Name: The World You Knew Is Never Coming Back | TCAF 247
Uploaded: 2026-06-19T13:00:33+00:00
Duration: 3809 s

Speakers

Michael Zezas — Head of US Public Policy, Citi

Josh Brown — CEO, Ritholtz Wealth Management

Summary

Josh Brown and Michael Batnick host Michael Zezas, Deputy Global Head of Research at Morgan Stanley, to explore how a permanent shift to a multipolar world is driving massive capex in AI, defense, and re-industrialization. Zezas argues AI infrastructure spending is still early, with trillions to flow, and that European and Japanese equities have become more investable due to policy and structural changes. They also highlight the ongoing broadening of the US equity rally beyond mega-caps and defend enterprise software stocks against disruption fears.

Global capex boom driven by AI, reshoring, and defense spending.
AI infrastructure stocks projected to deliver 42% EPS growth by 2027.
Europe benefits from re-industrialization and AI-driven productivity.
Japan supported by governance reform and a $7 trillion household cash pile.
US equity rally broadening; equal-weight indices sharply outperforming.
Enterprise SaaS selloff seen as overblown; incumbent moats remain.
AI adopters showing 2x faster EBITDA growth than non-adopters.
Midterm elections unlikely to produce major policy shocks.

Ideas

Michael Zezas Head of US Public Policy, Citi 35:10

Europe re-industrializing, AI beneficiary.

Europe is being forced to re-industrialize and spend on defense, ending its post-WWII stasis. European equities contain many heavy-asset businesses that could be sneaky AI beneficiaries through productivity gains, making the region more investable.

Michael Zezas Head of US Public Policy, Citi 35:52

Japan reforms and cash pile bullish.

Japan is already undergoing corporate governance reform, nationalism, and healthy inflation. With roughly 50% of the $7 trillion household base sitting in deposits, a shift into risk assets could drive a sustained bull market.

Michael Zezas Head of US Public Policy, Citi 36:35

AI infrastructure earnings to surge massively.

AI capex is still in early stages, with hyperscalers planning massive spending and only a fraction of the buildout completed. Estimates point to $2.9 trillion in global data center capex through 2028, and consensus expects AI infrastructure stocks to grow earnings 42% by 2027 versus 10% for the S&P 500. Even if the ultimate ROI is debated, the spending is locked in.

Michael Zezas Head of US Public Policy, Citi 42:05

AI adopters see faster earnings growth.

Companies actively adopting AI are seeing EBITDA expansion roughly 2x faster than non-adopters, and the share of firms reporting tangible AI benefits in earnings calls is climbing. This supports a powerful tailwind for AI adopters.

Michael Zezas Head of US Public Policy, Citi 46:01

Broadening trade to continue, buy equal-weight.

The broadening out of US equity performance is already happening, with equal-weight indices sharply outperforming the cap-weight S&P 500 and Mag7. Morgan Stanley expects this trend to continue as earnings growth broadens beyond mega-cap AI stocks.

Michael Zezas Head of US Public Policy, Citi 58:04

SaaS selloff overdone, moats intact.

Market fears of an enterprise software apocalypse are overblown. These companies retain a moat because industrializing AI inside large organizations still requires their platforms; the selloff has created value.

The World You Knew Is Never Coming Back | TCAF 247

Summary

Ideas

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