AI story is no longer an equity story, says Apollo Global’s Torsten Slok

? (Anchor) 00:00.350

but tourists and slack chief economists at apollo global management is here with us at post nine it's great to have you here welcome

Torsten Slok (Chief Economist) 00:07.190

thank you so

? (Anchor) 00:07.910

we just teased it the economy is in better shape than people than people are expecting why what are you seeing well the

Torsten Slok (Chief Economist) 00:13.190

list of bullet points of the tailwinds is just getting longer and longer so we have the one big beautiful bill which will literally start next week that's good for consumers that's good for immediate expensing for companies we also have lower oil prices we also have that the

Torsten Slok (Chief Economist) 00:25.990

dollar has been going down and finally we also have that the trade war is now further and further behind us so the list of reasons why you should be more bullish on growth just keeps on growing as we look into the next several quarters i've heard

? (Anchor) 00:36.750

the talking points that there's stimulus here in this economy to going to twenty twenty six whether it's overt and explicit or not your thoughts absolutely

Torsten Slok (Chief Economist) 00:45.550

the one big beautiful bill helps on two different fronts it helps with immediate expensing for companies so now you can do a hundred percent write down of your capital expenditures right away that's not normally the case you have to normally do that throughout several years the

Torsten Slok (Chief Economist) 00:57.870

second thing that's also helpful is that we also have that the consumers is facing now a lot of tailwinds because we get a lot of refunds in the beginning of this year because now you have a look back to two thousand twenty five and that will help also the refunds will generally

Torsten Slok (Chief Economist) 01:11.710

be fifty percent bigger in two thousand twenty six than what they were in two thousand twenty five so both from the consumer side and from the corporate side and the fact that the trade war is getting further and further behind us it is all very helpful for growth

? (Anchor) 01:22.630

you know tourists and a lot of us on wall street like to read your daily notes out there you kind of juxtapose the markets next to what's happening with the economy is the market where it is right now justified given what you think is a better economy that's going to develop

? (Anchor) 01:38.590

over twenty twenty six and how exactly does that give it more runway than what it already has right now from a valuation standpoint yeah

Torsten Slok (Chief Economist) 01:45.990

this is exactly the discussion for two thousand twenty six that the growth outlook as we just talked about is actually good but the problem of course for the market as usual is that it's so concentrated in AI the ten biggest stocks now make up basically forty percent of the

Torsten Slok (Chief Economist) 01:58.270

index and we have AI is no longer just a big issue in concentration in equities is also because of hyperscaler issuance becoming an issue in public IG because the public IG and it used to be just financials but other public IG indexes not only financials but it's more and more

Torsten Slok (Chief Economist) 02:13.390

also becoming hyperscalers so the AI story is just no longer just an equity story it's also highly concentrated in the credit market and the consequence of this is that yes growth may be good but if the AI story disappoints in two thousand twenty six we could still have good

Torsten Slok (Chief Economist) 02:27.510

growth but at the same time the AI story rolls over we could have some headwinds especially to equity markets but now also more and more to public credit markets