Michael Batnik (2:39)

We've done this work in the past where you think about or you visualize rolling returns for various asset classes, 60, 40, whatever it is, and the shorter your timeframe, obviously the greater the variability when you zoom out to 30 years. And of course nobody lives in 30 year increments as an investor, but it is remarkable how relatively stable long term returns have been.

Ben Carlson (3:01)

So I've done this recently. The volatility of stock market returns over 30 years, like the range of returns is lower than it is for cash and bonds. Wow. Wow. Pretty impressive, right? Anyway, we get into all this and more with Gabby Santos from JP Morgan. Here's our talk with Gabby now.

Michael Batnik (3:22)

Gabby, welcome to the show.

Gabby Santos (3:24)

Thank you so much. Thanks for having me.

Michael Batnik (3:26)

All right, this is an incredible report. We're so excited that we are able to talk about it with you today. A lot of obviously a lot of resources and hours go into this, so we appreciate you taking the time. I'm going to start here. There are a lot of competing forces in the world of investing today and you so aptly named the report Shifting Landscapes and Silver Linings. So let's start here. Economic nationalism, which you all say can constrain global growth but also accelerate domestic investment, obviously a push and pull there. How are you all thinking about the shifting landscapes of that through the investment lens?

Gabby Santos (4:11)

Yeah, that's a great place to start because we do think there are three interconnected themes. These are not new to this edition. These were themes we've been gaining more and more conviction over the years and then even more this year with a lot of policy change around the world. So we've got economic nationalism, we've got fiscal activism and capex buildout and we've got AI innovation and adoption and they all kind of feed on themselves. So if we think about economic nationalism, clearly there's a lot of frustration around the world rise in inequality forgotten areas and sectors and that's dropping, driving this focus to more investment domestically production domestically domestic labor force. For that, you do need to make sure that you're actually investing with this combination of public and private money to be able to finance the build out of certain industries like manufacturing in the U.S. rare earths, semiconductors. You need also a lot of private capital. Behind that there's also this additional force of AI, a lot of innovation and adoption that's fueling even more capex public and private. And that gains even more urgency if your labor force is starting to shrink and or get more expensive. So we see it all feeding on each other. And that's what I love about this report is, you know, we're not reacting to the news of the day or the month. These are all themes that have been building. I think they just gained even more urgency this year and truly are global phenomena. This is not just a description of forces in the US So I want.

Ben Carlson (5:56)

To get into some of the forces, but I thought it'd be interesting to take a step back because you guys are doing these long term capital market assumptions and it sounds like JP Morgan has been doing this report for about 30 years now. I got a question from an advisor recently who said, hey, I'm trying to figure out how to set expectations for my own clients when I do this. So what is the process that you all go through to do this? Because obviously there are estimates here and there's educated guesses, but in a lot of ways it is a guessing game because we don't know what's going to happen. The 2020s is a great example of that. So how do you go about setting these forecasts with the understanding that we don't know what's going to come next?

Gabby Santos (6:31)

Yeah, so the punchline at the end of the book are forecasts, efficient frontiers, projected returns, volatility, correlations. But I think it's really the buildup to those numbers that's particularly useful for clients. So it's thinking about, all right, from one year to the next, what have we learned that's truly new rather than just something that ends up moving the market that day or that week? And that way you're building a framework, a North star of where you think things are going and you're incrementally adding to it in terms of the process. Also, we take into account not just long term forces, but also how the markets have moved and priced all of this in. So we take the star starting valuation into account, the forces that we think are the most important for each building block, macro fixed income equities, private markets, correlations and volatility, a lot of stress testing with each other and thinking about different shocks that could arise along the way. And then that's how we end up coming up with the final numbers and with the final portfolio construction recommendations and discussions. So I would focus less on the specific basis points for setting expectations, but more the general discussion around starting valuations, forces and Then the kind of numbers that we're talking about and this is all over on average 10, 15 years. So it's never meant to be a forecast for next year. It can be a lot better, a lot worse. But having that at least a certain guidepost for people when they're planning for retirement, where they're coming up with strategic allocation, I think it's helpful. And then we tweak it around the edges as the year goes on with tactical allocation too.

Michael Batnik (8:23)

I feel like in the last, I don't know, five years or so inside the stock market, it's been a lot of the same story. Prior to this hyperscaler capex spend that we're spending so much time talking about, it was questions like will value investing ever work again? Are the large cap dominance, like will that ever mean revert? And this year seems to be the year where we're having some fundamental stories that are really impactful. So the last couple of decades, what you can describe part of the story as global economic cooperation and we are at what feels like an inflection point with retrenching, reshoring, domestic manufacturing. Obviously the administration has a large focus on that. I love this quote in your piece of Michael Semblis. He said it is shocking how little geopolitics actually matters to markets unless it gets truly terrible. And wholeheartedly agree there. But do you think that a lot of the policies that we're seeing are going to matter more in the future or is it really going to be more of the same where it's listening, it's earnings and it's inflation and everything else is noise? That's a lot. That's a big question. So that was a bad tee up.

Gabby Santos (9:39)

So I think on a month by month basis, geopolitics and all these forces, they really don't matter for the day to day of the markets unless there's really that peak rise in uncertainty like we had, you know, April this year with liberation day around, around tariffs. And then we just really didn't know exactly what businesses and economists and households should plan for. But I think in, in those three forces we teased out for, for these long term capital market assumptions, that's where we can, where maybe it does matter on the underlying structure. So for example, economic nationalism, that's something we see showing up more in our inflation estimates. So if all of a sudden you're building your supply chains not based on where it's cheapest and you can have the fattest margins, but based on considerations that local governments have just diversification of supply chains, national security. So that's one where maybe we need to think a little bit about how this can be ultimately passed on to end consumers. So we do see a little bit of an uptick in our long term inflation estimates. That's where that protectionism, economic nationalism is showing up. We do also see it showing up in yield curves. Steeper yield curves is a big theme for us. So forget the weird post financial crisis pre pandemic period. We're now projecting a return to kind of yield curve steepness. We used to have pre gfc. And then third, what about just inflation or rate volatility? And that's where we're projecting stock bond correlations to continue to move higher and just be more unpredictable. So that the main conclusion is diversifying the diversifiers. Let's not pin all our hopes and dreams on bonds. They'll work sometimes when it's about a recession or that kind of traditional shock we were used to there for 20 years. But they're not going to work when it's more geopolitical related to inflation or fiscal. Then you need other stuff that's uncorrelated to stocks and bonds and hopefully both as well to mix in there.

Ben Carlson (11:58)

So you had your 6040 portfolio. I think the outlook was like 6.4% for a 6040 portfolio. And then you also mentioned there's a 6040 plus portfolio because you bring some privates in. So maybe you could explain to us what that that 6040 plus portfolio is and then some of the other diversifiers used there.

Gabby Santos (12:15)

Yeah, and I'm sure as you guys know, you use 6040 as kind of like let's just mix in some public stocks and bonds. But that really hasn't delivered the kind of returns and experience. Right. That clients want for a few years now and especially after 2022 when both stocks and bonds sold off at the same time. And we just think it's a feature, not a bug of this investing landscape because of all of these forces that sometimes that stock bond mix just won't be enough. So part of it is diversifying the diversifiers. That could include things like gold, that could include things actually like active management, which is uncorrelated to just how the markets are behaving. And a big part of that is including private markets. So the types that are unrelated or uncorrelated, for example to bonds, so infrastructure, real estate, transportation, absolute return, hedge funds, all a really big part of that. The discussion around alternatives is also to improve returns because capital markets have changed. So for example, if the idea is to invest in small companies to really generate growth. We've really trimmed down our small cap premium. It's basically the same as large cap. So where are you going to find that these days? It's private markets, it's venture capital, it's private equity, it's even infrastructure very related to this whole AI capex build out and adoption. So really we're trying to retire the 6040 and go back to a new idea of a 6040 plus.

Michael Batnik (13:59)

Where do you think we are in the evolution of private markets such that the premium diminishes, such that we've seen in other areas of the markets that you've mentioned because there is a lot of money coming in and I am probably of the mentality that not that this necessarily ends badly and you know, buyer beware and you're going to get crushed with the vultures trying to sell you their illiquid bags like I'm not there. I'm not quite that cynical. However, I do think that as money pours in to an asset class that was previously restricted, has a liquidity premium, I do think that returns are going to be lower than they were historically. I don't think that's super controversial. I'm not calling for end of the world or anything quite that dramatic. But where do you think we are in that evolution? Do you think it's still early and you could use private credit? Because that's all the rage these days. A depending on how you measure it, a one and a half $2 trillion asset class still significantly smaller obviously than corporates and Treasuries like duh. But is there like how big do you think this can get before we start seeing those diminishing returns? And I know there's like a million, you know, caveats and nuance in there.

Gabby Santos (15:14)

Yeah, and I know and that's something actually our institutional clients worry about. For some of them they have 30, 40, 50% in alternatives depending if you're a pension or an endowment. And that is something they see. Look, all of this retail private wealth money, what does this mean for us in terms of expected returns? And I think we're still early days in a lot of the asset class specific alternatives within our piece actually if anything we're a bit more optimistic about that's the ones that derive a lot of their premium from alpha, which has been really pressured the last few years, the last decade and if anything's improving. But you're spot on Michael, that the one place to look is private credit and we did lower our Return forecast from last year for private equity by 50 basis points. There's just a lot more competition, whether it's all kinds of private credit funds, all kinds of fundraising that's happening. Banks might be coming back into some corporate lending, especially the higher quality and that leads to just spreads getting tighter and tighter and tighter and as a result lower returns. And you're seeing that and we do expect that to continue. I think that's one place that's the place to look at the moment is really private credit and what you really expect from that going forward. But still a lot of value add. Areas we're more optimistic about is the alpha component helping private equity again. Now that capital markets are open, price discovery is happening again, especially for tech and AI related names. Infrastructure is another area that we're all talking about, the build out of infrastructure. But they're going to be winners and losers. And we do think some are better positioned to capitalize on the whole rising electricity demand story. Real estate, some pockets still soggy under pressure versus others where there's more of a structural tailwind. And then lastly absolute return hedge funds. So for them a bit of a dream to have a little bit more macro uncertainty and shift in correlations happening beneath the surface.

Ben Carlson (17:30)

How much harder is it to offer the forecast for these private markets? Because a lot of these asset classes are still relatively new, haven't been through a lot of different cycles, they're more illiquid, so the marks don't happen as often. So it's harder to know the types of cycles these things could go through. So how, how challenging is that when you're trying to come up with the forecast for this stuff.

Gabby Santos (17:50)

So I think private market data full stop is really challenging, especially if you're trying to do apples to apples. So number one is just we do a lot of due diligence on what the best benchmark is where there aren't a bunch of issues around survivorship bias, for example, only the best companies are taken into account. The other thing is we need to make sure they're all net of fees so that we're truly getting the same experience. And then you have to make a judgment call. So we tend to look at the median manager knowing that there's going to be some that really shoot the lights out and some that really underperform. So we start there and we work with the data we do have, the history we have or try to come up with proxies, for example, for private credit to try to backfeed and backfill some of the data. And then the last thing we do around volatility is we de smooth the data. So we try to get rid of that illusion that everything's nice and smooth sailing in private markets because there is no mark to market happening as much. So we try to get at the heart of what's the economic volatility. For example in private. Private equity is a great example. Right. When you have smaller companies, there is some tie to what's happening in the economic cyc, although that might not show up in the kind of mark to market you're seeing. So that way we hope to get a more representative number and one that's more properly adjusted for volatility. And even there when we look at a 60 40, we had quoted 6.4%. And then we think about well, how much would alternatives help? If you're, let's say an institutional client, you're adding 30%, it would help that return improve to 6.9% and just improve your Sharpe ratio by about 25%. And then we show variations. You know, if you're earlier on Maybe it's just 10% or 20%, obviously the magnitude goes down, but still same direction of travel for the improvement in your outcome.

Michael Batnik (19:58)

One of the big themes that investors have been discussing that seemed to reach a fever pitch in December was this idea that US stocks would outperform international just forever and ever. It seemed really difficult to make a fundamental case why international markets should outperform other than simply mean reversion like fine, that's always there. Typically you need some sort of a catalyst. Maybe this year was a weakening dollar, which hard to foresee. But here we are in 2025. For the first nine months of the year we have the largest outperformance of international stocks versus US equities. Do you think that this is sustainable or is this yet again another blip in a long term divergence between the two areas?

Gabby Santos (20:45)

Yeah, we were really heartened to see that finally happen because it's been coming up in these long term capital market assumptions for a while now saying the dollar is overvalued, we expect the dollar to weaken. So that would boost that international return idea as well as valuations in the US are the most elevated and needs some sort of penalty or subtraction from long term returns versus other markets a bit less. And then we finally did have that catalyst. Imbalances persist until they don't and then you can get a massive correction. This huge outperformance of international biggest since 2009, biggest weakening of the dollar since 1973. So it's tough to have been too disheartened and caught completely off guard for kind of normalization that happened this year. Now, if we look going forward in our numbers, there are different flavors of US exceptionalism. We do still expect the rest of the world to outperform the US over the 10, 15 years. But still about the starting points. Still the currency a bit too expensive by about 10%, we think, and still the US having the biggest drag from the multiple, about 2 percentage point annualized drag.

Michael Batnik (22:08)

Wait, can we just pause there for a sec?

Gabby Santos (22:10)

Yeah.

Michael Batnik (22:10)

So you expect the US to lag or to underperform international markets over the next 10 to 15 years? I just want to pause on this for a second because that is a big statement that might or might not come true. But I think that a lot of listeners are probably not positioned for something like that. What do you think would be the main drivers outside of the currency? Is it, Is it? Is it? Is valuation the big one?

Gabby Santos (22:35)

Valuation's the big one. And the market was expensive last year. That was a big theme for us in the LTC mas. It's even more expensive this year. We haven't had the starting price to earnings ratios for US large cap since the early 2000s. And we like to say that valuations tell you nothing about returns the next year. But they do tell you a lot more about the kind of returns you should expect over this kind of window, the 10:15. I think it's really worth saying it's not a reversion to the mean. We do expect the fair PE to be higher than the long term average in the US because we just keep getting more and more profitable companies with amazing return on equity, very high margins, but still some normalization. And that ends up shaving off a little bit from long term US earnings by 2 percentage points a year versus the rest of the world. Nothing's dirt cheap. Everything's actually a little bit expensive. It's just got less of a drag. If you look at just secular returns though, outside of starting pes, starting currency, the US is exceptional. There's no comparison for the kind of return on equity, the kind of earnings growth that we're able to generate here. Actually, the only one that compares is India. Outside of that, if it wasn't for where we're coming from, the US should outperform. We just have a final little normalization that needs to happen here.

Ben Carlson (24:09)

And I got the numbers here. I think you have the ETH 7.5% and the US at 6.7. So it's still pretty, pretty close. So when you have these discussions, is there any thought, because Michael and I talk about this all the time, like, what if the US just deserves higher valuations now because these companies are bigger and better and have better margins and they're cash flow producing machines. What if this just is the new normal of valuations? Sometimes when you say that stuff it almost feels silly because you go, no. Every time this happened before the valuations get too high, eventually they need to come down a bit. The Mag 7 makes up 35% of the market now. And if these companies stay large. There's a lot of ifs here. But is it possible that this is just a new permanent plateau? I'm taking the 1929 saying here, do you give any credence to that possibility?

Gabby Santos (24:55)

We definitely do. And we did some work a few years ago on just resetting our equilibrium valuations for the US because of the change in composition. It is a lot more tech, it is a lot more profitability, especially coming through very elevated margins. So I thought I was pulling this up just to give some numbers, like some flavor to this. We like for this purpose, using last 12 months PEs, the long term average using last 12 months, the last 20 years is a PE of 18 times. We don't think we'll go back to 80 times. It should be higher. We think the equilibrium is 19.2 times. We are currently at 25 times. So I think it's really exactly. It's not reversion to the mean, it's reversion to the trend where it is a higher PE over time, but still too elevated to start things off. And there's a little bit of a drag there that's coming. And same for margins, right? It's also reversion to trend, not to mean they're just a little bit elevated right now versus the long term equilibrium.

Michael Batnik (26:09)

One of the drivers of or not one of the driver of higher multiples, higher margins are these tech giants that we spend too much time talking about. But you know, it is the elephant in the room. One of the areas where they're having a big impact outside of just the valuation and the equity, all that sort of stuff is inflation or deflation. So how do you think about the tug of war between the fiscal stimulus that we've seen and the supply chain, you know, breaking because of reasons that are well understood at this point. How do you, how do you think about like future inflation, fiscal spending versus AI, innovation, pulling down prices? Like how do you think about that tug of war.

Gabby Santos (26:52)

Yeah. And one of the big things I wanted to make sure to get across is even though for some of these forces there's a lot to worry about, there's actually a lot more to be optimistic about. And I think it's especially because we also have this whole tech innovation wave that's happening. One of those things is inflation. So some forces pushing inflation upwards, especially economic nationalism and fiscal activism, but there are also some forces pulling inflation lower, like technological innovation. And here it's really, I think, the urgency for businesses not just to adopt AI, but also automation. Right. Because otherwise, if you have more limited immigration, if you have protectionism, your costs are just going to go up unless you really lean into the technology even more. And then that way you don't have to sacrifice your margins and you don't have to increase prices as much. So in terms of magnitude, when I was earlier saying that we increased our forecast for US inflation, it's really 2.5%, which we're above 3% at this point. So it's still saying that a lot of that inflation fades over time, just a little bit higher than maybe the low inflation of the post GFC world. And importantly, that there can just be a little bit more uncertainty about inflation. There might be moments when we're like, where's inflation going? It's heading higher. But actually that it is not a permanent surge in inflation or it's not stagflation.

Ben Carlson (28:30)

I'm glad you mentioned these competing forces because it does seem like I'm of the opinion that nothing is going to stop this train in terms of governments spending money and piling debt on top of debt. It doesn't seem like there's just any impetus for anyone to slow that train down. But then you have AI on the other side of this thing. And if it really is as big and as efficient as people seem to think it's going to make our lives. That's deflationary, right? Potentially, because it means it's going to impact the labor market. So how do you try to weigh these things? And you mentioned earlier the fact that every year you're trying to update new things. Obviously, AI a few years ago was a very new thing. It took everyone by surprise when ChatGPT came out in November 2022. So, like, how do you update your priors when something like that happens and then you have these two competing forces? Is it too easy to think that they could just cancel each other out and we're right back to normal? Because you have this one inflationary thing and it's one deflationary thing.

Gabby Santos (29:20)

I think it depends where you're looking for real economic growth. We actually think AI and tech win in the sense of you've got headwinds now coming from nationalism, which means older populations, you're actually, even if you go a few years out projecting a negative contribution from your labor force. But at the same time we gained even more conviction the past year that there's this huge capex buildout related to digital and physical infrastructure around tech and that there's even faster adoption of it across businesses than we had previously expected. So that ends up being a positive when you think about capital stock growth. So just capex as well as productivity on top of that. So you would think wow, this is really challenging for economic growth. But if anything, we've been slightly nudging up our economic forecasts here in the US and around the world. A lot of that coming from tech. I also think you would say tech innovation means more of a good thing. If you look at equity returns, it's something that can keep margins elevated. It can help with productivity across sectors so profitability stays high. Otherwise our returns would be even higher. Just given what we talked about with the valuation standpoint, where it's a bit more challenging is if you're doing that 6040 traditional portfolio construction, it's just not going to work work because you do have these concerns around inflation. You have a risk premium embedded in there for, for governments and even certain corporations. And so you need to that whole message of diversifying the diversifiers with a 6040 plus.

Michael Batnik (31:10)

I'm sure you get this question all the time, are we in a bubble?

Gabby Santos (31:14)

So we don't think we are in as bubbles defined as things have gotten so exuberant, so beyond the fundamentals that there is there needs to be a massive correction and reset economically and in the markets. I think in the moment we are seeing a big capex build out but at the moment it is being accompanied by actual free cash flow and overall profitability. But of course I think every year we keep doing this, we'll keep monitoring exactly how much capex versus return on investment. Have we actually seen any improvement in productivity and margins across sectors? And then the risk is a few years from now we could say all right, now it's too much and this is going to be a big reset in terms of the capital build out, economic growth, the markets, so we might get there. People do tend to extrapolate forward quite a lot and get overly enthusiastic. We just don't think we're or there at the moment.

Ben Carlson (32:19)

So outside of some black swan event and some exogenous shock that we can't see coming, what would cause your forecast to be the most wrong here? Like what would make it so okay, we were way off here, we didn't get this right. What would that look like?

Gabby Santos (32:33)

So I think it's two things. I think there's a risk that we're not being optimistic enough. So we're being very, very conservative in how much we think tech adoption will help productivity and how much it can keep margins elevated. There's a risk that we're really underestimating this. Like other houses for example, have much higher forecasts for the productivity boost and the margin boost. So I think that's one, you know, maybe 6.7% for large cap US equities is just not too low, too low ball then in terms of the downside, I think where we might be wrong frankly is much more around the risk premium. So we're expecting let's say a three month ten year yield curve. Right now it's flat, totally abnormal. We think the normal state would be something like 120 basis points but really pre GFC you got to as high as 160, 180. So maybe we're being too conservative in how much the premium needs to go into your long term bonds to compensate people for all of this. Fiscal activism, inflation, uncertainty, nationalism. And so I worry that maybe we're just lowballing, let's say long end yields. But we try to account for that when it comes to this idea of inflation, volatility, rates, volatility and unstable correlations. And that's where this whole discussion is happening around other diversifiers.

Michael Batnik (34:13)

So this report with the long term expected returns, how long are you looking out?

Gabby Santos (34:20)

It's supposed to be on average 10, 15 years out like a whole business cycle.

Michael Batnik (34:26)

If there was one thing, which is an unfair question, but, but I have the microphone and I'm going to ask it anyway. If there was one thing that you got to peer into the future and have this piece of information that would make you feel more confident in nailing these return estimates, what would it be?

Gabby Santos (34:46)

That is such a good question. I think it's honestly what we end up doing with all of this tech capex I mentioned. We could be lowballing it and actually it's a lot more productive and amazing but of course it equally could all just end up being a bust. And actually we use it to send cool memes to each other or create different types of social media. And this is all kind of a misallocation of capital that we're doing. So if I could look out five years, 10 years, I would want to know what ended up happening with productivity growth, what ended up happening with actually all that return on that investment. That's happening both in public markets, private markets, governments, corporates, because we're certainly spending a heck a lot of capital and manpower on it. And it's going to keep increasing for another few years.

Ben Carlson (35:41)

Tell me Nvidia's market cap in 10 years and I'll tell you what the stock market is.

Gabby Santos (35:45)

But actually that's interesting because we do think 10 years back, right, six of the top 10 companies weren't there. So maybe what are some of the, you know, companies in someone's basement that are being created that might, might end up on that top 10.

Michael Batnik (36:02)

But that is a good thought exercise because if Nvidia, in 10 years, let's say where it was today, it's, it's $4 trillion, that can mean a whole host of things. It can mean that, oh, it's gone nowhere nominally for 10 years, that, that, that can't be good. Or it can mean, hey, it's held its market cap high expectations, but there's three other companies that it now competes with that are also $3 trillion market caps. And so that's why we play the game.

Gabby Santos (36:27)

That's right. And that's, that's the feature, right? Having competitive markets. Everyone's going to try to get at your big moat and try to compete with you. And then ultimately today's winners are not tomorrow's winners and you have to constantly keep changing your portfolio.

Ben Carlson (36:43)

So you mentioned the moat thing and it seems like the US almost has a moat around the rest of the world in terms of the stock market. And we've gone from, I think the number was 40% or so of world market cap after the GFC to now 65, maybe 70%. The US is just kind of swallowing the rest of the world. It seems like other countries are finally trying to get their act together and make their companies more shareholder friendly. And maybe a lot of the investors in these countries too have decided I need to be more invested in the stock market. Is it going to, is the U.S. the fact that it's so dominant, is that going to pull other countries back into this thing and make them be more competitive? Because you see all these reports about how, I don't know, I think the one last week was there's the 25 biggest companies in the world and there's like, there's zero from Europe there or something like will that cause meaningful change in these countries to help them compete more?

Gabby Santos (37:36)

That's such a good question. When we're doing the equity building blocks. So we're thinking about revenues, we're thinking about margins, we're thinking about valuations. But then we also have to think about what's happening with share issuance and buybacks. And for the US we know we like, we have a buyback culture and buybacks have been adding 3 percentage points over time, just buybacks alone. And then we haven't had that much share issuance recently. So it's been a really important contributor to US Equity returns. Barely any contribution historically from other developed. And then you had share dilution in certain emerging markets like China. Right. Which meant that revenues didn't always translate to the bottom line one for one. And I think if you wanted one thing to get excited about international markets, structurally it's really that they have discovered the secret sauce of buybacks and of focusing on shareholders. So at the moment if you look at Europe and the US same buyback yield, if you look at Japan making that's where you're seeing the biggest growth in buybacks. That's stretching across Asia now Korea as well, China as well. So you're starting to get much more of a focus on shareholders and that's something that ultimately does drive better long term returns. I think the second big thing to get excited about if you just look besides what's happening in the equity market really is Europe. This year we thought Europe was Last year we thought Europe was abandoning fiscal austerity, doing more fiscal spending but that's just gone on turbocharged this year with Germany joining the party. So Europe deciding that frugality at the expense of investing in its itself wasn't really a good long term trade. And so we are more optimistic about European capex and productivity after this big announcement in Germany and all of this focus on defense and infrastructure. So that's another big game changer.

Michael Batnik (39:49)

Okay, Gabby Santos, that was excellent. We'll come back in 10, 15 years and we'll give you a scorecard, see. All right, you were.

Gabby Santos (39:57)

Sounds good.

Michael Batnik (39:58)

Thank you for the time.

Gabby Santos (39:59)

Thank you guys. Thanks so much.

Ben Carlson (40:03)

Okay, thanks again to Gabby. Michael and I had to basically sign an NDA and sign over our family by looking at this report before anyone else could see it. But now it's available to everyone. So you can go to jpmorgan.com LTCMA 2026 or just click the link in our show notes and it'll take you to their report. Email Email us animalspirits at the compoundnews. Com.