Oct 21, 2026 · 14 min

UBS strategist sees resilience in a late-cycle US economy

Top of the Morning: CEO Macro Briefing Book Q4 update

The briefing connects monetary policy, AI adoption, IPO delays, and election uncertainty to the outlook for markets and small businesses.

3 key takeaways

1Paul Hsiao sees strong nominal growth and lower rate sensitivity limiting the drag from current monetary policy.
2Business AI adoption appears to be accelerating, even as official surveys lag private-market spending indicators.
3Delayed IPOs reflect higher rates, valuation pressure, and pricing gaps rather than a single verdict on market confidence.

Don't miss

Paul Hsiao explains why official survey data may understate accelerating business AI adoption when compared with private-market spending indicators.

The brief

Paul Hsiao of UBS frames the US economy as late-cycle but resilient, comparing today’s market signals with the 1994 soft landing while noting narrow equity performance.

Hsiao argues monetary policy is not excessively restrictive for businesses because this supply-driven cycle combines strong nominal growth with lower interest-rate sensitivity.

AI adoption is becoming visible through a gap between Census Bureau survey results and private-market spending indicators, suggesting official data may be lagging the shift.

Delayed IPOs reflect higher rates, compressed valuations, and mismatched pricing expectations; mixed results from recent offerings complicate the confidence signal.

The discussion closes with a likely split-government scenario and questions about how election outcomes could reshape the AI market narrative and small-business conditions.

What was said on this episode

9 statements · 2 positive · 2 negative · 1 mixed · 4 neutral

Paul Hsiaoon Rates, inflation, and narrow equity performanceNegative1:17
Rates, inflation, and narrow equity performance signal late-cycle conditions before recession
“these are generally signs of late cycle conditions right before a recession”
Listen at 1:17
Paul Hsiaoon Federal Reserve rate increasesNeutral1:24
Current conditions resemble 1994, when Fed rate increases restrained inflation
“We think that it's more like the 1994 when the Fed was more primed during— to stymie inflation by raising rates.”
Listen at 1:24
Paul Hsiaoon Alan GreenspanPositive1:34
“Greenspan was able to do that without causing a recession.”
Listen at 1:34
Paul Hsiaoon Current economic cycleNeutral2:00
Current conditions are not necessarily late-cycle
“there's no reason to think that we're necessarily in late cycle right now.”
Listen at 2:00
Paul Hsiaoon Long-term economic cycleNeutral2:08
Economic cycles have generally lengthened over time
“generally cycles have become longer and longer.”
Listen at 2:08
Paul Hsiaoon Long-term economic cycleNeutral2:23
Economic cycles do not necessarily end merely because they are old
“there's no reason that cycles can die of old age.”
Listen at 2:23
Paul Hsiaoon Interest rateNegative2:29
Current interest rates are high enough to slow the economy
“rates are high enough where— high enough where it can slow the economy by removing accommodation.”
Listen at 2:29
Paul Hsiaoon U.S. economyMixed2:39
The economy will moderately decline in Q4 without causing a recession
“the economy, we think, will moderately decline going into Q4, but not necessarily slow down where it will cause a recession.”
Listen at 2:39
Paul Hsiaoon Corporate earningsPositive2:45
Moderate economic decline without recession tends to support earnings
“that tends to be good for an earnings backdrop.”
Listen at 2:45

Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.

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