Intro
Market strategist Chris Galipeau reads the first morning of bank earnings as evidence the US consumer is in better shape than the headlines say, and argues the negative narrative around jobs, AI and recession has been wrong for years. The conversation covers what the big banks told investors, what actually holds consumer spending up, the one thing he says causes recessions, Kevin Warsh's opening moves at the Fed, and why oil and the Middle East stopped moving stock prices.
Guest: Chris Galipeau, strategist, in his 35th year in the business after starting as an equities analyst and portfolio manager
Published: 28 August 2026 on Wealthion
Watch on YouTube | 11 min
Key Takeaways
The banks have said the same thing for six quarters running
Consumer spending patterns, loan book quality, delinquency rates and net charge-offs have all been improving for 18 months
JPMorgan told investors that morning that the K-shaped economy notion is not true, and gave the data behind it
The negative narrative on the consumer has been wrong for two or three years
"That negative narrative is completely false. It's been false for the last two or three years. It's still not true."
Full employment plus a large move higher in consumer net worth — stocks, 401(k) plans and housing values
AI taking jobs is not material
"Goldman Sachs said explicitly that using AI will not cost anybody their job"
Only one thing has historically produced a recession, and it is not happening
"the only thing that causes higher unemployment, earnings degradation and creates a recession historically has been the Fed raising rates too high, keeping them there for too long"
Corporate profitability is the variable that sets stock prices, not geopolitics
The market stopped caring about oil two months ago and shook off the Middle East within a couple of weeks, the same way it shook off last year's tariffs
Q1 earnings beat a consensus that was already looking for double-digit growth
"the consensus estimate going into the year was about plus 13, 14% on a reported basis. Earnings were plus 25%."
Bullish, and the Banks Are the Reason
Asked for his view of US markets, with the audience split between the enthusiastic and the alarmed and nobody in the middle, his one-word answer is bullish
Earnings season started that morning in earnest, and the big banks always lead it off — JPMorgan, Bank of America, Goldman Sachs and Citigroup, plus Wells Fargo, which he did not get a chance to listen to
What he wants off those calls is not the earnings per share but the economy: the state of the consumer, the state of their spending, and, at an investment bank like Goldman, what management sees ahead for capital markets and investment banking activity
The message has not changed in a year and a half: he says the banks have been super consistent for six quarters in a row, going back to the first quarter of last year
The consumer, on their telling, is in much better shape than you hear about and read about
JPMorgan went further that morning, saying the K-shaped economy notion is not true and supplying the data to support it
Credit quality points the same way: delinquency rates and net charge-offs have been improving for 18 months
The economic backdrop is fine at a high level. The stock market is not the economy and the economy is not the stock market, he says, but it is a good starting point, and the earnings picture reflects it
The Negative Narrative on the Consumer, Taken Apart
The host lays out the bear case as it is usually assembled: the fiscal and COVID checks that ran out, then a booming stock market that feels like a rug pull waiting to happen, with AI in the wings coming to take everyone's job, leaving the economy one blip from recession
He hears the same questions from clients around the country and around the world every day, and rejects the premise — "That negative narrative is completely false. It's been false for the last two or three years. It's still not true."
His standing line to clients, which he invites the audience to footnote him on: "The world doesn't end that often, right?" Seemingly everyone wants to think that it is ending
First support: employment. The economy has been operating at full employment for the last couple of years, and until something changes that it is hard to put the consumer under pressure
Second support: net worth. A massive move higher in consumer net worth — the stock market, 401(k) plans and housing values — is a big tailwind and all of it is still at play
Goldman Said AI Will Not Cost Anybody Their Job
He points listeners at the primary source rather than his own read, encouraging them to go and read the transcript of Goldman Sachs' call from that morning
What the banks described was internal adoption, not headcount reduction: the case for using AI is pervasive inside the firms, and it is used to improve productivity, efficiency and profitability
"Goldman Sachs said explicitly that using AI will not cost anybody their job"
In some cases AI may replace people, he allows, but by and large it is not material at all
The Only Thing That Makes a Recession Is the Fed
The host says the weight of the world is coming off her shoulders hearing it, and that the reason Wealthion runs these conversations is how much doom porn there is online
He agrees on the mechanism: that is what gets the headlines and the clicks, and the world in fact does not end that often
The single thing worth guarding against: "the only thing that causes higher unemployment, earnings degradation and creates a recession historically has been the Fed raising rates too high, keeping them there for too long breaking something in the credit system, breaking something in the money market system putting us into recession. That is not happening."
He does not expect it to happen for at least the next couple of years
The news flow is seemingly doomsday constantly and he is asked about it all the time. Almost all of it, he says, is not true
Warsh, the Five Task Forces, and Why He Ignores Economists
The host sets up the macro week: the first of a couple of inflation readings came in a little lighter than expected, war is raging again in Iran and oil is moving higher, though not spiking to the highs seen before. How is he thinking about inflation, and about how Kevin Warsh is setting up his chairmanship?
He had not heard the new Fed chair speak and thought he might still be talking. He was on earnings calls instead, which he rates as more important than any piece of economic activity
What encourages him is structural rather than about rates: the establishment of five task forces, one of them centered on the collection of the data that informs the governors and therefore sets policy
His objection to that data is its plumbing: the collection methodology is arcane, and the number of people who respond is way too low to be statistically significant. Any marginal improvement in how the information is harvested should, in theory, produce better and more real-time decisions
Thirty-five years in, all of it as an equities analyst, portfolio manager and now strategist, he says he learned the hard way not to listen to economists — their data is the rearview mirror, and he is looking through the windshield
The revisions compound the problem: three, four or five of them on seemingly every day's data. His question is what good that is
Oil, the Middle East, and What Actually Moves Stock Prices
On the oil situation, his answer is that the stock market stopped caring about it two months ago
Two rules follow. Stock markets tend to bottom on bad news. And the variable that really matters for stock prices is not geopolitics or politics — that can matter for a week or two, but over the intermediate to long term it is immaterial
What really matters is corporate profitability — corporate earnings
Why the shock faded so fast: the market reacts to and reflects everything that is known and knowable, and reprices risk very quickly. It reaches the point of assuming everything will go wrong, which never really happens, and then starts thinking about what could go right
The Middle East was shaken off within a couple of weeks, the same way the tariff problem was last year
The earnings evidence he closes on: "Q1 earnings, the consensus estimate going into the year was about plus 13, 14% on a reported basis. Earnings were plus 25%. So, they were 100% better than consensus."
Q2 is probably going to be somewhat similar, he says, though he does not know whether the order of magnitude will be that high. He calls the season off to a very good start
Galipeau's bottom line is that the doom narrative has been wrong for years, that full employment and rising net worth are still holding the consumer up, and that with the Fed not tightening into a break, corporate earnings are the only variable worth watching.
Products, Companies & Tools Mentioned
JPMorgan (Told investors on its call that morning that the K-shaped economy notion is not true, and produced data to support it)
Goldman Sachs (The call he sends listeners to read: AI adoption is pervasive internally for productivity, efficiency and profitability, and the firm said explicitly it will not cost anybody their job)
The Federal Reserve (Under Kevin Warsh, standing up five task forces, one of them on the collection of the data that sets policy)
Books & Resources Mentioned
The Goldman Sachs earnings call transcript from that morning (What he tells listeners to read for themselves on how banks are actually using AI)
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