Michael Cembalest, Chairman of market and investment strategy at JPMorgan Asset Management and author of 'Eye on the Market', dives into the 2025 economy forecast. He discusses the unparalleled influence of the MAG-7 tech giants and their link to skyrocketing AI investments. Cembalest explores the potential revival of nuclear energy amid rising tech demands, while dissecting Europe's economic struggles versus the U.S. Lastly, he unpacks the complex challenges facing China and how Trump's policies intertwine with these global economic dynamics.
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insights INSIGHT
MAG7 Dominance
The MAG7's market cap share surpasses 1999 levels, disrupting active money management.
Their unprecedented free cash flow allows massive AI investments.
insights INSIGHT
Unprecedented Dominance
The MAG7's dominance is unprecedented since the Gilded Age.
Antitrust actions have been minimally effective so far.
insights INSIGHT
AI Spending Source
The MAG7's AI spending is fueled by profits from core businesses, not AI itself.
Their profitability enables this spending, unlike the dot-com bubble.
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In 'Destined for War,' Graham Allison explores the concept of the 'Thucydides Trap,' where the rise of a new power threatens the dominance of an existing one, often leading to war. Allison draws on 16 historical cases where a rising power challenged a dominant state, with 12 of these cases resulting in war. He applies this historical lens to the current relationship between the United States and China, highlighting the potential for conflict but also outlining '12 clues to peace' derived from historical analysis to prevent such an outcome. The book is divided into sections that cover the rise of China, historical lessons from the Peloponnesian War and other conflicts, and strategies for avoiding war based on these historical insights.
Happy new year! And what better way to celebrate the freshly torn calendar page than by welcoming one of Derek's favorite writers to the show to tell us what's in store for the 2025 economy. Michael Cembalest is the chairman of market and investment strategy for JPMorgan Asset Management, and the author of the truly spectacular newsletter, 'Eye on the Market.' Today, we start with stocks and describe the truly historic—and historically unprecedented—dominance of the so-called Mag-7 tech giants. Then, we draw the connection between Big Tech’s historic run and the surge of AI spending. After a discussion on the history and future of nuclear power in America, we do a pit stop on the European economy, where we evaluate the continent’s tradeoff between safety and growth, and move on to China to disentangle that economy’s slowdown. Finally, we connect it all back to a Trump agenda that is a fascinating brew of old-fashioned Reaganite deregulation, newfangled crypto enthusiasm, mid-19th century tariff obsession, mid-20th century industrialization policy, and ... a bunch of other ingredients that I think I’ll just let Michael tell you about.
If you have questions, observations, or ideas for future episodes, email us at PlainEnglish@Spotify.com.
Plain English with Derek Thompson 
