in neutral here. Jim, always a pleasure speaking with you. James Egan: And always great speaking to you too, Jay. And to all of our regular listeners, thank you for adding us to your playlist. Let us know what you think wherever you get this podcast and share Thoughts on the Market with a friend or colleague today. Jay Bacow: And go smash that subscribe button.

Our U.S. Public Policy Strategist Ariana Salvatore joins our Deputy Global Head of Research Michael Zezas to consider the consumer outlook and how it may impact the November midterm elections. Read more insights from Morgan Stanley.----- Transcript -----Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Morgan Stanley's U.S. Public Policy Strategist. Michael Zezas: And I'm Mike Zezas, Deputy Global Head of Research. Ariana Salvatore: Today, we'll be discussing the consumer outlook, policy catalysts, and what it could mean for the 2026 midterm elections. It's Thursday, June 25th at 9am in New York. Mike, you're on the road, obviously not in New York City this week. Why don't you tell us a little bit about the conference that you're at, and then we can get into some of the topics that have come up in your conversations. Michael Zezas: Yeah. I'm down in South Carolina at Morgan Stanley's Captains of the Consumer Industry Conference, where we put together investors and leadership of key consumer companies in the U.S. to learn about each other in a more informal way, brainstorm… And it's been really interesting. We've had a lot of meetings with leadership from different prominent consumer companies throughout the U.S. And it's been really fascinating to hear how the consumer's been quite resilient. But in general, one pattern that sticks out is rising concern about lower-income consumers' behavior starting to lag in meaningful way higher-income consumers' behavior. You're starting to see substitution and sort of more selectivity amongst lower-income households, a pattern that began a bit last year as a lot of these companies would report with higher tariffs. That seems to have continued with higher gas prices driven by the conflict in the Middle East. So, there's a lot of discussion and concern about how durable it is. And in particular, if there are some policy choices here that might alleviate some of that pressure and bring some fundamental strength to what is a challenged segment of the consumer market right now. Ariana Salvatore: Let's talk a little bit more about tariffs. It's our economists' view that we've mostly gotten through the tariff pass-through. Is that the sentiment that you're hearing from corporates and the clients that you're talking to? Michael Zezas: It is. Well, it's certainly the hope. And I guess the follow-up questions here are: once some of the temporary tariff authority that was put into place after the Supreme Court struck down the use of IEEPA, will there be a restoration of those tariff levels? And will the USMCA negotiations create higher tariffs? So, Ariana, what's your thoughts there? Is there any concern for companies that they're going to start needing to deal with a re-escalation of tariff costs relative to what we experienced, say, last year? Ariana Salvatore: Yeah, I think to answer that question, we need to dig into this under the surface a little bit and understand what types of tariffs that we're talking about. So, to your question on the USMCA, we see that largely as a story of continuity, right? So, the USMCA exemption has been in place since the deal was signed, right? And since Trumpimposed those Section 301 tariffs, we think that's likely to stay the case. That means the vast majority of the goods trade between the U.S., Mexico, and Canada is right now not subject to the 301 tariffs. Now, on the other hand, we have existing Section 232 tariffs in place on not just sectors like steel and aluminum, but a bunch of other goods, too, and we're supposed to get more of those investigations wrapped up in the next week or so. So, on that front, I do think there could be some potential room for escalation, but more broadly speaking, we think the direction of travel is relatively stable, if not slightly lower, because, as you mentioned, the IEEPA tariffs that were replaced by the Section 122s have to get replaced again end of July, right? So that Section 122 authority was a temporary authority. The president is going to have to replace that with a mix of Section 232 and 301. It's been our view that when that happens, there could be some alleviation for very specific pockets of goods that fall into really neither bucket, right? So,they're not necessarily critical for national security, and they're coming from countries that are difficult to maintain a Section 301 investigation on. So, it's actually very nuanced under the surface. I would say in the aggregate level, what we think is that you're going to see the tariff rate stay somewhere around 8 to 9 percent on a headline basis; if not directionally, maybe a little bit lower throughout the course of this year. Michael Zezas: Got it. And I think that message has been music to the ears of a lot of these companies. And I've been doing these meetings with our chief economist, Michael Gapen, who has said that that's contributing to what he forecasts as being a meaningfuldeceleration in inflation into the end of the year. Certainly an inflation level lower than what the aggregate Fed forecast isat the moment. Another question that comes up is whether or not the recent decrease in oil prices, which should feed through into lower gasoline prices, is durable. If that's something that could be counted on, because obviously these companies are thinking about it being a potential tailwind to demand going into the second half of the year. How do you think about that, Ariana? Ariana Salvatore: The MOU that the U.S. and Iran signed, I would say was a welcome development for markets. But that being said, there are a number of paths to re-escalation, in our view. Really four things to keep an eye on, kind of outstanding questions or uncertainties. The first is on execution risk of the MOU itself. It's very light on details. We need to see more about how exactly the Strait of Hormuz is going to reopen, if there's going to be a servicing fee, a tolling regime, et cetera. That was a red line of the United States. But again, implementation there is a big question. The second is on the calibration or divergence between the U.S. and Israel in terms of their objectives. We identified that early in the conflict as a potential indicator of how long this could possibly last, and I think it's equally as important in assessing how long the ceasefire or the MOU could stay in place. The third thing I would say we need to learn more about is the role of Congress in all of this. So, some Republican lawmakers actually pushed back against the MOU, saying it didn't go far enough to advance U.S. interests. Now Congress has a more limited role when it comes to the actual MOU implementation itself. Remember, the JCPOA, the Iran nuclear deal in 2015, didn't go through Congress either. But Congress can exert some more power come the fall when we start talking about defense appropriations, right? The Pentagon is asking for $1.5 trillion. [$]300 billion of that is supplemental war funding. And so, I think if you see Republicans push back, that's going to be an easy forum for them to do so. And the last point is on the negotiations themselves. So, the MOU is a 60-day ceasefire throughout which both parties are supposed to be discussing the nuclear question. Now, looking back at historical context here, the JCPOA took about 20 months to negotiate start to finish. This is a very compressed timeframe, and again, obviously potential risk for escalationas we see these negotiations go on the next few months. So, Mike, I would say, like I said before, markets are definitely seeing this as a welcome development, but that doesn't mean it's without execution risk. Across the board, our outlook actually expected a normalization of flows by the end of June, so we're kind of pulling things up by about two weeks. That means that the outlook basically remains intact, but with marginal upside as this is a slightly more constructive outlook. Michael Zezas: Got it. So net net, there's still plenty of execution risk going on, but the trend is at least towards easing of some of these policy pressures that have been impacting the consumer. And it's also been interesting that a lot of the conversations have led to questions about artificial intelligence. Now, at this conference last year, a lot of the discussion about artificial intelligence was around how these companies were implementing it to create new marketing opportunities, create efficiencies inside of their operations. This year, a lot of the discussion is actually about the macro trend around artificial intelligence, the acknowledgment of the industrial build-out around this new technology and how that is buoying investment and employment – and therefore consumption. And so, the policy concern or consideration from some of these companies is whether or not there are upcoming electoral issues, either in the midterms or in the next election cycle, that might change the dynamic around the AI industrial build-out. Are there signs that would show that a tougher regulatory regime? Data center construction bans that these things might take on a bipartisan flavor? And so right now, I think that's a very difficult question to answer. There is obviously some level of concern about if policy might change this dynamic around the AI industrial build-out that really has kind of helped the economy deal with some other external shocks from policy, namely what's going on in the Middle East and trade policy changes before that Ariana Salvatore: Yeah, to that point, this question around AI pushback, especially on data center build-out, has been a big theme in the elections. Thus far, it's really been dealt with on more of a state and local level. But our view is that it's been kind of bubbling up to the national level. Efforts there are nascent, but I don't think they're going away anytime soon. So obviously something that we're going to watch heading into November because it matters a lot for corporates and for investors alike. Mike, maybe we'll leave it there. Thanks so much for taking the time to talk. Michael Zezas: And thanks for taking the time to talk to me. Ariana Salvatore: And thanks for listening. If you enjoy the show, please leave us a review wherever you listen. And share Thoughts on the Market with a friend or colleague today.

In his first meeting as Fed Chair, Kevin Warsh signaled restraint in providing guidance. Our Global Head of Fixed Income Research Andrew Sheets looks at possible impacts of the new approach.Read more insights from Morgan Stanley.----- Transcript -----Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley. Today, why the Fed could do less than expected and why that could still lead to more volatility. It's Wednesday, June 24th at 2pm in London. Last week saw the first meeting of the Federal Reserve under its new chair, Kevin Warsh. It didn't disappoint. The Fed's Summary of Economic Projections saw significantly higher inflation than the last iteration in March, and in turn, a much stronger case to raise interest rates, perhaps multiple times. The Fed's statement, which laid out its views around the economy and its reasons for action, was changed dramatically – and also significantly shortened. We don't think the Fed will ultimately follow through on the interest rate rises that were flagged in this meeting and will choose instead to remain on hold this year. But we think this scenario of them staying on hold can still lead to more volatility. I'll try to address each side of this apparent contradiction. First, the Fed is clearly worried about inflation, which has been elevated for a considerable period of time. But working through the numbers, Morgan Stanley economists forecast lower inflation over the rest of this year than the Fed now expects. And so, while we think it would be entirely reasonable for the Fed to expect to raise interest rates based on the high inflation that they have penciled in, we think they could reach a different conclusion if our lower estimates are ultimately correct. Supporting our case, at least in our view, is that energy prices have fallen significantly in recent weeks since some of these Fed forecasts were set, as markets have moved to believe not only would existing oil production resume in the Persian Gulf, but Iran could increase exports materially under its new agreement with the United States. That would greatly reduce a source of underlying inflationary pressure in the U.S., Europe, and Asia. With inflation set to come in lower than feared, we think the Fed's most natural option will be to remain on hold this year rather than raise rates. But if the Fed's not doing anything, how exactly is that going to drive volatility? Our answer to that question lies in another thing that it's not going to be doing – providing as much information about where it thinks monetary policy is going next. Indeed, since the financial crisis, the Fed often went out of its way to give so-called forward guidance and significant detail about when and how they may change policy in the future. Proponents saw this as a way to avoid surprises and smooth the transmission of this policy, but critics saw it as limiting and potentially giving markets a false sense of certainty. The new Fed chair, Kevin Warsh, is one of these critics and has promised to give a lot less forward guidance. That lack of handholding by the Fed about what they might do next is a big change. Coupled with the potential for a smaller Fed balance sheet and big questions around the path of inflation and the impact of AI and productivity, every data point now has more potential to shift the market's thinking. My strategy colleagues think that this will lead to higher volatility in two-year interest rates, as well as more volatility in currencies. I'd also note that here in the UK, this paradox is not nearly as puzzling. Here, the Bank of England's target rate has been the same level since mid-December. But that hasn't stopped the UK two-year bond yield from trading in an over 100 basis point range. Thank you, as always, for your time. If you find Thoughts on the Market useful, let us know by leaving a review wherever you listen. And also tell a friend or colleague about us today.

First-time homebuyers may get short windows of relief, but our co-head of Securitized Products Research James Egan and Senior Economist and Strategist in Morgan Stanley's Private Wealth Management Sarah Wolfe say the bigger story is a housing market resetting around a higher bar to entry.Read more insights from Morgan Stanley.----- Transcript -----James Egan: Welcome to Thoughts on the Market. I'm Jim Egan, Morgan Stanley's U.S. Housing Strategist and Co-Head of Securitized Products Strategy.Sarah Wolfe: And I'm Sarah Wolfe, Senior Economist and Strategist within Morgan Stanley Wealth Management.James Egan: And today, why first-time homebuyers are facing a tougher path to ownership.It's Tuesday, June 23rd at 10am in New York.Buying a first-time home has always been a big step, but for a growing number of first-time buyers today, the goal can really seem insurmountable.Mortgage rates might be down from where they were in the second half of 2023, but they're significantly higher than they were for the several years before that. Monthly payments have roughly doubled for a median-priced home. And my colleague Jay Bacow and I have talked several times on this podcast about how many homeowners feel like they're locked into those lower rates.And they're staying put because they just don't want to give up a two or three-handle mortgage rate for something that has a six in front of it. But Sarah, as we know, this is bigger than just first-time buyers. Now, they often start the housing transaction chain, and when they can't buy, current owners may not be able to sell and trade up.That slows turnover across the market, and it also reduces activity tied to housing – from mortgages and renovations to moving and furniture. And it can keep would-be buyers renting for longer, which adds pressure to rental demand.So, how do you see this situation? Is this just another affordability squeeze, or has the housing market reset to a higher barrier to entry?Sarah Wolfe: I do think that we're on the upper bound of affordability pressures. This is about as bad as it's going to get. But as we discussed in our recent publication of The Economy Explained, unfortunately, we do think that the housing market is resetting at a structurally higher barrier to entry. There's a lot of reasons for that.The first is higher interest rates. Yes, mortgage rates are sitting around 6.5 percent, and they should come down from here, but maybe not better than 5.5 percent, right, in an optimistic scenario. The second is demographic pressures. Remember, we have this tremendous aging population of baby boomers. All of their children are now entering their prime home-buying years, so there's a lot of demand for ownership.The third and fourth ones are land regulation and permitting, which is at the state and local level, really hard to change. And the last one is climate risk. It's just raising insurance pricing and making it much more difficult to buy a home.So overall, we see a world where, yes, mortgage rates come down a bit, improve affordability marginally, but we think neutral and other interest rates at the longer end of the curve are going to be higher than the post-financial crisis period. And what we're going to see is that those forces are going to widen the divide between who can own a home and who cannot. And who gains from that wealth accumulation and who does not.James Egan: Right. So now, you mentioned where mortgage rates are today, above that 6 percent rate. Rates did briefly – in February, we got below 6 percent before they bounced back up here. Why did that short-lived relief matter so much?Sarah Wolfe: I think that short-lived relief showed us that moves in the mortgage rate make a difference, but things are so unaffordable that it didn't make that much of a difference.So, the dip below 6 percent was very exciting. It happened this past February. It was the first time that mortgage rates fell below 6 percent since 2022, and we saw a few things happen. First, it lowered the monthly payment for first-time homebuyers from about two point two thousand dollars a month to one point nine thousand.So makes a bit of a difference. And it lowered the share of income that goes towards monthly mortgage payments from about 26 percent of income to 22 percent, from peak to trough. So, that is a notable improvement. But what we saw in the new home sales data and the existing home sales data, that it did not drive people back into the housing market.I want to turn it back to you though, Jim, because you've actually done a lot of interesting work on this. And how this change in mortgage rates has changed the monthly cost that people have to pay for a median-priced home. Can you tell us a little bit more?James Egan: Sure. So, we talk about the lock-in effect a lot, and it's kind of easy to point to: Well, there are a lot of people with mortgage rates that are around 3 percent or 3.5 percent, and the prevailing rate's at 6 percent, and that's a lot higher, so they're locked in.But when we look at the actual numbers in terms of what we're asking a homeowner to do – to list their home for sale and move to another home today, pay off that existing mortgage, take out a new one. When you take into account how much higher home prices are today…You bought a home in 2016, for instance, right? Let's assume you refinanced in 2020 or 2021 if you still live there, right? Most homeowners did. So, you've actually taken your monthly payment, and it is lower today than it was when you bought your home in 2016. If we assume that your income has risen alongside just median household income over that time period, your monthly payment as a share of your income today is probably sub 8 percent.If you bought over the past three years, your monthly payment is a share of your income. You mentioned some numbers earlier. It's low to mid 20 percent. From a dollar amount perspective, if you were to pay off that 2016 mortgage, as an example, and take out one today, your payment is probably [$]13[00] or $1400 higher. It's like a 200 percent increase. That's very difficult economically for a lot of households, and that's the kind of physical manifestation of that lock-in effect.Now, Sarah, given this significant change in housing math, what does that mean for who is actually able to buy in this market?Sarah Wolfe: It's making who's able to buy into the market a lot more selective. So, what we're seeing is that first-time home buyers today are actually not meaningfully older. They're still about 36 years old, but they are a much more selective group financially. The Federal Reserve Bank of New York put out a great analysis on this recently, and they basically found that the first-time home buyer profile today is taking out a mortgage that's nearly $350,000, compared to $240,000 in 2019 and $200,000, a decade ago. So, significant increase in mortgage balances.At the same time, credit standards have tightened significantly, so that average credit score to get a mortgage has risen quite a bit over the last 5 to 10 years. And what this is doing is it's shifting who can buy and also where they can buy. So, we're seeing higher-quality home buyers moving to lower-income zip codes. So, buying cheaper homes in lower-income metro areas, and so it's wealthier buyers in lower-income areas.And that's the really big shift that we're seeing. It's a demand resorting story. And what we're also seeing, and we hear this a lot when we talk to our financial advisors and their clients, is that family is increasingly helping their other family members put that down payment down; in particular, parents helping their children buy that first home.So, we're seeing that first-time buyers may be feeling this pressure, right, when it comes to rates. How much of this affordability issue, though, is being driven by the locked-in effect specifically?James Egan: So, look, it's clearly playing a role. We just talked about some of the math behind that. But then when you look at what that means on a nationwide basis when it comes to inventory, when it comes to so many other aspects of this, that homeowner who's unwilling to give up that lower mortgage rate, that lower payment, right, their homes are off the market.Existing inventories for sale, they've picked up from historic lows in 2023, but they're still very, very low on a long-run basis. The fewer homes there are for sale, the more upward pressure or the absence of downward pressure that's going to put on home prices, right?We saw affordability plummet in 2022 and 2023 when rates backed up. We saw existing home sales really, really come down as a result. But home prices remained at record highs. They continued to set new record highs. For home prices to actually come down, right, you need people who are willing to sell at lower home prices.Sarah, you just mentioned that lending standards themselves remain tight.Sarah Wolfe: Mm-hmm.James Egan: Those forced sales, those tend to be distressed transactions. We don't see that distress in the market providing the inventory and the motivated inventory to lead to softer home prices. So, it's really that lack of inventory which we think is in large part driven by the lock-in effect that's kept home prices. And as a result, that piece of the affordability equation kind of stuck at these higher levels.Sarah Wolfe: I mean, it's really this vicious cycle, the locked-in effect making it difficult for entry-level buyers to get into the market – and then fewer existing homeowners sell or trade up or relocate. So, on and on it goes.Are there broader implications of this freeze?James Egan: Right. So, we just talked about what that means from an inventory perspective. And then if you think about affordability remaining challenged, lending standards themselves remaining tight, inventory remaining as low as it is, you could argue that we're at one of the more difficult times that we've seen for renters to exit rentership and step into homeownership.Now, there's a lot of different things that drive rent growth, and the fact that you have a stuck renter is just one of them. The other side of that equation can be the supply of rental units, right? So that's just a piece of the equation.But those are some of the externalities that we think about when it comes to how the tightness of the housing market – what the lock-in effect and what affordability is doing there. But outside of the housing market, Sarah, the wider economy, like how do these housing costs play a role there?Sarah Wolfe: Massive effect. Some of the work that we've done shows that housing affordability is the number one driver pushing down fertility rates in America. The number one driver. Above childcare costs, above finding a partner, finding a good job. It's housing affordability. So, you could see how that could pretty significantly ripple through the broader economy.But there's other components, right? So, as we discussed earlier, it's driving migration from unaffordable areas to more affordable regions. That has significant implications. And then putting my consumer economist hat on, as we discussed earlier in the podcast, when people buy a home, they tie themselves to that home. They spend money on couches, on beds, on TVs, right? Durable goods. And if we're going to have more people as renters for longer, that's going to expand the services economy at the expense of the goods economy.All right. Let's take a step back and think about where this is all going. It hasn't been a very optimistic conversation. Jim, what is the outlook for affordability in your view? Do we get anywhere back to the post-financial crisis period or even the pre-financial crisis period?James Egan: When it comes to the outlook for mortgage rates, the outlook for affordability, the outlook for the U.S. housing market – look, we just, throughout Morgan Stanley Research and Strategy, published our 2026 major outlook. From now through the end of 2027, we don't have conventional mortgage rates getting below 6 percent.We do have affordability improving on the margins. We have income growth exceeding home price appreciation that makes it a little bit better, but that doesn't get us back to the post-GFC affordability era, which was very, very affordable. Looking back over the past several decades, it gets us closer to where we were pre-GFC, not all the way back there.But when we think about how that ripples through the housing market and how we think about that evolving from here, look, we do think that the state of mortgage credit availability means there will be a lack of distress. We think that while affordability itself may be challenged and inventories may be low, there is some level of housing activity that has to occur regardless of where mortgage rates are or affordability is.We think we found that level. We think there's support for home sales at these current levels, and that combination of support for home sales, lack of inventory, means that home prices, very little room for them to grow from here. But we think they're going to be pretty supported.So, from a housing market perspective, at a ten-thousand-foot view, we're calling it 1-2 percent growth in sales, in home prices, well-supported. But the affordability outlook that we've outlined throughout this podcast – challenged to see a lot of acceleration.Now, when we pull it back to the first-time home buyer, based on our conversation, it seems that the key question is becoming less about when to buy, more about who can still afford to enter the market.But Sarah, it's really been great talking with you about the housing market today.Sarah Wolfe: It was great speaking with you, Jim.James Egan: And thanks for listening. If you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today. ***Sarah Wolfe is a member of Morgan Stanley's Wealth Management Division and is not a member of Morgan Stanley's Research Department. Unless otherwise indicated, her views are her own and may differ from the views of the Morgan Stanley Research Department and from the views of others within Morgan Stanley.

The Morning XTRA with Tug and Los delivers conservative talk on the biggest political, cultural, and news stories of the day. Smart analysis, unapologetic opinions, and real conversations every weekday morning. Every weekday from 6a to 10a! The 6 o'clock hour is brought to you by Subaru of Gwinnett First thing to know: Tucker Carlson leaves the Republican Party / The Dems are making up fake numbers Alpharetta, not Atlanta, is competing with Dallas for Morgan Stanley Atlanta's ONLY All Conservative News & Talk Station.: https://www.xtra1063.com/See omnystudio.com/listener for privacy information.

Our CIO and Chief U.S. Equity Strategist Mike Wilson reacts to Kevin Warsh's first Fed meeting, explaining why the new chair's credibility may require letting markets experience some short-term pain.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley's CIO and Chief U.S. Equity Strategist. Today on the podcast I'll be discussing my views on the New Fed Chair and how to interpret his FOMC meeting last week.It's Monday, June 22nd at 11:30 am in New York. So, let's get after it.I want to spend today on what I think was one of the more important market events of the year so far. Kevin Warsh's first Fed meeting as the Chair. Specifically, he is trying to fortify credibility at a very delicate moment. The economy is stronger than many expected. Inflation is still running above target. And markets have become accustomed to central banks telling them exactly what to think.Back in February, when Warsh was nominated, I argued that this was the right choice if the goal was to lift market credibility. At that time, precious metals were rising parabolically. To me that was a bad signal that markets were questioning whether policy makers could really run the economy hot without creating a disorderly move in the dollar or a broader inflation problem.Since Warsh's nomination, the S&P 500-to-gold ratio is up close to 40 percent, and I view that as a powerful vote of confidence from the markets. It suggests investors are giving Warsh the benefit of the doubt – that he can shake up the Fed, reduce reliance on the balance sheet as a policy tool, and solidify discipline that gives the administration some breathing room.But here's the catch. Enhancing credibility is not always painless. In fact, credibility must be earned by doing something markets don't immediately like. And last week had some of that flavor. Stocks weakened, the yield curve bear-flattened, the dollar strengthened, and precious metals sold off. From my perspective, that is not a failed first meeting. That is a good and necessary first step. What stood out to me most was Warsh's emphasis on the inflation mandate. He made it very clear that the Fed's primary responsibility is price stability – not managing every wiggle in the labor market, not smoothing every risk asset drawdown, and not hand-holding investors through every data point. And frankly, after five years of missing the inflation target, that message was overdue.The stronger economy and improving private payroll data give the Fed room to lean into that message. I don't think this means the Fed is about to hike rates immediately, or even necessarily this year. But it does mean the reaction function has changed, and markets do not like uncertainty around the Fed path.The other major shift was communication. Warsh appears to be moving away from excessive forward guidance, and I think that's a very healthy development. For years, I've argued that the Fed became too influential in shaping not only market behavior, but also how investors interpreted the data. When markets are only trying to guess what the Fed will say next, the Fed loses the value of market prices as an independent signal. That's backwards. Markets should be reacting to incoming information, and the Fed should be learning from those reactions – not vice versa.A little less Fed hand-holding may be uncomfortable, but ironically it is necessary to get to a more stable place. Investors may not like it in the short term, but the system works better when market prices are less impeded by policy manipulation. The wisdom of crowds is often better than the wisdom of committees.The near-term risk for equities is not rate hikes or even uncertainty. It's liquidity. Balance sheet support has already started to fade. The Reserve Management Program is down roughly 75 percent from its peak, Treasury buybacks have been reduced by 50 percent. And at the same time lending growth is accelerating because the real economy is using more capital. That combination means liquidity is tightening, and our work suggests that could remain a headwind for stocks into July.Bottom line, the market may test Warsh's resolve. That's what markets do. The key question is whether the Fed tolerates some short-term pain in order to strengthen longer-term credibility. My guess is that it tries to do exactly that, until funding markets, credit markets, or bond volatility forces its hand to add more liquidity and loosen financial conditions again. That argues for choppy and even corrective price action in equity markets in the near term until the earnings led bull market has its next leg higher. Thanks for tuning in; I hope you found it informative and useful. Let us know what you think by leaving us a review. And if you find Thoughts on the Market worthwhile, tell a friend or colleague to try it out!

My Most Productive Conversation with College Students...SPONSOR: Lear CapitalGold and silver are at all-time highs as central banks, sovereign funds, and major institutions like Morgan Stanley shift capital out of the dollar and into precious metals. Lear Capital helps everyday Americans get into physical gold and silver with experienced reps, transparent pricing, and IRA-eligible options. With a qualified purchase, you can receive up to $20,000 in bonus gold or silver. Call Lear Capital at 800-707-4575 or visit https://www.Nick4Lear.com-----SPONSOR: Alliance Defending FreedomSome of America's largest corporations, including American Express and Home Depot, are using their employee healthcare plans to pay for irreversible gender-transition drugs and surgeries for kids. Alliance Defending Freedom's petition puts direct pressure on corporate leaders and gives concerned Americans a real way to push back. Adding your name helps spark the kind of accountability that influences boardrooms across the country.Sign the petition at https://www.JoinADF.com/Nick-----GET YOUR MERCH HERE: https://shop.nickjfreitas.com/BECOME A MEMBER OF THE IC: https://NickJFreitas.comInstagram: https://www.instagram.com/nickjfreitas/Facebook: https://www.facebook.com/NickFreitasVATwitter: https://twitter.com/NickJFreitasYouTube: https://www.youtube.com/@NickjfreitasTikTok: https://www.tiktok.com/@nickjfreitas3.0

Jeff Zielinski is CFO of Hong Kong-based Buyandship, a leading cross-border e-commerce platform with operations across Hong Kong, Taiwan, the Philippines, Vietnam, and Malaysia. He has spent his entire career working at the intersection of Asia, TMT, and finance.Jeff began his career in 2000 in Morgan Stanley's technology investment banking group in Hong Kong, working on transactions for many of Asia's largest technology companies. From 2005 to 2015, he was with Goldman Sachs Principal Strategies (GSPS) and Azentus Capital — the Asia GSPS spinoff — captaining investments in TMT and Greater China across the major technology verticals, including internet, e-commerce, semiconductors, and hardware. At Goldman Sachs, he also represented GSPS Asia on the firm's Asia Pacific Risk Committee, and was a founding partner at Azentus when it spun off from Goldman in 2011 under the Volcker Rule. Earlier in his career, he held technology-related roles at News Corporation.Today, alongside his work at Buyandship, Jeff is an active investor and advisor in the regional technology ecosystem and serves with education-focused nonprofits in the community.LinkedIn: https://hk.linkedin.com/in/jeff-zielinski

A new report from Morgan Stanley finds that housing affordability is unlikely to return to the levels many Americans enjoyed before 2022. The findings suggest that aspiring homebuyers waiting for prices to fall may face a very different housing market than in years past. Subscribe to our newsletter to stay informed with the latest news from a leading Black-owned & controlled media company: https://aurn.com/newsletter Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

He hit the wall at his first Mumbai Marathon in 2013. Walked the last 10 kilometers. Finished in 4:02. And came home thinking — I can do better.Thirteen years later, Vijayraghavan Venugopal — known as ViRa — has run sub-3 thirteen times, completed all six World Marathon Majors, and clocked a personal best of 2:47:17 at Cape Town in 2026.In Episode 257 of Run with Fitpage, Vikas sits down with ViRa for a detailed conversation about what it actually takes to go from a 4:02 first-timer to one of India's most consistent sub-3 marathon runners over 13 years of learning, failing, and coming back stronger.In this episode we covered:➝ Growing up in Kerala in the golden era of Indian athletics — and why cricket became his sport when football and athletics felt out of reach➝ His first marathon at Mumbai 2013 — the wall at Haji Ali, the walk home, and the one decision that changed everything➝ How he went from 4:02 to 3:31 in five months using a single book — Run Less Run Faster➝ The only marathon he ever won — Spice Coast 2015 — and why a police escort to the finish line changed what he believed was possible➝ Paris 2016 — how he broke sub-3 for the first time without even planning to➝ New York 2019 — buying a Vaporfly three days before the race to compensate for a lack of confidence — and what happened next➝ The L4-L5 disc extrusion that almost ended his running — and the six-month rebuild that followed➝ What 20 days in Kenya in 2023 taught him about running that 10 years of training could not➝ How he restructured everything after 2022 — strength training, easy runs, mileage, sleep, nutrition — and why the results finally showed up in 2024 and 2025➝ Four marathons in 14 months at 50 — London, New York, Mumbai, Cape Town — and what comes nextAbout Vikas Singh:Vikas Singh, an MBA from Chicago Booth, worked at Goldman Sachs, Morgan Stanley, APGlobale, and Reliance before coming up with the idea of democratizing fitness knowledge and helping beginners get on a fitness journey. Vikas is an avid long-distance runner, building fitpage to help people learn, train, and move better.For more information on Vikas, or to leave any feedback and requests, you can reach out to him via the channels below:Instagram: @vikas_singhhLinkedIn: Vikas SinghTwitter: @vikashsingh101Subscribe To Our Newsletter For Weekly Nuggets of Knowledge!

On episode 247 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Michael Zezas, Deputy Global Head of Research at Morgan Stanley, to discuss: AI capex, data centers, productivity gains, prediction markets, the 2026 midterms, the Fed, enterprise software, and why policy calls are so difficult to translate directly into investment outcomes. This episode is sponsored by Public and Vanguard. To learn more about Public, visit https://public.com/Compound. To learn more about Vanguard bonds, visit https://vanguard.com/audio. Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ DISCLOSURES: For important disclosures, stock price charts and equity rating histories regarding companies that are the subject of this public appearance, please see the Morgan Stanley Research Disclosure Website at www.morganstanley.com/researchdisclosures, or contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY, 10036 USA. For valuation methodology and risks associated with any price targets referenced in this research report, please contact the Client Support Team as follows: US/Canada +1 800 303-2495; Hong Kong +852 2848-5999; Latin America +1 718 754-5444 (U.S.); London +44 (0)20-7425-8169; Singapore +65 6834-6860; Sydney +61 (0)2-9770-1505; Tokyo +81 (0)3-6836-9000. Alternatively, you may contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY 10036 USA. Public Disclosure: Paid for by Public Investing. Brokerage services by Open to the Public Investing Inc, member FINRA & SIPC. Advisory services by Public Advisors LLC, SEC-registered adviser. Complete disclosures available at https://public.com/disclosures Learn more about your ad choices. Visit megaphone.fm/adchoices

Send us Fan MailAfter the largest IPO in history (SpaceX, ticker SPCX, priced at $135), only about 5% of the company — roughly $83 billion — is actually free to trade. Insiders are locked up, the banks that underwrote the deal can't lend shares to short sellers, and index funds are being forced to buy as SpaceX joins the Nasdaq-100 and the Russel. In this episode of The Wall Street Skinny, Jen and Kristen, both former Morgan Stanley investment bankers, break down how the IPO was engineered — and the question every SpaceX investor should be asking: what happens when all that locked-up stock can finally sell?First, we cover what is normal in an IPO so you can see what isn't. We cover price talk vs. the $135 take-it-or-leave-it pricing, the green shoe, perpetual futures, and the fast-track Nasdaq-100 inclusion pulling in billions of passive buying. We lay out the risks, meaning the the wall of supply coming. Unlike the standard 180-day lockup, SpaceX is staggering its release: the first ~$240-500+ billion of stock unlocks after the first earnings report around September, with more tranches every few weeks after that — over $1 trillion freely tradeable by December, on the way to a ~$2 trillion overhang once Elon Musk's one-year lockup rolls off.  But we also lay out why the passive buying actually helps dampen that supply PLUS why many institutional investors are NOT bearish on the stock despite the insane valuation.If you want to learn MORE from us, check out our Investment Banking & Private Equity Fundamentals course where we go deep into accounting, Excel and Financial modeling, valuation (DCF, comps etc.), M&A analysis and LBO analysis. https://thewallstreetskinny.com/investment-banking-private-equity-fundamentals/If you're just here to have fun, subscribe for more high finance explained through the lens of pop culture, markets, and your favorite shows.Shop our Self Paced Courses:Investment Banking & Private Equity Fundamentals HEREFixed Income Sales & Trading HERESubscribe to our Substack: https://substack.com/@thewallstreetskinny

As AI investment keeps growing, our strategists Carolyn Campbell and Vishwas Patkar discuss the many ways tech infrastructure gets financed and the opportunities for investors.Read more insights from Morgan Stanley.----- Transcript -----Carolyn Campbell: Welcome to Thoughts on the Market. I'm Carolyn Campbell, Morgan Stanley's Asset-Backed Securities Strategist. Vishwas Patkar: And I'm Vishwas Patkar, Morgan Stanley's Head of U.S. Corporate Credit Strategy. Carolyn Campbell: Today, how fixed income markets are helping fund the AI build-out. It's Thursday, June 18th, at 10am in New York. Let's get right into it, Vishwas. We've both come on this podcast before to talk about how credit markets are financing the AI build-out. And over the last ten months, I think it's fair to say that things are faster, broader, deeper than we perhaps expected initially. This investment now spans investment-grade corporate bonds, high yield loans, and a range of securitized products. From your seat in corporate credit, why does AI infrastructure matter so much, to investors right now? Vishwas Patkar: This is a big talking point in our client discussions. it's also telling that less than a year ago, we wrote about this topic for the first time, identifying a $1.5 trillion financing gap that credit markets could help bridge. At that time, data center debt was not something that investors were really focused on. Yet less than 12 months forward, this, I think, is the number one theme dominating both your and my market. And why it's important, I would say, is across, three key vectors. First, just the scale. So, if you look at overall AI-related debt issuance so far this year, we're close to $250 billion. For the balance of the year, we expect that number to double, so about $500 billion of total AI debt financing for 2026. Increasingly the second vector, I think, is around the complexity of deals. So initially, while AI financing was dominated by vanilla investment-grade corporate bond deals, we are now seeing that broaden out into project finance style deals in the high-yield market. We have seen an uptick in chip financing across the different credit silos. And that's important for investors, as identifying value across these different options does require deep credit expertise. And third, as this investment cycle rolls along, it's also important to be cognizant of risks that are building. Not just from a very broad top-down sense around the demand for compute. But also, what are some of the nuances in these different structures – whether it is in data center construction or is in chip financing that investors will need to monitor. So, it's across these three themes that we think data center debt financing is gaining importance. Carolyn Campbell: Now, the underlying demand for AI infrastructure is very strong. That doesn't necessarily mean that every bond tied to this theme is automatically going to be attractive. And as you mentioned, [$]500 billion of supply for the year; a large amount of complexity between those structures.How should credit investors think about the various risks within these different structures? Vishwas Patkar: So, in investment grade, the story is a bit simpler. So, we have had unsecured hyperscaler bond issuance. We have had issuance from semiconductor names. And then we've had some, what we call, private style data center deals. But the vast majority still comes from hyperscaler investment grade rated bonds. For this market, our focus is less on fundamentals because fundamentals are very strong. And then hyperscaler are some of the more most creditworthy companies that we've seen in the history of the market. Our emphasis more is on just the quantum of supply. So, year to date, we have had north of [$]100 billion of hyperscaler debt in the dollar market. We've had north of [$]50 billion being issued in other currencies. If you look at the overall investment grade market, supply is up almost 25 percent versus last year. That's consistent with our call for a year of record issuance this year. And increasingly, if you look forward and then map these issuance numbers to our CapEx estimates, where we could very much be on track for another record to be hit next year. So, the issue of the investment grade market is not around the fundamentals of the companies or these deals. It's more about the quantum of supply, which we think eventually will test the demand capacity of this market. And our base case for the investment grade space is similar to 1997-1998, where credit was starting to finance the business cycle, spreads widened modestly, and IG could underperform other risk assets. But over a longer time horizon, spreads still look historically very low. Carolyn Campbell: Now, what about further down the credit spectrum into the non-investment grade portion? What about that part of the issuance spectrum for AI? Vishwas Patkar: Yeah. So, what we're seeing in the sub-investment grade space, especially in high yield, is very different. There, the growth in data center financing has happened around project finance deals for data center construction. In many cases, these have come from crypto miner companies that effectively provide what we call speed to power solutions. We've also had some unsecured issuance from neo clouds, although that's relatively small. But this sector has expanded from effectively zero billion around the fall of last year to about [$]40 billion this year. We expect to see another [$]20 billion of issuance by the end of 2026. And the way they fit into this whole ecosystem is – these project finance deals we think are interesting diversifiers for regular credit investors. They do come with construction risks, especially initially for the first two to three years till the data center is up and running. But on the flip side, you do get a lot of structural enhancements and creditor protections, which is something you don't see in the vast majority of the high yield market. So, I think a key shift in the framework that investors have to do for these deals is focus on asset-level risk, which is again, I think a big divergence from how the vast majority of the credit market trades, which is largely unsecured corporate-level risk that investors have been used to. Carolyn Campbell: All right. You just brought up construction risks. Do you think that's the biggest risk facing the high-yield investors today? Vishwas Patkar: Yes. I think for the high-yield deals in particular, construction risk is the dominant vector that investors are focused on. Because it's important to remember a lot of the debt issuers are first-time borrowers. And they have a limited track record of construction in the past. So, you could see potential delays and things like cost overruns that can affect sentiment on the sector. Or at least on specific bond deals. And this will be especially important to monitor going into the second half of the year, as we have some of the first delivery dates coming up for the deals in the sector that were announced last year. That being said, you know, even though some of the tenants have termination rights, if delays go beyond 180 days, our view is that given the structural power constraints, these termination rights are unlikely to be exercised. So, while construction milestones can affect sentiment and short-term valuations, we would look at any blips as buying opportunities in the space. Alright. So Carolyn, let me throw this back to you. So, construction risk clearly very important for the corporate credit market, especially for high yield investors. Is that something ABS investors or commercial mortgage-backed investors care about? And in what other ways are these asset classes different from corporate credit? Carolyn Campbell: Okay. So first and foremost, the biggest difference is that in securitized products, the assets are stabilized, they're cash flowing, they're online. We don't have that first vector of construction risk in our space. The second biggest difference is while in high yield and IG we've mostly seen – or we've entirely seen single campus, single tenant data centers; in securitization issuance, it's mostly multi-tenant, multi-asset, multi-regional, deals that have come to market. And so, it's a very different risk profile. And as a consequence, investors are focused not just on who is behind this one single lease and what are the termination rates, but what does the landscape look like in general for compute? How does that affect vacancy and churn rates? And then lastly, the issuers themselves are different. You talked about the crypto companies. You get a little bit more of the data center, data center construction. Whereas in securitized products, these are companies that have been around for 5, 10, 20 years. They're accustomed to managing a fleet of assets, dozens if not hundreds of tenants. They've got a little bit more of a track record for the most part, than the types of issuers we're seeing in the credit market. Vishwas Patkar: Your market post-construction, more leverage to the thematic of demand for compute – and how the AI investment cycle is playing out. Versus the corporate credit market, which is largely exposed to construction risks as the data centers get built out. So that's a very important difference.That being said, one theme that ties both our markets are just healthy fundamentals, but at the same time heavy supply. So, I talked about how we see that affecting our view on investment grade. How is that same tension showing up in securitized products? Carolyn Campbell: So exactly as you said, the fundamental story is very strong. We don't see deterioration in performance of the assets either that has happened yet or that we expect to come in the near term. So, it really is a technically driven story. Supply in this space, we're forecasting at around [$]30 billion for year, so smaller in magnitude, but relatively large for the market. That has very elevated supply expectations, and so as a consequence, we've seen spreads back up across the space. We do think that some of the cross-asset comparisons will help keep spreads contained from here. And so, we do see value in securitized credit across the stack for the rest of the year. Vishwas Patkar: All right. So, you brought up the cross-asset comparison. And so, we've discussed the fundamental differences in our market, how much issuance we expect. But, you know, just to end on a commercial note – if we are advising investors on where is the best relative value and what's the framework for comparing opportunities, how do you think about that? Where do we see value across the ecosystem? Carolyn Campbell: I mean, I think this is probably the biggest question that investors that are looking at this space are facing today. And there's... If we're thinking just about the data center backed assets, I think there are two main things. One is the asset itself, where we're focused on things like the geography, the tenant, the interconnectivity, the flexibility of this asset for multiple uses. And then the second is on the structure of the deal itself. How much leverage is being raised against the asset? How cash flowing is it? And then of course, the duration as well. But it's a great question. And because of the complexity of this space, it can be really hard to compare one to the other. Vishwas Patkar: Yeah. And, at the risk of providing a non-answer, I very much think investors are in the process of coming up with a framework because these deals have come very quickly. This is a new sector for most credit investors to analyze. But I think what we can say with a high degree of certainty is this is blurring the lines between corporate credit and securitized credit. So, you know, this opens up more avenues for us to collaborate on this topic going forward. Carolyn Campbell: All right. That's a great place for us to leave it today with that nice cross-collaboration. Vishwas, thank you so much for taking the time to talk. Vishwas Patkar: Great speaking with you, Caroline. Carolyn Campbell: Thanks for listening. If you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

Michael Smith—Managing Partner and Founder, Emerald Advisors Michael Smith shares how a client-first philosophy, niche specialization, and independence helped Emerald Advisors grow from $385mm to more than $1B in assets. In Summary What happens when an advisor builds a business around client service rather than operational efficiency? Jason Diamond speaks with Michael Smith, Founder and Managing Partner of Emerald Advisors, about the path from a successful Merrill practice to an independent RIA that has grown from approximately $385mm to more than $1B in assets. Along the way, Michael shares the story of being told he was “overservicing” clients, why that moment became a catalyst for independence, and how a highly specialized service model fueled the firm's growth. Drawing on lessons from a 24-year Navy career, Michael offers a perspective on leadership, specialization, client care, and what it takes to build a durable business in today's wealth management landscape. The Storyline Growth is often viewed as the result of marketing, referrals, acquisitions, or scale. Michael Smith sees it differently. After building a successful practice at Merrill, Michael found himself at odds with the constraints of the traditional wirehouse model. What ultimately stood out wasn't compensation, technology, or platform capabilities. It was a philosophical difference around client service. When he was told he was spending too much time helping clients navigate tax planning, equity compensation, and other financial decisions outside the traditional scope of investment management, he began to question whether the model aligned with the way he wanted to serve families. That realization eventually led him to launch Emerald Advisors in late 2019. The firm started with roughly 85 clients and approximately $385mm in assets. Today, Emerald serves more than 225 families and oversees more than $1B in assets. Throughout the conversation, Michael reflects on the lessons learned from building an independent firm, developing a niche around concentrated stock positions and executive compensation, navigating custodial and technology decisions, and creating a culture rooted in accountability and service. Underlying it all is a simple belief: when firms become highly intentional about who they serve and how they serve them, growth often becomes the outcome rather than the objective. Topics Covered Merrill breakaways and independence Client service as a growth driver Building an RIA RIA growth and scalability Organic growth strategies Concentrated stock positions and equity compensation planning Ideal client personas and niche specialization Schwab and Fidelity custody relationships Advisor succession and enterprise value Navy leadership principles in wealth management The rise of mega RIAs Advisor technology and infrastructure > Download a transcript of this episode… Listen and Learn Highlights for Advisors Why did being accused of “overservicing” clients become a turning point? (08:15)Michael explains how a conversation with management revealed a deeper misalignment between his client-service philosophy and the wirehouse model. What does client service look like beyond portfolio management? (11:30)The discussion explores how tax planning, equity compensation guidance, and proactive coordination can deepen client relationships. Why can specialization accelerate growth? (15:45)Michael shares why serving a defined niche often creates stronger referrals, greater expertise, and clearer positioning. How has the RIA landscape evolved since 2019? (20:30)Michael reflects on the rise of mega RIAs, changing technology capabilities, and why he believes independent firms still have significant advantages. What role do custodians really play in an independent business? (23:15)Michael discusses his experience working with Schwab and Fidelity and why he views custodians as strategic partners rather than competitors. Is the wirehouse model still the right fit for some advisors? (26:45)The conversation challenges the assumption that independence is the best path for everyone and explores the realities of running a business. Does reaching $1 billion in assets actually change anything? (32:45)Michael offers a practical perspective on growth, success, and why asset milestones can be misleading. What can advisors learn from the “steamboat” philosophy? (37:15)Drawing on his Navy experience, Michael shares a leadership framework that continues to shape how he approaches business building and decision-making. Key Takeaways Exceptional client service can become a meaningful competitive advantage when it extends beyond investment management. Independence gave Michael the flexibility to build a service model that aligned with his philosophy rather than adapting his philosophy to fit the platform. Developing a niche around executive compensation and concentrated stock positions helped accelerate Emerald's growth. The ability to make technology, custodial, and operational decisions quickly remains a significant advantage for independent firms. Not every advisor should be independent. Running a business requires a different set of skills and responsibilities than serving clients alone. Growth milestones are useful, but they do not define success. Michael believes success existed long before Emerald reached $1 billion in assets. High-performing teams with a clear client focus often find that growth becomes a natural byproduct of execution. https://youtu.be/RjzsMcC2DnY Quotable Moments “I literally had to go back and Google the word overservicing.” “Servicing the client is the most important thing that we can do today.” “If you serve a niche and you're very good at that niche, that word gets around.” “Growth becomes the outcome.” FAQs Can an advisor really “over-service” clients? The discussion explores the tension between efficiency and depth of service. While some business models prioritize scale and consistency, others are built around solving a broader range of client problems. The right answer often depends on the advisor's philosophy and business model. Does specialization still matter in a relationship business? Michael argues that developing expertise in a specific area can accelerate growth by making referrals easier and helping advisors become known for solving a particular set of problems. What actually changes when an advisor becomes independent? Beyond economics, independence often creates more flexibility around client service, technology, processes, and business decisions. At the same time, advisors assume responsibility for running the business itself. Is full independence the right path for every advisor? No. Michael acknowledges that many advisors benefit from the structure, support, and resources available within traditional firms. Independence offers flexibility, but it also introduces complexity and responsibility. How should advisors think about the $1 billion milestone? Michael views asset milestones as useful benchmarks but not measures of success. In his view, business quality, client outcomes, and sustainability matter more than any specific asset number. What role does an ideal client persona play in growth? Rather than trying to serve everyone, Emerald built its business around a clearly defined client profile. Michael believes that focus improves service, creates operational consistency, and supports organic growth. How can advisors balance growth with client service? One of the central themes of the episode is that growth and service are not necessarily competing objectives. In some cases, a differentiated service model becomes the reason a business grows. The discussion explores the tension between efficiency and depth of service. While some business models prioritize scale and consistency, others are built around solving a broader range of client problems. The right answer often depends on the advisor's philosophy and business model. Michael argues that developing expertise in a specific area can accelerate growth by making referrals easier and helping advisors become known for solving a particular set of problems. Beyond economics, independence often creates more flexibility around client service, technology, processes, and business decisions. At the same time, advisors assume responsibility for running the business itself. No. Michael acknowledges that many advisors benefit from the structure, support, and resources available within traditional firms. Independence offers flexibility, but it also introduces complexity and responsibility. Michael views asset milestones as useful benchmarks but not measures of success. In his view, business quality, client outcomes, and sustainability matter more than any specific asset number. Rather than trying to serve everyone, Emerald built its business around a clearly defined client profile. Michael believes that focus improves service, creates operational consistency, and supports organic growth. One of the central themes of the episode is that growth and service are not necessarily competing objectives. In some cases, a differentiated service model becomes the reason a business grows. Related Resources The Transitioning Advisor's Lament: Things I Wish I Knew Before Freedom vs. Familiarity: Is it Worth Disrupting Comfort for Something That Might Be Better? IBD vs. RIA Revisited: Two Independent Pathways for Advisors to Consider Advisor Transition Report 2026 Guest Bio Michael Smith, CPWA® is the Founder and Managing Partner of Emerald Advisors, an independent wealth management firm overseeing more than $1 billion in assets for affluent families, executives, and business owners with complex planning needs. Mike entered the wealth management industry in 2005 after a distinguished 24-year career in the United States Navy, where he served both as an enlisted sailor in the Submarine Force and later as a Limited Duty Officer aboard USS Abraham Lincoln and on major staffs around the world. He earned a Bachelor of Science in Management and an MBA with dual emphases in Finance & Accounting and International Business. Throughout his career, Mike has been known for his commitment to comprehensive planning, helping clients navigate complex issues involving concentrated stock positions, executive compensation, tax strategy, estate planning, philanthropy, and multi-generational wealth transfer. His client-first approach and passion for education have helped Emerald Advisors grow from a startup firm in 2019 to a nationally recognized RIA serving more than 225 families. Outside of the office, Mike is an avid ultrarunner, golfer, lifelong learner, and dedicated advocate for children’s health initiatives. He is a current member of the Legacy Council at Seattle Children’s Hospital and has served in leadership and board roles supporting the Juvenile Diabetes Research Foundation, the Barbara Davis Center for Diabetes, the ALS Association, and the Alyssa Burnett Adult Life Center. He is also the proud father of Kat Smith. NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation. View the transcript of this episode… From “Overservicing” Clients to Building a $1B RIA: A Merrill Breakaway Story A conversation with Jason Diamond and Michael Smith, Managing Partner and Founder of Emerald Advisors.      Jason Diamond: Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is From “Overservicing” Clients to Building a $1B RIA: A Merrill Breakaway Story. It’s a conversation with Michael Smith, managing partner and founder of Emerald Advisors. I’m Jason Diamond and this is the Diamond Podcast for financial advisors. Mindy Diamond: At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive whether that’s at a wirehouse, boutique or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned and, each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education driven and based on building relationships starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at (908) 879-1002. Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning, data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport. Jason Diamond: Growth is often viewed as the result of better marketing, stronger referrals, a larger team and even acquisition and that’s all true yet growth can be the byproduct of something else entirely. For example, Michael Smith built a successful practice at Merrill then, one day, he was told he was spending too much time with his clients, or his management put it over-servicing clients. For Michael, that wasn’t a warning sign about his approach, it was a signal that he might have outgrown the firm and the model. Today, Michael is the founder and managing partner of Emerald Advisors, the independent RIA he launched in late 2019 with roughly 385 million in assets and 85 client relationships. Less than seven years later, the firm has grown to more than a billion in assets while remaining deeply focused on a highly-specialized client base and an unusually hands-on service model. What makes this story particularly interesting isn’t just the growth, it’s the thinking behind it. Michael’s perspective was shaped long before he entered wealth management. After serving more than two decades in the Navy, he brought a leadership philosophy centered on accountability, discipline and what he calls steamboat people, those who keep moving forward regardless of conditions, that mindset continues to influence how he builds his team, serves clients and evaluates opportunities. In this episode, we discuss the decision to leave Merrill, the realities of launching a fully independent RIA, why specialization can accelerate growth, the evolving role of custodians and technology and why he believes exceptional client service remains one of the industry’s most durable competitive advantages. Because Michael’s experience suggests that growth isn’t always the result of finding more opportunities, sometimes it’s the result of creating the freedom to execute the vision you already had so let’s jump in. Michael, thank you so much for joining us today. For starters, can you walk us through your background and what brought you to the world of wealth management? Michael Smith: Jason, thank you so much for the opportunity to be here today, I do listen to the podcast a lot especially before I left Mother Merrill. But my background and how I got into financial services is really distinct because I was on the board of JDRF back in the day and the national sponsor for JDRF was UBS PaineWebber and they’re like, “Mike, why don’t you be a financial advisor?” And my master’s degree was actually a finance and accounting in portfolio management because I’ve managed my own portfolio for years and years and so, when I couldn’t get a job, I just fell into it because I couldn’t get a job and I needed a job. That was 21 years ago, Memorial Day so that’s how I got into this industry. Jason Diamond: It’s a unique background, it’s super interesting and I want to talk more about it. You mentioned Mother Merrill, we’ll certainly get there. Before we do, give us a little bit of context on the current business you operate, Emerald Advisors, any context you can share on size, number of staff, types of clients you serve would be great. Michael Smith: Sure. So, we launched Emerald in 2019, November 2019 with about 85 clients and you always talk about this on the podcast how scared it is to launch and go independent. And I would say we took over about 95% of our clients that we wanted to bring over and today we’re at about 230 clients, I think we have some onboarding right now, we have just over a billion of assets. So, we launched with the 85 clients and around 350, 385 million, now we’re over a billion. Jason Diamond: Good for you. Michael Smith: Thank you. And I launched with four employees and we’re now at 11. And I would give a shout-out to one of my key employees because, when I launched, I actually hired somebody that had no experience with us and that was really a good thing because that allowed that person to really focus on operations and back office stuff while my business partner Emily and I were able to focus on bringing on the clients and alleviating any issues that they may have or thought. Jason Diamond: So, meaning you hired somebody basically immediately upon launch to help you with the transition and with this next chapter? Michael Smith: Correct. I hired them before but they started the day we launched. Jason Diamond: Brilliant, I love it. Oh, let’s definitely talk more about that because I think that’s a great strategy for … You’re right, you said it in a joking manner now because you’re seven years past but it’s a very real fear that advisors have and I think it’s worth talking more about. I want to mention too you have, obviously, built this business and grown this business dramatically. I don’t want to make this episode about the pandemic but you moved the business at a, certainly, a unique time. Did it impact your growth at all? Did you feel like you hit a brick wall? Just curious about your thoughts. Michael Smith: No, Jason, that’s a great observation. I would venture to say that the pandemic was actually a good thing for us. Jason Diamond: Interesting. Michael Smith: And I say that because, all of a sudden, you could hit pause because everyone was relearning how to do business, how do we do client reviews, how do we communicate with clients in a environment. So, I think the pandemic allowed us to just really reset our expectations visiting with clients because I used to fly a lot because I have clients in 38 different states so this has actually been, not just good for me, but good for the industry because I think it’s reset our expectations that we don’t have to be every day with a client facing. Jason Diamond: I agree with that largely and it’s true of our business too, by the way, it’s certainly reshaped the way people expect to be communicated with. I think Zoom has become much more mainstream, phone calls and we’ve heard from many other advisors who say something similar. I was just curious because you moved so close to or if there was an impact but I get, honestly, I think you’re right, it allowed you to have this nice natural inflection point and almost like flipping a switch of a clean slate. Michael Smith: It allowed us to learn the processes too. So, we launched in November 1st, by March we were in lockdown and so it gave us the opportunity to take several months of just learning the processes of how to be an RIA, it was pretty good. Jason Diamond: Absolutely. So, one of the things you mentioned in that was the way in which you serve clients and I’d read something funny and I think it was around the time of your move. You were talking about that, Merrill, you had a manager who spoke about that you would overserve your clients, you serve clients too much, tell me about that. Michael Smith: That was such an interesting topic because I got called down to the ops officer’s office and they’re like, “Ugh, Mike.” And it brought my admin down with me and they’re like, “Mike, these reports that you’re taking care of your clients too much,” and I’m like, “What do you mean?” “Well, you’re overservicing them.” Jason, I literally had to go back and Google the word overservicing because I was like, “How do you overservice the client? I’m not making their bed.” It was just so funny to me that I got counsel for overservicing clients when we’re in a client-facing job and I think that was part of the catalyst. Jason Diamond: Tell me more about what they meant, you think. Michael Smith: Hindsight, I think they … I like to take care of people which means I’m very intuitive towards taxes, I understand how the tax code works, I understand how everything impacts their bottom line. So, when we’re doing deferred comp enrollments or 401(k) enrollments or I’m a big believer in Roth 401(k)s and backdoor Roths and I’ve been doing them for years, I think what Mother Merrill wanted at that time was us not to do that. And, again, nothing against Merrill, I get it but this is how they wanted us to act and I wasn’t in that mold, I was taking care of clients to a much deeper depth is how I would say it. Jason Diamond: And I think that speaks to you outgrew the model not necessarily the firm. I think Merrill does a lot of things really well, you would agree with that, I think given that you built 85 clients and 350 million in assets is nothing to sneeze at. But the model that it seems like you value client service and an integrated client service experience of that and the wirehouse model oftentimes doesn’t put a premium on that. Tell me about your ethos or your thoughts around client service today and what being independent enables you to do. Michael Smith: So, that’s an interesting observation because one of my clients actually just mentioned to me that the reason we’re growing so much is because of our service model and the fact that we deliver a tremendous amount of value over just portfolio management. I said my managers is in portfolio management, I don’t do that any longer, I have a staff that handles that for me but it’s really the servicing of the clients because they don’t know what we know and I think servicing the client is the most important thing that we can do today. Jason Diamond: Give me some examples of what you mean by servicing the client in a more holistic way. I agree with you, by the way, portfolio management, table stakes, financial planning, table stakes, tell me more about what you mean. Michael Smith: By that I mean we do a quarterly review on tax. So, a lot of people don’t understand how taxes work and how estimated taxes work. So, estimated taxes are January 1st to March 31st, January 1st to May 31st, January 1st to August 31st, that’s how you do your estimated tax payments, you figure out what that is. And for compensated employees where they have RSUs that come in at different times of the year or different grants or exercise their options at a different time, that can affect their estimated tax liability and I’m not big on giving Uncle Sam any more money than they have to have until they need it. And then everyone doesn’t understand how the penalties and interest works on the IRS. And I’m big on the tax payments because that’s where we can add a lot of value for not a lot of time and we integrate it with our portfolio so we know what we’re doing with our gains. And I happen to reside in Washington State which has a long-term capital gains tax rate once you surpass about 270,000 of long-term capital gains. So, it’s super important for us to be aware of this and that’s how we service them. We also help them with their rebalancing of their 401(k)s, things that wirehouses cannot supposed to do, we are not supposed to be helping them with some of their aspects of life. Jason Diamond: Yup. That’s what I was alluding to earlier, it’s limitations on the model, not because they’re bad models, it’s just a different way, a different ethos around client service. You mentioned RSUs and corporate employees, I know that’s a niche you have is around concentrated stock positions and equity comp plans. I guess let me ask you two different questions around this. First of all, why that niche? Interested. And then, second of all, do you think a team needs to have a specialization to be competitive these days or do you think it’s okay just to be like, “My job is to be the best advisor and I want to service assets wherever those assets may come from?” Michael Smith: Another great observation. I’m going to address the niche first and foremost. I think, and I talked to R.J. Shook’s staff just recently, and having a niche gives you a specialization and it also accelerates your growth factor. If you serve a niche and you’re very good at that niche, then that word gets around. If you’re a jack of all trades, you can do lots of things but I don’t think you’re focused and you’re not hitting the right numbers that I like to see. And I think that would be my theme is the niche allows you to focus on a very specific type of ideal client, that’s a Schwab thing where you have an ideal client persona and our firm has an ideal client persona. As far as having the equity comp, I absolutely was one of the teams at Merrill Lynch that was equity compensation designated, I managed a couple of plans. My exposure to that, Jason, I haven’t thought about this in a very long time, came from UBS where I had team members that were colleagues that were associated with the Nextel Sprint plan. And I always thought that you’re taking care of the top executives but, really, my background being in the military was how do we take care of the troops, the troops, I call them sailors, and how do we educate those sailors. And one of the things I’ve always said in my entire career in the military and I still say to this day is 50% of every bonus or a promotion or something like that should go to long-term savings. So, I use that same mentality with RSUs, with stock options, with bonuses. Set that aside, let that grow because you’re not used to spending it and you will learn to spend what you make. Jason Diamond: I think that’s a great reason, it’s super smart and I love your explanation, it was a very simplistic way. Honestly, even I hadn’t thought about that around your niche, I think, becomes almost like a force multiplier for your own growth because it’s much easier to become the guy in X, Y, Z vertical than to be the guy in every financial advisor of America, across America. Let me ask you a follow-up question, you mentioned the ideal client persona. I spend a lot of time at our firm thinking about this as well, what does your ideal client persona look like. How do you think about an opportunity though that differs from that persona? So, it’s great. Obviously, everybody, it’s easy, you get somebody who’s your perfect prospect, they walk in the front door, sign me up. But when you get something that’s not down the fairway for you, is it just I evaluate it on a one-off basis or are you super disciplined to that approach because it’s who your firm is? Michael Smith: I truly haven’t given that a whole lot of thought but I will tell you how I would handle that because I am handling it with some one-offs. I like the opportunity because you’re stretching your brain in that you’re thinking about how somebody else is reacting so you’d never know. So, I like it from a learning perspective but I also know it comes with a lot of other baggage, I’ll call it baggage, because, all of a sudden, they want to short the market, they want to go long-short strategies. So, all of a sudden, they’re not in our niche and, all of a sudden, they’re taking a lot of time, they’re draining our time so I think you got to be very careful about what you wish for. And there’s a lot of great advisors out there that will walk circles around these topics that I’m like, “Okay, I would rather refer somebody so they get the right experience than give them the wrong experience.” Jason Diamond: I absolutely love that answer. The bow you just put on it, I think, is the appropriate way in my mind to put a bow. At the end of the day, wouldn’t you rather service somebody more optimally even if you don’t believe it’s yourself, I agree with that. I want to ask you one more point on the client service piece. I was playing around on your website and, on your service model, you have health as a component of the client experience of your diagram. Why do you think health matters in a financial context? Michael Smith: I always believed in a healthy mind and a healthy body will bring so much joy to you and I think health is just part of your persona. If you don’t take care of yourself and your body and your mind, then it doesn’t matter what I do, I think you got to start with health. So, I’m very big on the executive physicals, I routinely require all of our staff to have an annual physical. And, again, they’re young people but you got to have these annual … I live and breathe going to see a doctor every year to do my annual physical, not because I think I’m pretty good health, I still run, I do a lot of things but I think your life starts with being healthy. Jason Diamond: Yeah, it’s refreshing to hear that, no doubt. It’s funny to think about but 2019 is a long time ago now and, in RIA world, I almost think of it like dog years. You’ve been around the block now for a little while so I’m curious how have you seen this space change since you launched in 2019? Michael Smith: In 2019, I didn’t know what I was doing, I could barely get out a wet paper bag but I do think it’s changed dramatically. I would say the biggest thing I’ve seen in just the six and a half, almost seven years is the rise of the mega RIAs and how they’re going to shape the industry. Everyone talked about fee compression at Merrill Lynch. When I was at Merrill, we talked about fee compression, then they talked about robo-advisors and now they’re talking about artificial intelligence replacing advisors, I don’t believe that and I don’t think that’s going to happen in the RIA space. What I see the RIA space maturing is into these very big mega firms as well as these independent RIAs like myself that serve a very niche market where we can walk in our lane. The ability to transact today is so much easier as an RIA than it was at a wirehouse as well because we have instant access to technology. My military background, my Navy background says make a decision right, wrong or different, if you don’t like it afterwards or you get new data, course change. So, in our industry, we can change on a notice. I hired a tech firm last year, I didn’t like the experience nine months into it, guess what, they’re not coming back. So, I can do that but you can’t do that at the bigger firms and even the bigger mega firms would have a hard time navigating a change just like that on a dime. Jason Diamond: You bring up an interesting point. To the extent you face competition, do you find yourself competing more against traditional wirehouse type firms or RIAs like yourself, mega caps RIAs? Are your clients attuned to any of this? Michael Smith: That’s an observation I haven’t thought of either there, Jason. I would say I don’t feel that I have a … I know there’s competition out there but we have a growth issue more than we have anything else so I don’t … I can’t take on the clients that want to become my clients so I’m not competing with people too much. Jason Diamond: A capacity issue, you mean? Michael Smith: Yeah, I have a capacity issue. Jason Diamond: I think you’re not alone in that. How can I even think about competition and the like when … A lot of advisors would probably say that. I want to talk more about the capacity situation but, before I do, let’s talk a little more about the RIA setup. Who do you custody with, remind us, and why or how did you arrive at that decision? Michael Smith: Yeah. So, when I launched, I went with Schwab, Schwab is a phenomenal partner, they helped me get a lot of stuff done, I couldn’t have done it without Schwab. During the pandemic, I realized that I should probably … So, remember, during the pandemic, we had a lot of issues with the banking industry, it was almost like a financial crisis but in a very compressed time. So, during the COVID, I decided to add Fidelity as another custodian so now I have two custodians and I opened accounts on both sides of the house but I like the custodians that are there to help you, they’re very good at what they do. I don’t even consider them a competitor and they aren’t competitors, they have their own branch so I don’t consider them competitors, I think they’re my partners and both Charles Schwab and Fidelity are good partners. Jason Diamond: Yeah, I think that’s the healthy way to look at the custody relationship. That’s a very common approach, I think, is launching with one custodian and then adding a secondary custodian or a tertiary custodian down the line for one reason or another so I appreciate you sharing that because we get those types of nuts and bolts questions a lot so I figured I’d ask you. One last question on the setup and then we’ll shift gears. Has anything been a negative? So, you talked about leaving Mother Merrill behind and, Mother Merrill, we use it facetiously but obviously it implies a degree of comfort and the homeland so I’m curious if you miss anything. Michael Smith: I miss the camaraderie of being with a bunch of other folks. I mentioned this when I first launched, I mentioned it year over year with my team, the one thing that we miss as an RIA and, again, Dynasty has their benefits as well and the mega RIAs have their benefits but, if you’re a true independent like myself, we get to go to conferences that we want to and that’s a timing issue, really, a time constraint. But one thing Merrill and Morgan, JPMorgan, and the other big wirehouses have as well as the megas, they have the ability to put conferences together for their advisors or their administrators and have this education. That’s the one thing that, I think, would evolve in the RIA industry in the future as well. They’re not my competitors, they’re my business colleagues. And if we think of them as competitors, and a lot of people do because I don’t want to share my client information or what I do with my competitor because they may steal them, if you’re that insecure, then you’re probably not the right advisor in the first place. Jason Diamond: I don’t disagree with that. It’s interesting too, I hear two common answers to that question, not about Merrill but just about somebody who’s broken away, what do you miss about the captive firm world. Either on this podcast or just in conversations with advisors, brand comes up a lot and then the point you just raised. I’ll even hear like, “Hey, forget the conferences and the trainings, just being able to have an office where I’ve got eight other advisors on a row for me, it’s a little bit of a different setup than in the independent space,” and I think that’s just a reality of you take the good with the bad. And for other advisors, by the way, one of the things I want to ask you about to this point is do you believe that there are advisors that are just better served in the W2 traditional firm world or do you think that every advisor should be looking at the RIA space? Michael Smith: I think that wirehouse serves a great purpose and- Jason Diamond: Okay, me too. Michael Smith: … there’s a lot of great people that are great advisors in that wirehouse, they need the structure. What I hadn’t alluded to is, and I mentioned this to a former manager from Merrill Lynch of mine just recently, actually, I was like, “I don’t think advisors realize what it takes to run a business.” I’m not trying to sugarcoat it, running an RIA is hard work, it takes a lot of your time day in and day out to run a business as well as taking care of and servicing your clients so I do think the wirehouse venue is the right way to go. And, Jason, I want to go back to one other thing about your identity. I launched as the Smith Group because that’s what I was known at Merrill Lynch. Within three or four months, I changed that name to a firm because I did not want to be associated with it. So, when you’re at one of the wirehouses, you’re known as your team name or something of that sort, I didn’t want to be known as that, I wanted to be known as Emerald Advisors not the Smith Group because, all of a sudden, you have a single point of failure. So, brand identity, it’s not so unique inside the wirehouse because it’s a team name versus Merrill or Morgan Stanley or something like that. Jason Diamond: It’s a good segue because I’ll tell you where my mind goes when you bring that up. My mind goes is you’re smart in a way that you might not even realize or maybe you do realize which is that, if and when it ever comes time to sell this business, it is probably more valuable without your name attached to it or maybe not. But in some way, shape or form, as an RIA, you have an obligation to be thinking about that or it’s probably on your radar, maybe not an obligation. Have you given an ounce of thought to M&A either acquiring businesses, growing in that way or, ultimately, when you succeed out of this business and what the RIA space enables you to do? Michael Smith: To answer that question, yes. Everyone’s thinking about merger and acquisition, I think about succession planning from day one. I actually thought about I’m a big team person, I come from the submarine force where everyone is a key player on a submarine, every single person has a job and responsibility on a nuclear submarine. So, inside the financial services industry, I know Merrill Lynch was very big on teaming, I understand Morgan Stanley is as well because teaming gives them a breadth of responsibility where the responsibilities are shared. So, mergers and acquisitions or selling my business, I think, if you’re not thinking about that … And I’m not thinking about selling my business because that’s a distraction to me. If I needed the money, then I would’ve went to a wirehouse and that’s okay, you monetize your life’s work. Today, I’m all about what’s right for the client, what’s right for my team and what’s right for where I want to be in the next 10 to 20 years. So, I am growing, I do want to grow, I’m looking at opening offices in probably three locations in the next 24 months or so. Jason Diamond: Well, that’s what I was going to say, plenty of advisors I think would say the same, I have a lot of runway. But what about the other side of this equation which is you’ve had tremendous organic growth, you’ve tripled your client base, you’ve more than tripled the asset base, have you thought about acquisition as a mean to jet fuel the inorganic growth side of things? Michael Smith: I have but not in the typical sense that you’re looking at as buying a book of business. I want to partner with like-minded advisors that share that common thread of taking care of clients where you can serve as their trusted counsel and sit in the meetings with their attorneys and sit in the meetings with the accountants and give them sage counsel that you can only do because you’ve been with the family for 20 years. You know this family and that, not always, but I think that’s missed a lot in other firms. Jason Diamond: Yeah, I think that’s fair. I just thought of something else that you brought up. You brought Dynasty so I’m going to ask … I’m going to pull on this thread. That implies to me that you’re at least loosely aware of the supportive independence models that are out there yet you chose a very independent, autonomous path, why? Michael Smith: Because I didn’t know what I was doing. Jason Diamond: Fair. Michael Smith: Let’s be honest, I like Dynasty, I talked with Dynasty when I left. I talked to them all, I talked to Rockefeller, I talked to Morgan, I talked to Dynasty and then, when push came to shove, I wanted to be Mike Smith and launch my own firm and learn. And I will tell you, you learn drinking through a fire hose and we did that, we learned, I know the mistakes. What I didn’t want to do is just go to someplace where this is the stuff you’re going to have to use. So, I think Dynasty is a great launching platform, I think there’s other ones out there that are similar to Dynasty or the Rockefellers or the Morgans, it’s truly what you’re trying to achieve in life. What do you want for you and your clients and I always put my clients before me because I’ve always had this lifelong thing of, you do the right thing, you’re going to get taken care of. Jason Diamond: Yeah. And that’s a very common analysis, by the way, and it’s very common too for big advisors like yourself to say I did my homework across all of those different categories. I looked at the traditional wirehouses and regional firms and boutique firms, I looked at the independent broker dealers, I looked at the support platforms and the aggregators and the roll-ups and here’s ultimately what I landed on and why. Did you always know that though or was that something that it took you a diligence process to figure out? There was plenty of advisors, by the way, who come to us and they’re like, “I knew for the last five years that I was sitting there I was launching an RIA someday.” Michael Smith: Yeah. I did not know that and, to be honest with you, hindsight, I think one of those partners probably could have made me a little bit better at first because then I could have focused on clients versus focusing on, hey, how to open a business, who’s your technology … We talked about custodians and some other things but we didn’t talk about technology, how do you go find that technology. Where’s your email address come from? Who’s your chief compliance officer? When it resides on you, you got to look in the mirror. So, I think those parties out there that provide that for brand-new advisors launching could be very beneficial. I had in my mind what I needed to do and I knew I’m very frugal so mine boiled down to how much money I wanted to spend, to be honest with you. Jason Diamond: I think it is a cost benefit analysis, it is. It’s absolutely … Because if you list the functions of a support platform on paper and you showed it to somebody who didn’t know the industry, they would say, “Why on earth wouldn’t you do this? They’re taking off your plate compliance and tech and custody and the like,” and the answer is because there’s a cost associated with it and plenty of advisors decide what you decide, I wanted … Or I just wanted a greater degree of autonomy and freedom, to your point, the name on the door piece, I wanted this to be mine. Michael Smith: And, Jason, I think it also goes to the uncertainty. I had never done anything since Navy, financial advising and then launching. So, for me, I was launching with four employees I had to take care of and here I was going to hire a third party that I was going to have to spend X amount on and I didn’t even know what my income was going to be. That’s different if you’re a multi-billion dollar FA coming out of a wirehouse, the monetary dynamics are different. Jason Diamond: Agreed. Okay, here’s a good one for you. We get this concept from advisors, from firms, from private equity that a billion dollars in assets is like this magic number in our industry. Do you feel like anything’s changed now that you’re at a billion and what’s the next chapter for Emerald Advisors? Is it just continuing on this steady trajectory and serving clients and trust that everything else comes with that? Michael Smith: I go back and forth on a billion, everyone thinks that’s the right number, the biggest number that you need but I think it’s just an arbitrary numbers because it didn’t define who I was. And a lot of people define success at a billion, they define success that you’re a successful firm at a billion. I think I was a successful firm at 300 million, I was a successful financial advisor with 20 clients in 2005. I would say a billion is a multiplier, what I would tell new advisors out there today is gather assets. The more assets you have, the more revenue you generate. The more revenue you generate, the more money you can put in your pocket which means the longer you can stay in the industry. The problem with the industry is an attrition problem, not anything else. So, assets just give us the ability to have revenue which gives us the ability to grow. Jason Diamond: And is that the plan? Keep adding assets, keep growing one client at a time with the focus though, obviously, on what makes you which is a very client-centric service model. Michael Smith: Correct. There’s a lot of things I want to do in the next couple of years and expanding our footprint is our biggest one with the right partners and then just keep adding. I have a business development officer that I’m probably offer a job to here pretty soon and things are going well. Jason Diamond: Yeah, that’s great. You mentioned the tech stack and the other components of the business and I hear you on the frugal cost-benefit analysis. But who did you turn to for some of those early decisions, was it Schwab primarily who helped hold your hand through that? Michael Smith: Schwab was very good at helping me identify the tech stack at first and the tech stack is actually the one consistent, there’s a lot of things I’ve been consistent on but tech is one that I’ve stayed with them. I launched with RightSize, now they’re Advisory, they’re very good, they do the right job for us and I’m big on cybersecurity. So, tech was helpful from Schwab, Schwab helped us with that. Jason Diamond: So, we spoke a little bit about your naval experience but, I’m curious, can you tell us how has your naval experience shaped your perception or your experience in wealth management? Michael Smith: My Navy path was a lot different than many officers. I served 12 years as an enlisted person before I got my direct commission as a Mustang officer, typically called limited duty officers or loud, dumb and obnoxious as I like to say. But that experience gave me a unique perspective because I was able to be the enlisted side and officer which are the workers and then the management side so I had both experiences which was unique. When I was commissioned, Admiral Jerry Ellis, a submarine admiral that commissioned me, heard this lesson to the podium, he was just talking about me in this point but he said, “There are three kinds of people in every organization. You have rowboat people who need to be pushed, you have sailboat people who move whenever the conditions are favorable and then there’s steamboat people, they move continuously through calm or storm.” And he said, “This is Ensign Michael Smith,” he said, “Make your course.” And that’s always stood with me because you do have those three types of people in life. You got people that are just … They’re robo people, they go until they get tired. You got sailboat people that go wherever the wind blows them and then you got steamboat people that chart their own course. I would say for advisors out there make your course or just be happy with what you’re doing. But for some of us hard chargers, I think that analogy has stayed with me my entire career. Jason Diamond: It’s fantastic. I love the analogy, great naval tie in also. Thanks for sharing that. We got time for one more question. You have a fascinating background, a fascinating path to the industry, obviously, an incredibly disciplined approach around client service, any parting thoughts, words of wisdom especially as it relates to growth? That’s what strikes me most about your story is the growth that your move unlocked and that’s what every advisor who listens to our show is looking for. Michael Smith: I’m going to give another plug to Schwab on this. We actually were fortunate and I got their consulting group to come in right afterwards and I’m a big believer in having offsite. So, I’ve had an offsite, two offsites a year for my team and it’s the entire team unlike the wirehouses where you don’t take your admins and stuff like that. I take my entire team to an offsite and we group up on what we’re trying to achieve and have goals and objectives for the year. Schwab allowed us to use their consultants and we came up with our ideal client persona. Teams or firms that have this model become high performing. When you become high performing, growth becomes the outcome. I couldn’t do anything but grow. Jason, I couldn’t not grow because I had this ideal client persona, I knew how I was going to do it, it was measurable. So, growth becomes the outcome and, if you hold people responsible, then we’re all going to grow together and it’s a fun outcome. Jason Diamond: Fantastic, it’s a great place to end. Thank you so much for sharing your expertise with us, I can’t wait to see what the next chapter holds for Emerald, this has been a lot of fun. Michael Smith: Jason, thank you so much. I appreciate everything you do for the industry as well. Mindy Diamond: As a financial advisor, you hold yourself to the highest standards of integrity, honesty and credibility. You are successful because you take your professional responsibility seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay or Should I Go? Is a book written with you in mind? It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook. From “Overservicing” Clients to Building a $1B RIA: A Merrill Breakaway Story A conversation with Jason Diamond and Michael Smith, Managing Partner and Founder of Emerald Advisors.      Jason Diamond: Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is From “Overservicing” Clients to Building a $1B RIA: A Merrill Breakaway Story. It’s a conversation with Michael Smith, managing partner and founder of Emerald Advisors. I’m Jason Diamond and this is the Diamond Podcast for financial advisors. Mindy Diamond: At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive whether that’s at a wirehouse, boutique or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned and, each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education driven and based on building relationships starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at (908) 879-1002. Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning, data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport. Jason Diamond: Growth is often viewed as the result of better marketing, stronger referrals, a larger team and even acquisition and that’s all true yet growth can be the byproduct of something else entirely. For example, Michael Smith built a successful practice at Merrill then, one day, he was told he was spending too much time with his clients, or his management put it over-servicing clients. For Michael, that wasn’t a warning sign about his approach, it was a signal that he might have outgrown the firm and the model. Today, Michael is the founder and managing partner of Emerald Advisors, the independent RIA he launched in late 2019 with roughly 385 million in assets and 85 client relationships. Less than seven years later, the firm has grown to more than a billion in assets while remaining deeply focused on a highly-specialized client base and an unusually hands-on service model. What makes this story particularly interesting isn’t just the growth, it’s the thinking behind it. Michael’s perspective was shaped long before he entered wealth management. After serving more than two decades in the Navy, he brought a leadership philosophy centered on accountability, discipline and what he calls steamboat people, those who keep moving forward regardless of conditions, that mindset continues to influence how he builds his team, serves clients and evaluates opportunities. In this episode, we discuss the decision to leave Merrill, the realities of launching a fully independent RIA, why specialization can accelerate growth, the evolving role of custodians and technology and why he believes exceptional client service remains one of the industry’s most durable competitive advantages. Because Michael’s experience suggests that growth isn’t always the result of finding more opportunities, sometimes it’s the result of creating the freedom to execute the vision you already had so let’s jump in. Michael, thank you so much for joining us today. For starters, can you walk us through your background and what brought you to the world of wealth management? Michael Smith: Jason, thank you so much for the opportunity to be here today, I do listen to the podcast a lot especially before I left Mother Merrill. But my background and how I got into financial services is really distinct because I was on the board of JDRF back in the day and the national sponsor for JDRF was UBS PaineWebber and they’re like, “Mike, why don’t you be a financial advisor?” And my master’s degree was actually a finance and accounting in portfolio management because I’ve managed my own portfolio for years and years and so, when I couldn’t get a job, I just fell into it because I couldn’t get a job and I needed a job. That was 21 years ago, Memorial Day so that’s how I got into this industry. Jason Diamond: It’s a unique background, it’s super interesting and I want to talk more about it. You mentioned Mother Merrill, we’ll certainly get there. Before we do, give us a little bit of context on the current business you operate, Emerald Advisors, any context you can share on size, number of staff, types of clients you serve would be great. Michael Smith: Sure. So, we launched Emerald in 2019, November 2019 with about 85 clients and you always talk about this on the podcast how scared it is to launch and go independent. And I would say we took over about 95% of our clients that we wanted to bring over and today we’re at about 230 clients, I think we have some onboarding right now, we have just over a billion of assets. So, we launched with the 85 clients and around 350, 385 million, now we’re over a billion. Jason Diamond: Good for you. Michael Smith: Thank you. And I launched with four employees and we’re now at 11. And I would give a shout-out to one of my key employees because, when I launched, I actually hired somebody that had no experience with us and that was really a good thing because that allowed that person to really focus on operations and back office stuff while my business partner Emily and I were able to focus on bringing on the clients and alleviating any issues that they may have or thought. Jason Diamond: So, meaning you hired somebody basically immediately upon launch to help you with the transition and with this next chapter? Michael Smith: Correct. I hired them before but they started the day we launched. Jason Diamond: Brilliant, I love it. Oh, let’s definitely talk more about that because I think that’s a great strategy for … You’re right, you said it in a joking manner now because you’re seven years past but it’s a very real fear that advisors have and I think it’s worth talking more about. I want to mention too you have, obviously, built this business and grown this business dramatically. I don’t want to make this episode about the pandemic but you moved the business at a, certainly, a unique time. Did it impact your growth at all? Did you feel like you hit a brick wall? Just curious about your thoughts. Michael Smith: No, Jason, that’s a great observation. I would venture to say that the pandemic was actually a good thing for us. Jason Diamond: Interesting. Michael Smith: And I say that because, all of a sudden, you could hit pause because everyone was relearning how to do business, how do we do client reviews, how do we communicate with clients in a environment. So, I think the pandemic allowed us to just really reset our expectations visiting with clients because I used to fly a lot because I have clients in 38 different states so this has actually been, not just good for me, but good for the industry because I think it’s reset our expectations that we don’t have to be every day with a client facing. Jason Diamond: I agree with that largely and it’s true of our business too, by the way, it’s certainly reshaped the way people expect to be communicated with. I think Zoom has become much more mainstream, phone calls and we’ve heard from many other advisors who say something similar. I was just curious because you moved so close to or if there was an impact but I get, honestly, I think you’re right, it allowed you to have this nice natural inflection point and almost like flipping a switch of a clean slate. Michael Smith: It allowed us to learn the processes too. So, we launched in November 1st, by March we were in lockdown and so it gave us the opportunity to take several months of just learning the processes of how to be an RIA, it was pretty good. Jason Diamond: Absolutely. So, one of the things you mentioned in that was the way in which you serve clients and I’d read something funny and I think it was around the time of your move. You were talking about that, Merrill, you had a manager who spoke about that you would overserve your clients, you serve clients too much, tell me about that. Michael Smith: That was such an interesting topic because I got called down to the ops officer’s office and they’re like, “Ugh, Mike.” And it brought my admin down with me and they’re like, “Mike, these reports that you’re taking care of your clients too much,” and I’m like, “What do you mean?” “Well, you’re overservicing them.” Jason, I literally had to go back and Google the word overservicing because I was like, “How do you overservice the client? I’m not making their bed.” It was just so funny to me that I got counsel for overservicing clients when we’re in a client-facing job and I think that was part of the catalyst. Jason Diamond: Tell me more about what they meant, you think. Michael Smith: Hindsight, I think they … I like to take care of people which means I’m very intuitive towards taxes, I understand how the tax code works, I understand how everything impacts their bottom line. So, when we’re doing deferred comp enrollments or 401(k) enrollments or I’m a big believer in Roth 401(k)s and backdoor Roths and I’ve been doing them for years, I think what Mother Merrill wanted at that time was us not to do that. And, again, nothing against Merrill, I get it but this is how they wanted us to act and I wasn’t in that mold, I was taking care of clients to a much deeper depth is how I would say it. Jason Diamond: And I think that speaks to you outgrew the model not necessarily the firm. I think Merrill does a lot of things really well, you would agree with that, I think given that you built 85 clients and 350 million in assets is nothing to sneeze at. But the model that it seems like you value client service and an integrated client service experience of that and the wirehouse model oftentimes doesn’t put a premium on that. Tell me about your ethos or your thoughts around client service today and what being independent enables you to do. Michael Smith: So, that’s an interesting observation because one of my clients actually just mentioned to me that the reason we’re growing so much is because of our service model and the fact that we deliver a tremendous amount of value over just portfolio management. I said my managers is in portfolio management, I don’t do that any longer, I have a staff that handles that for me but it’s really the servicing of the clients because they don’t know what we know and I think servicing the client is the most important thing that we can do today. Jason Diamond: Give me some examples of what you mean by servicing the client in a more holistic way. I agree with you, by the way, portfolio management, table stakes, financial planning, table stakes, tell me more about what you mean. Michael Smith: By that I mean we do a quarterly review on tax. So, a lot of people don’t understand how taxes work and how estimated taxes work. So, estimated taxes are January 1st to March 31st, January 1st to May 31st, January 1st to August 31st, that’s how you do your estimated tax payments, you figure out what that is. And for compensated employees where they have RSUs that come in at different times of the year or different grants or exercise their options at a different time, that can affect their estimated tax liability and I’m not big on giving Uncle Sam any more money than they have to have until they need it. And then everyone doesn’t understand how the penalties and interest works on the IRS. And I’m big on the tax payments because that’s where we can add a lot of value for not a lot of time and we integrate it with our portfolio so we know what we’re doing with our gains. And I happen to reside in Washington State which has a long-term capital gains tax rate once you surpass about 270,000 of long-term capital gains. So, it’s super important for us to be aware of this and that’s how we service them. We also help them with their rebalancing of their 401(k)s, things that wirehouses cannot supposed to do, we are not supposed to be helping them with some of their aspects of life. Jason Diamond: Yup. That’s what I was alluding to earlier, it’s limitations on the model, not because they’re bad models, it’s just a different way, a different ethos around client service. You mentioned RSUs and corporate employees, I know that’s a niche you have is around concentrated stock positions and equity comp plans. I guess let me ask you two different questions around this. First of all, why that niche? Interested. And then, second of all, do you think

Private credit disarray spells opportunity for housing giant Pretium, which targets high returns by lending to US homebuilders. “Our private credit looks a little bit different than other private credit in the sense that we are secured, we have real good downside protection,” Jon Pruzan, the company’s co-president, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Erica Adelberg in this episode of the Credit Edge podcast. “We have a lot of people who want capital and not a lot of people providing capital — that puts us in an opportunity to continue to generate attractive returns,” says Pruzan, who was previously chief financial officer at Morgan Stanley. They also discuss housing fundamentals, opportunity by region, how Pretium achieves midteens returns and political risks going into the November US midterm elections.See omnystudio.com/listener for privacy information.

AI's appetite for memory has turned chips into an inflationary factor. Our U.S. Public Policy Strategist Ariana Salvatore looks at what policymakers could do to reduce that pressure.Read more insights from Morgan Stanley.----- Transcript -----Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Morgan Stanley's U.S. Public Policy Strategist. Today, I'll be talking about chipflation and what policy tools can or can't be used to address the memory bottleneck. It's Wednesday, June 17th, at 10am in New York. Last week, you heard my colleague Shawn Kim talk about chipflation and the surging cost of memory. Today, I'll get into what policymakers can and can't do about it. As listeners will know, memory chips are becoming an increasingly strategic resource because AI infrastructure depends on them. And when a resource becomes strategic, governments tend to get involved. The challenge is that policy can help at the margin but probably can't solve the problem quickly. There are three reasons for that. First, many U.S. policy tools all take time. Direct subsidies, tax credits, procurement guarantees, and faster permitting are all things that can support new fabrication plants, packaging facilities, and testing capacity. But memory supply is not going to appear overnight. This new capacity has to be built, equipped, qualified, and ramped – and that process can take years. Second, China may be able to add some supply in conventional memory markets, but not enough to close the broader gap created by AI demand. That's especially true for high bandwidth memory, the more strategic type of memory for frontier AI systems. Supply there still remains highly concentrated, technically complex, and difficult to scale. Third, our base case is that U.S. policy remains more restrictive, not less. We don't expect a broad loosening of export controls given the strategic imperative of this technology. Instead, we think policymakers are likely to continue to prioritize supply chain resilience, trusted capacity, and geopolitical de-risking over the near-term price relief. Now, from a policy perspective, we think it's important to split memory into two categories. The first is AI strategic memory, high bandwidth and advanced DRAM. That's the memory that enables the most advanced AI systems. And for that reason, we think policy here is likely to focus on protecting strategic capability, limiting geopolitical vulnerability, and expanding trusted supply across the U.S. and its allied countries. The second category is commodity or legacy memory. That's the memory that you can think of as being used in autos, industrial systems, consumer electronics, and other non-frontier applications. Now here, we think policymakers could consider more flexible options, like differentiated licensing or targeted support for critical sectors. But even then, the limits are practical: permitting, workforce, tools, qualification cycles, and production lead times. China is the other major variable. Chinese producers are expanding in conventional DRAM and NAND. In some consumer-grade applications, that supply could act as a relief valve for buyers that have been crowded out by AI-related demand. But still, there are limits. Chinese producers face yield and technology gaps, even if policy is supportive. And China alone will not solve the high-bandwidth memory bottleneck. The regulatory backdrop reinforces that point.Some Chinese memory producers remain subject to U.S. restrictions or even heightened scrutiny. Access to the most advanced lithography tools also remains a hard ceiling. Without that access, scaling leading-edge memory becomes much more difficult. So, the bottom line is this: policy can mitigate chipflation, but it's unlikely to end it in the near term. For AI strategic memory, policymakers are more likely to defend access, deepen allied coordination, and encourage trusted capacity than to loosen restrictions. For commodity memory, there may be room for some targeted flexibility. But of course, geopolitics and timing still matter. Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

Plus: Dueling IPOs are forcing bankers at Goldman Sachs and Morgan Stanley to pick teams. And tech companies including Stripe, Google commit $915 million to pull carbon out of the sky. Julie Chang hosts. Learn more about your ad choices. Visit megaphone.fm/adchoices

A 200-page independent report just confirmed what the UK government spent two decades refusing to say out loud: that over 250,000 underage British girls were systematically raped and trafficked — and that the gangs doing it, quote, 'operated with either the active or passive consent of public authorities.' Right? That's not a conspiracy theory. That is now a documented, publicly funded, formal finding.SPONSOR: Lear CapitalGold and silver are at all-time highs as central banks, sovereign funds, and major institutions like Morgan Stanley shift capital out of the dollar and into precious metals. Lear Capital helps everyday Americans get into physical gold and silver with experienced reps, transparent pricing, and IRA-eligible options. With a qualified purchase, you can receive up to $20,000 in bonus gold or silver. Call Lear Capital at 800-707-4575 or visit https://www.Nick4Lear.com-----SPONSOR: Good RanchersOver 85% of grass-fed beef sold in the U.S. is actually imported, and most shoppers have no idea. Good Ranchers partners with local American farmers and ranchers to deliver 100% American meat, pasture-raised with no antibiotics or added hormones, straight to your door. Where you buy your meat directly supports the families keeping food production in this country. Get $100 off your first three orders plus free protein for life with a subscription, or $40 off a one-time order, at https://www.GoodRanchers.com/discount/NICK-----GET YOUR MERCH HERE: https://shop.nickjfreitas.com/BECOME A MEMBER OF THE IC: https://NickJFreitas.comInstagram: https://www.instagram.com/nickjfreitas/Facebook: https://www.facebook.com/NickFreitasVATwitter: https://twitter.com/NickJFreitasYouTube: https://www.youtube.com/@NickjfreitasTikTok: https://www.tiktok.com/@nickjfreitas3.0

SpaceX priced its IPO at $135 per share on June 11 and began trading on the Nasdaq under ticker SPCX on June 12, raising roughly $75 billion at a $1.75 trillion valuation - the largest initial public offering ever, dwarfing Saudi Aramco's $29B record from 2019. The stock opened at $150, jumped more than 20% intraday, and closed its first session at $161.11, up about 19% from the offer price. With about 556.6 million shares sold, SpaceX instantly became one of the most valuable companies ever to go public and gave public investors their first direct stake in Starlink and Starship.The U.S.-Iran confrontation that has kept the Strait of Hormuz contested for months drove another volatile week in energy markets, with crude having spiked toward triple digits earlier in the standoff before easing back toward the mid-$80s as diplomacy gained traction. Roughly 27% of seaborne crude moves through Hormuz, and analysts have warned prices could spike dramatically if the chokepoint stays disrupted. By Friday, Iranian media described a draft deal that would lift oil sanctions and reopen the Strait, with reports of a possible signing in Switzerland as soon as the weekend - sending crude down about 2% to near $85 and lifting risk assets.OpenAI said on June 8 that it had confidentially submitted a draft S-1 registration statement to the SEC, the clearest signal yet that the AI leader is moving toward a public listing. Reporting puts the targeted valuation in the roughly $850 billion to $1 trillion range, building on the $852 billion post-money valuation from its March 2026 raise led by SoftBank and Microsoft. OpenAI has reportedly tapped Goldman Sachs and Morgan Stanley to lead the deal, with a possible listing window stretching from September into Q4 2026.At WWDC on June 8, Apple unveiled Siri AI, a rebuilt assistant with conversation history, personal-context awareness, a dedicated Siri app, and customizable voice and pacing - the long-delayed AI overhaul it has been under pressure to deliver. The company also showed iOS 27, refinements to its Liquid Glass design language, new family-safety tools, and the next macOS, named Golden Gate. The event doubled as Tim Cook's final WWDC keynote as CEO; John Ternus is set to take over in September.Tesla and Elon Musk's xAI unveiled a joint project called Digital Optimus, billed as the first major outcome of Tesla's roughly $2 billion investment in xAI. The effort fuses Tesla's humanoid-robot hardware and efficiency with xAI's reasoning models, and Musk said a user-ready version could arrive within about six months - targeting roughly September 2026. The reveal deepens the cross-pollination between Musk's companies and lands alongside a June 12 signal from Musk that Tesla's partnership with Nvidia is heading to the next level.Anthropic launched the Claude Partner Network - including a new Services Track and Partner Hub - and committed an initial $100 million to help consulting firms, professional-services providers and specialist AI shops deploy Claude inside enterprises. The company said it will expand its partner-facing team roughly fivefold with applied AI engineers and technical architects, and reported early traction of more than 40,000 firm applications and over 10,000 certified consultants. It is a clear move to win the enterprise layer, where adoption is gated by integration and services rather than raw model quality.If you want a prize, send us a DM:instagram.com/rickerandbontiktok.com/@rickerandbonyoutube.com/@rickerandbon

Our Global Head of Macro Strategy Matthew Hornbach and our Chief U.S. Economist Michael Gapen discuss the signals investors will be seeking from the new Fed Chair leading his first monetary policy meeting and possible implications for markets.Read more insights from Morgan Stanley.----- Transcript -----Matthew Hornbach: Welcome to Thoughts on the Market. I'm Matthew Hornbach, Global Head of Macro Strategy. Michael Gapen: And I'm Michael Gapen, Morgan Stanley's Chief U.S. Economist. Matthew Hornbach: Today, markets are watching the Fed's next move. Are rate cuts delayed or could hikes possibly be back on the table? It's Tuesday, June 16th at 8:30am in New York. So, Mike, the FOMC meeting today and tomorrow is likely more about reading the signal rather than announcing a rate change. Markets will focus on inflation forecasts, the unemployment rate, and the growth outlook. But, of course, this will also be the first meeting after Powell ended his term as Fed chair in May. All eyes will be on Warsh. So, what are your thoughts before the press conference? Michael Gapen: A lot of thoughts, actually, before the press conference. I do think it's basically a foregone conclusion that the Fed will be changing its easing bias in favor of more neutral language. Seems clear the committee wants to do that, probably wanted to do that at the last meeting. And it does fit, I think, Warsh's preference for less communication, less guidance from the Fed. So, I do think that's largely a foregone conclusion, although obviously we need to see whether that happens and whether there are dissents. I think, as you noted, the forecasts will be important, but I think what's really important from my perspective – more than the modal outlook or the baseline that participants have – is their assessment of the balance of risks around the dual mandate. And I say that because obviously a year ago, the Fed eased policy when it felt that there were downside risks to the labor market that outweighed upside risk to inflation. This year, that seems to have flipped, where the labor market appears to have stabilized, labor demand has picked up a little bit, and it is inflation that looks persistent. So, if the Fed cut last year on downside risk to the labor market, I think the concern for markets is – maybe they hike in 2027 or later this year based on a changing balance of risks in the direction of firmer inflation. So, for me, that's really kind of key. In addition to what they're saying about growth inflation in the labor market, what is their assessment of the distribution of risks around that modal forecast? Matthew Hornbach: There's definitely going to be a lot of investor interest in the press conference itself. What exactly may result from the opening statement. Presumably, Chair Warsh will give an opening statement. How are you thinking about the back and forth between Warsh and the reporters that are asking questions? Are there certain questions that you would anticipate him getting asked, and how do you think he might respond? Michael Gapen: Well, I think certainly that if we are correct, and I think markets are correct, that they do change forward guidance in the statement to more neutral bias, that certainly opens up the possibility that the Fed will be hiking. So, the obvious first question is – is this the first step in the direction of hiking? What would get you to raise rates? Should investors be thinking about that? Is that the course of travel here? Now Warsh may not want to answer that if he, kind of, is consistent in the view of saying the Fed shouldn't give a lot of forward guidance. So maybe get some popcorn, Matt. It could be a situation where he gets asked questions about the future path of monetary policy, and maybe he decides, ‘I don't want to take that up right now. The data will tell us, and we'll do what's necessary.' And second, I think as you're noting and getting to about the structure of the press conference and what he might say is; past Federal Reserve chairs, let's say from Bernanke on, have found the press conference – the press conference statement, the questions, the format, the venue – as a way to control the narrative. And I think what will be interesting is to see whether Warsh has the same design. The risk, of course, is perhaps that he doesn't and pulls back the amount of communication guidance that he wants to give. And then we'll see what fills that vacuum. What narrative fills that vacuum? And is he okay with that? So, it may be that there's a new sheriff in town, and he chooses that there's some questions I'll answer, others I won't. And so, I do think that interaction with the press corps will be interesting. Hard to know exactly where it's going to come down until we see it in real time. Matthew Hornbach: During Chair Warsh's testimony to Congress, he alluded to the idea that potentially the Fed may not do a press conference at every meeting going forward. How are you thinking about that in the context of this idea that if you leave a void, somebody else may fill it? Michael Gapen: Obviously, the Fed used to not have press conferences at all, and then they moved to having them quarterly or four times a year. And they found that that was a little suboptimal because it became harder to make decisions and changes in the off-press conference meetings [be]cause they didn't have a venue to explain what they were doing and what they were thinking. So, they migrated to eight meetings. So, I think it's kind of twofold. Yes, it would mean that they speak less and therefore maybe their word doesn't carry as much weight. Or there's longer gaps for other narratives to come in. Like, do we lose forward guidance from the Fed, and is that replaced by forward guidance from the Treasury, for example? How do markets weigh those signals? And but then also I would say would that ultimately box in the Fed to only make decisions on quarterly meetings rather than eight times a year? Would the chair, for example… Let's assume that at some point in the future, the Fed decides it does want to raise interest rates. Historically, the Fed does not surprise on rate hikes. It's perfectly willing to surprise on rate cuts, when it comes to that. But if there is a world where the Fed does decide, ‘Hey, we do need to raise rates, but we don't have a press conference to explain our view.' Would they take the decision at that meeting or would they wait? So, does it reduce their opportunity set? Matthew Hornbach: I think this issue would certainly be an interesting one for investors to think about, which is why I'm bringing it up with you. Because to the extent that the plan going forward is to hold a press conference only once a quarter, as you alluded to – investors may interpret that as the Fed not being willing to raise rates at every single meeting going forward, which would certainly affect the pricing in the very short end of the interest rate market. But more broadly, on communication strategy, do you think that that would be something that Chair Warsh would take upon himself? Or do you think it would be more likely for him to organize a committee to discuss communications? Michael Gapen: I think the right thing to do… Again, our job is to say what we think he will do – not what he should do. But I'm going to answer this one in the question of what I think he should do. I do think he should create, say, a subcommittee on communication and reevaluate what the Fed does. [Be]ause as chair, he has almost unilateral control over communications. But obviously you work within a committee, the committee operates with consensus. So, I do think it would make sense to, kind of, work through a committee and try and get as much consensus as you can. And, here, what I would hope where they, kind of, ultimately land is – Warsh has been critical in the past of the Fed's forecast, the forecast being incorrect, providing maybe incorrect forward guidance. And I would argue that it's not really the sole job of the SEPs – the Summary of Economic Projections – to provide a forecast. But what you get out of them is more than just a forecast. You get a hint of the committee's reaction function. That if data are above or below certain thresholds on growth, inflation, and unemplyment, then expect our policy path to look different. So, is there a way that he could review the communication strategy, tamp down the elements that are, say, a pure forecast, but keep the items that communicate to the market what a reaction function is? That's where I think a review committee could be useful in reforming or revamping what they do. Matthew Hornbach: Absolutely. In terms of the things that are really the purview of the committee, can you walk us through what those are in the context of Chair Warsh coming in having to ultimately make decisions on monetary policy – both interest rate policy as well as balance sheet policy? What are the purview of the committee itself? Michael Gapen: Yeah. The two main tools of monetary policy, in this case interest rate policy and balance sheet policy, is both of those are under the purview of the Federal Open Market Committee. So, to change interest rates, to reduce the size of the balance sheet, to change the rollover rate, to buy assets, to sell assets – all of that is an FOMC decision. There are subcomponents of that world where the board can make certain decisions. Now, the Fed views communication broadly as a tool, but in this case, communication is not an FOMC decision. The evolution of the communication strategy grew kind of organically out of '08, '09. Chairman Bernanke kind of started that process. It continued through, through Yellen. And that's been more of what I'll call a consensus operation, but there's no formal vote. So, the chair has a lot of control over how the Fed communicates, how often it communicates. But the policy decisions are from the FOMC. Matthew Hornbach: I'm often asked about this idea that less communication may end up affecting the bond market in certain ways. And typically, the concern amongst investors is that with less communication from the Fed – whether it be the chair or whether it be from the committee as a whole through the Summary of Economic Projections and its interest rate dot plot – there's concern amongst investors that removing that type of guidance would raise bond yields, essentially through the term premium component of the term structure. And the way that we think about it is probably in this environment where interest rates have already been inching higher, and investors are concerned about the hiking cycle that may eventuate, it probably would raise term premia initially. But from a more medium-term perspective, the way I think about it is that, you know, term premia can be positive, it can also be negative. And if we have less forward guidance, I would generally expect that term premium component to be more volatile than it has been in the past. Not necessarily just in the upward direction. But it could also be in the downward direction if the macro environment ends up changing in some way. Michael Gapen: Yeah, I could see in the current context, the inflation surprises have been to the upside, so less communication may mean more term premium. But we went through almost a decade after '08, '09, where most of those surprises were to the downside. So, you can imagine that it could be a symmetric story rather than an asymmetric one. Matthew Hornbach: Absolutely. Well, thanks Mike. That's very interesting, and thanks for taking the time to talk ahead of this upcoming FOMC meeting. I'm looking forward to our next discussion around the following FOMC meeting. Michael Gapen: Great speaking with you, Matt. Matthew Hornbach: And thanks for listening. If you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

Steve Sosnick of Interactive Brokers examines growing retail investor interest in SpaceX. Memory stocks remain at the center of the market conversation: Mehdi Hosseini of Susquehanna explains why the group continues to surge and what is driving demand across the AI ecosystem. Plus, Carter Worth charts the surge. Our Oliver Renick breaks down the growing market for SpaceX-linked options and how investors are finding new ways to gain exposure. Ellen Zentner, Chief Economic Strategist at Morgan Stanley, analyzes the Federal Reserve's first meeting under Chair Kevin Warsh and what the shift could mean for rates, inflation and economic growth. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

In der heutigen Folge sprechen die Finanzjournalisten Philipp Vetter und Holger Zschäpitz über das SpaceX-Wunder, Nvidias billigen Finanztrick und die überkaufteste Aktie der US-Börsengeschichte. Außerdem geht es um Western Digital, Morgan Stanley, SanDisk, Fox, Roku, Salesforce, Rheinmetall, Hensoldt, Leonardo, Deutsche Telekom, RWE, E.on, AT&S, AMD, Commerzbank, UniCredit, ExxonMobil, Chevron, Shell, BP, Cheniere, Redcare Pharmacy, Jefferies, DocMorris, Amazon. Wir freuen uns an Feedback über aaa@welt.de. Noch mehr "Alles auf Aktien" findet Ihr bei WELTplus und Apple Podcasts – inklusive aller Artikel der Hosts. Hier bei WELT: https://www.welt.de/podcasts/alles-auf-aktien/plus247399208/Boersen-Podcast-AAA-Bonus-Folgen-Jede-Woche-noch-mehr-Antworten-auf-Eure-Boersen-Fragen.html. Hier könnt ihr den AAA-Newsletter abonnieren: https://www.welt.de/newsletter/article232797673/Alles-auf-Aktien-Der-taegliche-Boersen-Newsletter-fuer-WELTplus-Abonnenten.html Und - ganz neu: AAA gibt es jetzt auch auf Instagram: https://www.instagram.com/alles_auf_aktien/ Disclaimer: Die im Podcast besprochenen Aktien und Fonds stellen keine spezifischen Kauf- oder Anlage-Empfehlungen dar. Die Moderatoren und der Verlag haften nicht für etwaige Verluste, die aufgrund der Umsetzung der Gedanken oder Ideen entstehen. Hörtipps: Für alle, die noch mehr wissen wollen: Holger Zschäpitz können Sie jede Woche im Finanz- und Wirtschaftspodcast "Deffner&Zschäpitz" hören. +++ Werbung +++ Du möchtest mehr über unsere Werbepartner erfahren? Hier findest du alle Infos & Rabatte! https://linktr.ee/alles_auf_aktien Impressum: https://www.welt.de/services/article7893735/Impressum.html Datenschutz: https://www.welt.de/services/article157550705/Datenschutzerklaerung-WELT-DIGITAL.html

Our CIO and Chief U.S. Equity Strategist Mike Wilson explains why the recent equity correction may be more reset than reversal and where investors may find the next opportunities.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley's CIO and Chief U.S. Equity Strategist. Today: Possible opportunities to look out for in the equity correction over the past few weeks.It's Monday, June 15th at 1:30pm in New York. So, let's get after it.Sometimes the market changes direction or leadership not because the story has broken. Instead, it just needs to digest how quickly the story has evolved. Over the past few weeks, equities had their biggest correction since the important bottom in March. I don't view this as the end of the bull market though. I view it as a pause after an unsustainable acceleration in two key factors driving stocks higher this year: earnings revisions and liquidity. In my view, the market wasn't questioning the earnings bull market as much as it is questioning the speed at which earnings have been revised higher. These revisions have been particularly strong in leading sectors like semiconductors, which also corrected the most. When earnings revisions breadth gets north of 70 percent, it's reasonable to ask whether the second derivative is about to slow. That doesn't mean earnings estimates are going down. Instead, it means the rate of improvement is probably peaking, and in markets, it's always about the second derivative in growth. Such decelerations create corrections, not crashes. That distinction is important. Earnings revisions breadth may pause or roll over from extreme levels, but the next twelve-month earnings estimates are still likely to rise as we move through the year and roll forward toward 2027 numbers. That's why I remain convicted in our year-end S&P 500 target of 8000, even if the next few weeks remain choppy. Markets can correct while the earnings story remains intact. In fact, that's often exactly how healthy bull markets reset.The second part of this adjustment is liquidity. Earlier this year, liquidity was flowing strongly through the system as a means of regaining financial stability. Between the Fed's Reserve Management Program, reduced bank capital requirements, and Treasury buybacks, more than half a trillion dollars of liquidity was effectively added. But that pace is now slowing. The Reserve Management Program has fallen from roughly $40 billion a month in April to about $10 billion today; while Treasury buybacks have also slowed from the March and April highs. This rate of change slowdown matters at the margin, especially for crowded momentum trades that have been supported by abundant liquidity. Take note of these corrections in momentum because they often bring a change in leadership and that's the real opportunity. We've already seen a few leadership rotations this year – from precious and base metals, to rare earths, to energy and finally to semiconductors. Now I think the market may be ready to broaden again, much like it did late last year and in the first six weeks of this year.Importantly, our preferred sectors of Consumer Discretionary Goods, Transports, and Regional Banks are all up more than 10 percent over the past month while the S&P 500 was down modestly. Yet, sentiment toward these areas is still muted. That's exactly the kind of setup I like: improving fundamentals, better relative price action, and investors still skeptical.Another piece that should help this broadening. Macro variables that have been holding lower quality cyclicals back include interest rates, crude, and the dollar – they may all now be peaking. That fits nicely with the announced deal to reopen the Straits of Hormuz last night. If oil pressure eases and the bond market walks back the Fed hike it is currently pricing, interest rate sensitive groups should have room to extend their recent outperformance. Finally this week's Fed meeting matters too because it's Kevin Warsh's first as the Chair. I'll be watching less for the rate decision itself and more for how the bond market reacts. The key markers are still the same for me: 4.5 percent on the 10-year, while bond volatility and funding market stress need to remain calm. If the Iran deal holds, I think the Fed can lean less hawkish on rates – but I don't expect a proactive pivot to add more liquidity.Bottom line, markets have been digesting the peak rate of change in growth acceleration and liquidity. But that's far from the end of the cycle. The earnings driven bull market remains intact, but the leadership may be changing. As usual, the best opportunities may be hiding in the places investors don't believe in, yet.Thanks for tuning in; I hope you found it informative and useful. Let us know what you think by leaving us a review. And if you find Thoughts on the Market worthwhile, tell a friend or colleague to try it out!

Something of a bombshell has just dropped. Elon Musk, through the historic IPO of SpaceX on the Nasdaq — just became the world's first trillionaire. One trillion dollars. And the left's immediate reaction wasn't "how did he build that?" It was "how do we take it?" And I want you to understand something, because this is so important — the same people screaming about one trillion dollars in private wealth are completely silent about the three to four trillion dollars in wealth transfer payments the federal government moves every single year. Not a word.SPONSOR: Lear CapitalGold and silver have hit all-time highs, and experts are forecasting even higher prices ahead, with some predicting gold could reach $5,000 to $6,000 an ounce and silver $100 to $150. Major institutions like Morgan Stanley are shifting their portfolios into precious metals, and even Warren Buffett has been selling off big tech. Lear Capital is offering up to $20,000 in bonus gold or silver with a qualified purchase, plus a free information kit. Call 800-707-4575 or get your free information kit at https://www.Nick4Lear.com ----- SPONSOR: Alliance Defending FreedomSome of America's biggest companies, including American Express and Home Depot, are paying for gender-transition drugs and surgeries for kids through their employee healthcare plans. Alliance Defending Freedom's petition puts direct pressure on corporate leaders, and signatures from concerned Americans can spark changes that ripple across other companies. It's a real way to take action instead of watching from the sidelines. Sign the petition by texting NICK to 83848, or go to https://www.JoinADF.com/Nick -----GET YOUR MERCH HERE: https://shop.nickjfreitas.com/BECOME A MEMBER OF THE IC: https://NickJFreitas.comInstagram: https://www.instagram.com/nickjfreitas/Facebook: https://www.facebook.com/NickFreitasVATwitter: https://twitter.com/NickJFreitasYouTube: https://www.youtube.com/@NickjfreitasTikTok: https://www.tiktok.com/@nickjfreitas3.0

Chief Asia Economist Chetan Ahya joins Head of India Research and Chief India Equity Strategist Ridham Desai to break down India's macro outlook, capital flows and sector opportunities.Read more insights from Morgan Stanley.----- Transcript -----Chetan Ahya: Welcome to Thoughts on the Market. I'm Chetan Ahya, Morgan Stanley's Chief Asia Economist.Ridham Desai: And I'm Ridham Desai, Morgan Stanley's Head of India Research and Chief India Equity Strategist.Chetan Ahya: Today, the biggest takeaways from our India Investment Forum in Mumbai. From the shifting outlook for India's markets and flows to the sectors driving the next phase of corporate earnings and CapEx.It's Friday, June 12th at 7PM in Hong Kong.Ridham Desai: And 4:30PM in Mumbai.Chetan Ahya: Ridham, the Morgan Stanley's India Investment Forum took place in Mumbai last week, and I was there with you. These events are a great opportunity to speak with investors who come across from the globe to attend. Now that we have had a few days to process the conversations, what stood out to you? What was the biggest shift in investor sentiment that you picked on?Ridham Desai: So, Chetan, I think it's been the case of a continuing story about India. Domestic investors look that they are bullish, and foreign investors continue to stay rather cautious on the Indian markets. We could see that in the overall attendance. In contrast, I think domestic investors were looking for the next stock that they wanted to buy. They were seeking opportunities, and there was a lot of interest in meeting companies.Before we get into markets, let me turn back to you from a macro side. India's growth story remains strong, but relative growth appears to be cooling. This is in contrast to markets like Japan, Taiwan, Korea, and the US. How should investors think about India's macro positioning in that context?Chetan Ahya: So, Ridham, when I look at the macro data in India, they're all indicating a meaningful upside in the growth trend. So I'll just cite two key cyclically sensitive macro data points. One is the banking system credit growth, and number two is the auto sales, particularly the passenger vehicle. So bank credit growth is growing as of the last biweekly data point that we got. It's growing at seventeen point seven percent year-on-year, and car sales are growing at twenty-seven percent in the month of May.But as you were mentioning earlier, the relative growth opportunity is a challenge for India and to just share the numbers on the earnings growth for the first quarter that we saw across the region. So we saw Korea's earnings growth at one hundred and seventy percent. We saw Taiwan's earnings growth at forty-eight percent year on year. Japan at thirty-three percent. The US has seen a growth of about twenty-seven percent year on year.So in that context, when India is reporting thirteen percent growth, it's becoming a challenge for investors to look for opportunities in India relative to other markets. Either they are more focused on the other markets than India. So let me come back to you, Ridham. Staying with the investment implications, India projects stable valuations and strong corporate earnings, but its relative growth advantage has narrowed. How should investors reconcile this contradiction?Ridham Desai: If I go back thirty-five years, as long as we have the MSCI index series, and as far as I have been in this industry, this is the lowest relative multiple that India has traded at. And indeed, growth last year was weak. But if you see QOQ, we have started to accelerate. The broad market earnings growth trajectory has shown a doubling in the quarter that ended March over the quarter that ended December.But it underscores the point you made about the relative growth complex. It's clearly not in India's favor. And a lot of the capital in the world is short-term oriented, and it cares for what growth is gonna come in the next quarter or two. And that's the state of the market right now.However, what I would say is that equities is a quintessential long-duration asset class. In the long run, what matters is terminal growth. I don't really think India's terminal growth has moved much. It remains far superior to a lot of other countries around the world. And therefore, I think this does present itself as a great opportunity for a long-term investor while the markets are digesting this relative growth disadvantage that India seems to have over the next, say, three or four quarters.Chetan Ahya: And Ridham, another theme from the forum was policy action to attract capital. Policymakers announced a number of measures right as our conference ended and they aimed to withdraw withholding tax on debt investors, also providing banks with an incentive to take up more dollar borrowing. How central are these measures to sustaining foreign inflows into Indian markets?Ridham Desai: I think the measures taken by policymakers are very important, probably amongst the most important policy actions this year. The removal of taxation on debt investors will make a difference. The provision for hedging to external commercial borrowings as well as to foreign currency deposits will make a difference.It should boost flows into India over the next twelve months. That said, these measures may not help the equity flows because the equity flows, I think, are going to depend on the relative growth situation. Now, there's only that much India can do to lift its growth. It may accelerate to the high teens. So growth elsewhere needs to decelerate for equity investors to return. Or India needs to see the start of a major IPO cycle because in primary issuances, foreigners do come to buy, and that may change the net picture on FBI flows in the equity markets.But as far as the debt markets are concerned, I think the measures taken last week are going to prove to be quite potent, and India should see the benefits accruing over the next few weeks and months.Chetan, from your perspective, how important is the policy backdrop right now in determining whether India can keep attracting long-term global capital despite more competitive returns elsewhere in the short run?Chetan Ahya: So Ridham, I think the key focus for the policymakers had been with these measures to boost short-term capital inflows to stabilize the currency. There has been a balance of payment deficit. So from that perspective, the short-term capital inflow augmentation effort as you mentioned, has been the correct move. But from the long-term perspective, we think that the government needs to boost competitiveness of the Indian manufacturing. Because in the context in which AI could affect India's services exports, there is a need to augment more export receipts from the manufacturing sector. At the same time, if they improve the competitiveness of the manufacturing sector, it will help India to attract more capital inflows from long-term investors for the purpose of FDI.And the good news is that the government is on it. They are taking a number of measures to boost that competitiveness in the manufacturing. But we think that there is more action needed and hopefully in the intention to improve the balance of payment dynamics and exports from manufacturing sector, we will see more actions from the government in the coming months.Ridham Desai: Chetan, you've also written extensively about the structural capital spending cycle in Asia and India. Can you walk us through the key details here, especially in the Indian context?Chetan Ahya: I think the key story that we are observing, it's sort of more or less global, but definitely very clearly seen in Asia, that there seems to be a super cycle for CapEx as well as industrial activity. This CapEx cycle is effectively driven by spending in four key sectors, and that is AI and AI-related digital infrastructure, energy, defense, and industrial onshoring-related CapEx.Now, as far as India is concerned, we are seeing investments in all the four segments that I just mentioned. In fact, it's seeing a significant amount of activity in the space of energy. And, similarly, we are seeing a lot of policy measures, I mentioned earlier, in terms of boosting manufacturing competitiveness.But at the heart of it is government's effort to onshore industrial supply chain. So India's CapEx has also inflected higher. Having said that, the difference between India and, let's say, North Asia, which is Korea, Taiwan, Japan and China, is that they are also a big player in the export market for capital goods when there is global CapEx cycle upswing happening. Nevertheless, India will see the benefit of this CapEx cycle in terms of its own growth push, as well as improvement in productivity.So Ridham, how would you think about the sectoral opportunity within the Indian markets?Ridham Desai: We see a lot of interest in some of these sectors which you mentioned. But actually, I would like to start off with financials. I see the banks in a very sweet spot. Balance sheets are in pristine condition. The interest rate cycle has troughed, which means margins for the banks have also bottomed and credit growth is finally accelerating. If this CapEx cycle unfolds like the way you are describing it, I think financials will stand to gain the most.And interestingly, the valuations are quite good, both on an absolute as well as on a relative basis. Also, of course, investors can go directly into those sectors which are doing this capital spend. Energy to start with, semiconductors, fertilizers, data centers and aerospace.The only thing to note here is that not everywhere are the valuations attractive enough because in some cases the market has recognized the coming growth cycle and has started to price that in. So we have to be careful about the valuations. But I think financials and industrials are clearly great opportunities in the context of this CapEx recovery that India is likely to see in the coming five years.Chetan Ahya: And additionally, the most requested companies at the summit, Ridham, were consumer sector companies. What do you think investors are looking for at this sector over others?Ridham Desai: So, Chetan, I think from a structural perspective, the Indian consumer is quite clearly the best place to be. In fact, I would say that it's the leverage that India enjoys over the rest of the world.The one point five billion people in this country are split across, say, a hundred and fifty cohorts of ten million each, and each of these cohorts have got different consumption opportunities. So depending on what product or service you're offering to your consumers, there's a market in India, and which in nominal terms is growing between ten and fifteen percent.As we know, last year India accounted for something around seventeen or eighteen percent of global GDP growth, which means depending again on what you are selling to your consumer, India could be between ten and hundred percent of your revenue growth. So India's consumer is something that hardly anybody can avoid.So in summary, Chetan, when I look at it from an investment opportunity, financials, industrials, and consumption, not necessarily in that particular order, are probably the best places for investors to look at. However, IT services, I think could be the dark horse. It's a sector right now which is disrupted or potentially disrupted by AI, and there's a lot of confusion there.But I think as the dust settles on this, it may emerge as one of the most interesting areas for investors to look at. So there's a lot of stuff in India happening right now. I think growth is accelerating. Valuations are looking quite interesting. In fact, the best that they've been in many, many years.Trading performance suggests that investors are not positioned at all. And if things start looking up, then India could be a very good market in the coming twelve months.Chetan Ahya: Ridham, thanks for taking the time to talk.Ridham Desai: Great speaking with you, ChetanChetan Ahya: And thanks for listening. If you enjoy our Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or a colleague today.

Carl Quintanilla, Jim Cramer and David Faber kicked off wall-to-wall coverage of SpaceX's public debut day. Elon Musk's company was valued at nearly $1.8 trillion after pricing its record-setting IPO at $135 per share. The anchors explored what's at stake for the markets and investors. You'll hear Musk's speech to SpaceX employees at the company's headquarters in Starbase, Texas. Also in the mix: Cramer's message on SpaceX's opening trade, a live report from the trading floor of Morgan Stanley — one of the lead underwriters of the SpaceX IPO, a flashback to the first trading days for companies including Tesla, Facebook (now Meta) and Alibaba.  Squawk on the Street Disclaimer Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Full coverage of the leadup to the first trade of SpaceX. Live from the Nasdaq, the Morgan Stanley trading floor, and the New York Stock Exchange. We speak with some of the top SpaceX shareholders as well and industry experts to make sense of SpaceX's debut and its valuation. Squawk on the Street Disclaimer Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Story of the Week (DR):SuperBroIpoDystopia: Some key facts: MMa record-breaking $135 per share with$1.8T valuationTo make that math make sense, analysts estimate the company needs to grow its sales by 50% every single year for the next decadeSpaceX lost $4.9B last yearWall Street is Being Treated Like Order-Takers: Musk pre-set the IPO price strictly at $135 and dictating exactly which investors got allocations. This forced major investment banks like Goldman Sachs and Morgan Stanley to act as glorified order-takers without even knowing their exact compensation beforehandSaudi Aramco $1.7T; Alibaba: $237B; Facebook $118BNasdaq aggressively pushed through "fast-entry" rule changes specifically to allow mega-caps like SpaceX to bypass the traditional year of seasoning and enter the Nasdaq-100 in just 15 trading days. This forces passive index funds to buy in blindly to avoid tracking errorsMeme stocker bros: $100B in share orders30% of $75B offering is earmarked for individual retail investors. This effectively shifts late-stage, hyper-inflated valuation risk away from institutions and onto the public.BlackRock $5BInstitutional investors admitted that when they bought into SpaceX privately, they were given high-level revenue figures but were denied a copy of the actual balance sheet—an unprecedented lack of transparency for a company raising tens of billionsUniversity of Washington more than 10% of its $17B in assetsUNC about 10%SpaceX will make $75B in proceedsSaudi Aramco $26B; Alibaba $22BElon Musk's Absolute Voting Tyranny (80% of voting power)personal net worth has officially skyrocketed past $1.1TSpaceX's foundational scale was built on the back of the American public, securing over $20 billion in U.S. federal government contracts to fund its rocket developmentAntonio Gracias: personally lent Musk $1M to keep him afloat; his PE firm Valor gave $76MThat $1M lifeline and early institutional backing from 2008 have compounded into what analysts are calling the most lucrative return on a personal favor in business history.The Second-Largest Shareholder: Through various Valor entities, Gracias controls roughly 7.3% of SpaceX's Class A stock (more than 500 million shares)Gracias's stake is officially worth anywhere from $91B to over $140BThis single corporate listing instantly catapults Gracias into the ranks of the world's 50 richest people.The big party: combined valuation of $3.6TAnthropic ($965B) filed confidentially on June 1OpenAI ($1T) filed confidentially on June 8"We have not decided on timing yet; it may be a while because there are things we want to do that are likely easier as a private company. But it's a complicated set of tradeoffs, and this gives us the option to go public sooner if that ends up being best."What does it all amount to? 4 horrible objectives:Funding a Sci-Fi Passion Project with Public CashBecoming the Pentagon's Irreplaceable War MachineForget the folksy narrative that Starlink is just for connecting rural schools or isolated communities: SpaceX is systematically turning itself into the ultimate military contractorProject Starshield: Those satellites are the foundation for a highly classified, militarized version of the network designed for government surveillance, secure communications, and real-time battlefield tracking.Too Big to Regulate: By launching the vast majority of the world's payloads and controlling the dominant orbital communications network, SpaceX is making the U.S. military entirely dependent on its hardware. The ultimate point is to become so deeply embedded in national defense that the government can never afford to regulate, penalize, or dismantle Musk's empireAn Orbital Real Estate Land GrabBuilding a Borderless, Lawless EmpireSpaceX is attempting to build a tech infrastructure that exists entirely outside the jurisdiction of EarthUltimately, SpaceX isn't trying to save humanity from a dying Earth; it's trying to ensure that whoever controls Earth's future has to pay rent to Elon MuskIran threatens Elon Musk's companies in Middle East: Iranian state mediaAll of Elon Musk's companies in the Middle East are military targets for Iran as it retaliates against the U.S., Iranian state media outlet Fars reported.The targets include a regional Starlink ground station, according to Fars.Sen. Warren calls on SEC to delay SpaceX IPO, flagging concerns about valuation and governanceThe letter to the heads of the Nasdaq, S&P Dow Jones Indices, FTSE Russell and Morningstar Indexes sent on Thursday asked the companies whether they had made or considered rule changes based on lobbying from Elon Musk, other SpaceX officials or officials from OpenAI or Anthropic, and asked for any communications between the companies and the indexesLSEG, which owns the FTSE Russell, and Nasdaq declined to comment. Morningstar did not respond to a request from CNBC for comment.S&P Dow Jones Indices didn't comment on the letter, but the company noted it had decided not to change its rules regarding indexes: “S&P DJI determined that exceptions to these requirements should not be granted solely based on market capitalization,” it said in a statement to CNBC. “The decision not to adopt the proposed exceptions preserves core index principles by maintaining consistent application of these key requirements.”Democrats ask Goldman Sachs CEO why he's keeping lawyer who said she'd resign over ties to EpsteinGoldman Sachs CEO David Solomon is facing new scrutiny from congressional Democrats over his reported effort to retain the bank's top lawyer months after she said she would resign over revelations about her ties to convicted sex offender Jeffrey EpsteinIn a letter sent Wednesday:U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs CommitteeRepresentative Raja Krishnamoorthi (D-IL), Ranking Member of the Subcommittee on Health Care and Financial Services on the House Oversight Committee“Ruemmler ‘educated (Epstein) on how the law differentiates between underage victims of sex crimes and adult prostitutes…'”In February, Ruemmler announced her resignation from Goldman Sachs, effective June 30, 2026: “At the time, you stated that you “reluctantly” accepted Ruemmler's resignation. While Goldman Sachs has declined to comment on this matter, new reporting suggests that you ‘pressed' her to reconsider her resignation and instead move to a new position within the firm.”Teardown of Trump Phone Reveals Incredibly Embarrassing SecretA recent teardown by repair company iFixit confirmed that the T1 is an almost entirely unmodified HTC U24 Pro, a two-year-old and mid-tier Android phone, with a cheap coat of gold colorationTrump is selling an entirely Chinese smartphone, despite waging an economic war against the country.Apart from minuscule changes to the speaker grille and a lengthened flex cable, iFixit concluded that “everything is the same, except the pattern of holes in the case.”Goodliest of the Week (MM/DR):DR: Google and Meta denied new trial in youth social media addiction caseMM: In the United States, Solar Energy is Outpacing Coal for the First Time EverAssholiest of the Week - SPEED ROUND (MM):BP's useless, reactionary board of directors: BP drops net zero division in wake of boardroom turmoil; BP's new CEO Meg O'Neill rips up the energy giant's playbook—and the ‘green' era with it - 10Ryanair blowhard CEO Michael O'Leary: Ryanair investigated over charging parents to sit with children - 5EV killing GM and Mary Barra: GM is pivoting its battery expertise toward powering AI data centers and the grid - 10Every company that fired employees and replaced them with AI: Unfortunate Company Accidentally Blows Half a Billion Dollars on Claude in One Month; AI sticker shock hits corporate America - 10Everything out of Alex Karp's fat mouth: Palantir CEO Alex Karp says executives who brag about their AI cuts might as well ‘sign up for the Bernie Sanders manifesto'; Palantir CEO says AI companies 'don't understand how unlikeable they are'; - 10Sorry Liz, this is investors job: Sen. Warren calls on SEC to delay SpaceX IPO, flagging concerns about valuation and governance - 0Every investor in SpaceX IPO: Franklin Templeton to participate in SpaceX IPO, CEO Johnson tells CNBC; SpaceX IPO demand is approaching four times oversubscribed, source says; Wall Street's undignified SpaceX mania; SpaceX's president hints at a Tesla merger: 'That might make Elon's life a little easier' - 10Billionaires: Billionaires' Billions Are Increasing Faster Than Ever - 10Beef (not Ebola): Elon Musk Faces Backlash as a Horrific Texas Screwworm Outbreak Follows Brutal DOGE Budget Cuts - 10Mark: Meta Furious Over Bombshell Smart Glasses Revelation“Last week, Wired reported that Meta discreetly moved to infuse facial recognition tech into its popular smart glasses, as evidenced by a piece of code discovered in the Meta AI app by the magazine's journalists.” - 10Headliniest of the WeekDR: UBS CEO [Sergio] Ermotti hopes to step down before 2030MM: You Can Now Get a Religious Exemption From Using AI at Work“The funniest possible outcome of the AI mandate era is about to be HR departments discovering that ‘sincerely held religious belief' under Title VII has a much lower bar than they assumed, and Pope Leo handed every Catholic employee a written excuse,” tweeted San Francisco-based startup founder Corey Quinn. (Title VII of the Civil Rights Act prohibits employment discrimination and retaliation based on race, color, national origin, religion, and sex.)MM: Furious Judge Cancels Entire Trial After Finding Out Lawyers on Both Sides Used AIWho Won the Week?DR: HTC U24 Pro, a two-year-old and mid-tier Android phone. Or maybe it was the cheap gold paint?MM: Everyone religious - what CAN'T you opt out of using a religious exemption? PredictionsDR: Attacking dictator-run companies (i.e., Iran/Tesla) starts to enter the realm of normalcyMM: Atheists adopt a religion to opt out of tech bro oligarchies

MRKT Matrix - Friday, June 12th Dow gains 300 points as SpaceX soars in debut, U.S.-Iran deal nears (CNBC) SpaceX Shares Extend Gain to 30% in Trading Debut (Bloomberg) SpaceX hit with sell rating by CFRA shortly after IPO (CNBC) SpaceX's ‘out-of-this-world' valuation supported by its rocket launch ‘moat,' says Wolfe Research (CNBC) Goldman and Morgan Stanley to Pocket $100 Million Each In SpaceX IPO Fees (WSJ) After SpaceX's huge IPO, Americans' financial future will be bound to AI (The Guardian) Highest Number of S&P 500 Earnings Calls Citing “AI” Over the Past 10 Years (FactSet) For Warsh as Fed chair, silence may be the point (CNBC) --- Subscribe to our newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://riskreversal.substack.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ MRKT Matrix by RiskReversal Media is a daily AI powered podcast bringing you the top stories moving financial markets Story curation by RiskReversal, scripts by Perplexity Pro, voice by ElevenLabs

Are you looking to save time, make money, and start winning with less risk? Then head to https://www.ovtlyr.com.Learn more about OVTLYR: https://youtu.be/TUCbD5KovlcThe Space IPO story keeps getting more suspicious… and at this point, this channel may officially be the number one hater channel for this IPO.In this breakdown, we react to a video asking whether the Space IPO is a scam, and the concerns are hard to ignore. Space is reportedly preparing to list on the Nasdaq under the ticker SPF, raising around $75 billion at a valuation near $1.75 trillion. That would make it the biggest IPO in history… and also one of the strangest.The biggest issue is the valuation. Space is reportedly being priced far above recent private-market valuations, despite losing billions, burning cash, and trading at a revenue multiple that makes even the biggest tech stocks look cheap by comparison. Then add in underwriters leaking extremely bullish projections, index providers changing fast-entry rules, and billions in passive money potentially being forced into the stock early.That's where retail investors need to be careful. The FOMO story is everywhere: “buy the IPO or miss the next Amazon forever.” But if the real reason for going public is to give early investors an exit, regular investors could end up being the bag holders.✅ Space IPO, Nasdaq ticker SPF, and $1.75 trillion valuation✅ Goldman Sachs, Morgan Stanley, underwriters, and bullish projections✅ Index fund rule changes, passive investing, and forced buying✅ Retail FOMO, exit liquidity, and IPO bag holder risk✅ OVTLYR discipline, trading plans, and avoiding hype trapsIf you're thinking about chasing the Space IPO just because everyone online is talking about it, this one gives you several reasons to slow down first.Subscribe to OVTLYR for disciplined trading strategies that actually make sense.

Our Global Head of Fixed Income Research Andrew Sheets explains our differentiated view of a potential benign outlook for inflation, despite the recent acceleration.Read more insights from Morgan Stanley.----- Transcript -----Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.Today, why is everything still so expensive?It's Thursday, June 11th at 2pm in London.The Federal Reserve has a so-called dual mandate, tasked with keeping the labor market healthy and prices stable. It is currently having much more success with the former than the latter.Let's start with that good news.Last Friday saw solid data from the U.S. jobs market, reducing some of the fears from earlier this year that artificial intelligence and other factors would lead companies to make do with fewer workers. The U.S. unemployment rate sits at just 4.3 percent, a historically low level. Measures like initial jobless claims indicate no large uptick in firings.Yet the success within the U.S. labor market is mirrored by struggles with inflation. The Fed tries to keep inflation, the annual increase in a broad set of prices, to about 2 percent per year. Their preferred measure of these prices, so-called PCE inflation, well, it's been materially above this target over the last three months, six months, twelve months, and indeed, the last five years.As for another key measure of inflation that was reported yesterday, CPI, overall prices increased more than 4 percent. While that was close to expectations, it still represents prices that are rising much faster than the Fed would prefer.This leads to a dilemma. One diagnosis of what's going on is that elevated inflation is a sign that conditions are simply too loose and too accommodative at these levels of interest rates. Corporate capital expenditure and merger activity is surging, regulation is being eased, and the U.S. government is spending a lot more than it's taking in. All of these are consistent with a hot economic cycle, which in the past would've warranted higher interest rates to bring the economy back down to a more sustainable speed.But it might not be that simple.The surging spend that we're seeing on AI data centers feels pretty unique and almost insensitive to other dynamics. Indeed, we've seen a 700 percent increase in the price of memory over the last year. Yet it's done little to slow demand for this construction as the large, well-capitalized companies behind the AI buildout see it as so essential to their future success.U.S. consumers are also still spending, boosted perhaps by record levels of household wealth. As just one example of this, my colleagues in Equity Research note that the price of airline tickets has gone up 25 percent over the last year, yet there's been no sign of people flying less.Now, the positive story would be that while there are some high-profile categories like computer memory or airfare that are seeing these large price increases, the broader inflation picture is actually set to get better as the year goes on, and costs for things like housing and tariff-impacted goods moderate. That is our view at Morgan Stanley, where our economists think that inflation will ultimately be lower over the next twelve months – and lower than many in the market expect.But there's definitely uncertainty.This month, June, is one where central banks may appear to have a renewed commitment towards inflationary pressures; with the ECB hiking rates today and our expectation that the Bank of Japan will hike rates next week, while the Fed will remove their easing bias. And our more benign economic base case for inflation does assume that oil will start flowing through the Strait of Hormuz pretty soon. It may not, and that could also lead to more sustained inflationary pressure.The big story on inflation has not gone away. Our assumption that pressures could ease in the second half of the year is a key and differentiated input to our forecast for lower bond yields and higher stock prices in 12 months' time. But it does rely on a change of the status quo.As of now, inflation is still too high.Thank you, as always, for your time. If you find Thoughts on the Market useful, let us know by leaving a review wherever you listen. And also, tell a friend or colleague about us today.

Janek Ambros is a filmmaker, producer, writer, and founder of Assembly Line Entertainment whose work has screened in connection with major festivals including Sundance, Venice, SXSW, and TIFF. As both a producer and director, he has built a career balancing the creative and business sides of independent filmmaking while helping bring a wide range of projects to life. In this episode, we discuss Janek's unconventional path from studying economics and interning at Morgan Stanley to building his own production company and producing award-winning independent films. We talk about his documentaries IMMINENT THREAT and MONDO HOLLYWOODLAND, the importance of editing as a storytelling tool, and why producing other filmmakers' work helped shape his perspective as a director. We also dive into the collaborative spirit of the legendary "Film Brat" generation, the influence of filmmakers like Francis Ford Coppola, Martin Scorsese, Paul Thomas Anderson, and James Cameron, and the current state of independent cinema. Janek shares his thoughts on practical effects versus CGI, the future of moviegoing, why comedy films have become increasingly difficult to make, and the importance of building communities of filmmakers who support one another. As always, we close the conversation with Janek's two favorite movie scenes and the lessons filmmakers can learn from them.   Hosted by Zef Cota Produced by Cole Howard

Private lenders are going back to basics as debt trouble spreads, market participants tell Bloomberg News’ James Crombie in this special episode of the Credit Edge podcast. “Boring is beautiful, boring is better right now,” says Christina Lee, managing director at Oaktree Capital Management. The podcast also explores AI debt risks, software distress, how tight bond spreads can go and the state of US consumers with the following guests: Matt Brill, head of North America investment-grade credit at Invesco; Anish Shah, global head of debt capital markets at Morgan Stanley; Lotfi Karoui, multi-asset credit strategist at Pimco; Jody Lurie, Bloomberg Intelligence senior credit analyst; Na Wei, global head of leveraged finance at Barclays; Sheel Patel, head of Mayer Brown’s private credit practice in New York; Shalini Sriram, Third Point’s head of structured credit; and Scott Goodwin, co-founder of Diameter Capital Partners. Interviews were recorded June 3 at Bloomberg’s Global Credit Forum in New York. See omnystudio.com/listener for privacy information.

Morgan Stanley analysts Ravi Shanker and Jeff Adelson take a look at what the fight for affluent, loyal travelers could mean for banks and airlines. Read more insights from Morgan Stanley.----- Transcript -----Ravi Shanker: Welcome to Thoughts on the Market. I'm Ravi Shanker, Morgan Stanley's North American Airlines analyst. Jeff Adelson: And I'm Jeff Adelson, Morgan Stanley's U.S. Consumer Finance analyst. Ravi Shanker: Today, who really owns your travel loyalty? The airline, the bank, the rewards platform, or you? It's Wednesday, June 10th at 7am in New York. Jeff Adelson: So, Ravi, you just came from your annual travel conference, and I'm about to head into the second day of Morgan Stanley's 17th Annual Financials Conference here in New York, where we're hosting roughly 135 corporates.A lot of themes are coming up there: retail engagement, product innovation, regulatory change, AI digital assets, capital markets recovery, and so on. All of these connect back to a bigger question. Who owns the customer relationship? Ravi Shanker: And that's exactly where travel co-branded cards come in. They sit at the crossroads of premium consumer spending, loyalty, and the competition for wallet share. They've become a more important revenue stream across travel, banking, and hospitality.But it's not as simple as more travel means more co-brand growth. Most customers still want flexibility, cashback, and low fees. Premium travelers and loyal airline customers behave differently. Let's start with the cardholder. Most consumers have a credit card, but travel co-branded cards are still a much smaller piece of the overall wallet. So, how big is the opportunity here, and how hard is it to get consumers to switch? Jeff Adelson: So, what's actually interesting, Ravi, is that travel co-branded cards are still relatively under-penetrated. In our survey, about 90 percent of cardholders have a general purpose card, while only about 22 percent have an airline card, and 12 percent have an hotel co-brand card. So, on the surface, the runway for growth does look significant. The upshot is also that once you get these consumers in the door, they are much higher spending and drive a ton of volume and incremental card economics for both the banks and their co-brand travel partners. The challenge is that consumers are pretty loyal to their cards or airlines that they already use, so most people aren't actively looking to switch. They tend to add a new card only when the value proposition is compelling enough. And sometimes given these one-time nature of the signup bonuses, it results in some churning without keeping the customer for the long term. So ultimately, what this all means is issuers and travel brands aren't just competing with each other, they're competing against habit. So, to win, they need to offer something that's meaningfully better than what's already in the consumer's wallet. Ravi Shanker: Got it. So, consumers seem to care most about value, fees, rates, and reward. Cashback still leads by a wide margin. So where do travel-specific rewards fit in? Jeff Adelson: The nuance here matters. Travel rewards don't need to win with everybody to be valuable. What makes them so powerful is they resonate with a specific group of customers, specifically the ones who are traveling – the frequent travelers, the ones who spend more, and those who engage more deeply with loyalty airline programs, for instance. For those consumers, lounge access, status benefits, upgrades, and airline or hotel points can create a level of engagement that's difficult for just a basic cashback card to replicate. The nuance here matters. Travel rewards don't need to win with everybody to be valuable. What makes them so powerful is they resonate with a specific group of customers, specifically the ones who are traveling – the frequent travelers, the ones who spend more, and those who engage more deeply with loyalty airline programs, for instance. For those consumers, lounge access, status benefits, upgrades, and airline or hotel points can create a level of engagement that's difficult for just a basic cashback card to replicate. Ravi Shanker: So, the premium consumer looks different. Why is that customer so important to card issuers? Jeff Adelson: So, higher income consumers frankly just spend a lot more. They're more loyal, they carry more cards, and they're more willing to pay a higher annual fee if they feel like they're getting the value from the card back after they pay that fee. In our survey, consumers earning over [$]150,000 per year of income spent roughly twice the amount on their primary card, and they were willing to pay almost twice the annual fee as other income cohorts. They're also attractive from a credit standpoint, from a, you know, delinquency perspective. These customers are more likely to pay their balances in full each month, and as a result, have lower credit risk. And often they keep long-standing relationships with their banks or their airline partner. That's why premium card and travel partnerships remain such an important customer acquisition tool for a bank. It has a really long lifetime value. The battle isn't really for the average card holder; it's for the affluent consumer who's driving a disproportionate share of spend in the U.S. economy.Ravi Shanker: Got it. So, the banks and travel brands are partners today. But they're also starting to potentially compete more directly for the same customer. What should investors watch to see whether this stays a partnership or becomes more of a tug-of-war? Jeff Adelson: So historically, this has been a successful partnership, especially in recent years as high-income consumer spending pie has grown in the U.S. How this works is airlines provide loyalty and travel experiences. Banks provide the card issuance, distribution scale, and share back those card economics to the airlines. Everybody wins when the travel spend grows. But we're starting to see some things overlap. Banks are building their own premium travel ecosystems. That includes things like flexible rewards points with the ability to transfer to any airline you want, proprietary lounges away from the airlines, and travel benefits that increasingly compete with airline loyalty programs. So, what investors should watch from here, in our view, are two things. Number one, is the high-income consumer and the travel pie continuing to grow? That's really what's held everything up and frankly, driven the airlines that you cover to realize that they hold this golden ticket. They hold the access to that consumer, so they've begun negotiating for more of the economics away from the card issuers. The second thing we think that you need to watch out for is whether consumers really continue to value these airline-specific rewards enough to justify the existing partnership model. Our survey indicated that most consumers still prefer flexible rewards over points tied to a single airline. But among frequent travelers and airline loyalists, the airline ecosystem does remain powerful. So, the future does seem to depend in part on whether these travel brands can continue to deliver on experiences that the consumers really can't get elsewhere. So, Ravi, maybe switching to you. For the airlines, the question I have for you is a little different. How do you turn loyalty into a durable, profitable revenue stream without losing sight of the core travel product? Ravi Shanker: That's exactly it. Kind of you referenced the strength of the travel ecosystem in your previous response, and I think that's exactly what the airlines need to focus on. I think the takeaways for the airlines from the survey is very clear. You cannot have a co-brand revenue opportunity in isolation. It is just a layer on top of your core revenues. You cannot build an incredible loyalty or co-brand franchise without having a very strong core airline product. The analogy we use in our report is that it's sort of like the restaurant business.Most restaurants usually make the bulk of their profitability off of the wine menu or the liquor menu, even though you're going there primarily for the food and the ambiance and the service. If you don't have really good food and ambiance and service, you can't make money off of the wine menu. Similarly, we think the airlines need to continue to focus on their core product, whether it's their network or their reliability, their safety, where they fly, the quality of the product in the sky, the lounges, as you mentioned. And once you get all of that in order, then you can tap into the co-brand revenue opportunity over time. Jeff Adelson: So maybe just running with that analogy on, you know, co-branded revenues becoming a more meaningful part of the airline business. Why are they so strategically important in your view? Why should the consumer pay for that bottle of wine that they can get? Ravi Shanker: Look, we, we don't have a full disclosure from the airlines just yet, but we have some nuggets that tell you that this is a very attractive revenue opportunity, right? So, look at some of the numbers we do have. We think that this business has been growing at a low double-digit CAGR for the industry, which is much faster than core revenue growth. We think it has already grown to be about low double-digit percentage of overall revenues. And from the little info we have, we can surmise that this is a very, very profitable business. Something in the order of 35-50 percent operating margins, if not much higher than that in an industry that is overall working really hard to get to double-digit margins on a core basis. So, this business can be about half of overall mid-cycle profitability, maybe even higher for some of the airlines, even though, it is considered to be an ancillary revenue stream. This is also a very, very stable business that doesn't exhibit the kind of cyclicality or volatility as the core passenger airline business. And so, we think the airlines will be looking to grow this for the margins, for the stability, and for the, honestly, growth opportunity over time. Jeff Adelson: And if we think about that opportunity growing over time, if consumers really do care more about tangible benefits than brand prestige, as I think our survey indicated, what does that mean for the airlines trying to build that loyalty through these card partnerships?Ravi Shanker: It's exactly as you mentioned, kind of, earlier – that we think both the banks and the airlines need to keep investing in the product. They need to keep giving the consumers enough rewards that make it seem worth the fees and worth the while to subscribe to a travel co-brand card – versus going with a more generic card that gives you just plain cash back. And I think, again, it comes down to whether the core airline product is strong enough for the consumer to warrant going down the path of building loyalty with the airline franchise. And if the consumer is committed to travel, as a share of the consumer's wallet significantly enough to commit to travel cards' benefits over generic benefits. We have a lot of confidence in the latter. In that all of our data, all of our surveys since the pandemic have shown that travel is now almost a consumer staple spending item rather than being a consumer discretionary spending item that it was before. And travel is now a significant spending priority – after only groceries and household staples for the average consumer. For the high-end consumer, it is the number one spending intent category. So, we know that travel is very important. Whether the airline is worth, kind of, committing to or not is very airline specific in our view.Jeff Adelson: So, if we put this all together and, you know, you think about your forecast for the industry and, you know, our joint forecast for the co-branded card revenues… Ravi Shanker: Mm-hmm. Jeff Adelson: Maybe just talk a little bit about how you think those revenues keep growing so strongly, or whether they continue to grow strongly. Or is there a risk that this all plateaus at some point in the near future? Ravi Shanker: Look, that's a great question, and that's why we highlight three possible scenarios in the report. In our base case, we have the industry growing at roughly the same double-digit CAGR that it has been for the last few years. That sees the market go from about $25 billion today to about [$]60 billion in the next 10 years. In our bull case, we have travel as a share of overall spending, and travel cards as a percentage of overall credit card issuance, which you highlighted earlier was a pretty low number, actually expand to something more reasonable. And that's where we see the potential for the market almost quadrupling from $25 billion today to [$]100 billion in the next 10 years. And our bear case, kind of that's when you talk about a macro risk. Second, maybe some kind of slowing down in travel as a spending priority, which we actually don't think happens. But what's more likely is the point you referenced earlier, in response to my question about the relationship between the airlines and the hotel companies versus the credit card issuers may be changing a little bit. And this becoming a little more of a free-for-all in the industry and a little more competitive. That could potentially, kind of, hurt the economics for the overall industry, even though the size of the pie will continue to grow. So that brings us back to the consumer's wallet. So, every time I'm on a trip, I have several options – maybe a cashback card, maybe a premium travel card, maybe an airliner hotel co-brand card. So, which one am I reaching for every time I look to swipe? Jeff Adelson: Well, I mean, I think at its core, it really depends. It's a battle at the end of the day for the loyalty of a high quality, sticky and heavy spending consumer. And consumers are largely rational, right? So, they're going to go with a card where they think they get the best value. And if that's their airline card where they think they can accrue the best loyalty status and maybe get their first class upgrade every now and then and get unlimited access to the lounges, maybe they'll choose that. But really in a survey what we learned was most consumers tell us they care about value, flexibility and rewards. So, the highest value consumers I just mentioned are also looking for experiences, convenience and status. So that's why the banks, airlines and hotels are all investing so aggressively in these premium ecosystems to try to lock them in and keep them loyal. Every swipe is really a vote for which ecosystem delivers the most value if you think about it, right? The winner isn't necessarily the company with the best card too. It's the company that creates so much of the strongest overall relationship with the consumer. And that's why this competition matters so much across banking, travel and hospitality. So, we are watching this competition. So far, it's working. It's a rising tide that's lifting all boats. But as I mentioned before, it really will only continue to work if our forecasts are right and the high-income consumer views this as less of a discretionary spend item and more of a stable spend item. And, if that pie, and the high-income consumer, continues to grow in the U.S., then this relationship can continue to work for the foreseeable future, we think. Ravi Shanker: That makes a ton of sense. Jeff, thanks so much for joining me on the show today. Jeff Adelson: Thanks, Ravi. It was my pleasure. Ravi Shanker: And to our listeners, thanks for listening. If you enjoy Thoughts on the Market, please leave us a review wherever you get your podcasts and share with a friend or colleague today.

This week on The Business of Watches, a brand we don't talk about a lot on this channel - Jacob & Co. Complicated, audacious, and expensive, Jacob & Co. watches hold a unique position in the industry. The brand enjoyed a strong 2025, growing sales and volumes, according to estimates by Morgan Stanley and LuxeConsult, bucking the industry trend.  And the brand recently got some high-profile exposure on the wrist of the Roland Garros winner with French Open champion Alexander Zverev wearing Jacob & Co. during his matches and on the podium. We sat down in Geneva with Benjamin Arabov, the Chief Executive Officer of Jacob & Co., to talk about the brand's operations and strategy. You might be surprised at how Jacob & Co. watches are produced, the size of its production, and how the brand is being impacted by the war in the Middle East. Finally, looking ahead to next week's episode, number 30 in the history of The Business of Watches, we're planning a special Q&A episode and will gather some of the Hodinkee team, including Editor-In-Chief James Stacey and Editors Mark Kauzlarich and TanTan Wang, to answer your business-related questions. Want to offer up a question? Please drop it in the comments on this episode's page on Hodinkee.com. We're looking forward to hearing from you and answering your questions on all things watches and business!  Show Notes  0:40 Rolex And Cartier Are In Another League – A Deep Dive On The Pains And Gains In Morgan Stanley's "Swiss Watcher" Report (Hodinkee) 1:13 Chopard plans to cut jobs in Val-de-Travers (Le Temps) (French, paywall) 2:59 Chopard plans to cut around 30 jobs (RTS Info) 3:20 Swiss Watch Export Data for April (FHS) 4:35 Jacob & Co. 5:45 CEO Benjamin Arabov Triples Sales In Five Years (Bilan French)) 10:20 Jacob & Co. Collaborates On Exclusive Watch With Salman Khan (Watch Pro) 13:46 Concepto Watch Factory (company website) 14:35 Jacob Arabo / Arabov (Wikipedia) 15:17 Astronomia Regulator 18:50 Our Favorite Guilty Pleasure Watches Of 2018 (Hodinkee) 21:15 Godfather II Watch (Jacob & Co.) 25:01 In-Depth: How The Five Time Zone Shaped Modern Watch Culture (Malaika Crawford Hodinkee)   

What They Won't Tell Young Men About MasculinitySPONSOR: Lear CapitalGold and silver have hit all-time highs, and experts are forecasting even higher prices ahead, with some predicting gold could reach $5,000 to $6,000 an ounce and silver $100 to $150. Major institutions like Morgan Stanley are shifting their portfolios into precious metals, and even Warren Buffett has been selling off big tech. Lear Capital is offering up to $20,000 in bonus gold or silver with a qualified purchase, plus a free information kit.Call 800-707-4575 or get your free information kit at https://www.Nick4Lear.com-----SPONSOR: American FinancingMany homeowners have more equity than they realize but are turning to credit cards instead of putting that equity to work. American Financing's salary-based mortgage consultants can help wipe out high-interest debt, with mortgage rates currently in the 5s and customers saving an average of $800 a month. There are no upfront fees, and starting now could even delay two mortgage payments.NMLS 182334, nmlsconsumeraccess.org. APR for rates in the 5s start at 6.327% for well qualified borrowers. Call 866-886-2026 for details about credit costs and terms. Average savings based on borrowers who save over $199.99.Call 866-886-2026 or visit https://www.AmericanFinancing.net/MTA-----GET YOUR MERCH HERE: https://shop.nickjfreitas.com/BECOME A MEMBER OF THE IC: https://NickJFreitas.comInstagram: https://www.instagram.com/nickjfreitas/Facebook: https://www.facebook.com/NickFreitasVATwitter: https://twitter.com/NickJFreitasYouTube: https://www.youtube.com/@NickjfreitasTikTok: https://www.tiktok.com/@nickjfreitas3.0

Morgan Stanley manages trillions — and it's now putting Bitcoin in front of clients. Amy Oldenburg runs the firm's digital asset strategy, and she joins Natalie Brunell to break down what Wall Street actually sees in Bitcoin, why the price has been stuck, and what could finally move it. She also explains how much Bitcoin Morgan Stanley tells clients to own, why most financial advisors still aren't on board, and her honest take on where the price goes over the next 5 years. Topics: Why a 26-year Wall Street veteran embraced Bitcoin How much Bitcoin Morgan Stanley recommends owning Why Bitcoin is stuck even as the banks pile in What could spark the next big move Her real 5-year and 10-year Bitcoin outlook Why "all crypto is the same" is a costly mistake Amy Oldenburg is Head of Digital Asset Strategy at Morgan Stanley. Connect with her on LinkedIn.  ---- Order Natalie's new book "Bitcoin is For Everyone," a simple introduction to Bitcoin and what's broken in our current financial system: https://amzn.to/3WzFzfU  --- Coin Stories is powered by Gemini. Invest as you spend with the Gemini Credit Card. Earn up to 4% back in sats on everyday purchases like gas and groceries. Sign up today https://www.gemini.com/natalie  ---- Ledn is the global leader in Bitcoin-backed loans, issuing over $10 billion in loans since 2018, and they were the first to offer proof of reserves. With Ledn, you get custody loans, no credit checks, no monthly payments, and more. Get .25% off your first loan, learn more at https://www.Ledn.io/natalie  ---- Abundant Mines is a fully-managed Bitcoin mining in the U.S. You own the miners. You keep 100% of the Bitcoin. Voted #1 mining company by peers. Get 1 month of free hosting: AbundantMines.com/Natalie ---- Natalie's Bitcoin Product Partners: Check out my favorite lightning wallet and trivia app Speed Wallet. If you're a business, let Speed help you accept BTC like they did for Steak 'n Shake! Visit http://speed.app/natalie/ and use code COINSTORIES10 for 5,000 free sats Block's Bitkey Cold Storage Wallet was named to TIME's prestigious Best Inventions of 2024 in the category of Privacy & Security. Get 10% off using code STORIES at https://bitkey.world   Master your Bitcoin self-custody with 1-on-1 help and gain peace of mind with the help of The Bitcoin Way: https://www.thebitcoinway.com/natalie  With BitcoinIRA, you can invest in bitcoin 24/7 inside a tax-advantaged IRA. Choose a Traditional IRA to defer taxes, or a Roth IRA for tax-free withdrawals later. Take control of your future with BitcoinIRA: https://www.bitcoinira.com/natalie  Natalie's Upcoming Events: Join us for the biggest Bitcoin conference in Europe at BTC Prague this June 10-13 with a keynote from Michael Saylor, Code HODL for discounted passes: https://btcprague.com/  The best time to plan for Bitcoin 2027 is right now. Early bird tickets are live — grab the lowest pricing available and use code HODL for 10% off: https://tickets.b.tc/event/bitcoin-2027?promoCodeTask=apply&promoCodeInput=HODL    Extra Services to Consider: Protect yourself from SIM Swaps that can hack your accounts and steal your Bitcoin. Join America's most secure mobile service, trusted by CEOs, VIPs and top corporations: https://www.efani.com/natalie   Ditch your fiat health insurance like I did four years ago! Join me at CrowdHealth: www.joincrowdhealth.com/natalie  ---- This podcast is for educational purposes and should not be construed as official investment advice. Ads in this episode are baked-in and may reference promotions or offers that are no longer available at the time of listening. ---- VALUE FOR VALUE — SUPPORT NATALIE'S SHOWS Strike ID https://strike.me/coinstoriesnat/ Cash App $CoinStories #money #Bitcoin #investing

The AI IPO race is heating up.In this episode of the Market Maker Podcast, we break down the latest developments surrounding the SpaceX IPO and OpenAI's confidential S1 filing to the SEC.We discuss Goldman Sachs' huge growth forecasts for SpaceX, the surge in retail investor demand, and why Elon Musk may be positioning SpaceX as one of the biggest AI infrastructure plays in the world.We also dive into OpenAI's reported internal tensions ahead of its IPO process, including concerns around governance, leadership and whether the company is truly ready to go public.If you're interested in AI, investing, IPOs, venture capital or the future of technology companies, this episode gives you a practical breakdown of what's happening behind the headlines.(00:00) Intro(01:03) SpaceX IPO Update(08:39) Bankers Selling the Vision(10:35) Retail Demand & Hype(14:20) OpenAI Files for IPO(18:57) OpenAI's Internal Issues(22:59) Why CEO/CFO Tension Matters(24:57) Goldman & Morgan Stanley

As AI demand surges, our Asia Energy Analyst Mayank Maheshwari discusses the new multi-trillion-dollar investment cycle to secure the power, fuels, grids and storage that keep modern life running.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Mayank Maheshwari, Morgan Stanley's Asia Energy analyst. Today: how AI's rapid growth is forcing Asia into a massive energy buildout across power grids, fuels, storage and dependable energy and power generation. It's Tuesday, June 9th at 8am in Singapore. Every time you ask AI to draft a note, summarize a file, plan a trip or generate an image, the response feels instant and easy. But behind it sits a very physical system: data centers, electricity, cooling, fuel, metals, power lines, storage tanks and ships. There is no AI without energy. And in Asia, the power and energy needs could get much bigger. And right now, we are at a critical inflection point where energy, AI, and security converge into [a] once-in-a-generation investment cycle. We see a super cycle with $5 trillion plus in new investments in energy over next five years, almost double of what we have seen in the past decade. And this has global implications as Asia consumes almost half of the world's energy needs – but produces only about a third of it at home. Energy markets may be global, but energy insecurity is local. It shows up in electricity prices, fuel shortages, factory delays, food supply pressure and household budgets. By 2030, Asia's energy use could rise by about 38 exajoules. That increase is roughly equal to all the energy the Middle East consumes today. Power demand alone could reach about 19 trillion units a year when expressed in kilowatt-hours. That is around four trillion more units of electricity usage than in 2025, driven by data centers, industry, and onshoring of businesses. AI is now part of that demand story. By 2030, data centers could use roughly one-sixth of all new power units in Asia. That makes AI a major new load on the power system. Meeting this demand requires a major investment cycle. Asia's annual energy investment could rise to roughly US$1.1 trillion a year over the next five years. Much of that spending goes into the power system itself: generation, grids, storage and the equipment needed to connect everything. Grids may be the biggest bottleneck. Think of [the] grid as the highway system for electricity. You can build more power plants, but if the roads clog up, the power does not reach homes, factories or data centers. Asia's grid investment needs could reach close to about US$1 trillion by 2030. Transformer lead times have stretched to years in some cases, which shows how tight the equipment supply chain has become. The hardest part is keeping the lights on every hour of the day. Baseload power means electricity that can run around the clock. Asia is adding a large amount of renewable power to its energy infrastructure. But that source depends on when the sun shines or the wind blows. That is why coal, gas and nuclear remain part of the conversation. Storage also moves from useful to essential. Batteries help smooth out renewable power demand when supply rises and falls during the day. Global energy storage installations could rise from about 500 gigawatt hours in 2025 to around 3,000 gigawatt hours in 2030. Powering AI also reaches beyond electricity. Data centers need power, but the system around them needs dependable fuels, grids, batteries, metals, refining, storage and shipping. Electricity has to be generated, moved, backed up and supplied through physical infrastructure. That is why this story pulls in copper and aluminum for grids, fuel refining for transport and petrochemical supply chains, and fertilizers because energy security also connects to food security. The future may look digital, but it will be powered by something far more physical: the largest energy buildout Asia has seen in decades. Thanks for listening. If you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

Connect with Early Riders // Connect with OnrampPresented collaboratively by Early Riders & Onramp Media...Final Settlement is a weekly podcast covering capital markets, dealmaking, early-stage venture, bitcoin applications and protocol development.This week Brian, Michael, and Liam cover the SpaceX IPO and the capital-rotation narrative around Bitcoin, the Bernie Sanders / David Sachs debate over government equity stakes in AI companies, the Zcash inflation bug that allowed unlimited mint for four years before Claude caught it, JPMorgan's tokenized-deposit consortium with Citi, Bank of America, Wells Fargo, and Chase, the Stripe / Visa / MasterCard stablecoin consortium, Morgan Stanley's Galaxy partnership letting high-net-worth clients lend Bitcoin for in-kind ETF conversions, Tether's first gold-backed Visa card, the US sanctioning Iran's largest crypto exchange Nobitex, and the Polymarket MicroStrategy resolution controversy.Chapters00:00 - The State of Digital Assets01:13 - Upcoming IPOs and Market Dynamics05:54 - Contrasting Views on Investment Strategies08:19 - Long-Term Perspectives on Bitcoin14:11 - Speculation vs. Saving in Investments18:32 - Government Involvement and Market Bubbles25:22 - Zcash Inflation Bug and Crypto Vulnerabilities31:12 - Tokenization of Deposits and Future of Banking34:12 - Understanding the Future of Investment and Money35:56 - The Role of Traditional Finance in Digital Assets37:11 - Morgan Stanley's Bitcoin Lending and ETF Strategy40:54 - Market Timing and ETF Launches42:48 - The Evolution of Wealth Management and Asset Preservation44:40 - Stablecoins and 24/7 Trading in Crypto Markets49:05 - US Sanctions and the Impact on Crypto Markets52:59 - Tether's Gold-Backed Innovations55:19 - The Future of Agentic Payments and Prediction MarketsIf you found this valuable, please subscribe to Early Riders Insights for access to the best content in the ecosystem weekly.Keep up with Michael:https://x.com/MTangumahttps://www.linkedin.com/in/mtanguma/Keep up with Liam:https://x.com/Lnelson_21https://www.linkedin.com/in/liam-nelson1/Keep up with Brian:https://x.com/BackslashBTChttps://www.linkedin.com/in/brian-cubellis-00b1a660/

The Head of our Europe and Asia Technology Team, Shawn Kim, explains how AI's appetite for memory chips is boosting the cost of everything from data centers to smartphones, with consequences that may reach far beyond the tech industry.Read more insights from Morgan Stanley.----- Transcript -----Shawn Kim: Welcome to Thoughts on the Market. I'm Shawn Kim, Head of Morgan Stanley's Europe and Asia Technology Team. Today, we're talking about chipflation – when memory chips stop getting cheaper over time, and become more expensive and even harder to find. It's Monday, June 8th, at 3pm in London.Memory chips are easy to ignore, until your laptop slows down, your phone costs more, or your cloud bill jumps. Memory is the computer's workspace. It holds whatever the machine needs at that moment, whether that is a web search, a video, a spreadsheet, or an AI model answering a question. DRAM is the fast memory inside servers, PCs and phones. NAND is what stores files in solid-state drives. And HBM, or high bandwidth memory, is the high-performance version sitting right next to the AI chip, helping them move huge amounts of data quickly. That last one – HBM – is key because AI has become intensely memory hungry. Memory prices have risen more than six-fold over the last year, a sharp break from decades when the cost of DRAM generally kept falling. The pressure is coming from AI infrastructure buildouts. We see servers accounting for 59 percent of DRAM demand by 2028, up from 37 percent in 2023. We also see enterprise solid-state drives reaching 65 percent of NAND demand, up from 18 percent. And simply put, data centers are taking a much bigger share of the memory pie. AI memory use is climbing fast, and at every scale. A newer AI chip uses 7.2 times more HBM than earlier generations. A full system uses about 65 times more. Across an entire AI data center buildout, the jump gets even bigger. HBM has gone from roughly 10 terabytes in 2020 to about 18 petabytes in 2026, orders of magnitude more. This demand is running into a supply chain that cannot respond quickly. New memory capacity takes years to build, qualify and ramp up. Supply relief is a process, not a switch. And that creates a two-tier market. Large AI and cloud buyers can sign long-term agreements, prepay and secure priority access. Traditional buyers, including PC makers, smartphone makers and industrial hardware companies, must compete for what remains. This impacts everyday products. In 2027, we see PC memory demand potentially facing a 15 percent shortfall, equivalent to about 58 million PCs. Smartphones could face a 12 percent shortfall, equivalent to about 134 million units. Companies may have to raise prices, cut specifications, delay launches, and accept lower profits. The dollar numbers are striking. We see the memory market growing from about $220 USD billion in 2025 to about $890 billion in 2026. Expectations for 2026 memory revenue rose 71 percent in just three months. That implies roughly $600 USD billion of incremental memory revenue in 2026, more than the annual market for smartphones, PCs, or servers, each taken on its own. The broader economy may not see a significant direct inflation shock. We estimate the direct impact on headline CPI at about 0.1 percent in 2026. But pressure is showing up in producer prices, in corporate margins, cloud costs, capital spending plans and delayed technology upgrades. AI has turned memory from the cheapest part of the digital economy into one of its most contested resources. These tiny chips most people never think of may now decide what gets built or delayed, and how much we all end up paying. Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

How Godly Can Families Save America w/ John LovellSPONSOR: Lear CapitalGold and silver have hit all-time highs, and experts are forecasting even higher prices ahead, with some predicting gold could reach $5,000 to $6,000 an ounce and silver $100 to $150. Major institutions like Morgan Stanley are shifting their portfolios into precious metals, and even Warren Buffett has been selling off big tech. Lear Capital is offering up to $20,000 in bonus gold or silver with a qualified purchase, plus a free information kit.Call 800-707-4575 or get your free information kit at https://www.Nick4Lear.com-----SPONSOR: Alliance Defending FreedomSome of America's biggest companies, including American Express and Home Depot, are paying for gender-transition drugs and surgeries for kids through their employee healthcare plans. Alliance Defending Freedom's petition puts direct pressure on corporate leaders, and signatures from concerned Americans can spark changes that ripple across other companies. It's a real way to take action instead of watching from the sidelines.Sign the petition by texting NICK to 83848, or go to https://www.JoinADF.com/Nick-----GET YOUR MERCH HERE: https://shop.nickjfreitas.com/BECOME A MEMBER OF THE IC: https://NickJFreitas.comInstagram: https://www.instagram.com/nickjfreitas/Facebook: https://www.facebook.com/NickFreitasVATwitter: https://twitter.com/NickJFreitasYouTube: https://www.youtube.com/@NickjfreitasTikTok: https://www.tiktok.com/@nickjfreitas3.0

Trade policy is once again in the news with the announcement of new tariffs. Our Head of Public Policy Research Ariana Salvatore digs into why tariffs may not be a disruptive factor for markets this time.Read more insights from Morgan Stanley.----- Transcript -----Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Head of Public Policy Research for Morgan Stanley. Today, I'll be talking about how investors should be digesting the latest tariff headlines and what they could mean for the broader economic and market outlook. It's Friday, June 5th at 10am in New York. Tariffs are back in focus as the U.S. administration has proposed new levies following Section 301 investigations into more than 60 of our trading partners. At the same time, USMCA negotiations appear to have begun in earnest, with recent headlines focused on autos, including the possibility of raising regional content requirements for vehicles and auto parts. Now, at first glance, these developments sound like a meaningful escalation in trade policy. But we think these headlines are best understood as a continuation of the existing tariff regime rather than a new and more disruptive phase. Let's start with Section 301. Listeners may recall that the administration replaced the IEEPA tariffs with Section 122 following the Supreme Court's decision back in February. However, that was done under a temporary authority that expires in the end of July. It's been our view that as we approach that deadline, the administration would seek to replace the existing regime under a new authority. The conclusion of the Section 301 investigations is really a step in that direction; or said differently, a continuation of existing policy. We see the administration preserving the current tariff regime come July, but without a larger inflation or growth shock. The second issue is the USMCA. Raising regional content rules may be part of the negotiation now, and those changes could create sector-level friction. Similarly, we think it's possible we see escalation ahead of the July deadline as all three countries work to improve the existing trade deal. Now that being said, we're still constructive on the longer-term trade alignment between the U.S., Mexico, and Canada, and we see structural and procedural constraints that are going to limit the downside risk to something like a potential withdrawal from the agreement. We still expect the USMCA carve-out to remain in place even for Section 301 goods on a range of trading partners. That's because we think the administration sees value in maintaining supply chain integration within North America across a number of sectors. In general, we actually think the recent pattern on tariffs has been toward less, not more, trade pressure at the margin. Recent months have come with several carve-outs, exemptions, and delays on broad-based and sectoral tariffs. That suggests that the administration is still sensitive to the downstream cost impact of tariffs, and of course, affordability matters politically heading into the midterm elections in November. That view also fits with our broader U.S. economics outlook. Our economists continue to see a relatively benign macro backdrop. Growth is expected to remain trend-like, with consumer spending slowing but not collapsing, and strong AI-led CapEx offsetting some of the drag from higher energy prices and policy uncertainty. On inflation, tariffs remain part of the story, but much of the pass-through appears to be already in the data. That pairs with a more constructive outlook for equity markets as well, as our strategists there see a strong earnings story supported by things like positive operating leverage, AI adoption, improving pricing power, and a broadening out in earnings growth. So, the key message for investors is this: tariff policy is still noisy, and it will remain a source of headline risk. But in our base case, the administration is moving toward a more durable version of the current tariff regime, not a materially more disruptive or restrictive one. Section 301 replaces Section 122, the USMCA carve-out stays in place, and selective exemptions continue where the affordability or supply chain costs are too high. Thanks for listening. As a reminder, if you enjoy Thoughts on the Market, please take a moment to rate and review us wherever you listen, and share the podcast with a friend or colleague today.

Our Global Commodities Strategist Martijn Rats discusses why the restart of oil flows through the Strait of Hormuz may be slower and tighter than the market expects.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Martijn Rats, Morgan Stanley's Global Commodities Strategist. Today – how fast can Middle East production return?It is Thursday, June the 4th, at 3pm in London.Every time you pull into a gas station, those prices are staring back at you. What you see at the pump is just the front end of a global system we've been watching for months: tankers, storage, insurance, and shipping lanes, all still constrained by the Strait of Hormuz. But while prices at the pump are still high, Brent has actually fallen back to around about $92 a barrel.In inflation-adjusted terms, today's Brent price is actually right at the 50th percentile of the last 20 years – suggesting that the market is assuming a clean, near-term recovery in supply. Yet the disruption continues to be extraordinary. Roughly 11 million barrels per day of Gulf crude remains offline, close to half the region's pre-conflict output.We think the market may be too optimistic. Our working assumption is now that meaningful export recovery through the strait begins only in the second half of July. Even then, normal does not return with the flip of a switch.First, ships need to be willing to sail. Owners and insurers need confidence that the waterway is safe. If mines remain in traditional shipping lanes, the strait can be technically open but still operate at reduced capacity. Clearing that risk can take weeks, and potentially several months.Second, the tanker fleet is in the wrong place. When ships cannot work in the Gulf, they move elsewhere. Bringing enough empty tankers back to lift crude takes time.Third, storage is a limiting factor. Oilfields cannot restart if export tanks are full. For producers that rely heavily on seaborne exports, empty tankers are therefore essential.Last, oilfields themselves need restarting. Before the closure, around 36,000 wells were active across six Gulf producers. Roughly 10,000 of those are currently offline. After a shut-in of nearly five months, about 4,000 to 5,000 wells could face restart constraints. Reservoir pressure can decline, equipment can fail after sitting idle, and flowlines need cleaning and safety checks.All told, around 75 percent of lost supply can probably come back within four months after flows through the Strait of Hormuz resume. But the final 25 percent may take well into 2027.So why have prices not moved more? The market began this shock with buffers. Inventories were elevated, oil-on-water was high, and emergency relief releases helped. The U.S. increased seaborne net exports of crude oil and refined products from roughly 5 million barrels a day to 9 million barrels a day. At the same time, China's seaborne net oil imports fell from around 13 million barrels a day a year ago to just over 7.5 million a day over the last 30 days.But these cushions are thinning. Strategic reserve releases are scheduled to drop from about 2.5 million barrels per day in April through June to about 0.7 million in July and August. U.S. gasoline and diesel inventories are already well below five-year seasonal lows. China is already on track for five consecutive months of unusually low crude buying for April through August delivery. But that starts to raise the probability that Chinese buyers return for September barrels. Buying for September typically starts mid to late June.Now, oil is trading like the disruption is nearly over. But at the same time, the physical system is telling a slower story. Prices may look calm on the screen, but the bottleneck is in tankers, storage tanks, wells, and crews.Our Brent forecasts remain $110 per barrel for the second quarter and about $100 a barrel for the third quarter. We recently raised our estimates for the fourth quarter to $95 and the first quarter of 2027 to $85 a barrel, and expect a return to $80 eventually thereafter.Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

Chief Fixed Income Strategist Vishy Tirupattur takes a look at how credit markets are adapting to fund the new phase of AI capex.Read more insights from Morgan Stanley.----- Transcript ----- Welcome to Thoughts on the Market. I am Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist. Today – The critical question behind the AI-driven capex cycle that is front and center for markets year to date. How is credit market financing this ecosystem evolving? It's Wednesday June 3rd at 2 pm in New York. When we first discussed the role of credit markets in financing the AI and data center build-out around the middle of last year, the direction of travel was clear. Realizing the transformative potential of AI requires unprecedented levels of capex. What has really surprised us since is the scale and speed of that spending, both of which have exceeded our expectations by a wide margin. The upward revision to capex expectations has been dramatic. A year ago, we projected the combined capex of the five large hyperscalers at roughly $450 billion in both 2026 and 2027. After the first quarter earnings reports, Morgan Stanley's internet equity analysts, led by Brian Nowak, now expect hyperscaler capex of roughly $800 billion in 2026 and $1.2 trillion in 2027. One data point really captures the surge in the underlying demand for compute. According to OpenRouter, the global weekly token usage, which is a key proxy for compute, has risen by roughly 350 percent since early January, increasing from about 6 trillion tokens to 28 trillion tokens. Credit channels for financing this capex have not only been broader and deeper than we anticipated, spanning public and private markets, but have seen remarkable in the structural innovation that is blurring the lines between public and private markets. Over $200bn of public AI-related issuance across the different credit channels has happened just in the first five months of this year. We had previously assumed unsecured issuance would be limited by the scale of the largest non-financial issuers, confined to investment grade credit only, and largely USD denominated. Instead, some hyperscaler issuance has now far exceeded even the largest telecom names; funding has expanded well beyond USD into EUR, GBP, CHF, JPY and CAD markets. The issuer base has also broadened to include data center REITs and neoclouds, particularly in the high-yield market. The scope of financing has also widened beyond the data center shells themselves. GPU financing, which we assumed would be funded entirely through equity capital, has begun to migrate into credit markets. Funding is now coming through broadly syndicated loans and asset based financing, with ABS structures not far behind. Structural innovation illustrates how rapidly the credit ecosystem is adapting to the complexities of demands of AI-driven capex. Financings that combine elements of project finance, tranching, and residual value guarantees, along with high-yield issuance backed by hyperscaler guaranteed leases – these are innovations that we have never seen before. These structures have expanded the investor base, reduced the funding frictions, and further blurred traditional boundaries – between both corporate and project finance, and public and private credit markets. At the same time, physical, operational, and political constraints are beginning to shape the pace and the composition of the AI infrastructure build-out – and, by extension, the demand for financing. Grid access, power generation equipment, skilled labor, and permitting delays are emerging as significant constraints. These are compounded by political and regulatory frictions at the local, national, and international level. As power availability becomes a gating factor, the AI build-out is likely to pull energy infrastructure financing more tightly into the orbit of AI infrastructure financing. The clear takeaway is this. The capex requirements underpinning AI infrastructure are expanding exponentially, and with them the role of credit markets in financing this build-out. Along the way, there will be winners and losers, periods of adjustment, and a range of physical, financial, and political constraints that shape outcomes on the margin. But the broader trajectory is certain. The scale, duration, and strategic importance of AI infrastructure investment mean that financing of this will remain a defining theme for credit markets and credit investors for years to come. Thanks for listening. If you enjoy the podcast, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

$7 trillion goes digital. Amy Oldenburg, Morgan Stanley's Head of Digital Asset Strategy, breaks down how one of the world's largest wealth platforms is going all-in on crypto, from a Bitcoin ETF that crossed $200 million in just three weeks to spot crypto trading coming to their full advisory platform later this year. On the mainstage at CoinDesk's Consensus, she makes the case that the TradFi vs. DeFi battle is over, and it's all just finance now. - Timecodes: 00:00 - Amy Oldenburg at Consensus Miami 2026 00:47 - Morgan Stanley's Digital Asset Strategy 01:52 - The Bitcoin ETP Hits $200M in Three Weeks 05:21 - Morgan Stanley's Early Lead in Crypto Access 08:38 - Advisor Education When Clients Know More Than the Advisors 10:38 - What Comes Next: Tokenization and Redemptions 12:35 - The DeFi vs TradFi Battle 13:43 - A Decade-Long Project, Not a 2026 Project

On January 2, 2026 his second day as mayor, Mamdani signed Executive ORDER 7 creating the Office of Mass Engagement. This wasn't improvised. An office this complex, with hiring structures and a $1.6M budget already in place before it launched, was designed before the election. This is the first indicator: it was pre-planned infrastructure, not responsive governance.SPONSOR: Lear CapitalGold and silver are at all-time highs as central banks, sovereign funds, and major institutions like Morgan Stanley shift capital out of the dollar and into precious metals. Lear Capital helps everyday Americans get into physical gold and silver with experienced reps, transparent pricing, and IRA-eligible options. With a qualified purchase, you can receive up to $20,000 in bonus gold or silver.Call Lear Capital at 800-707-4575 or visit https://www.Nick4Lear.com-----SPONSOR: Good RanchersOver 85% of grass-fed beef sold in the U.S. is actually imported, and most shoppers have no idea. Good Ranchers partners with local American farmers and ranchers to deliver 100% American meat, pasture-raised with no antibiotics or added hormones, straight to your door. Where you buy your meat directly supports the families keeping food production in this country.Get $100 off your first three orders plus free protein for life with a subscription, or $40 off a one-time order, at https://www.GoodRanchers.com/discount/NICK-----GET YOUR MERCH HERE: https://shop.nickjfreitas.com/BECOME A MEMBER OF THE IC: https://NickJFreitas.comInstagram: https://www.instagram.com/nickjfreitas/Facebook: https://www.facebook.com/NickFreitasVATwitter: https://twitter.com/NickJFreitasYouTube: https://www.youtube.com/@NickjfreitasTikTok: https://www.tiktok.com/@nickjfreitas3.000:00:00 – Exposing Mayor Mamdani's socialist takeover of NYC.00:00:51 – Antonio Gramsci and the roots of cultural Marxism.00:01:44 – The long march through our American institutions.00:02:11 – Using taxpayer money to fund radical leftist agendas.00:03:51 – Defining the intermediate step toward Marxist utopia.00:04:41 – New York's new taxpayer funded propaganda office.00:06:13 – Inside the $5 million mass engagement scam.00:08:09 – Campaign staffers becoming permanent city hall employees.00:10:32 – Meeting the DSA commissioner running NYC outreach.00:12:04 – Using your money to "liberate" you from freedom.00:13:50 – Why the Democratic Socialists of America are serious.00:14:50 – The radical plan for permanent socialist governance.00:16:07 – Rewarding political friends while punishing conservative enemies.00:18:41 – New York's massive budget holes and state bailouts.00:20:02 – A cautionary tale for every major American city.00:23:20 – Creating permanent dependency to rig future elections.00:24:27 – Why socialism always fails to deliver its promises.00:26:15 – Families fleeing blue states to escape exit taxes.00:27:50 – How socialism benefits the politically connected elite.00:29:17 – Why activist bureaucrats cannot run a modern city.00:30:37 – Final thoughts on saving the American Republic.

Our Global Head of Fixed Income Research Andrew Sheets takes a closer look at potential investment paths when markets appear increasingly synchronized around a few macro themes.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley. Today, how to square a market that is both highly correlated, and highly divergent, at the same time. It's Tuesday, June 2nd, at 3pm London. A market of one. That may be a way that you hear investing described these days, and strictly speaking, it's accurate. Stocks and bonds, the two big asset classes that form the bulk of most investors' portfolios, are moving in unusual lockstep. Stocks are rising when yields fall, and vice versa, with the most consistency in over 20 years. And both, perhaps unsurprisingly, are moving in close relationship with the price of oil. At this point, it all seems pretty clear. The Iran conflict is a big deal for markets, representing the largest disruption to global energy supply in history. Of course, stocks and bonds, and oil are all moving together based on the perception of how this enormous issue resolves. In doing so, they suggest that the conflict still remains quite important, even as markets appear quite strong. Just as we can measure the extent to which stocks, bonds, and commodity prices move together, we can also track how individual stocks move relative to each other. And so, are stocks also rising and falling together like we see with these big asset classes? No. In fact, without exaggeration, it is the complete opposite. There are a few ways to measure how the individual stocks within, say, the S&P 500, are moving relative to one another. But all of them say the same thing. Day to day, stocks are moving with unusual dispersion and independence. At the same time that the relationship between stocks and bonds is the tightest in over 20 years, the relationship between stocks within the S&P 500 – to each other – is the lowest. If Iran is the factor driving the tight linkage that we discussed between stocks and bonds, Artificial Intelligence may be the culprit behind the opposite effect when we get down into individual companies. The perception that some companies will be incredible beneficiaries of AI, while others will be left behind, would explain at least part of the divergent performance. And so would an attention gap; with so much focus and positioning in AI sensitive names, other parts of the market can quickly feel forgotten, and thus move more independently. Indeed, while the S&P 500 is back near all-time highs, the market's advance-decline line, a measure of how many stocks are going up versus going down, is lower than where it was in late February or mid-April. We see a few implications to all of this. First, while stocks and bonds are closely linked for the moment, we think that this correlation would flip under more significant energy market stress. Were the price of oil to spike to our Commodity team's bear case, of $130-$150/bbl, we think yields would start to fall as the market would turn more concerned about the effect of all of this on growth. So, while the diversification of bonds has been disappointing so far, we do think that it will improve and materialize when it really matters. In equities, this dispersion means that stock selection can allow one to stand out from the overall market. Indeed if one considers themselves a stock picker, low correlation between stocks is exactly the market that you would hope to have. And it also means that many individual names may not be as heady as the broad market levels would imply. As discussed on this program recently, my colleague Mike Wilson and our U.S. Equity Strategy team expects U.S. stock performance to broaden out from here. Thank you, as always, for your time. If you find Thoughts on the Market useful, let us know by leaving a review wherever you listen. Also tell a friend or colleague about us today.