Moelis & Co.'s Eric Cantor Talks AI Supercycle

**SPEAKER_1** (0:02)
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**SPEAKER_2** (0:07)
We got some new forecasts from JP Morgan in the last 24 hours. And they're looking for yields to go even higher. They're looking for 540 on 30s, 485 on 10s, and Barclays say there's room for long-term rates to move even higher. What does it mean for this competition for capital, this race to raise money? Joining us now, Madison Company Vice Chair and former House Majority Leader, Eric Cantor. Eric, good morning. It's good to see you.

**Eric Cantor** (0:31)
Great to be here.

**SPEAKER_2** (0:32)
You've got a major competition for capital. I haven't seen anything like this for a long, long time. What do you see in your business?

**Eric Cantor** (0:37)
Look, some people say that we are in the biggest investment cycle since the late 1800s. I mean, it is amazing to see sort of the pivot into this incredible digital infrastructure surge around data centers and really the standing up of new industries almost. I mean, this is, I think, where every conversation that we're having at Moelis is somehow downstream from this incredible cycle we're seeing. And listen, the markets are still constructive for the M&A deal environment.
As you said just now, the resiliency is pretty stunning on the consumer end, although people will say it's a case-shaped consumer market. But for now, again, I think you've got Washington poised such that it wants to see this growth continue given everything else that's going on in the world.

**SPEAKER_2** (1:29)
We were speaking to Cisco, to G2 Patel in the last week or so, and I've been somewhat concerned about where the technology might be heading for several different reasons and he asked me if I was still skeptical or concerned. I said I was becoming more concerned about where financial markets were going, the amount of debt that's being issued, the amount of debt that will be issued over the next year and perhaps even beyond. Have we entered the more creative stage on Wall Street that might be of concern?

**Eric Cantor** (1:53)
Look, there's no question. Number one, there's a super cycle for the mega caps. I mean, there's no question and we've seen this with the hyperscalers, we're seeing this with everyone on the board level, at the senior management level who come into their jobs every day and say, hey, how are we going to position given this technological revolution that we're facing? Given where the constructive nature of the regulatory environment, I think that there is a willingness and a desire to want to transact. On the private equity side, there's a lot of dialogue that continues. I know that we at Moelis are continuing in all kinds of discussions with our sponsor clients as well, and there's just availability of capital for good companies.
As we know, there's been a thematic in the sponsor world about trying to return more capital to LPs, and if there isn't a traditional exit strategy, there are all kinds of creative solutions to help these investors access capital so they can return to LPs and start a new fund. So it is pretty remarkable, the resiliency of what we're seeing.

**SPEAKER_4** (3:00)
How active do you expect deals to be in the second half? I mean, is it gonna be accelerating actually even from the first half because of the smaller corporate action from LPs, from these exits that are getting creative?

**Eric Cantor** (3:11)
Well, I just think in general, the markets are still looking fairly healthy. As you noted, the earning season has been pretty stunning on the part of those that have reported. And I think that is indicative of where the mindset is, that we are continuing an upward trend just in the macro level of the market. So, you have midterms looming out there, and people always like to say, will that or won't that impact transaction activity? We'll have to see.

**SPEAKER_4** (3:39)
Do you think that good corporates are competing for capital with the US government?

**Eric Cantor** (3:43)
Look, I don't think there's any question. If you look at the spreads between the 10-year corporate investment-grade instrument versus the 10-year, I think if historically it's 150 basis point spread, I think we're under 100 now, which could tell you one of two things. Either corporates are getting a lot more healthy or the government's getting a little less healthy. So, I do think there is a race for capital. And as we said before, we're in the super cycle of investment.
The preferred choice of financing currently has been this issuance of debt on the private side. And yet, we have this increasing populism around the world that is forcing governments to have to take a look at how much and how they're going to figure out to finance the needs of their government and their population.