Surprises of 2025: AI, Credit Cycles, Policy Shifts

You know, the biggest surprise is, I mean, politically, obviously, the changes in policy in the United States, you know, that's a big change.

And so that's been very interesting to watch the pressure on the Federal Reserve, the trade and tariff wars, different things that have happened with taxes.

So definitely on the fiscal side, I mean, that's been a change in the environment.

I mean, if you step back, a couple of the things that are really, well, two of the things that are most interesting is 1, this lack of a credit cycle, right?

I mean, we had some credit events in the last few months, but they're really relatively minor, right?

And sort of we're, of course, tracking whether those credit events become a bigger deal.

But in general, you're not really seeing a credit cycle.

And so that's, again, that's very supportive.

The other obviously is AI and just how big AI is, the scale of the investments that are happening there, the pace of improvement in AI tools.

And so how how rapidly that technological innovation is affecting the economy.

So lack of credit cycle.

So if you summarize sort of the lack of the credit cycle, the scale of AI, and I think I think maybe the last thing you would put in there is just this sort of certainty around rate cuts.

So you touched on some of the issues that we're facing where the US stocks in particular look on the fuller side of fair, to use your words, but you're headed into what appears to be a pretty significant rate cut supported by the current administration in the U.S., where there's pressure from the administration to cut rates.

And so it's difficult to pop, even if you're someone who thinks we are in a bubble, and certainly we can talk about whether there are characteristics of that, it's difficult to to pop a bubble when you're cutting rates.

I don't think it's ever happened where a bubble has been popped into a rate cutting cycle, right?

So we have to put all that together in the mix.

The other thing, Jennifer, that I think stands out is, you know, I think we're seeing what appears to be some structural changes in regime around investing.

You mentioned sticky rates, sticky inflation, higher rates.

you know, changes in regulation.

And this is really changing the environment from the period between the global financial crisis and COVID.

It really appears to be a different kind of regime.