Bloomberg Surveillance TV: August 10th, 2026

Summary

Bloomberg Surveillance TV: August 10, 2026 — Podcast Summary

Episode Overview

This episode of Bloomberg Surveillance focuses on the critical intersections of technology, capital investment, and financial markets. Hosts Jonathan Ferro, Lisa Abramowicz, and their guests analyze the ongoing demand for capital within the tech sector, the implications of aggressive AI-related spending, and the shifting landscape within both private and public credit markets. Key segments feature insights from Eric Johnston (Cantor Fitzgerald), Sarah Kunst (Clio Capital), and Emily Bannister (Wellington Management). The episode also touches on macroeconomic challenges, consumer impacts, and the nuanced evolution of risk in a high-capex, AI-driven environment.

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Key Discussion Points & Insights

1. Tech Sector Capital Expenditures & Market Dynamics

Tech’s Ongoing CapEx Surge

• Eric Johnston (Cantor Fitzgerald) discusses extraordinary capital expenditure (capex) demands, projecting the "big four" tech firms’ spending exceeding $1 trillion next year, especially driven by AI and cloud infrastructure build-outs (02:38).
• Companies like Microsoft and Amazon are now demonstrating faster monetization — cloud growth has accelerated, margins are expanding, and rental prices for compute are rising, reducing the need for raising external capital (02:38).

"The amount of capital that is going to be required is clearly going to be enormous... you're seeing margins expand and you're seeing rent prices for compute starting to move higher."
— Eric Johnston (02:38)

Why Front-Load Capex?

• Companies are making significant investments now, anticipating rising costs of borrowing and long-term infrastructural requirements. Early capex is substantially higher compared to later years, with benefits to free cash flow expected in future quarters — a trend already seen with Microsoft (04:27).

"When they're building a data center there are parts ... that have a 30 year life. ... CapEx requirements early on are a lot more than ... in two, three, four years from now."
— Eric Johnston (04:27)

Market Impact of Tech Earnings

• Recent earnings from Big Tech were seen as an inflection point. For cloud businesses within giants like Google, Microsoft, and Amazon, revenue growth is accelerating (40–70%). This suggests strong ongoing demand (06:04).

"Margins are starting to expand ... because the demand for compute continues to outstrip supply, pricing is going higher, margins are going higher."
— Eric Johnston (06:04)

Intel’s Stock Offering & Industry Implications

• Intel’s $15B stock offering is discussed as a necessary move tied to its unique U.S. foundry ambitions—unlike other chipmakers, which are generating strong cash flow and buying back shares. The broader concern: rising equity supply could weigh on markets longer term (07:12).

2. AI Infrastructure & Leverage in Markets

Market Cleansing & Momentum

• A recent “washout” event cleared out leveraged retail flows and crowded AI momentum trades, particularly impacting South Korea and certain ETFs. Now, institutional positioning is seen as “cleaner,” supporting continued strength in AI-linked equities (08:35).

"We saw a major derisking ... from institutions who were in this momentum trade. ... We think was a clearing event ... now you have this cleaner positioning."
— Eric Johnston (08:35)

3. AI’s Consumer & Competitive Landscape

The Role of TSMC and Google in AI

• Sarah Kunst (Clio Capital) emphasizes TSMC’s irreplaceable role in near-term global chip supply for AI, validating the bull case for select tech stocks (12:54).
• Alphabet (Google) stands out thanks to its massive Android user base (3B devices), which positions it as a likely winner in on-device AI. However, she notes, some companies (e.g., SpaceX, CoreWeave) appear overvalued (12:54, 13:52).

"Google at the end of the day will power, particularly in mobile, the vast majority of on-device AI."
— Sarah Kunst (14:32)

Apple, Android, and Chips: Trade and Consumer Risks

• Apple experimenting with Chinese CXMT memory chips raises questions about U.S. tech supply chain openness and pricing pressure. If Apple and others seek cheaper chips, prices could fall for consumers — but not necessarily for tech stocks themselves (15:20).

"The reason that the Apples of the world are curious about using these other chips is largely because of price and ... the political climate in China."
— Sarah Kunst (15:20)

Capital Intensity, Monetization, and Consumer Health

• Sharp rises in capex may pressure component profit margins (e.g., memory chips). Ultimately, monetization speed is critical — not only for VCs but for consumer affordability, which is under strain amidst broader economic uncertainty (16:39).

"...all the VC dollars in the world don't make a difference if ... the end consumer can't afford to buy what you're selling."
— Sarah Kunst (16:39)

Apple’s Changing Narrative

• The episode discusses Apple’s relatively defensive capital position, recent share downgrades, and questions over new leadership in Cupertino. Future growth may hinge less on new product cycles and more on monetization or replacement cycles (17:59).

"Their products are so good and they're relatively reliable that you're not constantly buying more. And so where do they get that extra money...?"
— Sarah Kunst (17:59)

4. AI Financing, Credit Markets, and Selectivity

Lender Selectivity in the AI Build-Out

• Emily Bannister (Wellington) underscores the broad set of financing avenues for AI — spanning data centers, power, cooling, etc. — and stresses the need for lenders to be sharply selective, as indiscriminate thematic investing (“rising tide lifts all boats”) no longer works in AI (22:22).

"AI is a place you need to be selective because it's becoming increasingly complex..."
— Emily Bannister (23:46)

Navigating Risk, Yield, and Market Overlaps

• Due to complexity and mounting risk factors (tenant, construction, geographic, political), investors must weigh yields against very specific exposures. Cross-market financing (banks, public, and private credit all supporting the same infrastructure) makes holistic risk management essential (23:24, 24:13).

Political Risk and Geopolitics in AI Infrastructure

• U.S. data center build-outs face political and community pushback, with moratoriums and election-year debates (25:30). Each project’s risks are increasingly local and political, not just financial.

5. Leveraging & Correlation Risks in Market Structure

• As capital requirements push new equity and debt to market, the risk of greater correlation between stock and bond markets is rising — an unusual dynamic that could drive new volatility or systemic risk (26:22, 27:06).
• Bannister observes that while leverage is rising in some private credit pockets, the market's growing institutional depth creates areas of both emerging risk and unique opportunity, demanding more nuanced portfolio construction (28:01).

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Notable Quotes & Moments (with Timestamps)

• Eric Johnston:
  • “The amount of capital that is going to be required is clearly going to be enormous… what they're starting to show is… cloud growth has accelerated… margins expand” (02:38)
  • “[Data centers] have a 30 year life… CapEx requirements early on are a lot more than… in two, three, four years from now.” (04:27)
• Sarah Kunst:
  • “TSM is… irreplaceable in chip production for the next three to five years… no real competitors on the horizon.” (12:54)
  • “Google at the end of the day will power… the vast majority of on-device AI.” (14:32)
  • “All the VC dollars in the world don’t make a difference if… the end consumer… can’t afford to buy what you’re selling.” (16:39)
  • “Their products are so good… you’re not constantly buying more.” (17:59)
• Emily Bannister:
  • “AI is a place you need to be selective because it’s becoming increasingly complex…” (23:46)
  • “We actually did some work on… data center deals… about a third were financed by banks, about a third by the public markets, and… a quarter by private credit.” (24:13)
  • “[In private credit] there are certainly areas where you’ll find stress or leverage. There are also areas where you’ll find incredible growth profiles…” (28:01)

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Segment Highlights & Timestamps

• [02:07] Stocks, bonds, and tech capex outlook with Eric Johnston
• [06:04] Tech earnings and sector momentum
• [07:12] Intel's stock offering implications
• [08:35] Market leverage and positioning washout
• [12:54] AI supply chain and tech stock perspectives with Sarah Kunst
• [14:26] Google’s mobile advantage in AI
• [15:20] Chip supply chain geopolitics
• [16:39] Capital intensity and pressure on consumer affordability
• [17:59] Apple’s business challenges post-Tim Cook
• [22:22] Lending, risk, and selectivity in AI finance with Emily Bannister
• [24:13] Financing structures and cross-market analysis
• [25:30] Political risks in data center rollouts
• [26:22] Equity issuance and market correlation concerns
• [28:01] Private credit risks and opportunities

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Tone & Takeaways

The discussion is candid, insightful, and pragmatic — fitting Bloomberg’s reputation for rigorous market analysis. Speakers balance bullishness on tech's underlying trends with strong caution regarding risk, leveraging, and the complex realities of market and political forces shaping the future of AI investing and infrastructure.

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For More

Watch or listen to Bloomberg Surveillance TV weekday mornings 6–9am Eastern.
Subscribe via Apple, Spotify, Bloomberg Terminal, or the Bloomberg Business App.

Transcript

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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro along with Lisa Abramowicz and Annmarie Horden. Join us each day for insight from the best in markets, economics and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from 6 to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always on the Bloomberg Terminal and the Bloomberg Business App.

[Jonathan Ferro]

Begin this hour with stocks and bonds kicking off the trading week. Little change. Erik Johnston of Cantor Fitzgerald writing Equities will need to battle the negative seasonality over the next two months. We think stocks can power through these headwinds and will be led by the tech sector. Thank you so much for joining us Eric. Now for more. Eric I just want to start on and all of this financing that is expected coming out, we're seeing this from intel, we're seeing this now from Macquarie and Anthropic. At what point does it get concerning based on just the ability to monetize it in quick fashion?

[Eric Johnston]

So the amount of capital that is going to be required is clearly going to be enormous. We're going to see a big step up in CapEx next year to over, you know, over $1 trillion from, from the big four. But the bottom line is, is that what they're, what they're starting to show is and this is what the market has been looking for. We saw it from Microsoft and Amazon's earnings where cloud growth has accelerated. And so you're seeing margins expand and you're seeing rent prices for compute starting to move higher. And so part of this story is about the cash flows from these businesses increasing and likely reducing the need for, for as much capital markets as people expected before. And so I think that's, that's incredibly important. Now the reality is, is that you know, equity and debt is going to be needed and that's been part of the pressure that we've seen on Treasuries because the amount of paper that's going to need to come to the market from a corporate perspective is going to be very significant. But I think the key point is that you're going to see these cash flows from, from operations increase and that will likely reduce the need for the capital markets.

[Jonathan Ferro]

Eric, I just wonder what some of these companies know that we don't. Why are they frontloading all their capex now unless it's a market that is frankly looking really good to them. In other words, they think it's only going to get more expensive for them to borrow which means that yields are only going to get wider which means that anyone who's buying in right now is probably going to lose money on a market value perspective. And the same sort of goes for the equity side of things. Why is this such a good time for the borrowers?

[Eric Johnston]

Yeah, I mean they're starting to finally explain how this capex is going to work and talking about how very soon revenue growth is going to exceed capex growth and also the fact that, you know, you brought the point about front loading capex. When they're building a data center there are parts of the data center that have a 30 year life. There are other parts that have a much shorter life related to the chips. But the point is, is that the CapEx requirements early on are a lot more than what they are in, you know, two, three, four years from now. And so that's going to likely inflect their, their free cash flow. We're already seeing it from, you know, someone like Microsoft where their free cash flow this quarter came in higher than what then what the market was expecting. I think that's a trend that is likely going to continue in the quarters to come. And so that's going to be a very favorable dynamic from a borrow perspect perspective. I would also say that although the amount of supply is clearly very large and that has been part of the problem around the back up in, in some of these spreads but the reality is, is that their balance sheets are still extraordinarily strong and a year from now and two years from now are also going to be extraordinarily strong even with all the spending they're doing.

[Lisa Abramowicz]

Eric, every earnings quarter it feels like for these tech names the bar gets higher that they have to clear. But you think this last season was an inflection point why?

[Eric Johnston]

So part of it was how they actually handled the conference call in terms of really explaining the dynamics of the capex. The second thing is, is that margins are starting to expand and so because the demand for compute continues to outstrip supply, pricing is going higher, margins are going higher. And you're also seeing it in the revenue growth. So if you looked whether it was Google, Microsoft or Amazon, you know, they all came in higher than what the street was expecting and the growth is accelerating. So you're seeing revenue growth, you know, for their, for their cloud business depending on who it is, you know, between 40 and 70%. And the likely scenario is, is that this acceleration is going to continue into next year and that's very, very powerful dynamic.

[Lisa Abramowicz]

You're bullish on the momentum factor, you're very bullish on what's going on. The semiconductor sector led by memory. What do you make of intel this morning?

[Eric Johnston]

So this was somewhat expected that at some point they were going to need to raise equity. So their business is a little bit different than, than others because of this foundry build out and this thought to be able to build foundry here in the United States. And so I think this, you know, the stock is call it 30, 40% off the highs. And so I think investors were somewhat expecting this. Ultimately it's a supply of equity. So I'm not surprised to see the stock down this morning considering this supply that needs to be absorbed. But you know, I don't, I don't think it's necessarily a indication of, you know, what other, for example semis are going to need to do. Most of them are generating significant cash flow where they're going to be doing the opposite and actually buying back shares. So we'll see how this plays out. I do think that the overall equity supply story is a real story will be a headwind for equities over the course of the next year. And this is an example that's certainly, you know, part of it.

[Jonathan Ferro]

Eric, have we beat any leverage out of the system since situational awareness, or is it all come roaring back in the four days subsequently after.

[Eric Johnston]

So I know, I think we've, we've certainly have taken a lot of the faster retail money from a global perspective out of the market. You know, certainly you look at what's going on in South Korea and some of these levered ETFs are down, you know, 75, 80%. Significant number of brokerage accounts have been shut down. The margin calls have been of, you know, significant proportion. And then here in the US we saw a major derisking not only, you know, from a little bit from retail, but really from institutions who were in this momentum trade. And the momentum trade ultimately is highly correlated to the AI infrastructure trade. And so I think what we saw was a pretty significant event that we think was a clearing event from both a positioning standpoint for the momentum trade and it's for a group that it was crowded for good reasons. The fundamentals are really strong and we think the fundamentals are going to continue to be strong. And so now you have this cleaner positioning.

[Jonathan Ferro]

Yeah.

[Eric Johnston]

That I think is going to allow this group to work in the coming, you know, the coming weeks and months.

[Bloomberg Podcast Host]

Stay with us. More Bloomberg surveillance coming up after this.

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[Jonathan Ferro]

Sarah Kunst of Clio Capital writing I said for years TSM is a linchpin of AI. It is essentially irreplaceable in chip production for the next three to five years with no real competitors on the horizon. Sarah joins us now for more. Sarah, thank you so much for being with us. I want to take a step back because what we've seen over the past week is a real sense that tech is safe again. We've had leverage kind of pushed out of the system. We've had earnings, particularly from the hyperscalers that seem to confirm the story that they're able to monetize more quickly than people previously expected. Do you think that it makes sense to lean into the bull case with tsmc, just one pillar of the overall positive?

[Sarah Kunst]

I think it makes sense on a case by case basis. So I think TSM is in a pretty safe place as long as you think that the sort of overall demand for chips is going to stay pretty much flat or even a little bit up over the next few years. I think Alphabet is in a potentially really interesting situation when you look at the stock price versus the revenue. But I think that there are still a lot of other names in this space, like the space X is, that are really, really overpriced and that make me nervous. Core Weaves another one of those.

[Jonathan Ferro]

There's an issue right now. People are trying to imagine what the world looks like in an AI universe, and there's this question of hyperscalers versus the adopters as Mike Wilson is talking about that he's looking for. How are you expecting us to understand consumer products that might have AI? And I'm thinking about Google and their phone that will be coming out later this week, or potentially even Apple that's going to be talking about their foldable phone, but maybe with less a coming

[Sarah Kunst]

out in September, everybody's making foldable Phones and glasses. It is unclear if anyone wants them but I mean I think one, it's a great reminder, hey, Google makes phones. And also Google powers the Android ecosystem of 3 billion devices. Right. Google touches across a lot of their properties, well over 4 billion people every month. And so that's one of the reasons why I do think that they will be ultimately the AI winner. They have a baked in user base across devices, across consumer products and enterprise that just dwarfs any of the competitors.

[Lisa Abramowicz]

Can they be the winner when it comes to mobile phones because of where they are in the air race?

[Sarah Kunst]

I mean are we all going to have Pixels?

[Emily Bannister]

No.

[Sarah Kunst]

But are we Do a huge swath of people, particularly globally have Androids? Yes. Do we know that very often Apple has ambitions on its own and then sort of goes back to Google and says actually can I just borrow your os? Can I borrow your search bar? I'll pay you for it. Right, so, so we know that it is likely that Google, Google at the end of the day will power, particularly in mobile, the vast majority of on device AI. And I think that that is a pretty logical step in when you pull back and look at their dominance with the Android OS when it comes to mobile phones.

[Lisa Abramowicz]

Lisa and I were just talking about how there's this journal report over the weekend how Apple is testing CXMT memory chips to put in their product lines. Are we opening up a can of worms here in the United States markets

[Sarah Kunst]

in terms of Chinese chips? I mean, I think that we are, we are going to sort of surface what has been happening underneath, which is we know that, that China gets their hands on a lot of Nvidia chips that everyone swears they don't have and I think a little bit of vice versa, which hasn't happened a ton in the last decade, is, is not shocking. I also think that it opens up the competition more to say, hey, maybe we have to drive these prices down. The reason that the apples of the world are curious about using these other ch is, is largely because of price and then obviously the political climate in China. And so if, if these chip companies have to be a bit more competitive on price, I think that that is not necessarily a bad thing for the market, even though it might be a bad thing for their stock.

[Jonathan Ferro]

I'm glad that you mentioned that. It seems like increasingly the story is a financial market story and a capital intensity story. The idea that you have to raise potentially 3,4 trillion dollars the next couple of years in order to build all of the hopes and dream, how important is it going to be that margins compress in some of these places. Whether it's memory chips or other potential components that go into this universe. At a time where investors are that much more focused on rapid monetization before they hand out more cash, I think

[Sarah Kunst]

it's going to be really important. I think that we're going to see pressure that hey look Nvidia, it's great that your margins are so big. But one that means there's a lot more sort of competition happening. We know that, you know, the Google's of the world, a lot of companies are working on their own chip design. But then on the other side there's only so much that people can bear. Right. And, and when we look at Apple having to raise their prices and because they can't get their hands on chips and everything else, a lot of these price increases are starting relatively small but they eventually snowball against a consumer that is really feeling the pain. I think we're going to see more of that in the University of Michigan report this week. So I think that we are at this point where all the VC dollars in the world don't make a difference if at the end consumer, the end small business can't aff to buy what you're selling because they just don't have the cash.

[Jonathan Ferro]

It seems like Apple has been rewarded for a number of months for not having as much capital intensity as some of the other AI related companies. Do you think that can last? We're just seeing a report that a Jefferies analyst who's really tracked closely Edison Lee by the Wall street community downgraded their expectation for Apple. You're seeing shares down some 1.2% in response. I'm just wondering if that makes sense to you based on its recent rise and frankly some of those questions that you were just talking about with consumer health.

[Sarah Kunst]

So I think you also have to remember there's another big narrative happening inside Cupertino which is they're getting a new CEO and they have a long beloved CEO who's done a really good job. And the new guy, while not new internally, is pretty new to the market. And so I think some of this is, is a little bit of a question mark, a little bit of a let's, let's see what he's like. Do we like this new boss? And so I would put some of that downgrade, I would put some of those concerns in the bucket of would this be happening if Tim Cook were still in charge doing the same thing. And on the other side, I think there's there is a problem that Apple has, which is a good problem to have for consumers, which is their products are so good and they're relatively reliable that you're not constantly buying more. And so where do they get that extra money if your, if your phones aren't getting stolen or you can get them back, right? And if your computer isn't breaking and you don't really need more memory? And so I think that's part of this problem for them, even though it

[Emily Bannister]

points to the fact that their products

[Sarah Kunst]

are really, really good.

[Bloomberg Podcast Host]

Stay with us. More Bloomberg surveillance coming up after this.

[Carol Massar]

This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work, I'm Carol Massar. Globetrotters hunting for airfare bargains are in for a rude awakening as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Wan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares. Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seat inventory and seasonal trends, while also continuously tracking competitors fares and capacity changes to update prices in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off peak and lower demand routes. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get [e-mail] today by selecting work mode available on plus and Pro plans.

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[Jonathan Ferro]

Emily Bannister, the head of private at Credit Wellington Management, writing the bigger the opportunity gets, the more selective lenders need to be. This is becoming a market of winners and losers. Emily joins us now for more. Emily, great to see you. Thank you so much for joining us. Emily, what does it mean to be more selective when it comes to AI investment?

[Emily Bannister]

Well, one thing to really think about with the financing ecosystem that's going on right now is that it is incredibly broad. We are certainly seeing the large data center deals come, but we are also seeing opportunities to finance the AI build out through multiple different lenses. You're seeing it in power generation, you're seeing it in cooling, you're seeing it really across all of the physical infrastructure that will be needed to support AI. And that means you have opportunities to really pick your spots. So when we hear things about one part of the market getting hotter or having a lot of issuance coming in the future, we are also seeing those other seams, those other areas where you can really structure something unique for a need that is supported by the same demand but may have really different dynamics for a lender. And that's got us very excited about areas like within investment grade private credit or commercial real estate debt where you can really look at these themes and then look at the individual structures and investments and find the ones that are going to be the great opportunities for lenders going forward.

[Jonathan Ferro]

How do you immunize yourself, Emily, at a time when we're getting trillions of dollars of capex into an investment theme that yes, everybody believes in, but it's murky as far as what the end state looks like and exactly the degree to which it can be monetized. How do you evaluate the type of yield you need to offset the risk? Also, amid an inflationary moment, I think

[Emily Bannister]

you make a great point which is that not every deal in the theme is going to go well. I think that's a guarantee from here because this is a very broad space and in many cases we've seen some thematic ideas in the past where if you identify the theme correctly, you can invest across it and the rising tide will lift all boats and you'll do well. I would say AI is the opposite of that. AI is a place you need to be selective because it's becoming increasingly complex when we think about underwriting a data center type deal. You need to think not only about the corporate exposure, because it's not only a corporate exposure. You're thinking about the tenant risk, you're thinking about the ability for construction to meet its milestones. You're thinking about what are the opportunities for power generation, how contracted are those, and you're thinking about the structure that you've agreed to and whether it protects you. In addition, in addition to your great point, what are you getting paid? What are the yields? So in a complex space like this, really being able to dig in is incredibly important. I think the best way to immunize yourself is actually to have a lens across markets, because this market is also becoming a place that where markets are intersecting. We actually did some work on the more than 300 data center deals over the last two and a half years, and we found something interesting, which is that about a third, third of those were financed by banks, about a third by the public markets, and then about a quarter by private credit. So this is an ecosystem that is getting financed by multiple different parts of our financing options. And you need a lens across all of them to see where the structure is right, where is the pricing right. And having a full picture across all of them, I think is the way to immunize yourself going forward.

[Lisa Abramowicz]

Emily, you mentioned a bunch of risks. When you look at how to invest in AI, what about the political risks? You know, we're sitting here in New York and there was a moment Memorial, a ban for a year, basically on data centers. People don't want them in their backyard. And this is becoming a huge election issue, especially into the midterms.

[Emily Bannister]

Well, you couldn't possibly talk about something more fun for a credit person than risk. So definitely a good place to go. But I would say that really gets to the main point, which is that there is incredible complexity underneath data center financings. And each project can look different. They're in different geographies with different permitting processes, with different community engagement strategies. And we do expect that you need to understand what's underneath each deal as opposed to just investing thematically, because that's really where I think lenders can support great projects and do well over time.

[Jonathan Ferro]

Intel just came out and announced a proposed $15 billion dollar stock offering. This isn't just a debt story. This is a financing story. Across the entire capital structure, we're seeing the shares lower by about 3% in premarket trading. It just highlights how if there's trillions of dollars necessary over the next couple of years to build out the incredible tech infrastructure, it's going to be required to come from all places do these equity issuances and we've seen this from other companies as well earlier this year. Improve, improve the profile of the private credit space, of the credit space overall, or potentially increase the risk of correlation between stocks and bonds to a degree that we haven't seen for a long time.

[Emily Bannister]

I think both are important considerations. What we're seeing here is a trend that even goes beyond AI and data centers into really one of the important emerging trends in private credit, which is the interconnectedness of markets. We're seeing increasing convergence between public and private credit and to your point, we're seeing increasing overlap between issuer exposure and credit and equity markets and really being able to understand how those are pulling together. And for an investor to be able to look across a portfolio and understand the aggregate risk that they have to a certain theme and to a certain issuer and to a certain credit profile is going to be one of the most important trends going forward for investors.

[Jonathan Ferro]

Emily, just quickly here, how concerned are you about leverage that's building out in the system that was really highlighted by the situational awareness, but frankly has come roaring back since a small washout period?

[Emily Bannister]

Yeah, in many ways what I'm seeing right now is a market that is really because of its maturity and its increasing maturity in, in private credit becoming a market that you can't tag with just one brush. So there are pockets of private credit and the overall market where we are seeing leverage increase. There are other areas where we're seeing really modest leverage and where we're seeing really strengthening profiles. And I think the breadth of the private credit market that has now moved significantly beyond sponsor backed corporate direct lending to really include many other types of types of financing for assets, for projects, for high quality companies. You get to see multiple different profiles and that makes it much more important to be selective because there are certainly areas where you'll find stress or leverage. There are also areas where you'll find incredible growth profiles going forward.

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