Apollo Chief Economist: Markets Caught Between Inflation and Slowdown Fears

Apollo Global Management's Chief Economist, Torsten Sløk, recently shared his insights on the current state of the markets, highlighting the delicate balance between inflation and slowdown fears. In an interview, Sløk discussed the challenges and opportunities presented by the ongoing economic landscape.

Inflation has been a significant concern for investors in recent years, with the consumer price index (CPI) reaching multi-decade highs. However, Sløk believes that the markets are now caught between inflation and slowdown fears, as the economy faces the prospect of a potential downturn. "The markets are in a tough spot right now," Sløk said. "Inflation is still high, but there are also concerns about a potential economic slowdown."



Sløk pointed to the strong performance of the US economy in the post-pandemic world as a key factor in the current situation. The economy has proven less sensitive to interest rate hikes, and there has been a surge in corporate and research spending, particularly in the AI sector. Additionally, fiscal policy has been more stimulative than in other parts of the world. "The US economy has charted its own path in the post-pandemic world," Sløk said. "It's diverging from its own historical performance and its historical correlation to other developed economies."

However, Sløk also acknowledged the potential impact of new policies following the election of Donald Trump as US president. If implemented, his key policy objectives—lower taxes, higher tariffs, and reduced immigration—could increase rates, boost asset prices, drive inflation, and strengthen the dollar. "It's too early to assess the impact of potential new policies," Sløk said. "But if implemented, they could have significant effects on the economy and the markets."

Despite the challenges posed by inflation and slowdown fears, Sløk remains optimistic about the long-term prospects for the US economy. He believes that the Fed will lower interest rates at a slower pace than the market expects, and that strong GDP growth, moderate unemployment, and persistent inflation are likely in 2025. "The outlook for the US economy remains strong," Sløk said. "We see no signs of a major slowdown going into 2025."

In conclusion, Apollo's Chief Economist, Torsten Sløk, has highlighted the delicate balance between inflation and slowdown fears that the markets are currently facing. While acknowledging the challenges posed by the ongoing economic landscape, Sløk remains optimistic about the long-term prospects for the US economy. As investors navigate the complexities of the current environment, they would be wise to consider the insights and expertise of experienced economists like Sløk.