Alicia Levine 1.9 4 ideas

The firm remains overweight risk assets (equities) relative to bonds, believing the damage from sustained high oil prices would not allow the war to continue much longer. The U.S. economy entered the crisis on strong footing, earnings expectations have actually improved during the conflict, and the industrial/AI investment theme remains intact.

The AI buildout and industrial reshoring themes are driving a durable capital expenditure cycle, supporting growth in industrials and related sectors. This is an industrial revolution with forward momentum for the next few years, making industrials an attractive area for investment.

Lazar forecasts a 12% jump in CapEx for 2026, driven by a "manufacturing renaissance" and heavy truck orders. Levine notes a rotation into "dirty businesses" (making things) as capital flows to the physical world. The AI trade is broadening from digital to physical. You cannot build data centers, factories, or energy infrastructure without materials and industrial machinery. This sector benefits from the "goods producing" jobs multiplier. LONG. Cyclicals are the beneficiaries of the "No Landing" / 4% GDP growth scenario. If the Fed keeps rates higher for longer due to strong growth, financing costs for heavy industry could bite.