Transcription
How can these companies that have been market leading, meaning that they've been driving returns for the S&P 500 so strongly for the last several years, how can it be that suddenly people are beginning to ask questions about what will be the situation for these companies over the next 5 years and is that divergence between hey fundamentals are really great but at the same time market pricing is telling you that there's more and more worries. That is the conversation in is it the market pricing that's wrong and the fundamentals are good or vice versa is the market pricing telling you that there is some more danger coming down the road and of course that danger is all about the payoff from AI.
Welcome to Profy Markets. I'm Edson. It is July 29th. Let's check in on yesterday's market vitals. The S&P 500 and the Dow rose. Meanwhile, the Nasdaq declined as chip stocks got crushed. More on that in a moment. Brent crude declined to about $84 per barrel. The yield on 10-year treasuries fell ahead of the Federal Reserve's interest rate decision due later today. And finally, SpaceX shares fell to a new low of $107 per share, down 52% from their all-time high.
Okay, what else is happening?
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The most important sector in the stock market is starting to fall apart. The tech-heavy NASDAQ 100 fell for a fifth straight day, briefly entering correction territory, meaning it fell 10% from its highs. Chip companies led the decline. The PHLX semiconductor index sank as much as 6% and Micron fell 9%. But the sell-off started overnight in Asia where SK Hynix dropped nearly 15% and the Kospi index fell 11%. This drawdown raises a major red flag. In the first half of this year, nine of the 12 biggest contributors to the S&P 500's return were semiconductor stocks. So investors are left wondering, where can this market go without chip stocks?
Here to discuss this, we're speaking with Torsten Sllock, chief economist at Apollo Global Management. Torsten, great to see you again. Thank you for joining us. You said an a striking quote recently on our friend Steve Eisman's podcast. You said, quote, "This AI thing better work out because if it doesn't work out, your portfolio will be in trouble." Is this a sign that AI might not be working out?
>> Well, the challenge at the moment is that the hyperscalers and those who are building the infrastructure, they are changing their financing, which used to be mainly from the equity side of the balance sheet to now being on the debt side of the balance sheet. And the amount of debt that has come to the market from the hyperscalers, meaning the companies that are building out the infrastructure, has just been enormous. So as a result, we've seen a very, very significant increase in supply of investment-grade credit that is in the hyperscaler space. And the consequence of that is that we have started to see spreads in credit widen out on that hyperscaler debt. And this has resulted, of course, in a number of questions being asked, namely, are spreads widening out on hyperscaler debt because of worries about the underlying credit of these companies, meaning their ability to pay back their debt, or is it simply just because of demand and supply that there's just more supply at the moment and now there's just not so much demand and as a result spreads have been widening out? The other development more recently to your question, Ed, is also the CDS spreads, meaning the cost of insuring yourself against these companies going under in the next 5 years. Those CDS spreads have also widened out quite significantly. So one way of answering your question is that there's simply so much debt that has come to the market and the market has now begun to ask some questions around, well, if these companies need all this financing, what is the right interest rate? What is the all-in level of yield that is required to finance the buildout the way that we're seeing at the moment? And that is really the starting point for how the domino bricks are toppling here, namely that spreads have widened out and as a result, the equity in these companies, the stock price of these companies have also started to underperform. And that is where we are today, namely this discussion around what is the speed of the AI buildout, what is the payoff from the AI buildout, and all those questions, of course, are very important when we think about the stock price, especially for the hyperscalers and more broadly the Magnificent 7.
>> Yeah, just looking at the price of those credit default swaps that you mentioned there, some companies whose credit default swap prices have hit record highs in recent weeks: Oracle, uh, SpaceX, Google, Amazon, recently, uh, Nvidia. I mean, from your perspective, how dangerous is the debt situation in AI right now? Uh, how likely is it that some of these enormous names that have become so structural and so important to the market could actually go under in the next 5 years?
>> Yes. So what is really important about that question is, remember that all these companies, as you, of course, know all too well, they are investment-grade credits. That means that they are very, very profitable. They have very, very strong earnings growth. They have very high profit margins. They generally have very, very solid credit fundamentals. That's, of course, very important when we begin to think about the question, will they go under over the next 5 years? Because companies that are among the most profitable companies in the world and have done exceptionally well in the last 3, 4 years, of course, they are very, very unlikely to go under. But that is exactly the mirror image of this discussion. Given everything that if we just agreed on how solid they are from a credit perspective, why is it that these credit spreads are widening out, especially to your point? Why is the CDS widening out? Meaning, why are people buying protection against these companies going under the next 5 years? What are people really worried about? And that's, of course, why the discussion in the market at the moment is about how can these companies that have been market leading, meaning that they've been driving returns for the S&P 500 so strongly for the last several years. How can it be that suddenly people are beginning to ask questions about what will be the situation for these companies over the next 5 years? And it's that divergence between, hey, fundamentals are really great, but at the same time, market pricing is telling you that there's more and more worries. That is the conversation. Is it the market pricing that's wrong and the fundamentals are good, or vice versa? Is the market pricing telling you that there is some more danger coming down the road? And of course, that danger is all about the payoff from AI. How long time will it take before we see the payoff from AI? Remember, as we all know, stock prices today is the net present value of future discounted cash flows. So that means that at the moment, the market has a certain expectation, the consensus has a certain expectation that returns will look say like this. But if the payoff in AI is going to come only like this, that means that the net present value of these companies, so they should be lower. And that is the risk, of course, at the moment that maybe the market pricing is actually correct in the sense that there's more questions being asked about what is the payoff profile. Because if it is involving a slower stream of payments in the future, then it does imply that the equity should be lower today and credit spreads should be wider today. So this is this discussion around AI implementation. Where are we seeing it paying off? Are we seeing it in form of higher productivity? Are we seeing in the form of a stronger economy? That is the very abstract discussion that is behind most of these price movements that we have seen.
>> Why do you think this is all happening right now? And when I say this, I refer to the negative sentiment surrounding these companies and surrounding the AI buildup because these are topics that you and I have discussed for many months at this point, that other people and other investors have discussed for a long time. But it seems as though, I mean, to Jeremy Irons' quote, logically this, it seems as if the music is beginning to get quieter only now. And I can't quite tell why that is. Why is it happening at this moment?
>> I think there's a series of developments that have brought us to this point. First was Amazon issuing debt, and that resulted in some concessions and some changes in the debt that was issued, and it's been trading wider, meaning the market saying that spreads on this particular credit should be a bit wider. We've also seen last week, and you talked about this last week, of course, Google going for the first time in its history to now having negative free cash flow, which is also a development where people are beginning to ask, is there too much investment? Is there too little investment? If there's negative free cash flow, what does that mean? How long time is that going to take? How many years will it take before we see a payoff on those investments? So I think it's a reaction to some of the individual events we've seen around individual names that are moving towards the narrative. Exactly to your point, or in your language, as you just mentioned, the music being a little bit more quiet because people are beginning to ask, okay, uh, yes, this has been going on for a while, in fact for several years, this has been the main driver of returns in the S&P 500 and NASDAQ. Uh, but now the questions are being asked, well, okay, but, uh, what is the profile of this payoff in earnings? So there's two races going on, namely there's a race to deliver, uh, ROI, meaning return on investment for AI. And there's a second race, namely that the data, the buildout requires a lot of financing. And if that financing now is becoming more and more expensive, then people are asking essentially two questions about, on the one hand, how quickly will the AI investments pay off? In other words, in the form of higher profit margins, in the form of higher earnings growth, not so much in the Magnificent 7, but higher profit margins for the S&P 493 and higher earnings growth for the S&P 493. And similarly, the other race is at the on the other side, namely, can we still continue to see issuance of hyperscaler debt, of debt for the buildout to grow at this very, very rapid pace if the spreads are now widening and if the CDS spreads are also widening? So those two things are the two areas to watch, namely, what's the evidence of AI paying off? And the other area is to watch what is the returns and what is therefore the spreads that investors require, especially of course on hyperscaler debt.
It seems like whenever these questions are put to the CEOs of these companies, these big tech companies, they often avoid the question or they don't answer it fully. Or in the case of like Jensen Huang, for example, where it was asked of of his company, what's going on with all these circular deals? And his response was, I don't think there's anything circular about what we're doing, which, I mean, to me is kind of insane. We have big tech earnings coming up. I'm curious if you think that we will get some clarity on a lot of these questions from the leaders of these big tech companies and these hyperscalers. Do you think the fears will be addressed?
>> Yeah, this is extremely important because I actually think the most important event tomorrow and of also on Thursday are the hyperscaler earnings. It's actually become more important than the FOMC meeting. And despite that, I'm an economist who spends all my time when the Fed, and you and I have talked about this for a long time, naming that, of course, Fed action is very important. Are they raising interest rates? Are they not raising interest rates? That's a very important debate at the moment. But currently, because we are at approaching, it looks like at least some inflection point and the risks are rising that the market might interpret this as an inflection point. It becomes very, very important what we get from the three hyperscalers that are reporting tomorrow and Thursday because, to your point, it almost feels like that there's a whole different conversation going on. The labs and the hyperscalers are talking like this is existential. We have to do this. There can be no discussion about it because this is the only thing that's required to, of course, we need to create as much compute as we can. Whereas on Wall Street, the conversation is saying, well, hold on, what is the price for that compute? How much revenue can you generate for that compute? In other words, in plain economics, what is the marginal cost and what is the marginal revenue from these investments? So I think that discussion really is really the technologist talking in the direction of saying, of course, we need a lot more tech, we need a lot more compute. And the market and the Wall Street language saying, well, no, that price of building that compute is now coming at a wider spread because there's simply not enough capital available to build that compute. And that is coming together tomorrow and the day after in the hyperscaler earnings because then we will figure out, is it still the message from them like it was with Google last week that we're still growing the capex more and more and more, or are there signs that the capex has been as a roll over? And how is that then going to be interpreted by market? So there's a lot of different small signals, not so much only about the headline earnings, but also about what is the action from the hyperscalers. How do they think about the spread widening we've seen during this quarter in terms of their plans for the capex continued buildout.
>> Final question. One of your big themes has been, you pointed out how dependent on AI the market has become. And so your advice is, try to find areas and investments that are not AI. Can you figure out how to how to diversify away from AI and that might be the right investment strategy? First question, I mean, Apple has been the best performer of the year. They're the ones who sat out of the AI race. Number one, is that a non-AI investment? And number two, what areas and what sectors are you looking at? What are some some ways that people and investors can diversify out of AI if they're worried that the AI trade is starting to slow down?
>> Yep. Because if we think about the 60/40 portfolio, this is the simplest way of thinking about investing. I have some bonds, I have some equity, and the equity is 60%, the bonds is 40%. Historically, this has been very diversified. When stock prices went up, bond prices would go down. And vice versa, when stock prices went down, bond prices would go up. So I would be naturally hedged that if one side didn't do well, then the other side would do well. This worked out for a long, long time when interest rates were falling and that resulted, of course, in rising stock markets and at the same time, whenever there was a bump, it was always a good idea to be in bonds. Today, we have a very different situation because in the equity side of my portfolio, the 60, that has to a very significant degree, the returns been driven by AI. The 10 biggest stocks now make up 40% of the index. It's very clear that AI has been dominating returns when it comes to investing in public equities. On the bond side, it's also turning into more and more AI. Hyperscaler issuance is, of course, AI in software. We also have a lot of issuance now in AI and venture capital. It used to be the venture capital was inventing prescription drugs, pharma, biotech, but now venture capital, 87% is also AI. So the challenge to this discussion is that investors, AI is really everywhere. It's in equities, it's in credit, meaning public credit, and is also, of course, in venture capital. So the answer to your question is exactly that, a good recommendation at the moment is to invest in non-AI. And what really is fundamentally non-AI is really value. V, value investing is not been popular for a long time. But if you look at the factor models at the moment, growth is absolutely crashing completely and value is skyrocketing because people are going away from growth towards value to actually invest in companies that have earnings, to actually invest in companies that are able to pay their debt servicing costs so that they're not vulnerable when interest rates are higher for longer. So non-AI in this case, in the public space, means the S&P 400. In the private space, it means private equity that is value investing, then private credit that is value investing. And more broadly, non-AI, of course, also means sectors globally, of course, also commodities that are not directly associated with the AI trade. Those are places to hide and to invest to benefit from not being in the AI trade because the AI trade, of course, is wobbling at the moment.
All right, Torsten SL is chief economist at Apollo Global Management. Torsten, always appreciate your time. Thank you.
>> Anytime, mate. Thank you.
>> We'll be right back. And if you're enjoying the show, be sure to subscribe to the ProfG Markets YouTube channel at the link below. Support for the show comes from Lisa. If you've ever looked at Maslow's hierarchy of needs, you'll see sleep right there at the foundation, right in between breathing and eating. Good sleep is the bedrock of a good life. And the bedrock of good sleep just might be a Lisa mattress. Lisa has a lineup of beautifully crafted mattresses tailored to how you sleep. Each mattress is designed and assembled in the USA with specific sleep positions and feel preferences in mind. And they back it all up with free shipping, easy returns, and a 120-night sleep trial. Our research associate Dan Shalon got a mattress from Lisa. He went with the Sapra Hybrid and he said it provides the perfect amount of support. Plus, he's been sleeping noticeably better since he got it, which is great news for all of us. Go to lisa.com for 30% off select mattresses. Plus, get an extra $50 off with promo code markets exclusive for our listeners. That is lessa.com. Promo code markets for 30% off select mattresses plus an extra $50 off. And when you use [music] our code, you are supporting our show. lisa.com, promo code markets.
We're back with Profy Markets. Trump's latest trade strategy just took effect. Early on Friday, a new set of tariffs kicked in on 80 countries covering more than 99% of US imports. These tariffs replace the temporary levies Trump put in place back in February, the same day the Supreme Court struck down his original Liberation Day tariffs. And this time, the Trump administration is reaching for a new legal tool, section 301 of the Trade Act of 1974. The stated rationale: countering the loss of US business from the use of forced labor. Countries that have taken steps to ban forced labor will face a 10% tariff, while those without a ban face a 12% tariff. The average tariff rate is now 11.1% and is expected to rise to 11.8% by the end of 2026. That is according to the Yale [music] Budget Lab.
Joining us to discuss these tariffs, we're speaking with Justin Wolfers, professor of public policy and economics at the University of Michigan and the founder of Platypus Economics. [music] Justin, it is great to see you. It feels like it's been a long time. I'm not sure it has, but it feels that way. We wanted to get your views on this new tariff regime specifically. Is it different from the previous one? Is it worse, better, the same? What do you make of it?
Well, it's really interesting. If I told you that there was a new set of taxes, that there's a political party in Washington that's in favor of taxes and it's taxes because it cares about forced labor. Do you really think that would be the Republican party or the Republican party of old? But, um, it does seem that the president has found his deep and abiding passion for the world's downtrodden and he's also come to understand the value of taxes as a way of funding the welfare state and and help. Sorry, I forgot we're in America. There's a big sarcasm sign right here. Uh, you probably didn't need it, but. Okay, mate. Let me answer your question. I'm going to give folks at home just a little bit of rewind. Step, you know, it's a it's a it's three episodes. Episode one was Liberation Day, the Emergency Powers Act, set of tariffs that they've had to pay back because they were never constitutional. Then they moved to a so-called balance of payments crisis despite the fact that America's balance of payments is and has been for decades precisely $0, but that was regarded as a crisis. Those tariffs are still unclear if they were legal and whether we might have to pay them back. But by the same token, even if they were legal, they ended last week, 6 months later. That was the nature of the legislation. So now we need to look around behind the couch and see if we can find a leftover tariff authority that the United States government might be able to use. Remember, actually, it's very easy to get tariffs done if you're the US government. What you do is you read in the Constitution where it says the right to tax and the right to tariff belongs with Congress. The president refuses to go to Congress because the president doesn't like Congress and Congress doesn't like tariffs. So he fiddles around down the back of the couch and discovers this section 301 thing that you're talking about. What it does, if you're a White House lawyer, you get to say, "You beauty, the boss wanted tariffs. I found a way to give them to him." If there was an economic team at the White House, they would have said, "No, no, no, no, no. That one doesn't work because it doesn't actually achieve any of the things we want." Let me explain why. This is a global across-the-board tariff, basically 10 or 12% on every essentially every country we trade with. If what the president wants is bargaining power when he sits down with President Xi in China, this doesn't give it to him. He can't say do what I want or this form of tariff goes up, and he can't say thank you for paying homage. I'm going to reduce this form of tariff. So the very thing the president wants tariffs for, this doesn't deliver. So episode three of the tariff saga is the worst and surprisingly enough the dumbest one yet.
I think this brings up an important question, which is like, why are we doing it again? It it seems like the consensus from 2025 is it did not, it was not paid for by other nations. We have a pretty clear understanding of that. It was paid for mostly by American companies or by American consumers.
>> We gave the money back when they're illegal and unconstitutional. We didn't even raise money.
>> And that was another piece of it too. So, so we tried it, didn't work. Then we were told by the Supreme Court, not legal. Now we also have launched a war in Iran, which is adding more fuel to the fire that is inflation. And we're doubling down. And so I guess the question, like, is there any world in which this makes any economic sense whatsoever, or is this pure grievance, pure politics, just an excitement about bullying other nations? What actually is in it for us here?
>> Yeah. So, there's there's several questions there. One is, is there a world in which there are tariffs that would have an economically defensible rationale? I'm going to say yes, there is. I don't love it. I don't love those tariffs. But we could have a real debate about smart tariffs, targeted tariffs, tariffs that serve the American interest. It would not be tariffs on inputs into American production. It would not be on again, off again so that businesses could actually make invest. If they're lasting businesses, would make investments in the United States. There's a bunch of things that you would do completely differently. So could we have a sensible set of tariffs that would not seem like lose-lose? We could. Is this that? No. Um, what this is is a set of tariffs. Basically, Jameson Greer is a lawyer and the boss asked for tariffs and he found a way to get in tariffs. But Jameson Greer forgot actually the reason we want tariffs is to serve America's interest. Um, Ed, I hate doing this to you, but I love it, which is pretty much at the same time as you release this video, Platypus Economics is going to release one where we take a look at what the underlying theory of international trade is. And I'm happy to repeat any of it for you here, mate. Um,
>> Yeah, please.
>> Which is there is actually, if you listen to Jameson Greer's very revealing interview on The Daily, the New York Times podcast, there is actually a very serious theory of the case. But the theory of the case is fundamentally that of a lawyer. A lawyer is the bloke you call in when the other country does something wrong, you have a grievance, you want damages, and you go and you see what you can do. The problem with a lawyer is a lawyer tends to think in very zero-sum terms. If you got something, it's something that I didn't get. That is, they think about trade very much as zero, um, head-to-head battle. It's a war. And Jon Green uses a lot of war language, literally war language.
>> Whereas economists start by thinking, why do people trade? Like right now, Ed, you and I are engaged in international trade, which is you, a Brit, are trading your services as a podcast host with me, an Australian economist trading my services as a stunningly, stunningly insightful economic commentator. Now, we're doing that because we're both better off. And if I could like speak for the rest of this and speak over you and then if you had a zero-sum capacity, you think, well, Ed lost, therefore Justin gained. Actually, it would just create a shitty podcast, right? We'd both lose and the audience would lose. And that's the fundamental difference, which is you and I understand trade is cooperation. And the moment you understand that, then throwing up roadblocks to cooperation is different than throwing up roadblocks to the other side in a war. So there, there is a coherent view. It's just muddled.
>> It seems like the psychology of the president is that any transaction, any form of business is a form of war. It's a form of battle. It's requires some level of aggression. The thing that is so remarkable about this though is how clearly it backfired and and hurt him. Not just in terms of what we saw in terms of inflation, but also the polling because people are seeming to connect the dots here. More tariffs equals more inflation. Which brings me to your views on, or I'd like to get your views on what inflation will look like over the next year. It seems that the Iran war is kind of similar to tariffs last year, which is it's on again, off again, and no one seems to know what's actually happening there, but it's still generally around. Tariffs are the same story. Um, what do you think inflation will look like in 2026? Do you think that this round of tariffs will continue to contribute to higher prices?
>> Yeah. So, let me be a little glib, but in the service of something, which is the president is actually a really brilliant TV producer. And I'm not being funny there. I think that he has a a great sense of drama, of narrative, of intrigue, and I always want to tune in for next week. I didn't actually watch The Apprentice, but we know some people did, right? [laughter] Um, he appears to be taking that to the White House. Now, here's that's the glib part. The analogy though that is useful, which is it's the same writer room. It's the same writers room running the trade war as is running the Iran war.
>> And so Ed, you and I spent a year talking about the trade war. And neither of us has a lot of defense knowledge. I'm the I'm happy to admit that. I know I look like a soldier, but actually beneath this tough exterior is a quiet professor. Um, and but it is the same writer room and they do seem to be on again, off again in exactly the same way. And I think in season 3 of Tariff Wars, we've learned this is a telenovela that's never going away. And look, I really hope the Iran war goes away, but given what we saw on, you know, we've got one production company, they've got one major franchise, the trade wars. We know what their story lines look like. It feels like that's going to be the story line over in Iran. There's one important thing they both have in common, which is these are both supply shocks, right? A supply shock raises the cost of doing business and slows the economy. So, two bad things. And the thing is, a Fed can't fix a supply shock. It can fix one of the two symptoms, but not both of them. It's also the case that the economics textbook says when there's a supply shock, you raise the cost of doing business. Everyone raises their prices to take account of that. And that might be the end of it. That we have higher prices, but if that's the end of it and those prices stay high, we get no further inflation. So, the economics textbook actually says if you're the Fed, you can afford to wait it out. You can look through it. I partly because I write economics textbooks, I tend to think we should take economic theory a little bit seriously. The counterarguments are very strong. The counterargument Kevin Walsh has said is, you know, we've been out there for 5 years waiting for transitory to prove itself to be transitory. How much longer can we afford to wait? But I think, you know, certainly tariffs are still playing a role, but actually the effect of tariffs on price levels, it's going to be complete pretty soon unless the president does something crazy. The effect of the war probably still has a little bit more to go. But therefore, the effect on inflation through say, after the midterms, might turn out to be relatively minor if we're prepared to be patient.
>> So 3.12% right now. I I I assume that you would agree that that's not a particularly sustainable inflation rate if we sit around there for the next several months, or is that cause for real concern?
>> So the the the simple answer is simple, which is the Fed says it should be two. We're aiming for two. Three and a half isn't two. That's the very simple answer. And so that's the, look, if you guys are going to crush the economy every other time we get inflation, you should do it this time. I want to see some internal consistency. I do think that's a little too glib because of the fact that this is a supply shock. If this were a demand shock where we're running the economy hot,
>> That's caused three and a half% inflation and the Phillips curve says it's going to continue to do that and maybe even escalate, then I think there's no case for being patient. Um, but you know, I, it is one of those finely balanced moments. I checked the markets recently, just like literally minutes ago, and they said the betting odds for tomorrow's Fed decision is 70/30. Um, I want folk, 70/30 sounds like, oh great, the markets are pretty confident the Fed's not going to move. Actually, I want folks to understand it's very rare for the day before a Fed decision for things to be that much up in the air. So,
>> I want to acknowledge both sides of that debate are actually bringing good faith, good rigor, good arguments. I don't need to whine within half a percentage point or so of what what the right rate is. I don't need to whine about it. So, I think we don't know what's going to happen tomorrow. Um, but that gives you a sense of how, how good the arguments are on both sides.
>> Yeah. Just for context for listeners, this goes out, this episode comes out Wednesday. We're recording this Tuesday, July 28th. So that interest rate decision will come out later today.
>> Happy, happy Wednesday, Ed. By the way, what a delightful Wednesday it's been. What about those lot numbers from yesterday? Could you look them up for me?
>> Exactly. I'll check him out. But the expectation is that rates will stay where they are. But as you say, a rate hike isn't off the table. And I thought it was quite interesting. Citadel Securities, this quant fund is predicting that the Fed will raise rates. As you say, we don't know. And it's very uncertain. And this new Fed chair is unlike other Fed, previous Fed chairs where he's kind of refusing to give us much guidance at all. So we don't know. Do you have a prediction though for what might happen here, or do you have a thought on what is the right decision?
>> Right. This, so on the prediction side, you and I are in slightly different lines of business. You talk directly to people in markets. People don't pay me enough money to do that. If anyone wants to, they're welcome to pay me a lot of money. Um, given [clears throat] that the markets say it's 70/30, I reckon the 70% chance thing is more likely to happen than the 30% chance thing. And I think also whoever you interview next who gives a more confident answer should remember actually that markets tend to be better informed than any economist. So I just sounded glib, but actually I wasn't. I was the most accurate economist you'll ever talk to because I said I am dumb relative to markets and I'm the only one dumb enough to admit that. Um, [laughter] so what I'm more interested in is, you know, helping people understand what's going on. And if things do go authorized, there are times you and I, Ed, have been having conversations like this before Fed meetings saying, "I can't believe the mistake they're on the cusp of." And so I think at a moment when the debate is, you know, pretty close and it's serious, I actually just want to acknowledge, good job, Fed. You guys have brought out the the right arguments. You know, I wasn't a huge fan of Kevin Walsh before the fact. Very interesting Wall Street Journal article yesterday that seems to suggest there's a little more friction inside the Fed than we'd heard previously. Um, but I do feel like we're in a good place with the Fed, and that's fantastic because that's not true for all federal agencies.
>> If people thought that Kevin Walsh was going to be the sock puppet that would do whatever Trump wanted him to do, that appears to not be the case at all. It does appear that he is taking inflation quite seriously, perhaps more seriously than anyone else, more seriously than than anyone had expected. Uh, which I agree. I think that is good news. Justin Wolfers is professor of public policy and economics at the University of Michigan. He is the founder of Platypus Economics, and you can find some of his, uh, economic analysis there. Justin, we really appreciate your time as always. Thank you.
>> Great pleasure and happy Wednesday.
>> Okay, that's it for today. Tune in tomorrow for our coverage of Microsoft and Meta's earnings. [music] We will see how they fare amid this broader tech selloff. We will also be covering the Federal Reserve's interest rate decision on Cali. The odds that the Fed holds rates steady this time around are actually about 77%, but it's worth noting the odds of a rate hike before year-end [music] are at a new high of 74%. Stay tuned. Thanks for listening to Profy Markets from Profy Media. If you liked what you heard, subscribe to our YouTube channel and tune in tomorrow for [music] more.
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