Speaker · Updated
Torsten Slok: latest market views
Apollo Global Management
Summary
Torsten Slok is Partner and Chief Economist at Apollo Global Management, which he joined in 2020 after about 15 years on the sell side (including as chief economist at Deutsche Bank), and is known for his daily chart-driven macro commentary, 'The Daily Spark'.
Chorus has 11 views from Torsten Slok across 2 episodes on Bloomberg Surveillance since October 12, 2026.
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The latest views
Newest first. Every quote is checked against the episode's transcript.
AI infrastructure & data centers
AI spending adds about one percentage point to US growth, making data center buildout a critical GDP driver.
Normal US growth is about 2%, and AI spending now contributes about one percentage point of it. The data center and associated energy buildout has contributed heavily to GDP growth, and consensus expects about 4% quarter-over-quarter annualized growth over the next 18 months. Because of this, the AI trade is now central to economic forecasting. If the buildout is delayed, the GDP outlook would also weaken. Talk in energy circles suggests only 25 to 50% of planned data centers may ultimately be built because of power constraints.
“growth normally is 2% and now one percentage point of growth is coming from AI spending.”at 13:51
Bloomberg Surveillance: Bloomberg Surveillance TV: October 22nd, 2026 ·
AI infrastructure & data centers
Credit spreads on AI names, including data center bonds and neoclouds, are widening and now matter for AI financing.
AI is not rate-sensitive, but yields and credit spreads on many AI-linked borrowers have widened substantially. Data center bonds are trading down and neoclouds are trading wider. The concern is that credit markets are beginning to question the economics of AI, particularly for hyperscalers. Investors are asking where the payoff is for the S&P 493. Productivity gains outside the Magnificent Seven are not yet visible. This credit pressure could curtail AI issuance and spending plans by more than currently projected.
“spreads on a lot of different things in AI have widened out now, where they are absolutely beginning to matter. That's why a lot of data center bonds are trading down, that's why of course the neo cloud is trading wider.”at 15:24
Bloomberg Surveillance: Bloomberg Surveillance TV: October 22nd, 2026 ·
AI infrastructure & data centers
Bipartisan voter hostility and state moratoria threaten data center buildout, a risk that could persist after the midterms.
Local ballot measures and city moratorium proposals on data centers are emerging. Torsten says the risks include moratoriums, pauses and audits in several states. Both Democratic and Republican voters are generally unhappy with data centers. The key question is what happens after the midterm elections, because opposition could continue or ease. Economists at his firm spend time on the post-midterm political outlook for data center build-out.
“the risks are, of course, that there is a moratorium, there is a pause, there's an audit in a number of states... both democrat and republican voters are generally not happy with data centers.”at 17:23
Bloomberg Surveillance: Bloomberg Surveillance TV: October 22nd, 2026 ·
Fed should hike at the October meeting; holding now means catch-up hikes likely in December and 2027.
Under the Fed's dual mandate, the labor market is strong, with ADP and weekly claims data improving, job openings rising and payrolls generally solid. Inflation was an ugly print that broadened across categories. Both parts of the dual mandate point to a hike, possibly at the next meeting. A Richmond Fed survey found 80% of businesses say monetary policy is not restrictive for their capex decisions. Torsten says it is unusual for the Fed to pause, so there is likely catch-up tightening later, especially into December and 2027.
“Inflation, it was a truly ugly number that we got. It was broadening out to a number of categories... both these two parts of the dual mandate would say, of course, the Fed should even be hiking next week.”at 17:58
Bloomberg Surveillance: Bloomberg Surveillance TV: October 22nd, 2026 ·
Higher rates are cutting housing supply, pushing rents up and feeding inflation, a perverse feedback loop.
Slok argues that when rates rise, construction slows and housing supply shrinks. With less supply, rents climb, and rent inflation is already accelerating in a large part of the country. Owners' equivalent rent is roughly a quarter of CPI, so this is a problem for the Fed: rates that should slow the economy are instead restricting housing supply and pushing up inflation. He frames this as a possible positive feedback loop, where a prolonged shrinkage in housing could add upward pressure on inflation.
“when you raise interest rates, you lower supply of housing. When you lower supply of housing, rents start going up, and that's exactly what we're seeing in a large part of the country.”at 18:02
Bloomberg Surveillance: Bloomberg Surveillance TV: October 12th, 2026 ·
Slower AI revenue payoff would hit valuations, including public-market valuations, not just rates.
Slok says the main question is when the AI payoff arrives and how large and fast it is. Companies expect AI to generate revenue increases in the trillions of dollars. If that revenue does not arrive quickly enough, it will have implications for many valuations today, including in public markets. He frames the current AI financing slowdown debate as being about this payoff timeline rather than about interest rates.
“if that revenue increase that's expected to come in the trillions of dollars as a result of AI is not arriving quick enough, then that will certainly have implications for a lot of valuations today, including also in public markets.”at 19:57
Bloomberg Surveillance: Bloomberg Surveillance TV: October 12th, 2026 ·
Companies are cutting token spending as costs bite, so token spending is flattening out.
Slok argues that companies paid heavily for tokens at the start of the year but now find them very expensive relative to their budgets, so they are reluctant to keep paying. Token prices have fallen while demand has risen, and as a result token spending has started to flatten out. He treats this as a separate driver from interest rates, one that affects the broader AI story and expectations for future AI revenue.
“No. I actually think that's more a token story that in the beginning of the year, companies paid a lot of money for tokens. Now companies realize that tokens are very expensive on their budget. So now companies, of course, are being more reluctant to pay for tokens.”at 19:57
Bloomberg Surveillance: Bloomberg Surveillance TV: October 12th, 2026 ·
Agentic AI could speed deposit outflows and expose bank funding mismatches, though a bank run is unlikely.
Slok argues that agentic AI could let deposits be moved in and out far more quickly than today. That threatens the basic bank funding model, where short-term deposits fund long-term lending, so the liability mismatch is the key challenge agentic AI poses to banks. He does not expect an agentic bank run to happen, but he thinks the issue will remain an important part of the conversation, especially as more deposits move on-chain and into the tech world.
“that mismatch in liabilities is, of course, the key challenge that's now coming from [agentic] AI. So I know I don't think we'll get an [agentic] bank run, but I think that this continues to be a very important part of the conversation.”at 21:05
Bloomberg Surveillance: Bloomberg Surveillance TV: October 12th, 2026 ·
Energy prices, delayed tariff effects and immigration limits keep US inflation pressures elevated.
Slok argues the Cleveland Fed's Hammack is right that the economy lacks restraint, because the sources of inflation are real. Energy prices are creating inflationary pressure. New York Fed surveys show tariffs still feeding through to prices. Restrictions on immigration are pushing up wage inflation in sectors that rely on unauthorised immigrant workers, such as construction, agriculture, hotels and restaurants. He says the business anecdotes gathered by Fed officials on the ground should be taken seriously.
“given we have inflationary pressures at the moment coming from energy prices, we still have delayed effects of tariffs according to New York Fed surveys, and we also have restrictions on immigration putting upward pressure on wage inflation”at 22:20
Bloomberg Surveillance: Bloomberg Surveillance TV: October 12th, 2026 ·
AI investment is supplying roughly half of US GDP growth, a dependence that could unwind in 2027.
Slok's calculation is that the AI boom adds about one percentage point to US GDP growth, against a normal trend of about two percent, so roughly half of growth now comes from AI. He notes that interest-rate-sensitive sectors like housing and autos are weak while AI, healthcare and education are strong, which is why higher rates are not slowing the economy as they normally would. If rate-sensitive sectors grow heavier and token spending slows, he sees a possible slowdown in 2027 that could matter for the Fed debate.
“So far GDP growth has been driven mainly by the AI boom is adding in our calculation about one percentage point to GDP growth at the moment. GDP is normally two, so now roughly half of GDP growth comes because of AI.”at 23:03
Bloomberg Surveillance: Bloomberg Surveillance TV: October 12th, 2026 ·
Rates aren't slowing growth; a recession-driven slowdown would stop the three priced Fed hikes.
Slok argues rates are not slowing the economy in the usual way. Housing and autos are rate-sensitive and weak, but AI, healthcare and education are strong and largely insensitive to rates, so higher rates are not restraining growth as expected. He frames the nightmare scenario for 2027: rate-sensitive sectors slow, AI slows as token prices and spending fall, and prices also fall, so both growth and inflation decline. In that case, he says the Fed will certainly not hike the three times markets currently price in.
“So the real nightmare scenario, if we just think into 2027, is now that the interest rate sensitive sectors of the economy begin to slow down... the Fed will certainly not hike the three times that's priced into markets at the moment.”at 24:36
Bloomberg Surveillance: Bloomberg Surveillance TV: October 12th, 2026 ·
Shows
- Bloomberg Surveillance · 2 episodes
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