And for more on that, I want to welcome into the program Joe Leavia, counselor to Treasury Secretary Bessett. Joe, thanks so much for joining me. Always great to see you.>> Thank you. Thank you. >> The Fed yesterday increased their outlook for the economy next year.They now see GDP growth of 2.3%. Fed Chair Powell said that he thinks that any price increases from tariffs could peak in the first quarter. where they see inflation falling to 2.5% next year, but the unemployment rate is expected to hold at 4.4% ...

Tax-rebate checks are expected to arrive in the second quarter for consumers, but the bulk of relief from Trump's One Big Beautiful Bill Act is geared toward businesses ...

Group 1 - The importance of data center infrastructure to the economy is highlighted, indicating that market performance will largely depend on major tech companies [2] - Recent discussions have centered around the influence of AI and Federal Reserve policies on market dynamics, suggesting a complex interplay rather than a simple binary choice [3][4] - The market sentiment shifted from excitement about potential rate cuts and economic growth to a more cautious stance, impacting AI stocks more than underlying fundamentals [5] Group 2 - Consumer spending is expected to be supported by tax refunds and provisions from recent legislation, although the immediate impact of full expensing and bonus depreciation has not yet been observed [7][8] - There is a belief that companies may need more time to adapt to new policies, which could lead to a resurgence in non-AI capital expenditures [8] - Despite discussions about equal-weight S&P investments, the performance has predominantly favored major tech companies, with earnings growth being the primary driver rather than multiple expansions [10][12]

High-income residents in Democratic-leaning states are poised to get unusually large tax refunds early next year, thanks to the relaxed cap on state and local tax deductions https://t.co/3ImkRjPLVG ...

Core Points - The US ended fiscal year 2025 with a lower deficit-to-GDP ratio than the previous year, with expectations for continued improvement in 2026 [1][2] - The deficit as a percentage of GDP is projected to decrease from 6.5% to 5.9%, marking a significant reduction [2] - Treasury Secretary Bessent anticipates substantial tax refunds for lower-end consumers due to changes in tax withholding schedules [4] Fiscal Outlook - The Treasury has not released the exact fiscal 2025 deficit-to-GDP figure due to a government shutdown, but estimates indicate a positive trend [2] - Bessent expressed optimism for 2026, suggesting it could be a strong year for both corporate and consumer economies [5] Tax and Consumer Impact - The recent tax bill is expected to lead to higher take-home pay for consumers, particularly benefiting the bottom 50% [4] - Changes in tax withholding are anticipated to result in increased disposable income for lower-income households [4] Banking Industry Dynamics - The Trump administration aims to lower capital requirements for mortgages and corporate credit, shifting lending back to banks from non-banks [5][6] - The current regulatory framework post-2008 financial crisis is seen as a threat to community banks, which have experienced a significant decline in market share [6][7] Community Banks - The share of outstanding bank loans held by community banks has decreased from 27% to 20% since the financial crisis [7] - The creation of new community banks has drastically reduced, averaging only six per year since 2010 compared to over 100 annually before the crisis [7]