Lance Glinn:

Welcome into another episode of the Inside the ICE House Podcast, our first episode of our Markets in Focus series here in 2026 in partnership with Opening Bell Daily. And today I am joined by Phil Rosen. Phil, thanks so much for joining me.

Phil Rosen:

Thanks for having me, Lance.

Lance Glinn:

So Phil, we are seeing this odd moment where the GDP is booming, but job creation is slowing down. I think the December jobs report in earlier January failed to meet expectations by a pretty decent margin. How do you explain that disconnect? And do you think it's just a temporary sign or more of a, I guess, long-term shift in the economy and how things are going?

Phil Rosen:

Yeah, that's a great question. So 2025, it was the worst year for job growth in a non-recession year, I think in two or three decades. So it was very unusual to see such depressed labor market activity. And I wouldn't say the labor market is necessarily breaking by any means, but it's unusually slow right now. And on top of that, the other unusual thing here is that the economy is kind of booming, on paper at least. You have GDP expected to come in over 5% according to the Atlanta Fed. And in the previous quarter, it also beat expectations by I think more than 1%. So, you have those two dynamics happening at once.

And in between there's this great tension. Well, if the labor market is so weak, but the economy is still booming and growing very rapidly, more rapidly than usual, what does that mean for people trying to find jobs? What does that mean for corporate earnings? What does that mean for investors? And really, as we saw in the last year, stocks did very well, asset prices did very well, and people took a long time in many cases to find a job. So, this is like the Goldilocks scenario for Wall Street, because they can grow their profit margins, grow their earnings, without necessarily have to hire more people. So they're getting more for less, essentially, from their workforce.

And I think in the last quarter we had productivity surge by almost 5%. So, that happened, and I don't think there was that marginal of an increase in hours worked. So people are working pretty much the same amount of time, they're more productive, and that means more money, more value for these corporations. And all of that is great for our portfolios, but the human side of this is that it's going to possibly get harder to find a job in the near term, I would estimate.

Lance Glinn:

Do you think something like this is sustainable? Do you think that it could, I guess, impact earnings, either in a negative or a positive way moving forward?

Phil Rosen:

My guess is that this could actually accelerate this trend because we have AI making its way through the workforce right now and through these corporate earnings. Companies are talking about AI more and more every quarter. You hear it on their earnings calls, they're mentioning AI. They're saying, "We just installed this new tool. We've hired these new people in AI. We're posting more jobs related to AI." So, all these things suggest that productivity will continue to increase. And when productivity increases, that kind of suggests that people will be hiring employees less. When I think about my own company, we've frankly saved a lot of headcount because we can automate so much, we can do so much ourselves with these, in many cases, free tools that are AI powered. So I imagine when you scale that up to Fortune 100 companies, they're getting extremely productive, because if they're typically hiring several thousand people a year, what if that gets cut in half? What if that gets cut by 80%? Their profits are going to just go up.

And unfortunately though, a lot of people will continue to look for jobs without success. But what's interesting right now, I think unemployment actually ticked down in December by 0.1% or something. So there is that unusual detail there. But again, this productivity trend is going to be something to watch I think for years to come. I think it's only going to accelerate. I think it's going to be very deflationary as well, because AI is going to get everyone doing more with less output that is deflationary. And I think the bigger risk, everyone talks about inflation, the bigger risk is deflation in the coming years.

Lance Glinn:

Like you said, productivity is certainly soaring at a lot of companies regardless of the industry that they're in.

Now, I do want to talk about this generation of boomers. They hold this sort of massive amount of wealth, especially when it comes to equities. Markets, we've been talking about them in the first couple minutes, they've hit highs at times, they've been really strong, especially in 2025, now in 2026. So with that being said, is the stock market in your mind essentially or especially powering the consumer rather than the other way around? How do you see this massive amount of wealth really being discovered and being used?

Phil Rosen:

Yeah, that's a great question. The strength of the stock market, I think is giving confidence to a lot of consumers to continue spending, especially boomers. I think boomers have the most assets. They own the most assets in the economy. And they haven't slowed down at all in the last year or two. And a lot of the expectations going into 2025 were, okay, consumer spending is going to pull back. We didn't see that pretty much at all. And I expect that will probably stay the same in 2026, because if asset prices keep going up, that's essentially the confidence gauge in why people feel comfortable continuing to buy discretionary products, keep spending capital.

So, I don't know if that is going to necessarily change anytime soon. It is an interesting input to watch as far as how does the wealth effect from the stock market translate to the real economy. So far it's looking pretty good, but I think the caveat here is that most of it is powered by boomers and the wealthy. I don't know how much of this is really supported by, let's say, Middle America.

Lance Glinn:

Sure. So, we talked a little bit about earnings earlier. And so far in 2026, we've seen big banks, including NYC listed enterprises like JP Morgan, Bank of America, Citigroup, Wells Fargo, really take the spotlight of earning season so far, as they always do, usually early in earnings. What do these results so far, what have they told you about just the overall health of the financial sector as we kick off the year and as we head more and more into this earnings season?

Phil Rosen:

Big banks did incredible in 2025. And right now there's a mixed bag of earnings results from these Wall Street firms. I'm not really looking at it, frankly. I think the next one, two, three years for these banks are going to be very, very strong, because one, I think they're going to get extremely productive, with AI automating a bunch of these financial tasks. You have a lot of early career college grads that are struggling to get jobs in these big banks. And my guess is that that difficulty will increase as banks start implementing AI more and more. And two, I think the financialization of everything, that only benefits the banks. I mean, that's a huge upside to firms like JP Morgan and Goldman Sachs. And three, I think this tokenization trend that we hear about on the fringe of headlines. But for me, I'm looking at this stuff every day. Tokenization is almost too big to ignore for me.

And if all these assets, and for these high net worth clients, if asset holders, everything becomes tokenized, that makes it so much more seamless for banks to be processing and handling all this management, and all these... Everything just becomes faster and more resilient. So that's really interesting for me when I think about the big picture on Wall Street. Where is it going in the next year or two years? I'm very bullish on the banks. I think the banks were one of the surprising outperformers of 2025. The ones who were watching closely probably weren't that surprised. But I think that strength is, they're going to be one of the big, big winners in the coming years.

Lance Glinn:

And if you are an investor looking at these results, what's sort of the biggest takeaway for how you would position yourself, just in the broader market heading into obviously really the meat of the earning season and then forward as we get into the rest of 2026?

Phil Rosen:

A lot of people look to the banks as sort of like the canary in the coal mine for credit health. I didn't see anything that stood out as far as, okay, we're getting into a red flag zone as far as the underlying healthy, the economy, or maybe the metrics around consumer health, or consumer credit. Everything looked pretty much within range, as far as I can tell. And again, I'm not a bank expert, I'm certainly not a credit expert. But from a bird's eye view, things looked pretty solid, and I imagine they will set the tone for a very strong earning season across other sectors. And I think right now analysts expect something like 15% growth for the whole S&P 500. And if that were first couple weeks of the year, and things are looking pretty good, usually these estimates are actually undershooting. Everyone's very conservative on their estimates, and no one wants to go out on a limb and be as bullish as maybe they are inside their head. So, I think it's going to be a pretty good year.

Lance Glinn:

So, talking full year now, we are obviously in January, a full year of markets ahead of us. When you just look at the landscape across all of the different variables that could affect equities, rates, growth, earnings, consumer behavior, so on and so forth, how would you just characterize the market setup as the year really ramps up?

Phil Rosen:

The market setup is very bullish. The asset prices should be positive this year. I think it's going to be another very strong year. I think interest rates are being underestimated right now as far as the Fed. People think that interest rates will come down maybe once or twice this year. That's what a lot of these forecasters and banks think. I'd probably lean closer to three times, because you can't underestimate the successor to Jerome Powell. Whoever it is, as of this recording, we don't know. They're going to be way more dovish than most people think.

And I think everyone understands that, but they are in the camp that, let's say, Fed independence will overrule, or have a greater influence than what one guy's call will be. And that call is frankly coming from the White House. The White House wants lower rates, and I don't see why it's such a leap to expect the Fed chair to do just that, to lower rates more than people think. So, I think people are underestimating that. And when rates come down, that's just rocket fuel for stock prices, asset prices across the board. So, I think that is going to be a huge catalyst this year, because especially, if people think one or two rate cuts are coming and we get three, it's not like a 25 basis point move in either direction really makes a difference, but the psychological effect of that is insane. So, I think that could be one underestimated, let's say, positive catalyst.

And generally, I'm going to be watching Bitcoin this year. I think that will have a rebound year. So it's funny, because everyone talks about how Bitcoin was negative in 2025. And it was down I think six, 7%, something like that. But if you zoom out instead of 12 months and you go to 14 months, it's up almost 40%. Still almost double the S&P 500 in that same period. So, I think that's going to be coming back pretty strong this year. And all the bullish tailwinds that were there at the start of 2025, that essentially didn't materialize. The White House is pro crypto, lawmakers in DC are pro crypto, and you have Wall Street getting in on crypto, and Bitcoin especially with all these ETF launches. All that's still in place. So I don't see why, if you were bullish at the start of last year, you would not be bullish at the start of this year, despite the negative calendar performance of 2025. So, that's sort of what I'm looking at.

Lance Glinn:

So, as we close out the first markets in focus episode of 2026, I'm going to sort of put you on the spot here. What's one prediction you'd make about how 2026 ultimately plays out? Something that you think investors should keep in mind really as the year unfolds in the months to come?

Phil Rosen:

That's a good question.

Lance Glinn:

And you may have answered before, right? People expecting one or two Fed cuts, you're saying we could see three, right? That could be your answer right then and there, but is there anything else that you think might be something that investors could keep in mind moving forward?

Phil Rosen:

This is sort of a macro forecast here. The bearishness on the labor market I think is overdone right now. And we were just talking about it, how it's harder to get a job in many cases right now because of all these automations that are coming in, AI implementations, workers are getting more productive, so companies need to hire less people. I think that might be true, but at the same time, I think we're going to see a wave of new jobs coming online, and that's going to be a bunch of new opportunity that will be specifically catered to young people, because young people, I think they have 11% unemployment right now, worse than any other demographic. But I imagine that will come down, because the jobs that are new and built to innovate and built for the future, those are always for young people. So, whatever jobs they may be, I think things are going to improve more than people think for the labor market, especially for fresh grads.

And I think the pessimism around AI is taking everyone's jobs, I think that will start to pull back this year, because it is really big and scary, and it's a fantastic headline to write and to read about. I think it's overdone. I'm pretty optimistic, because I see in my own life just what I've been able to accomplish and do with AI that I couldn't have done a couple years ago. And there's people way smarter than me that are in college right now that are going to figure out much more effective ways to use these tools, or they're going to invent the new tools that they'll have to teach me and my older colleagues. And I think people are underestimating that.

Lance Glinn:

Well, Phil, I always enjoy these conversations. I look forward to seeing what lies ahead for 2026. Thank you so much as always for joining us inside the ICE House.

Phil Rosen:

Thank you, Lance.