Realistic Growth Expectations and Trade Policy Drive 2026 Strategy - Episode Hero Image

Realistic Growth Expectations and Trade Policy Drive 2026 Strategy

Bloomberg Surveillance · · Listen to Original Episode →
Original Title: Single Best Idea with Tom Keene: Lisa Shalett & Erin McLaughlin

TL;DR

  • Realistic expectations for 2026 growth are crucial, as investors may overestimate stimulus effects from rate and tax cuts, potentially driving earnings growth to 10-12% rather than 15-20%.
  • Companies are delaying supply chain decisions like onshoring or nearshoring until major trade policies with China, Mexico, and Canada are clarified, likely in the second or third quarter of next year.
  • Active fixed income ETFs can provide access to 100% of the US public bond market, offering twice the opportunities compared to passive ETFs which capture only about 50%.
  • Adobe Acrobat Studio's AI assistant can accelerate research and proposal creation, enabling users to complete tasks like two hours of research in an instant and produce polished documents quickly.
  • Direct purchasing from Lenovo.com offers exclusive deals and avoids shopping chaos, with potential discounts of up to 50% on gaming PCs.

Deep Dive

The core argument is that navigating the upcoming year requires realistic expectations, particularly for investors and businesses, as the drivers of growth and decision-making are shifting. While double-digit earnings growth is anticipated, the source cautions against assuming a return to the higher growth rates fueled by past stimulus measures, emphasizing that key trade and supply chain decisions remain pending, which will dictate future investment and economic activity.

This perspective has significant second-order implications for investment strategy and corporate planning. The expectation of 10-12% year-over-year growth, contrasted with the unsustainable 15-20% figures some investors might anticipate, suggests a need for a more measured and grounded approach to capital allocation. This means that companies and fund managers must adjust their forward-looking projections away from aggressive expansion fueled by past stimulants like rate cuts and deregulation. Instead, the focus shifts to operational efficiency and strategic positioning in a market where growth, while still robust, is more constrained.

Furthermore, the delay in major trade decisions concerning China, Mexico, and Canada creates a critical lag in corporate decision-making regarding supply chains and investment in reshoring or nearshoring. Businesses are hesitant to commit to significant structural changes until the geopolitical and trade landscape becomes clearer, likely in the second or third quarter of the following year. This creates a period of strategic uncertainty, where companies might adopt a wait-and-see approach, potentially slowing down capital expenditures and new projects until trade policies solidify. The implication is that the pace of economic restructuring, particularly in manufacturing and logistics, will be directly tied to the resolution of these trade negotiations, impacting global supply chain resilience and regional economic development.

The takeaway is that while the economic outlook is positive with anticipated double-digit earnings growth, the underlying drivers and decision-making frameworks are evolving. Companies and investors must temper expectations by recognizing that past stimulus-driven growth rates are unlikely to repeat, and that clarity on trade policy is a prerequisite for significant supply chain realignments and future investment decisions.

Action Items

  • Create realistic expectation framework: Define 3-5 key drivers for 10-12% year-over-year growth, avoiding assumptions of 15-20% from stimulus.
  • Audit supply chain decisions: Analyze 3-5 companies' decisions on nearshoring/onshoring based on unresolved trade policies with China, Mexico, and Canada.
  • Track earnings and margin surprises: For Q1-Q2 next year, identify 3-5 key indicators that signal continued earnings and margin surprises.
  • Evaluate guest preparation process: Define 3-5 essential components for guest briefing emails (name, title, bio) to ensure consistent preparation.

Related Episodes

Key Quotes

"Next year will be different. The key to 20 to navigating in 2026 is having realistic expectations. Our best guess is that we've got another enough fuel in the in the pipe to drive 10, 12% year-over-year growth, which is very, very good. What we caution against is that investors get, you know, too out over their skis, assuming that the stimulus of rate cuts, tax cuts and financial market deregulation are going to drive things like 15 or 20%."

Lisa Shalett argues for a measured approach to future market expectations. She advises investors to maintain realistic outlooks, suggesting that while double-digit growth is likely, expecting significantly higher figures driven by stimulus measures may be overly optimistic. Shalett emphasizes the importance of grounded predictions for successful navigation in the coming years.

"I think there's a lag. I think it goes back to the decision making. So why would you decide, and we hear this from our companies that are members at the Conference Board, why would you decide to onshore or to nearshore or change your supply chain if big trade decisions have not really been made with China, Mexico and Canada? Those are all still sort of on the back burner until, you know, second, third quarter next year."

Erin McLaughlin explains that companies are hesitant to make significant supply chain adjustments like onshoring or nearshoring. She indicates that these decisions are contingent on the resolution of major trade policies involving China, Mexico, and Canada. McLaughlin suggests that these trade decisions are currently unresolved and are not expected to be clarified until later in the following year.

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This statement from Lenovo promotes a direct-to-consumer sales strategy for their gaming computers. The advertisement encourages potential buyers to bypass general retail channels and visit Lenovo.com for exclusive deals. It highlights specific gaming models and emphasizes savings of up to 50% as a benefit of shopping directly.

"Fixed income ETFs only capture about 50% of the US public bond market. But with J.P. Morgan Asset Management's active fixed income ETFs, we can help you capture 100% of the US public bond market and explore twice as many opportunities."

J.P. Morgan Asset Management is presenting its active fixed income ETFs as a superior solution for investors. The company claims that traditional fixed income ETFs only access half of the U.S. public bond market. J.P. Morgan's active ETFs, however, are positioned to provide access to the entire market and a broader range of investment possibilities.

Resources

External Resources

Books

  • "Single Best Idea" - Mentioned as the title of a publication from which insights are drawn.

Articles & Papers

  • "Bloomberg Surveillance Radio" - Mentioned as a source for insights discussed in the episode.

People

  • Lisa Shalett - Featured guest from Morgan Stanley, discussed for her insights on economic growth and investor expectations.
  • Erin McLaughlin - Featured guest from The Conference Board, discussed for her insights on infrastructure and supply chain decisions.
  • Tom Keene - Host of Bloomberg Surveillance, mentioned for breaking down insights and hosting conversations.
  • David Gura - Mentioned for his role in discussing the chairman of the Fed.
  • Anna Wong - Mentioned from Bloomberg Economics for her contributions to discussions.
  • Gina Martin Adams - Mentioned for her insights on earnings and margin surprise.
  • Paul - Mentioned as a co-host or participant in live YouTube broadcasts.
  • Boxer - Co-host of the Experience Columbus podcast.
  • Sarah Towns - Co-host of the Experience Columbus podcast.

Organizations & Institutions

  • Morgan Stanley - Affiliation of guest Lisa Shalett.
  • The Conference Board - Affiliation of guest Erin McLaughlin.
  • Bloomberg Economics - Mentioned in relation to Anna Wong.
  • Brown University - Mentioned as the alma mater of Lisa Shalett.
  • J.P. Morgan Chase & Co. - Parent company of J.P. Morgan Asset Management.
  • J.P. Morgan Distribution Services, Inc. - Entity issuing a communication, member FINRA.
  • Lenovo - Company whose gaming computers are advertised.
  • Adobe - Company whose Acrobat Studio software is advertised.
  • Bloomberg Audio Studios - Producer of podcasts, radio, and news.
  • Experience Columbus - Organization associated with a podcast about Columbus.
  • CVS - Company discussed in relation to community service and prescriptions.

Websites & Online Resources

  • jpmorgan.com/getactive - Website for J.P. Morgan Asset Management to learn more about their ETFs.
  • Lenovo.com - Website for Lenovo, offering deals on gaming PCs.
  • omnystudio.com/listener - Website for privacy information related to omnystudio.
  • CVS.com - Website for CVS.

Podcasts & Audio

  • Bloomberg Surveillance - Podcast where guests are featured and insights are discussed.
  • Bloomberg Surveillance Radio - Radio program from which insights are drawn.
  • Experience Columbus podcast - Podcast providing information about Columbus.

Other Resources

  • Fixed income ETFs - Discussed in relation to market capture and investment opportunities.
  • Active fixed income ETFs - Mentioned as a product offered by J.P. Morgan Asset Management.
  • US public bond market - Referenced in the context of ETF market capture.
  • Lenovo Legion Tower 5 Gen 10 gaming desktop - Specific product mentioned in an advertisement.
  • Lenovo Lock gaming laptop - Specific product mentioned in an advertisement.
  • Adobe Acrobat Studio - New software for working with PDFs, featuring an AI assistant.
  • PDF spaces - Feature or capability of Adobe Acrobat Studio.
  • AI assistant - Feature within Adobe Acrobat Studio.
  • Fed parlor game - Term used to describe discussions surrounding the Federal Reserve chairman.
  • Earnings and margin surprise - Topic discussed in relation to Q1 and Q2 of the following year.
  • Onshoring - Supply chain strategy discussed in relation to trade decisions.
  • Nearshoring - Supply chain strategy discussed in relation to trade decisions.
  • Supply chain - Topic discussed in relation to trade decisions and company member feedback.
  • China, Mexico and Canada - Countries mentioned in the context of trade decisions impacting supply chains.
  • Arch City - Nickname for Columbus, mentioned in relation to the Experience Columbus podcast.
  • Science museum - Mentioned as a feature of Columbus.
  • America's next great food cities - Ranking mentioned in relation to Columbus.
  • Best big cities in America - Ranking mentioned in relation to Columbus.
  • Prescriptions - Service offered by CVS.

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