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We begin this hour with stocks lower and crude rising as peace talks in the Middle East remain idle. Eric Cantor of Moelis & Company writing energy independence and domestic production are key to insulating the US from global shocks. Eric joins us now for more. Eric, good morning. It's good to see you.
John, it's great to be here.
In the present, it's tough. In the future, things are looking better according to financial markets. What's going to shake this market have such a powerful forward-looking mindset?
You know, look, if you think about where we are, and I know the discussion around the table this morning has been the incredible resilience of the American economy. And I think that if you look at it, a lot of it has to do with some shock absorbers that frankly the Trump administration in Washington has put into place. You've just experienced big tax refunds that came out of the one big beautiful bill. You now have a shock absorber, if you will, that is going to be afforded to the corporate community in the terms of $160 billion tariff refund. You've got actions on the part of this president have said, 'Hey, we're going to go and ease this oil crunch by releasing more of the strategic petroleum reserves, the waivers on the Russian oil.' And ultimately, you've got a very pro-business administration in Washington. So you've got a regulatory construct that is much more constructive than we've had in the past. So I think all that helps when you see these earnings helps explain where we are.
Do you think we're underestimating the momentum going into this war?
Well, I do think so. And I think that there's not been a lot of credit given to this construct, the policy construct we've operated in. Certainly, the liquidity that's out there with a high-end consumer has not abated yet. But look, I don't think we've necessarily gotten to peak shortage yet. And just as your guests have been discussing on the show this morning, I do think that we've got real uncertainty as to where and how you're going to see these oil flows resume so that you can get back to normal.
Blackstone just came out with earnings. They said this is going to be the year of the IPO. They still think it's going to be an unprecedented year for IPOs. We've heard that from a number of companies that mergers and acquisitions going incredibly strong. When you talk to companies, given the uncertainty out there that you just reflected, how much are people willing to carry through with some of these plans given that things could change a lot in the next couple of months?
I think you know the market's clearly looking through the short-term uncertainty in the Gulf. I mean, there's no question about that and it's undergirded by the earnings. But you know if you look at the forces that have been at work and I talked about some of the policy forces but if you see in the commercial world and where companies are with this technological revolution that we're experiencing with the AI boom, you know companies are thinking how am I going to position myself. Boards and management are saying hey what do we have to do to take advantage of this and you've got that tailwind that continues to push forward in terms of people saying hey maybe we should transact. Maybe we should accomplish more scale in order to take advantage of this situation. Then obviously in the world of private equity, you constantly have this need of recycling capital. You constantly have a need for return of liquidity to the LPs. That hasn't gone away either. So in many ways, the structural pillars that have supported the environment to transact have not gone away either.
So, you don't think that what we're seeing right now in the Middle East is going to deter the pace and frankly the pipeline that people were talking about, which is unprecedented heading into this year?
Well, I mean, look, there's no question that there are going to be specific areas. I mean, individuals, entities in the Middle East are certainly not in the same, you know, state of mind as they were eight weeks ago. So, there are going to be geographies and there are going to be certain areas. I mean with the AI situation and private credit and software certainly that's going to have an impact right now but that I think is a short-term sort of thought that longer term you've got these structural tailwinds that are continued to propel people's willingness to say hey we want to do something moving too rapidly.
So many people in this industry are incentivized to keep on dancing. We could see three of the biggest IPOs we've ever seen in the history of this country: OpenAI, Anthropic, SpaceX, all in the next nine months. And it potentially could change the dynamic that we've seen in terms of assets in the US where people were talking about a scarcity of stocks and the buybacks that have been going on for so long and suddenly we're going to see the biggest expansion of US equities, public equities that we've seen in many, many years. So there are a lot of structural questions that are facing this market later this year.
Eric, we've struggled with reality versus hype. I'd like your view on that. When I say everyone's incentivized to keep on dancing, it's a little bit of snark in that as well. I think everyone's incentivized to say things are maybe better than they are at the same time because everyone's got to make some money later this year, particularly off those three big IPOs potentially. What is real and what is hype?
You know what is real is we have sort of an era of revolution right now. You think about sort of the geopolitical revolution, the trade revolution that's come into play with this president. You think about the technological revolution that we are experiencing. All these forces are coming to bear that really is the reality. People are trying to understand how to best position themselves, their capital, their companies to take on these new times. And I think that is reality. And there is incentive for sure to try and benefit from a lot of the changes.
