Earnings season good but guidance slightly disappointing. With extended valuations, companies not beating significantly see shares fall - reflects market optimism rather than earnings negativity.

More pessimistic than street with 1% GDP forecast for 2026 due to cracks in labor market - private job growth ex-healthcare negative, rare outside recession.

Multiple factors: reduced immigration lowering job growth run rate, AI affecting certain jobs (programmers), company signaling about AI more than actual implementation, reticence to hire, tariffs and geopolitical uncertainty weighing on CEO/consumer confidence.

Base case: Fed cuts more than market expects (3 cuts). Despite economic caution, fully invested because of expected Fed easing hitting 2% target. Risk is consumers can't continue spending outpacing income growth without more debt or savings drawdown.

Tailwinds under market different from main street economy. Need to be fully invested in equity market.

Solid earnings growth: 15% this year, ~10% following year. Not much valuation expansion lift. Expect high single-digit returns from continued momentum. High cost to sitting out market/being too bearish.