We initiate on JEF with a Hold rating and $52 PT. JEF is a diversified financial services platform across investment banking, capital markets, and asset management across global regions. As capital markets volatility continues against a backdrop of Fed 'higher for longer', Jefferies balances structural strengths (accelerating fee momentum, disciplined leverage, and revenue composition) with macro pressure and investor skepticism on the margin recovery. Underneath the cyclical recovery, we highlight that recent hiring in IB and the ramping SMBC relationship has already set the bar for above consensus FY25 earnings, as our FY25 $2.70 of diluted EPS reflects earlier fee ramp than the Street anticipates, while cost headwinds remain a focus as far as comp and tech investments peak before normalizing in FY26. That normalizing cost base, however, implies a slower return to operating leverage, as we see our FY26 $3.70 earnings power 13% below the Street, as comp reset remains behind the curve and margin accelerates more slowly than rapidly. Where the valuation punchbowl meets the pitch: While Jefferies is pointedly discounted (18.5x vs 25.4x median), the group is not immune to declines in liquidity, sticky real rates, and fragmentation from geopolitics, which pressure forward multiples; thus we anchor our base case with 14x 2026 EPS, or 5% below the current price. Snap back remains a cocktail of rate cuts and M&A resurgence, but we see it as more tail than base case given persistent policy. [goldmansachs.com] If deal volume and expense reset overshoot to the upside, the story gets more interesting, but as the landscape stands, risk/reward