Here’s a preview of what we’ll cover this week: 

• Macro: The U.S. Economy Keeps Defying Gravity; Deal Flow Is Back; The American Consumer: Still Spending, Still Solid; Credit Quality Stays High; Private Credit: Not a Cockroach Colony

• Markets: The AI Capex Flywheel Is Only Spinning Faster

• Digital Assets: The AI Productivity Cycle; Seeing AI for What It Is

• Lumida Curations: Retail Investors Are the New Analysts; The Great AI Infrastructure Boom; Fear Just Fueled the Next Rally

Spotlight

This week on Non-Consensus Investing, I sat down with Eric Jackson, founder of EMJ Capital, for a wide-ranging discussion on how social platforms have permanently changed how information flows, and how markets price it.

Here’s what we discuss:

• How Retail Investors and Social Media Are Changing the Game

• How Social Media Shapes Modern Investing

• Opendoor: A Look at Activist Investing

• The Opportunity in Mortgage Refinancing

• The Future of BETR’s AI and Growth Potential

• What’s Next for Digital Assets and Treasury Companies

Watch the full podcast here.

This week, Lumida hosted a small group at Formula 1 event. We met some great people and in our ever expanding community.

I also hosted a livestream while driving in the Tesla FSD explaining why the recent frauds from Tricolor, Cantor and First Brands are not signs of systemic risk here.

This Week: Bank Earnings 

This week, we got Q3 earning reports from all major banks. 

We obsess over bank earnings because it's really a cheat code to understanding what's happening in the real economy. 

If I'm stuck on an island somewhere, I'd prefer bank earnings rather than government data. It’s accurate, final, and real. 

We had some interesting commentary coming out of the leadership of the banks about the US economy, consumers, private credit, stablecoins and more.

We’ll talk through these commentaries in this newsletter. I also did a more timely analysis on our Youtube. You can watch the stream here. Follow us on Youtube to stay updated.

The U.S. Economy Keeps Defying Gravity

Despite rate volatility, geopolitical shocks, and repeated calls for a slowdown, America’s growth story remains intact.

Every major bank this quarter described an economy that’s resilient, adaptive, and still expanding.

Jamie Dimon (CEO, JPMorgan) put it plainly:

“The U.S. economy remains strong. Consumers are still spending, businesses are still hiring, and credit quality remains quite good.”

Bill Demchak (CEO, PNC) echoed that sentiment with a regional lens:

“Our customers remain on solid footing. Spending has been remarkably resilient across all segments, and corporate clients are expressing cautious optimism about their business outlook.”

And from Jane Fraser (Citi) came confirmation that the macro backdrop is steady across markets:

“We’re seeing steady activity levels across most markets and healthy balance sheets among U.S. corporates.”

The throughline is clear: credit, jobs, and demand remain stable. 

Deal Flow Is Back

After nearly two years of subdued dealmaking, Wall Street’s core engine is turning again.

Banks transcripts show a revival in capital markets activity and returning confidence to boardrooms.

Jamie Dimon noted:

“We’re seeing stronger pipelines across M&A and capital markets. Clients are feeling more confident about the economy and the interest rate outlook.”

At Morgan Stanley, Ted Pick (CEO) also framed a similar narrative:

“We’re seeing a broad-based pickup in advisory and underwriting… The backlog has grown, and activity levels are normalizing to pre-2022 trends.”

Citigroup reported the same momentum. Jane Fraser said:

“Investment banking revenues were up quarter-over-quarter, driven by improved M&A dialogue and stronger debt and equity issuance — clear signs of returning client confidence.”

Even the regionals are benefiting. Citizens’ Chris Emerson highlighted a record quarter:

“Capital Markets delivered a record third quarter and our best performance since 2021. Performance was strong across all categories. M&A, debt underwriting, and loan syndications.”

PNC added that sponsor activity is picking up again:

“We’re seeing increased demand from private equity clients as transaction volumes rise and valuations stabilize.”

Taken together, the message is one of rising confidence in the economy.

Why do Banks Matter?

Banks extend credit. Credit isn’t truly paid back, it’s refinanced.

Both equity and credit financing is opening - and borrowing rates are dropping.

This, combined with productivity and earnings growth, means you have an all clear sign for continued economic growth.

We find the ‘Bubble Top Calling’ sentiment quite remarkable. This is what Goldilocks looks like.

The American Consumer: Still Spending, Still Solid

The American household remains the quiet force keeping the economy alive.

Across every major bank this quarter, executives reported steady spending, stable credit, and no signs of consumer fatigue.

Brian Moynihan (CEO, BAC) said it best:

“Debit and credit spending are up mid-single digits… We continue to see steady outflows for travel, entertainment, and dining, while goods spending has moderated.”

Bill Demchak (CEO, PNC) shared a similar sentiment, emphasizing breadth rather than excess:

“Spending has been remarkably resilient across all segments. Customers are engaging across debit, credit, and investment accounts, and balances remain healthy.”

Brendan Coughlin (President, CFG) pointed out that consumer health is visible in repayment behavior:

“Inside of each category, delinquencies are very stable. I’d broadly characterize it as fully normalized from COVID. You have to really de-average it to see stress. It's concentrated at the lower end of the market, which we typically don’t serve.”

Americans are spending where it matters, maintaining credit discipline, and keeping the foundation of the economy remarkably stable.

Credit Quality Stays High

For months, analysts have been waiting for cracks to appear in the credit cycle. They’re still waiting.

Jamie Dimon noted: “Credit quality remains quite good. Consumers and businesses alike are in healthy financial shape, and delinquencies are simply normalizing after unusually low levels.”

At PNC, CFO Rob Reilly noted the same trend in the numbers:

“Total delinquencies declined this quarter. Net loan charge-offs were 22 basis points still below historical averages.”

On the commercial side, Citizens’ Don McCree underscored that credit weakness is narrow and contained:

“Other than office CRE, which we’re well reserved for, we’re seeing no deterioration on the C&I side at all… credit indicators look stable six to twelve months out.”

Citi’s team struck the same tone:

“We’re not seeing any broad-based deterioration. Credit trends are within expectations, and reserve coverage remains robust.”

Overall, the credit delinquencies are stabilizing, which affirms the economy on strong footing.

The AI Productivity Cycle

Banks are reorganizing their workforces around AI. This quarter’s transcripts showed AI integration at scale. 

The releases confirm our thesis of how demand isn’t slowing due to a recession, but due to AI integration. 

JPMorgan’s management described it as a structural shift:

“We now have over 2,000 people working on AI, data, and machine learning… It’s embedded in risk, fraud detection, marketing, and trading, and it’s already improving productivity.”

At Morgan Stanley, Ted Pick linked AI directly to advisor leverage and revenue generation:

“We’re deploying generative AI across research, wealth management, and operations to enhance productivity and advisor efficiency.” 

We don’t need to tell you why it reduces demand. 

Citi’s leadership tied it to permanent cost discipline:

“AI and automation are allowing us to simplify processes, reduce manual work, and improve controls, all while maintaining a lower expense base.”

The common theme is that efficiency is being driven by design. AI is compressing the gap between labor and output, replacing process friction with analytical precision.

Private Credit: Not a Cockroach Colony

Jamie Dimon’s “cockroach” comment was the highlight of the JPM’s Q3 transcript. He used it to refer to the recent bankruptcies of Tricolor and Firstbrands in the private credit market. 

The quote: “when you see one cockroach, there are probably more”.

The actual transcript, however, tells a calmer story. JPMorgan acknowledged limited exposure and emphasized structure.

CFO Jeremy Barnum: “We do not have any exposure to First Brands. On Tricolor, it represents $170 million of the wholesale charge-off this quarter… We’re always quite conservative about taking all possible hits upfront.”

He then laid out why JPMorgan, and the broader system, isn’t alarmed:

“The vast majority of [NBFI] lending that we do is highly secured or in some way structured or securitized. It’s not like we’re doing extremely high-risk, low-rated lending for the NBFI community.”

I had a detailed livestream here explaining how these credit risks are likely idiosyncratic and not systematic here.

Barnum continued:

“A lot of the private credit actors are large, very sophisticated, very good at credit underwriting… I don’t think you’re supposed to conclude that there are necessarily lower standards there or a huge systemic problem. The lending follows our normal practices. It’s often highly secured.”

Other banks also confirmed how individual private credit bankruptcies shouldn’t be taken as a systemic panic. 

PNC’s Bill Demchak said:

“The category is the wrong category… our largest holdings are securitizations to corporations. [These are] bankruptcy-remote receivables from investment-grade borrowers. That's a very low risk of default and extremely low loss given default.”

Citizens’ Don McCree went further:

“We lend to the private credit complex through securitization structures. It’s very high credit quality with diversified pools of collateral… Most of these are 364-day lines, so we can adjust the book quickly if we see anything that disturbs us.”

Bruce Van Saun (CEO, CFG) closed the loop:

“Subscription line financing, securitizations, asset-based structures; the loss history is pristine, and they’re all investment grade.”

The narrative is clear: 

Banks see no reason to treat private credit as a systemic fault line. Losses like Tricolor are irritants, not infections. They dent fund returns, but not bank balance sheets, and definitely not the economy.

Private credit funds can afford to lose a few basis points of IRR. The banking system is well-capitalized, collateralized, and diversified.

I also did a livestream on how the credit risk for regional banks is highly exaggerated. Watch it here.

Citi: Tokenized Deposits > Stablecoins

Citi is drawing a bright line. For institutions, tokenized deposits beat stablecoins. 

Let’s touch upon the concept first.

A stablecoin is not issued by a bank and it doesn't pay interest. But, the regulations govern how it's backed to ensure those that use it are protected.

The advantage of a stablecoin is that you can move it across borders and it is permissionless.

There's no KYC or KYB on the receiver or sender. The point of control is the fiat wraps where you get money onchain or offchain at exchanges.

It's internet money. It's cryptographically secured, borderless and persionless (no KYC) with matching assets at some institution. An amazing thing. 

Now, tokenized deposits are emerging.

It means you take a deposit at a bank and you put that onchain. The tokenized deposit can bear interest to the holder and it can enjoy FDIC insurance like deposits (because they are deposits).

Unlike stablecoins, Tokenized deposits are issued by banks, pay interest and are KYCd.

Now, here is Jane Fraser’s reasoning for expecting tokenized deposits to take share from stablecoins (we agree): 

“For our client base… we see tokenized deposits as delivering what the client needs… real-time money movement with minimal to no friction and low cost.” 

Fraser believes their clients require “interoperable, multibank, cross-border, always-on” payments “provided in a safe manner,” with “compliance, reporting, accounting, and AML” solved by the bank.

On stablecoins, Citi stays pragmatic but blunt about tradeoffs: 

“We view Stablecoin as another option… It’s got more friction because of the on-off ramp… tax, accounting, AML requirements that our tokenized deposit capabilities avoid.” 

The endgame is bigger than payments:

“Clients are going to want solutions that seamlessly offer financing, securities issuance and settlement in a regulated trusted environment… regulators are now letting us innovate… It will really help scale up.”

I had a fantastic interview with Ben Foreman from Parafi. I would recommend having a listen to it here. 

Our view: stable coins are good for point-to-point transactions. They're not good as a store of value because of the opportunity cost of capital. 

Tokenized deposits are a very attractive means to move money, especially if you're a massive merchant like Amazon. 

Imagine you're settling funds with merchants using a stable coin and you're giving up the interest on how many billions and billions of dollars.

You’d be better off using a tokenized deposit. 

Market

The AI Capex Flywheel Is Only Spinning Faster

When hyperscalers stop couching AI spending as speculative and call it “infrastructure you have to build”, you know the flywheel has momentum.

Amy Hood (CFO) from Microsoft recently laid it out: 

“AI scaling laws are continuing to compound across both pre-training and inference-time compute,” and much of their capex “goes to long-lived assets that will support monetization over the next 15 years.”

Revenue growth is constrained by capacity. 

“Demand exceeds supply.” - Amy.

Amazon is doubling down too. 

It’s targeting ~$100 billion in capital spending for 2025, with the “vast majority of that spend” on AI for AWS. 

Andy Jassy (CEO, Amazon) frames it as self-fueling:

“Companies will spend a lot less per unit of infrastructure … but then they usually end up spending a lot more in total on technology.”

Increasing AI capex drives demand for semiconductors, energy, real estate, telecom, and industrial infrastructure. It shows up in markets reaching new highs.

We talked about the AI flywheel in our last newsletter. Read it to see who are the beneficiaries of the ecosystem. 

Tax Mitigation

If you’d like our expert asset management team to handle your portfolio, drop an email to [email protected], or book a call here.

The actions you take now can go a long way into mitigating your tax bill in 2026. If you are expecting significant capital gains from the sale of equity, a business, or proceeds from an IPO - be sure to reach out.

Lumida ventures is also exploring tax mitigation strategies that can help you reduce your tax liability for 2025 substantially. You can fill out the form at www.lumiaddeals.com to learn more. 

Artificial Intelligence

Seeing AI for What It Is

AI is no longer a shadow in the dark, it’s the real creature we’ve created. 

The danger isn’t in the technology itself, but in denial. 

As Jack Clark puts it, the only way to “win” is to acknowledge its power, understand it, and learn to live alongside it. Read the full article here. 

Lumida Curations

Retail Investors Are the New Analysts

Wall Street still labels them “dumb money,” but a new generation of retail traders are proving otherwise. They are armed with data, conviction, and social networks as their research desks.

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The Great AI Infrastructure Boom

A $3 trillion wave of data-center investment is reshaping the global economy as hyperscalers race to expand AI capacity, driving unprecedented demand for chips, power, and compute.

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Fear Just Fueled the Next Rally

A sudden spike in volatility signaled real fear. That flush may have reset overbought markets, setting the stage for the next leg of the bull.

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Meme

Stay tuned, stay informed, and as always, stay ahead.

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