Getting to the Fun Part

Easing of the cost of capital would be a catalyst for transaction activity

Summary: Markets are optimistic about the economy's trajectory. Blackstone's Steve Schwarzman even said that we're advancing towards the "most fun" part of the cycle. The economy is resilient, but growth is not particularly strong. Optimism is mostly founded upon policy actions. More rate cuts may be required to really boost activity, though. 50 bps was nice but not inspiring.

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Macro

Markets are optimistic
"Needless to say, the markets are improving. You're seeing momentum in the economy. Uncertainties are lifting. And retail clients are engaged both from seeking advice but also coming to the platform as new clients, which I think is a particularly good trend to watch." – Morgan Stanley (MS 0.00%↑) CFO Sharon Yeshaya

"Now while growth [years] are not slower than last year, global economic performance continues to be surprisingly resilient. Whatever you want to call the U.S. landing, the sentiment around it is more optimistic, supported by the recent positive payrolls report, and we see a healthy yet more discerning U.S. consumer and the U.S. corporate sector on its front foot." – Citigroup (C 0.00%↑) CEO Jane Nind Fraser

It looks like the fun part is on the way
"We also stated our belief that an easing of the cost of capital would be very positive for Blackstone's asset values and would be a catalyst for transaction activity, including deployment and ultimately, realizations, which in turn fuel fundraising. This is the virtuous cycle that powers our business. We believe we're now advancing towards the stage in the cycle, it is always the most fun." – Blackstone (BX 0.00%↑) CEO Stephen Allen Schwarzman

The U.S. economy is resilient
"The U.S. economy continues to be resilient. Inflation has been coming down. The recent unemployment data is supportive, while we've seen some softness in consumer behavior, the tone of my recent conversations with clients has been quite constructive. The beginning of the rate cut cycle has renewed optimism for a soft landing, which should spur increased economic activity." – The Goldman Sachs Group (GS 0.00%↑) CEO David Solomon

"Looking at labor markets broadly, we continue to see resilient top-line trends, with unemployment holding relatively steady in many places and little indication of widespread layoffs...While we're not seeing signals of significant improvements, we're also not seeing signs of a significantly weaker environment ahead." – ManpowerGroup (MAN 0.00%↑) CEO Jonas Prising

Consumer activity is steady
"Consumers are wary of the cost of living, worried about higher rates and other matters. But overall, activity is fine. Unemployment is low and wage growth is steady, both of which bode well for the consumer overall and for consumer asset quality." – Bank of America (BAC 0.00%↑) CEO Brian Thomas Moynihan

"Spend across our affluent U.S. consumer base continued to be very stable with strong growth from Millennial and Gen-Z customers, up 12%." – American Express (AXP 0.00%↑) CFO Christophe Y. Le Caillec

Inflation is not extraordinarily challenging
"In terms of kind of the setup in the inflationary environment for next year, wage inflation. We expect north of 4% next year...the rest of the book is likely to kind of be in line with what you're seeing in terms of overall [PPI], maybe call it, 2.5%, 2% to 3%, somewhere in that ballpark. So it's not like the equation is extraordinarily challenging." – CSX (CSX 0.00%↑) VP & Acting CFO Sean R. Pelkey

There's still caution
"Right now, we see a continuation of the cautious employer approach we've been talking about for some time...In essence, there hasn't been a significant tone change in the conversations we've been having with employers over the past 12 months. They remain focused on managing the macroeconomic and geopolitical challenges impacting their businesses." – ManpowerGroup (MAN 0.00%↑) CEO Jonas Prising

But policy actions are expected to provide a boost
"We think the actions that are being taken and where we are is clearly going to be improving. The question is when... But the kinds of actions that we're seeing on lower inflation, actions by central banks to lower interest rates, to stimulate demand, I think, are exactly the kinds of things that provide for greater certainty and create a more dynamic business environment." – ManpowerGroup (MAN 0.00%↑) CEO Jonas Prising

"You've seen the lower inventory levels, the low CapEx to sales levels. So it does feel as though we're at the point of the cycle to where loan growth is not too far off." – The PNC Financial Services Group (PNC 0.00%↑) CFO Robert Q. Reilly 

"Two years of sustained higher rates has had a material impact on loan demand in our markets. We're optimistic that rate cuts and some clarity in November could lead to a pickup in loan demand and originations." – Home Bancorp (HBCP 0.00%↑) CEO John Bordelon

More rate cuts will probably be required though
"While customer sentiment remains cautiously optimistic, the initial decline in rates was well received, as select businesses showed early signs of an uptick in activity nearing quarter end. However, to see a more significant shift in behavior and reinvestment, we believe customers are looking for further rate reductions, confirmation of a soft landing, and getting past the impending election." – Comerica (CMA 0.00%↑) CEO Curt Farmer

"In general, sentiment among corporate customers remains cautiously optimistic. Despite recent interest rate cuts and stability of more, customers are hesitant to make capital expenditures until the resolution of the election along with greater economic and geopolitical certainty." – Regions Financial (RF 0.00%↑) CEO John M. Turner

50 basis points was nice but not inspiring
"So the feedback we're getting from our portfolio was that 50 basis points was nice, but not inspiring necessarily. And that really, I think what most of the economies are going to need to see is another 50 basis points to 100 basis points to really see some stimulation there. So we certainly were feeling earlier in the year that the second half of 2024, we would start to see loan demand pick up, and that really hasn't occurred." – Comerica (CMA 0.00%↑) Chief Banking Officer Peter Sefzik

International