00:00Torsten Schlock of Apollo says the following, we expect to see a Nike-Switch recovery for the economy over the
00:05coming quarters.
00:06Torsten joins us now. Torsten, good morning.
00:08Morning.
00:08Before we get to that, your reaction to that jobs report at 8.30?
00:11Well, it is absolutely correct, of course.
00:14Looking at it from only last month of what happened in February and March, it does look more volatile.
00:18But exactly the three-month average at 68,000, that's a pretty strong number,
00:22in particular when the Fed just yesterday published a research note saying that the new breakeven number is 10,000.
00:28On the timing of that note and that number on its own, it tells you that 68 is a blowout
00:33number over the last several months.
00:35So the momentum in the economy is really quite strong at the moment.
00:37The Taiwan's are real. We've had rate cuts. We're getting tax refunds.
00:41You've got all this capex coming from major companies in this country.
00:44How supportive of that will this be, of this economy, in the face of a real energy shock coming out
00:50of the Middle East?
00:50It will continue to be supportive and drive growth forward.
00:53Last year, the narrative was all about headwinds coming from the trade war.
00:56The Nike swoosh bottom that we're standing at at the moment is all about the three tailwinds that are now
01:00emerging.
01:01We have a lot of spending on AI, a lot of spending on data centers, a lot of spending on
01:04energy associated with AI.
01:06We also have productivity gains from AI.
01:08We also have, on top of that, an industrial renaissance.
01:10There's a huge political desire to bring back production of everything from pharmaceuticals to semiconductors,
01:16of course, also to defense. That's also an engine of growth.
01:18And most importantly, as you mentioned, John, we also had the One Big Beautiful Bill.
01:22Last year, on average, tax refunds was around $3,000.
01:25We calculated that this year, on average, tax refunds will be around $4,000.
01:29Why is that the case?
01:30Because the One Big Beautiful Bill lowered taxes retroactively starting January 1, 2025.
01:35That means that we have all paid too much in taxes when we go and file our taxes here on
01:40April the 15th.
01:40That means over the next several months, consumer spending should continue to see strong tailwinds.
01:44That's what we're seeing in retail sales. That's what you see in your weekly data from Redbook, same-store retail
01:49sales.
01:49That's what you see in TSA travel data. That's what you see in the daily data for travel across the
01:54board.
01:54So the conclusion is there is a lot of momentum in this economy because of AI spending,
01:59because of the industrial renaissance, and because of the One Big Beautiful Bill.
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