Armed with a PhD in economics, Torsten Slok spent several years at the OECD, doing deep dive analysis and making policy recommendations on big picture issues such as pension reform, tax systems and health care policy, before ultimately hitting Wall Street. He spent more than 15 years on the sell-side, a period that included the GFC and Pandemic and the lean rate years between them.

Now a Partner and Chief Economist at Apollo Global Management, Torsten is providing input on the macroeconomic backdrop and the implications for the firm’s investments. Our discussion primarily considers the joint states of the economy and inflation - where we’ve been, where we’re headed and the read through on Fed policy. On the economy, Torsten suggests that in this cycle, the transmission of changes in monetary policy to the real economy is especially lagged as both individuals and corporates have largely shielded themselves from rate increases.

On inflation, Torsten describes the ebbing and flowing of goods versus services inflation. The latter, which fell sharply during the Pandemic lock-downs has re-emerged as consumers travel, stay at hotels and attend concerts. We then talk about wages, which Torsten believes the Fed sees as still too high. Moderation here is a key part of reducing service sector inflation which, in turn, is needed to reduce the overall level of inflation.

I hope you enjoy this episode of the Alpha Exchange, my conversation with Torsten Slok.