Introduces Rebecca Patterson, former Bridgewater CIO strategist, now at Council on Foreign Relations, and asks about her 2026 playbook and reaction to forming bullish consensus.
Host
Rebecca Patterson
Identifies as a 'tempered bull.' Acknowledges consensus for 2026: 2% GDP growth, faster EPS growth, supported by more Fed cuts, stimulus, tax refunds, share buybacks, deregulation, and AI capex. Problem is this is all priced in.
Asks how the Fed's recent 'QE-ish' tactical move to purchase front-end Treasuries adds to her bullish 2026 outlook.
Host
Rebecca Patterson
Says it affects sentiment. Fed calls it tactical to ensure market functioning. If it lasts 4-5 months (through tax day), speculation will grow about more activist bond management or a new Fed-Treasury accord.
Asks about international markets in a world of potential Fed liquidity, noting it was the year to own international and if that continues.
Host
Rebecca Patterson
Agrees international outperformance continues. A big tailwind has been weak dollar. Dollar may not fall aggressively due to Fed easing, but due to interest rate differentials.
Asks about risk if AI capex disappoints as a bullish 'tentpole,' and how that offsets other bullish factors.
Host
Rebecca Patterson
Highlights major risk due to high valuations, concentrated ownership, and AI's large role in S&P. AI wealth fuels consumption and earnings; capex fuels business investment. Disappointment risks a major pullback.