MS · Earnings call · 2026Q3T · Full report

Geopolitical and Macro Outlook

MORGAN STANLEY · 2026-10-14 · Importance 23 · Surprise 24

Management described July and August as unusually active, driven by hyperscaler investment in the AI ecosystem, before Middle East tensions and higher global interest rates moderated market volumes after Labor Day. Management cited persistent conflicts in the Middle East and Ukraine, higher benchmark interest rates and energy prices, elevated equity valuations, and uncertain electoral and policy responses as reasons for caution. The interaction of AI enterprise adoption and geopolitical conflict is expected to drive investor and corporate behavior through year-end and the first half of 2027. Management also said U.S. nominal GDP growth is running at 5% to 6% in the more optimistic scenario.