PIMCO’s Richard Clarida Talks AI, US Economy

Summary

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Bloomberg Talks

PIMCO’s Richard Clarida Talks AI, US Economy

Date: June 11, 2026
Host: Bloomberg (with Katie, co-host/contributor)
Guest: Richard Clarida, Managing Director & Global Economic Adviser at PIMCO; former Federal Reserve Vice Chair

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Episode Overview

This episode features a wide-ranging conversation between Bloomberg’s hosts and Richard Clarida of PIMCO, focusing on the transformative impacts of artificial intelligence (AI), ongoing CapEx booms, credit markets, the significance of SpaceX’s IPO, and broader macroeconomic forces shaping the global financial landscape. Clarida shares insights from PIMCO’s annual Secular Outlook and discusses how AI is shifting investment strategies, productivity expectations, and risks in public and private capital markets, as well as global economic implications.

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Key Discussion Points & Insights

1. AI as a Transformative Economic Force

• AI’s Evolution:
  • AI has shifted from being a "wildcard" to a principal driver of economic activity and capital markets over the next five years (01:07).
• Productivity and Disinflation:
  • AI could act as a disinflationary force by boosting productivity and possibly causing wage compression.
  • "We think AI is a transformative technology. In fact, if anything, we think the productivity benefits and boom from AI could happen sooner than a lot of folks believe." – Richard Clarida (02:14)
• Investment Surge:
  • There's a significant CapEx boom not just in the U.S. but globally, spanning AI, defense, and energy security sectors.
  • "Right now we're seeing it in this CapEx boom... not just in the U.S.—really, a global CapEx cycle, including defense and potentially energy security." – Richard Clarida (01:07)

2. Financing Trends and Credit Market Dynamics

• Private vs. Public Markets:
  • While much AI-fueled investment is visible in private markets, there’s a substantial spillover into public debt and bond markets, especially amongst large tech “hyperscalers.”
  • Credit spreads remain tight, but new supply hasn’t yet disrupted markets (03:11).
• Issuing Company Profile:
  • Unlike past cycles, most current borrowers are "very, very prosperous and profitable companies," making this CapEx surge notably different (03:11).
• Investor Diligence Matters:
  • The complexity of deals and tight market conditions mean "investors are going to need to do their homework or hire firms to manage their money that does their homework" (03:11).

3. Credit Loss Cycle and Middle Market Risks

• Emerging Credit Losses:
  • Most incremental lending growth the past 12-15 years was in direct lending to middle-market firms, where the credit loss cycle has already turned—creative financing and payment-in-kind arrangements are becoming more common (04:23).
  • "That's probably the area of the credit market that we would highlight is the one in which the credit loss cycle has begun already to turn." – Richard Clarida (04:23)

4. Global CapEx Trends

• Regional Dynamics:
  • U.S. and Asia are leading in AI-related CapEx (Asia supplying chips/silicon), while Europe is focusing more on defense (especially Germany) and accelerating the green transition (05:28).
• Shared Themes:
  • The CapEx and AI investment story is global and likely to broaden to emerging markets as well.

5. SpaceX IPO & the Space Economy

• IPO as Investment Catalyst:
  • The SpaceX IPO could act as a pivotal moment spurring broader investment in the “space economy” and adjacent technologies (05:59).
  • "We're more confident in the direction of travel than necessarily in the pace and the path to the destination... they're certainly eye-popping numbers." – Richard Clarida (06:28)
• IPO Details:
  • The registration filing for SpaceX became effective June 11; shares priced at $135, set in a "take it or leave it" manner, with less price discovery than a traditional IPO (07:19).

6. Macro Implications: Wealth Effects and Economic Outlook

• Wealth Effect:
  • Buoyant equity markets and ample financing increase household wealth, providing a tailwind for consumption and the broader economy (06:58).
• Cost of Capital:
  • Public borrowing and private market deals are likely to push credit spreads up from currently tight levels.
  • The recent energy shock in the Middle East has pushed the ECB into a hiking cycle, but the Fed is likely to wait and see (08:28).
  • "The borrowing that you're talking about in credit markets is potentially going to be putting some upward pressure on credit spreads that are at very tight levels, and also probably lead to some important changes in some of the private markets as well." – Richard Clarida (08:28)

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Notable Quotes & Memorable Moments

• On AI’s Economic Impact:

  • "AIs gone from really being a wildcard what if to a major driver of economy and markets the next five years." – Richard Clarida (01:07)

• On CapEx and Investment Cycles:

  • "We think this is how capitalism and financial markets are supposed to work. Attractive investment, see funding." – Richard Clarida (02:14)

• On Due Diligence in Credit Markets:

  • "If you're going to provide liquidity in public markets, you should be paid for providing liquidity in public markets. And so we look at each deal on its own merits." – Richard Clarida (03:11)

• On the Credit Loss Cycle:

  • "Right now you see it not so much in, in actual losses as you do for creative financing, payment in kind and other arrangements." – Richard Clarida (04:23)

• On the Global Nature of CapEx Boom:

  • "In Europe there's a real push as we all know to...increase defense spending and in particular in Germany and so capex there may be more, have more of a defense...and in Europe a big push on...the green transition." – Richard Clarida (05:28)

• On the SpaceX IPO:

  • "The registration filing has finally been declared effective as of today, June 11th... the price will be at $135 a share... just tell me how much you want and be thankful if you get any piece of it." – Podcast Host (07:19)

• On Rising Cost of Capital:

  • “The energy shock in the Middle East has pushed the ECB and perhaps some other countries to hiking rates. We don't think that's not our baseline for the Fed... credit markets are potentially going to be putting some upward pressure on credit spreads that are at very tight levels...” – Richard Clarida (08:28)

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Important Timestamps

| Timestamp | Segment/Topic | |-----------|-----------------------------------------------| | 00:56 | AI as a disinflationary force, and risk | | 01:07 | AI’s evolution to major economic driver | | 02:14 | Productivity, CapEx boom, investment drivers | | 03:11 | Public/private markets, credit spreads | | 04:23 | Credit loss cycle, middle market risks | | 05:28 | Global CapEx, regional investment focus | | 05:59 | SpaceX IPO as a catalyst for new investment | | 07:19 | Breaking news on SpaceX IPO pricing | | 08:14 | Cost of capital, central bank policy | | 08:28 | Expected pressure on credit spreads |

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Summary Flow Notes

• The episode moves quickly from big themes like AI’s disruptive influence and investment cycles, to sector and regional nuances (U.S., Asia, Europe), then pivots to current market excitement surrounding the SpaceX IPO and ends with sober analysis of financing trends and central bank policy direction.
• Throughout, Clarida’s tone is measured but optimistic about the positive secular impacts of AI and investment activity, while referencing the risks and uncertainties inherent in these evolving cycles.

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This summary provides a comprehensive view of Richard Clarida’s perspectives and the market context discussed, with direct attributions and actionable timestamps for further exploration.

Transcript

[Richard Clarida]

Indiana University strengthens tomorrow's workforce with practical real world experience. IU grads make a difference in your community, serving as teachers, nurses and engineers who rise to tomorrow's challenges and meet them. Learn more at iu. Edu Impact,

[Bloomberg Audio Studios Announcer]

Bloomberg Audio Studios Podcasts Radio

[Podcast Host]

News between everything going on with AI, the big IPO with SpaceX raising rates over at the ECB and a lot of concern, concerns about geopolitics, who better to kick the show off with than Richard Claret, Managing Director and Global Economic Adviser at PIMCO and former Vice Chair over at the Federal Reserve Board of Governors. Rich, great to have you here.

[Richard Clarida]

Glad to be with you again.

[Podcast Host]

Remain, I do want to take a moment to talk about the report that you and Dan Iverson and others put out yesterday, your annual Secular Outlook. And there are a lot of themes in there, but obviously one big thing that you couldn't ignore was AI.

[Richard Clarida]

Yeah.

[Podcast Host]

And you kind of described it as a potential disinflationary force because of increased productivity, maybe wage compression, but also presenting a certain degree of financing risk as well. Kind of square that circle for us.

[Richard Clarida]

Well, you know, remain, AIs gone from really being a wildcard what if to a major driver of economy and markets the next five years. Right now we're seeing it in this CapEx boom we talked about, not just in the U.S. really, a global capex cycle, including defense and, and potentially energy security, but also at the margin, a lot of this air is being financed in the credit markets and in the bond markets. You know, PIMCO has been active in that in certain select deals. So, you know, like it or dislike it, investors are going to need to factor in AI and all of their calculations going forward.

[Podcast Host]

One thing I thought was interesting there, and you talk about the CapEx boom, obviously not just in AI, but you also mentioned defense and a few other areas. But I mean, you've been doing this a long time. There was a criticism for, for years, decades really, that there wasn't enough capex spending coming out of corporate America, that they were taking their cash and just for buybacks and things like that. And now we're finally getting it and everyone's wringing their hands over it. So I know there's got to be a balance. But when you think about the potential for an increase in productiv that's been relatively absent, at least in any kind of headline numbers for for years and decades, are you kind of excited that maybe finally here.

[Richard Clarida]

Oh, certainly. I want to be very clear. We think AI is a transformative technology in Fact, if anything, we think the productivity benefits and boom from AI could happen sooner than a lot of folks believe. But we're also humble. We don't have a crystal ball and we think there's a wide range of, of outcomes. But, but let me be clear. We think this is how capitalism and financial markets are supposed to work. Attractive investment, see funding, and as I said, we participated in some of those deals as well and I expect will continue.

[Katie (Co-host or Contributor)]

Well, it's interesting, you know, how this is all being financed because you're seeing a lot of this coming through in the private markets, but it's making a big splash in the public markets as well. You think about the hyperscalers and some of their plans for borrowing for this year. And I wonder, you know, how you're viewing that over at Pimco. You know, you think about a world where credit spreads are so, so tight and the fact that we have this influx of supply, it hasn't yet really made a dent on those spreads.

[Richard Clarida]

There are a couple of things going on. First, a lot of the companies that are issuing and borrowing are very, very prosperous and profitable companies. And so that's a big difference from some of the previous CapEx cycles where we've seen where a lot of borrowing is, is companies that have a lot of revenue or cash flow. So that's one big difference. But Katie, you bring up an excellent point. We do think we're in a world where investors are going to need to do their homework or hire firms to manage their money that does their homework because you need to look at the details on the deal. You need to look at the way the deals are str and the details will matter. You know, we believe that if you're going to provide liquidity in public markets, you should be paid for providing liquidity in public markets. And so we look at each deal on its own merits.

[Katie (Co-host or Contributor)]

And talk to us a little bit about, you know, how this is wrapping into the view that you put out yesterday about the credit loss cycle. You sort of think about the heavy spending that we're seeing on AI. Obviously there's going to be certain companies that come in a big way and, you know, really try to spend their, that maybe don't have the fundamentals to fall back on in the way the Magnificent Seven does. And I was hoping that you could sort of thread that needle for us.

[Richard Clarida]

Well, there are a couple of things that, that we highlight in the essay that I'd like to bring forward. The first is that a lot of the incremental growth in lending in the Last dozen or 15 years has been in a particular segment of the private credit markets, in particular direct lending to middle market companies. You know, that's probably the area of the credit market that we would highlight is the one which the credit loss cycle has begun already to turn. Right now you see it not so much in, in actual losses as you do for creative financing, payment in kind and other arrangements. But as I said, this is going to be with us for the next five or 10 years. Opportunities will be there. But it's also important for investors to do their homework.

[Podcast Host]

Is this when we start to talk about not only the increase in, in CapEx spend across industries? This is a global story. Are we going to see a better share of this spend from say Europe, for example, Asia, maybe even some of the emerging market nations?

[Richard Clarida]

Exactly. So when we highlight this in the report, we're talking not just about the AI piece which is really relevant in the US and also frankly some Asian countries that are going to be big providers of the chips and silicon into, into AI capex. But in Europe there's a real push as we all know, to, for, for really now they really mean it to increase defense spending and in particular in Germany and so capex there may be more, have more of a defense and then also in Europe a big push on continuing on the green transition.

[Podcast Host]

I am curious and I know you know, you're not you know, picking stocks or anything like that, but there's a lot of people focus on this space X IPO not only for the company itself, but the idea that it could be a catalyst for a much broader investment in not just AI, but the space economy. A lot of new areas of the world and really beyond this world that haven't been invested in. Have you started to kind of factor that into your economic forecast about maybe the potential increase and broadening out of economic activity around these new technologies?

[Richard Clarida]

Oh, oh sure. And again, we want to be wary of thinking we have false precision. So I think we're more confident in the direction of travel than necessarily in the pace and, and, and the path to the destination. But, but absolutely. And again, I'll defer to your equity experts here about how to think about the IPOs this week. But they're certainly eye popping numbers.

[Podcast Host]

Yeah, I mean you can't ignore them. I mean not only this and then maybe we get another trillion dollar IPO in a few weeks or months.

[Richard Clarida]

Now turning it back to the area. No better macroeconomics obviously buoyant equity markets and financing availability for companies also increases wealth value. There's a wealth affecting consumption in the economy and that's an important tailwind for the economy.

[Katie (Co-host or Contributor)]

Absolutely. Well, you know, to broaden back out. I mean, to get to the conversation we were having.

[Podcast Host]

Hey, Katie, I'm just going to interrupt. Yeah, just one second. We are getting some breaking news actually right now on Space X. The registration filing has finally been declared effective as of today, June 11th. And as Bloomberg reporting has been, the document says the price will be at $135 a share. Obviously, there was a lot of discussion about the fact that this wasn't a traditional range that you typically see on these roadshows where everyone has to sort it out. It was basically, this is what it's going to be. Just tell me how much you want and be thankful if you get any piece of it.

[Katie (Co-host or Contributor)]

Exactly. Maybe less surprise here than a traditional ipo given that it seems like this price was very much set at $135. And as you said, sort of a take it or leave it for investors.

[Podcast Host]

Rich, I do just want to give you one final statement that we have to go and I apologize. I mean Space X, unfortunately. Welcome back. But I do just want to. In all seriousness, let's get your general view on this idea of the cost of capital.

[Richard Clarida]

Yeah.

[Podcast Host]

Particularly in light of not only this IPO that, that the borrowing that we've seen in the debt markets by a lot of these companies and the idea that the least in Europe, you're in a rate hiking cycle. Who knows what happens with the Fed next week. Yeah, there are a lot of people betting we could be on an upcycle here as well.

[Richard Clarida]

Yeah. Well, look, the energy shock in the Middle east has pushed the ECB and perhaps some other countries to hiking rates. We don't think that's not our baseline for the Fed. We think the warshead will be wait and see for a while. But importantly, the borrowing that you're talking about in credit markets is potentially going to be putting some upward pressure on credit spreads that are at very tight levels and also probably lead to some important changes in some of the private markets as well.

[Bloomberg Audio Studios Announcer]

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