Latest news with #TorstenSløk
Yahoo
a day ago
- Business
- Yahoo
Why Trump has turned the US economy into a Nike swoosh: Economist
Listen and subscribe to Opening Bid Unfiltered on Apple Podcasts, Amazon Music, Spotify, YouTube, or wherever you find your favorite podcasts. The US economy isn't heading for a crash landing. It's just coasting through a curve. Torsten Sløk, chief economist at Apollo Global Management, likened current conditions to the iconic Nike swoosh — a dip followed by a gradual rebound. (Disclosure: Yahoo Finance is owned by Apollo Global Management.) "It makes sense to worry about the trade war. It makes sense to worry about immigration restrictions, deportations. It makes sense to worry about student loan payments, but overall, this is more like a Nike swoosh,' Sløk said on Yahoo Finance's Opening Bid Unfiltered. "Not a recession, but a Nike swoosh, where we have a slowdown over the next several quarters and then we start to recover again," he explained. The analogy captures a key sentiment on Wall Street. While growth is cooling and headwinds remain, the economy is not tipping into recession territory — just softening after years of outsized gains. Several indicators support this more optimistic view. Consumer spending has remained steady despite high borrowing costs. The job market, while slowing, continues to post solid numbers. Read more: What is a recession, and how does it impact you? The latest gross domestic product (GDP) print and July jobs report, both due this week, will offer fresh insights. Ahead of the second quarter GDP report, economists are expecting growth to rebound to a 3% annualized rate after the economy shrank 0.5% in the first quarter. Meanwhile, it's estimated that the economy added about 102,000 jobs last month, with the unemployment rate ticking up to 4.2% from 4.1% in June. Investors will also be watching for updates on a trade deal between the US and the EU, which includes a baseline tariff rate of 15% on EU imports. President Trump has called the deal "the biggest of them all," suggesting any developments could influence sentiment on tariffs and broader economic growth. Whether the Federal Reserve cuts interest rates later in 2025 remains a wild card. According to the CME Group's (CME) FedWatch tool, markets have currently assigned only a 3% probability of a cut at the Fed's July meeting. See more from the Opening Bid podcast Why Tesla's valuation is hard to read as Musk's EV empire falters Reebok founder on Trump tariffs: It's virtually impossible to make sneakers in US Why the CEO of the world's large sovereign wealth fund is worried about rising US debt The backdrop helps explain why some economists still view the recession risk as real, even if those concerns have eased in recent months. "Some people put a lot more weight on [these headwinds] than I do and say that the risk of a recession therefore is higher," Sløk said. "But I think the recession probability ... is lower today than where it was just a few months ago." Other points of contention remain. Sløk flagged a "huge point of divergence" between how markets and economists are viewing the potential fallout of political uncertainty and the future of the Federal Reserve, particularly its independence. "Fed watchers are really, really worried about this issue," he said. "But in markets, there's just a lot of complacency that even if a new Fed chair advocates for rate cuts, the rest of the committee could vote otherwise." Fed Chair Jerome Powell's term expires in May 2026, with potential names like Chris Waller and Scott Bessent as contenders to replace Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at Each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid Unfiltered. You can find more episodes on our video hub or watch on your preferred streaming service. Click here for in-depth analysis of the latest stock market news and events moving stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
Why Trump has turned the US economy into a Nike swoosh: Economist
Listen and subscribe to Opening Bid Unfiltered on Apple Podcasts, Amazon Music, Spotify, YouTube, or wherever you find your favorite podcasts. The US economy isn't heading for a crash landing. It's just coasting through a curve. Torsten Sløk, chief economist at Apollo Global Management, likened current conditions to the iconic Nike swoosh — a dip followed by a gradual rebound. (Disclosure: Yahoo Finance is owned by Apollo Global Management.) "It makes sense to worry about the trade war. It makes sense to worry about immigration restrictions, deportations. It makes sense to worry about student loan payments, but overall, this is more like a Nike swoosh,' Sløk said on Yahoo Finance's Opening Bid Unfiltered. "Not a recession, but a Nike swoosh, where we have a slowdown over the next several quarters and then we start to recover again," he explained. The analogy captures a key sentiment on Wall Street. While growth is cooling and headwinds remain, the economy is not tipping into recession territory — just softening after years of outsized gains. Several indicators support this more optimistic view. Consumer spending has remained steady despite high borrowing costs. The job market, while slowing, continues to post solid numbers. Read more: What is a recession, and how does it impact you? The latest gross domestic product (GDP) print and July jobs report, both due this week, will offer fresh insights. Ahead of the second quarter GDP report, economists are expecting growth to rebound to a 3% annualized rate after the economy shrank 0.5% in the first quarter. Meanwhile, it's estimated that the economy added about 102,000 jobs last month, with the unemployment rate ticking up to 4.2% from 4.1% in June. Investors will also be watching for updates on a trade deal between the US and the EU, which includes a baseline tariff rate of 15% on EU imports. President Trump has called the deal "the biggest of them all," suggesting any developments could influence sentiment on tariffs and broader economic growth. Whether the Federal Reserve cuts interest rates later in 2025 remains a wild card. According to the CME Group's (CME) FedWatch tool, markets have currently assigned only a 3% probability of a cut at the Fed's July meeting. See more from the Opening Bid podcast Why Tesla's valuation is hard to read as Musk's EV empire falters Reebok founder on Trump tariffs: It's virtually impossible to make sneakers in US Why the CEO of the world's large sovereign wealth fund is worried about rising US debt The backdrop helps explain why some economists still view the recession risk as real, even if those concerns have eased in recent months. "Some people put a lot more weight on [these headwinds] than I do and say that the risk of a recession therefore is higher," Sløk said. "But I think the recession probability ... is lower today than where it was just a few months ago." Other points of contention remain. Sløk flagged a "huge point of divergence" between how markets and economists are viewing the potential fallout of political uncertainty and the future of the Federal Reserve, particularly its independence. "Fed watchers are really, really worried about this issue," he said. "But in markets, there's just a lot of complacency that even if a new Fed chair advocates for rate cuts, the rest of the committee could vote otherwise." Fed Chair Jerome Powell's term expires in May 2026, with potential names like Chris Waller and Scott Bessent as contenders to replace Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at Each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid Unfiltered. You can find more episodes on our video hub or watch on your preferred streaming service. Click here for in-depth analysis of the latest stock market news and events moving stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
The S&P 500 is ‘extremely concentrated,' Apollo economist says, warning the best AI investment may not be in the Magnificent 7
The S&P 500 has become a lopsided index, with the Magnificent Seven significantly increasing risk exposure for investors, according to Apollo chief economist Torsten Sløk. As the paths of the Magnificent Seven begin to diverge and the AI bubble swells, Sløk argues it's time to begin questioning which AI companies to invest in. It's time to question the soundness of continued zealous investment in the Magnificent Seven, one top economist warns. The S&P 500 has become 'extremely concentrated,' with the top 10 stocks contributing 54% of the market returns since January 2021, Apollo chief economist Torsten Sløk said in a Friday blog post. With the cluster of tech stocks at the top beginning to unravel, he is pouring cold water on continued aggressive investment in the index and in the Magnificent Seven. 'The textbook idea that the S&P 500 gives you a diversified exposure to risk is just simply no longer the case,' Sløk told Fortune. 'You are very focused and concentrated in a small group of names, in particular in tech, making up such a significant share of your overall risk exposure.' The top 10 companies in the S&P 500 now prop up 40% of the index's market capitalization—more than 30% of which is from the Mag Seven—meaning the fortune of the markets has become increasingly reliant on investors' optimism in AI. Alphabet's AI rally not only helped mint CEO Sundar Pichai as a billionaire, for example, but the Google parent's earnings beat gave the S&P 500 its fourth consecutive record close on Thursday. But as the AI bubble swells larger than that of the IT bubble a quarter century ago, as Sløk has previously noted, the extreme hype around the technology risks creating even broader economic consequences than the dot-com crisis. To protect one's individual investments, now is the time to reconsider pouring money into the Mag Seven, Sløk argued. 'One should have some exposure to the S&P 500 and should certainly also have some exposure to AI,' Sløk said. 'But it's very clear that [due to] the market's extreme focus and concentration on this story, this is the time to have a conversation around, What are the things I should be doing with my money?' The Magnificent Seven becomes Six, becomes Five Mounting concerns about the ramifications of a growing AI bubble coincide with the unraveling of the Magnificent Seven stocks. 'We're beginning to have conversations about the 'Magnificent Six', maybe it's only five,' Sløk said. 'This is also just telling you that the Magnificent Seven are seven very, very different companies that have very different businesses.' Popularized in 2023 by Bank of America analyst Michael Hartnett, the 'Magnificent Seven' was meant to bunch together a group of companies alike in their goal of pushing toward an AI future, but the tech firms once in lockstep are beginning to diverge in their levels of success and areas of investment. Apple, for example, has lagged behind competitors like Microsoft and Meta in developing AI products and services. With its stock down about 12% year-to-date, some market watchers have called for CEO Tim Cook to step down from the company, despite Cook boosting the company's stock price by nearly 1,500% over the past decade-plus. Tesla has likewise failed to deliver on promises to autonomous driving, continuing this week its streak of sales misses and disappointing quarters. Tesla's stock has fallen nearly 15% in 2025 as investors' confidence in CEO Elon Musk continues to be tested. Meanwhile, Nvidia this month became the first publicly traded company with a more than $4 trillion valuation as its stock price surged by approximately 1,460% over the past five years. The company expected to continue strong sales growth, despite increasing competitive pressures. Ahead of next week's earnings reports for Meta, Apple, and Microsoft, analysts are continuing to scrutinize the pricing of these companies' stocks, assessing if there are other options in the tech sector worth buying into. 'AI will continue to have a dramatic impact on all our lives,' Sløk wrote in his blog post. 'But the question remains whether the Magnificent Seven are correctly priced, and if they will even be the best AI investments over the next five to ten years.' This story was originally featured on
Yahoo
21-07-2025
- Business
- Yahoo
AI mania is worse than 1999's tech bubble, Apollo's top economist warns
A top Wall Street economist is sounding the alarm on sky-high valuations in AI stocks — and drawing comparisons to the tech bubble of the late 1990s. "Yes, AI will do incredible things for all of us," Torsten Sløk, chief economist at Apollo Global Management, said on Yahoo Finance's Opening Bid. "But does that mean I should be buying tech companies at any valuation?" (Disclosure: Yahoo Finance is owned by Apollo Global Management.) According to Sløk, the answer is increasingly no. In a research note to clients this week, he pointed to internal data showing the price-to-earnings ratios (P/E) of the 10 largest companies in the S&P 500 (^GSPC) — many of them AI stock picks like Meta (META) and Nvidia (NVDA) — have eclipsed P/E levels seen at the height of the dot-com bubble in 1999. That signals a dangerous concentration of investor exposure in just a handful of tech giants, Sløk argued. "Almost 40% of the S&P 500 is made up by the 10 largest companies," he said. "So if I take $100 as an investor and buy the S&P 500, I think I have exposure to 500 different stocks, but I'm really just betting on the Nvidia and the AI story continuing." In his note, Sløk noted that the current valuations in megacap tech stocks, and the index as a whole, may not be sustainable. His concerns echo a growing unease on Wall Street over how much of the recent stock market rally is driven by AI euphoria and momentum trades. BTIG analysts flagged similar warning signs in a note this week, describing market sentiment as "frothy" and raising the possibility of a near-term pullback in high-flying AI names. Their focus was on the BUZZ NextGen AI Sentiment Index, a benchmark of AI-related stocks popular with retail investors. The index is up 45% over the past 16 weeks and trading 29% above its 200-day moving average. According to BTIG, both are the highest since early 2021, when speculative tech stocks peaked. "Can it get more so like it did in '20-'21? Of course," BTIG analyst Jonathan Krinsky wrote. "But tactically, this feels a bit extreme to us." Krinsky also warned that the index's top holdings, including Rocket Lab (RKLB), Coinbase (COIN), and Unity Software (U), are showing "vertical" chart patterns and are increasingly vulnerable to "short-term shakeouts." The note suggests that investors consider rotating into more defensive sectors, such as utilities or even Chinese tech, which has been consolidating for months. Together, the Apollo and BTIG notes point to a growing split in the market between long-term optimism around AI's potential and near-term concerns that valuations and concentration have gone too far, too fast. Francisco Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-07-2025
- Business
- Yahoo
Here's when a top economist says the US will see the most damage from Trump's tariffs
Damage from Donald Trump's tariffs will be felt in the next few months, Apollo's Torsten Sløk says. Apollo's top economist expects inflation to peak due to tariffs by November or December. The Fed is unlikely to cut interest rates until it surveys the extent of the impact, he said. Apollo's chief economist says the most damage from Donald Trump's trade war will be felt in the economy sometime around the end of the year. Torsten Sløk said he thinks that the sweeping tariffs the president announced this year will push prices higher until inflation reaches a peak in November or December. Speaking to Bloomberg this week, Sløk pointed to consensus inflation expectations, which show inflation rising through the last two months of the year. Inflation, meanwhile, is already starting to "lift-off" in consumer goods, he said. The latest consumer price index report showed that prices for durables grew 0.7% year-over-year in June, the second-straight month of growth after more than two years of annualized declines. The headline number also drifted higher, hitting 2.7%, from 2.4% in May. Services inflation, which accounts for 60% of the CPI, will likely take off soon as well, Sløk said. He pointed to the impact of Trump's mass deportations on wage growth, which raises employment costs for businesses and can cause prices to rise as well. "They need to wait to see the peak. And we have really only had the take-off stage," he said of the Fed and inflation Hotter inflation spells bad news on two fronts, Sløk said: The Fed is unlikely to cut interest rates. Central bankers will want to assess the peak damage from Trump's tariffs before loosening monetary policy more meaningfully, he said. It could be the start of a stagflation shock. In a previous note to clients, Sløk said he believed the US was already beginning to see a stagflation shock, a situation where inflation rises while economic growth slows. Economists have described stagflation as one of the worst-case scenarios for the economy, as the Fed can't cut rates to boost economic growth without fanning inflation. Stagflation could cause GDP growth in 2025 could more than halve from its peak last year, Sløk estimated in a recent whitepaper. Inflation could also remain around 3% throughout 2025, while the unemployment rate could rise over the next two years, he predicted, based on where tariffs stood in June. Read the original article on Business Insider Sign in to access your portfolio
