00:00But at what point does this become not a commodity story? Because that's been the other reason why I think
00:04a lot of investors were willing to buy the dip.
00:06And, you know, we've had some folks in this program that said, look, you know, wake me when it starts
00:09to affect, you know, the bottom line for Microsoft or for Alphabet or something like that.
00:12We know what the impact is in the energy space, in the commodity space.
00:16Is there any material worry now that this could be a much broader issue for, you know, at least the
00:22public and traded companies out there?
00:24So we have to ask ourselves, you know, who we are most worried about.
00:29And I think one of the key areas that I'm worried about is the U.S. consumer.
00:34And, you know, the rule of thumb has been that if you get oil at $120, $130 a barrel for
00:40any kind of sustained period of time, that is very likely to trigger a recession.
00:44And I think that would largely be driven by the costs that the increased costs that consumers face.
00:51And we're already in a K-shaped economy where the lower leg of the K is under very significant pressure.
00:57We've heard about affordability issues for many, many months before this.
01:03And this is only exacerbating a lot of the problems that we've already had.
01:07We're already in a semiconductor shortage.
01:10That only gets worse because of this and on and on.
01:14So, yes, it's going to take a while for it to hit the bottom line of Microsoft.
01:18But we're also not factoring in the other issues that we were worried about before this military strike in Iran,
01:25which was the AI apocalypse.
01:29You know, sort of a whodunit.
01:30Which industries is it going to kill or, you know, do serious damage to, like software as a service?
01:37But far beyond that in terms of, you know, working through who could be impacted.
01:43And then you've got private credit.
01:44So you have a lot of issues facing this economy and very few drivers.
01:49I mean, we were really seeing most of the growth coming from AI data center build out and high end
01:55consumers and their spending.
01:58And if we see some kind of slowdown in those drivers, which could very well come from some of the
02:04factors that this economy is facing, it could be problematic.
02:07Well, let's talk a little bit more about private credit, which, of course, is related to the AI software questions
02:12that have been percolating through the public markets as well.
02:16But, I mean, the conversation we've been having is that it almost feels like a feedback loop when it comes
02:21to these redemption requests and maybe, you know, just structural misunderstanding or mismatched expectations when it comes to liquidity.
02:29But, I mean, what sense do you have, what do you make about what the fundamentals of some of these
02:35private credit portfolios look like right now?
02:37Because that's the big question.
02:39They're private by nature and certainly not as transparent as, you know, some investors have gotten used to.
02:45Well, that is absolutely the $64,000 question, and it is something of a guessing game.
02:50We can assume that there are some pressures, but it's unclear that this is anything incredibly dramatic.
02:58And so I would just say that it adds to fear, it adds to negative sentiment in markets, and ultimately,
03:06I think, just increases the pressure on the economy.
03:11And in my opinion, it's just so many factors building up that at this point, it just seems more likely
03:17than ever that this economy goes into recession this year, which is not being priced in.
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