ECB/Fed outlook, AI boom, and US consumer risks (with Francine Lacqua)

Torsten Slok expects ECB to consider another hike in September due to second-round effects from energy costs, while the Fed under Kevin Warsh will proceed cautiously. He sees rates higher for longer given strong AI-driven growth tailwinds. A stock market correction could hurt high-end US consumers who drive 40% of spending.

Yields up , medium term, interviewee explicit

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NDX cautious up , short term, interviewee implicit

implicit

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Apollo Global Management 9.0
Asset Manager $671.00B
Torsten Slok 8.5

ECB/Fed outlook, AI boom, and US consumer risks (with Francine Lacqua)

ndx

Slok notes AI spending boom drives US GDP but warns of bumpy road ahead for AI valuations due to revenue uncertainty and token cost dynamics. Near-term bullish but with caution on valuation corrections.

yields

Bottom line is we still expect interest rates will be higher for longer.

17 calls

+5

no reliable edge (random outcomes)

6/16/2026 9:25:02 PM	short term cautious up	5 days later	+1.03%	+0.52%
6/15/2026 6:03:06 PM	short term cautious down	6 days later	+1.83%	-0.91%
6/4/2026 9:46:53 PM	medium term cautious up	20 days later	-3.17%	-1.59%
6/1/2026 9:35:58 PM	medium term up	20 days later	+1.21%	+1.21%
6/1/2026 7:36:19 PM	medium term up	20 days later	+1.21%	+1.21%
6/1/2026 7:02:14 PM	medium term up	20 days later	+1.21%	+1.21%
5/5/2026 6:12:22 PM	short term cautious up	5 days later	+1.24%	+0.62%
4/3/2026 7:31:50 PM	medium term up	21 days later	+0.02%	+0.02%
3/27/2026 8:49:47 PM	medium term up	21 days later	-2.12%	-2.12%
3/27/2026 7:30:29 PM	medium term up	21 days later	-2.12%	-2.12%
3/6/2026 4:48:14 PM	short term sharp up	5 days later	+3.68%	+5.52%
12/23/2025 11:03:06 PM	long term up	61 days later	-2.59%	-2.59%
10/28/2025 5:15:14 PM	medium term cautious up	20 days later	+1.60%	+0.80%
10/13/2025 6:26:53 PM	medium term cautious up	20 days later	+2.09%	+1.04%
10/9/2025 2:13:08 AM	medium term sharp up	20 days later	+1.04%	+1.56%
8/29/2025 2:18:36 PM	short term sharp down	6 days later	-5.40%	+8.10%
8/15/2025 11:30:11 PM	medium term cautious down	21 days later	-6.80%	+3.40%

Show all 17 yields results

ECB keeps repeating data-dependent approach; asks what Torsten expects from them this year.

Francine Lacqua
Torsten Slok

Energy prices have come down substantially since the last ECB meeting, changing the outlook. The ECB will likely still consider hiking in September because second-round effects from companies adjusting to higher spring energy prices could push core inflation up.

The ECB is proceeding very cautiously, taking one meeting at a time, because they don't know the magnitude of second-order effects.
Asks why wait until September if a hike is needed.

Francine Lacqua
Torsten Slok

Lagarde emphasized the last hike was a real hike to lower inflation expectations, not an insurance hike. That's why they proceed cautiously step by step.
Asks about Kevin Warsh's first travel abroad as Fed Chair and market perception of him as a Trump yes-man.

Francine Lacqua
Torsten Slok

Warsh's communication is similar to Lagarde's — he doesn't know how shocks will play out and will proceed cautiously. He clearly stated his priority is price stability and getting inflation down to 2%.

If energy prices continue to fall, that changes the Fed's calculation. Markets are pricing a September hike.
Asks how close we are to rate cuts from ECB and Fed.

Francine Lacqua
Torsten Slok

The US has strong AI spending boom and the One Big Beautiful Bill contributing to GDP growth. These forces are not sensitive to interest rates. In Europe, defense spending and energy transition provide tailwinds. Bottom line: rates will be higher for longer.

Both US and European outlooks continue to look good because of spending on long-duration assets like defense and energy.
Asks about the UK situation with Andy Burnham expected to become PM.

Francine Lacqua
Torsten Slok

Bank of England is also in wait-and-see mode. If political change brings fiscal policy in a different direction, the BoE needs to recalibrate policy accordingly.
Asks if the AI boom in the US can be infinite, referencing a chart on margins outside AI.

Francine Lacqua
Torsten Slok

About 1% of 2% US GDP growth comes from AI spending. The key question is whether AI company earnings assumptions will be met or come slower. Chinese models at 50x lower cost raise questions about revenue sources. Demand for compute is unlimited, but the revenue path may be bumpy for AI valuations.

Companies are now paying for tokens starting April, raising questions about revenue sources if token spending declines.
Asks about CEOs putting a stop to staff spending on digital tokens and whether that signals a reversal in AI stocks.

Francine Lacqua
Torsten Slok

Token prices are coming down which helps, but the revenue question for AI companies remains. The market assumes earnings will come quickly, but they may come slower, raising questions about winners and losers in the AI spectrum.
Asks about the impact of a big market correction on the US consumer.

Francine Lacqua
Torsten Slok

The top 20% of US income earners account for 40% of consumer spending. They've benefited from rising stock prices, home prices, and high cash flows from fixed income. If the Magnificent Seven corrects, it could hurt the US consumer. It's important for the S&P 493 to show profit margin growth to carry the baton.

We need to see AI spread beyond tech into the broader economy.

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