Apollo's Torsten Slok: Majority of Fed is feels that we're not quite done fighting inflation

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Apollo 9.0
Asset Manager $671.00B
Torsten Slok 9.0

Apollo's Torsten Slok: Majority of Fed is feels that we're not quite done fighting inflation

ndx

While not explicitly forecasting NDX direction, Slok expects AI benefits to spread beyond Magnificent Seven to broader market, sees economic tailwinds from fiscal policy supporting growth through 2026, suggesting cautious optimism for tech/NDX over medium term

Markets recovering from yesterday's drop, Nasdaq led by Micron, Microsoft, Nvidia; asks about Fed expectations for December

Host
Torsten Slok

Fed unlikely to cut rates in December as inflation remains around 3% and majority of FOMC members signal they're not done fighting inflation

Consensus expects inflation around 3% for next 18 months, making it difficult to begin cutting rates
Questions whether inflation expectations being under control and weakening labor market should provide comfort for cuts

Host
Torsten Slok

Labor market data complexities due to Thanksgiving timing and October data gap create uncertainty about true labor market health

December employment report will compare with September data due to October gap, jobless claims remain stable
Torsten Slok

AI job impact narrative overblown - unemployment rate for young female college graduates declining while male rate rising

If AI were causing widespread job losses, jobless claims would be rising, which isn't happening
Asks about Chinese exports shifting to Asian markets and implications for supply chains

Host
Torsten Slok

China successfully redirected exports to other Asian countries as US exports declined, maintaining strong export performance

Exports to Europe, Africa, Latin America flat - growth entirely from other Asian countries
Notes Nasdaq recovery and asks when AI benefits will show in broader market data beyond Magnificent Seven

Host
Torsten Slok

AI benefits need to spread to S&P 493 companies - currently earnings and profit margins up for Magnificent Seven but down for rest

Burden now on seeing broader corporate space benefit from AI, some early signs in last earnings season
Torsten Slok

Expects economic rebound in 2025 with 'one big beautiful bill' adding nearly 1% to GDP growth via accelerated depreciation

Current economic lull temporary - Nike swoosh recovery pattern expected through 2026
Torsten Slok

Multiple tailwinds building for US economy including fiscal policy, easier financial conditions, trade war resolution

These factors create upside inflation risks on top of already 3% inflation
Torsten Slok

Inflation pressure likely to emerge in services sector due to rising input costs over past six months

Services make up 60% of CPI basket, ISM prices paid rising significantly

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