Wall Street is pricing next year's earnings growth at 11 to 12%, and Jack Janasiewicz says that is still a very robust backdrop for stocks.
Host Chuck Jaffe put it to him that the economy has blown through every warning sign investors worried about this year. Janasiewicz's answer draws a line between two words that sound alike and aren't: slowing, in his usage, means the economy is still growing at trend, while slow is the word for when recession odds start rising — and he doesn't think markets are at that point yet.
"And when I continue to look at that earnings backdrop, it's really showing me one thing and that's up and to the right."
Janasiewicz is senior vice president, lead portfolio strategist and portfolio manager at Natixis Investment Managers, where he sets the firm's views on global economic and capital-market themes.
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Here are the 8 calls that matter.
👤 Guest: Jack Janasiewicz, Senior Vice President, Lead Portfolio Strategist and Portfolio Manager at Natixis Investment Managers
🎙️ Host: Chuck Jaffe, host of the syndicated Money Life radio program and podcast
📰 Published: 10 September 2026 on YouTube (Money Life with Chuck Jaffe)
🔴 YouTube | 🟣 Apple Podcasts | 🔗 Show notes | ⏱️ 1 hr
Key Takeaways
Wall Street is pricing 11 to 12% earnings growth for next year, and Janasiewicz calls that "a very robust backdrop"
The trickier comparison is this quarter, against a base of 40%-plus prior growth
A 10-year Treasury yield above 5% worries him more than oil above $120 a barrel
He said the US economy has become more energy-efficient, so oil has less bite than it used to
The September Fed meeting is "basically" a coin flip, and he leans toward no hike
The market is already pricing in a bit more than one and a half hikes by year-end
He closed his overweight to US stocks over international this year, because AI and non-AI stocks now sometimes move in opposite directions
His barbell: keep tech, and add financials, healthcare and materials as second-order AI plays — not the classic defensives
Hyperscaler AI spending is "really a free call option," because even a null outcome leaves pristine, already-profitable balance sheets underneath it
Second-quarter earnings calls gave the market its first real evidence that AI capex is starting to convert into revenue
A 5-10% correction happens about three times a year in a normal market — he isn't expecting one from AI capex slowing, but from an inflation-driven repricing of rate cuts
1. Earnings Beat the Worry
Jaffe opened by asking whether an economy that has been "climbing the wall of worry" all year is due to stop. Janasiewicz's answer comes down to one thing.
"We're still optimistic between now and the end of this year and early into next year because I think it all comes down to one thing, right? And it's earnings."
"Slowing is still a pretty good backdrop as we've sort of returned to growth, trend growth, whereas slow, I think you're starting to think about the increasing odds for a recession. And I just don't think we're at that point."
Some strong recent earnings have still been punished by the market — stocks down 10% after hours on results that, in his words, were "outstanding" — which he attributes to elevated expectations rather than weak results
"You know, when you think about what we're looking at for earnings expectations next year, you're looking at, you know, on average 11 to 12% earnings growth. And that's still a very robust backdrop."
The harder comparison is this quarter's numbers, set against a base of 40%-plus growth a year earlier — a gap he says analysts already understand and have priced in
He also pointed to multiples compressing as the market recognizes growth can't keep beating those tougher comparisons, which he called a sign the market is already digesting the slowdown rather than being surprised by it
2. The Fed Is a Coin Flip
Jaffe pressed him on what the Fed does next, when it happens, and whether a move in either direction is bad for markets.
"We're in the camp and we've been saying this all year that we expect the Fed to remain on hold. I will say though that this upcoming September meeting is probably a coin flip and that's basically what the market is pricing."
Two data points land before the meeting — an inflation print and the jobs report already released — and he said the Fed is weighing the inflation print more heavily
The market has already priced in a bit more than one and a half hikes by year-end, so he doesn't expect the decision itself to move markets much, beyond a shift in the shape of the yield curve — steeper if the Fed holds and credibility concerns build, flatter if it hikes
On cutting while inflation still sits above the Fed's 2% target: "Cutting rates when we're not at target, I think really puts a big question mark on credibility going forward. So certainly not a good thing."
3. The 10-Year Is the Risk
Jaffe asked which worries him more: oil prices returning to "scary territory," or long bond yields pushing past 5%.
"I would certainly lean towards the risk of the Treasury yield and moving north of 5% as being the biggest risk for the economy and the markets going forward in here."
"I think if you get something north of 120 bucks a barrel, for example, that's a problem." But he said the US economy has become more energy-efficient over the past 20 to 30 years, so a sustained move higher in oil no longer bites the way it once did
He said the economy can tolerate rates near 5% or a little higher mainly because AI-related capital spending by the largest hyperscalers — the small group of giant cloud and AI infrastructure companies funding this buildout — is enormous enough, at roughly 2 to 2.5% of GDP by his estimate, that a modest rise in funding costs doesn't change their spending plans
The risk falls unevenly: he said housing is already in stasis, and higher financing costs on credit cards and other borrowing could squeeze the lower-end consumer further, worsening what he called a K-shaped economy — one where higher earners keep spending while lower-income households pull back
4. Closing the US-Intl Gap
Asked where he stands on US versus international stocks, and on valuations at home versus abroad, Janasiewicz described a correlation that has started to break down.
"And it's gotten to the extremes where in some cases you could argue that correlation's actually gone negative where you get the AI trade going up and then the broad market actually going down."
Natixis went into the year with a "pretty substantial" overweight to US equities and has since told clients to close that gap with international — not because the US case is wrong, but because the US market is concentrated in the AI trade while international, especially Europe, is more value-oriented and less exposed to it
"The point being where are all the earnings coming from? It's coming from tech. Maybe that actually explains partly why you should have a little bit of a premium when you start to think about tech in the US relative to the rest of the world."
5. A Barbell, Not All Tech
Jaffe asked how much of Janasiewicz's positioning is chasing tech because that's where earnings are, versus avoiding it because that's where the volatility is.
"The one thing we don't like is really the defensive names or the defensive sector." Instead he wants exposure to financials, healthcare and materials as what he called second- and third-order derivatives of the AI trade — sectors that could see margin improvement from using AI more effectively, without carrying the direct exposure tech does
"So we call it a barbell between tech and then cyclical value, as I mentioned, cyclical value Europe. It's also everything X tech, X defensives in the US from a sector perspective."
6. Not the Dot-Com Bubble
Jaffe raised the comparison to the dot-com era and to earlier technology waves where early leaders didn't last — asking whether today's AI leaders could be displaced the same way.
Janasiewicz said the key difference is who is funding this buildout: some of the largest companies in the world, with what he called the most pristine balance sheets in the world
He argued that even in a worst case where the AI trade doesn't pan out, those companies fall back on original businesses that were already profitable before AI capex began — which is why he sees the spending as, in his words, "really a free call option" for many of them: real upside if the AI bet pays off, and a soft landing back to a profitable core business if it doesn't
7. Early Signs of AI ROI
Jaffe asked when AI has to move from potential to proof.
"The issue has always been ROI. You're spending billions and hundreds of billions of dollars on capex. We're not really seeing much in return."
He said the market rewarded heavy capex spenders last year on a "first place" theory, but shifted in the first and second quarter of this year to demand visibility on returns, punishing new spending increases that lacked it
By his read, second-quarter earnings calls supplied the market's first real evidence of monetization — cloud revenue climbing and hyperscaler backlogs growing "exponentially" — even though the gap between what's being spent and what's coming back in revenue is still wide. He said that emerging evidence is what kept the market at its highs rather than sliding into what he called "a nice little correction"
8. What Ends the Bull Run
Jaffe pushed on when a bull market that has defied every warning sign finally turns — not necessarily a crash, but "something worse" than a routine pullback.
"Having a 5 to 10% correction usually happens roughly three times a year for a typical market. So, you should be expecting these sort of things."
He isn't seeing signs of a slowdown in AI capital spending, so that isn't the risk he is watching. The two risks he named both run through the rates market: a persistent uptick in inflation forcing the market to price in fewer rate cuts, or a sharp spike in oil prices — either of which he said could tip the market into "a proper 10% correction," while adding that catalyst is "still going to be a little ways off"
Bonus Insights
On why hyperscalers keep spending regardless of small rate moves: "These hyperscalers are telling us that you're either first place or near last place. There's no in between." Janasiewicz said a 25 or 50 basis point change in funding costs doesn't alter that calculus, because the companies intend to keep spending either way
Janasiewicz's bottom line is that the market's advance still rests on earnings and on hyperscaler balance sheets strong enough to absorb higher funding costs — and that the next real test is not a crash, but whether inflation or oil forces the Fed's hand before AI spending proves out its returns.
Products, Companies & Tools Mentioned
Natixis Investment Managers (Janasiewicz's firm, where he sets views on global economic and capital-market themes)
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