Fallout

At the bleeding edge, AI is being trusted to write and review its own code

Summary: The fundamentals of the economy continue to be pretty strong. The consumer is holding up surprisingly well, considering the political volatility and a large drop in confidence. It's possible that the economy will be affected with a lag, but for now, there are only limited signs of a slowdown.

Meanwhile, progress in the world of AI continues unabated. Models are increasingly being trusted at the bleeding edge to write and review their own code. Humans are falling out of the loop.

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Macro

The fundamentals of the economy are pretty strong
"I think that the fundamentals in the economy continue to flash strong. We're at or near full employment. I think when people are employed, they spend money. Markets are happy right now. And so I'm cautiously optimistic that despite a lot of the volatility that is poking its head up, that what we're seeing in the portfolio tells us that the fundamental strength of the economy is intact." – Ares Management (ARES 0.00%↑) Co-Chairman Michael Arougheti

The consumer has held up well
"I'd say what we're seeing on the consumer is really not much difference in this last 2 or 3 years. I think consumers continue to in their rhetoric and in the qualitative comments talk about being cautious and even some modest kind of confidence kind of variations we've seen over the last few months. But if they can practice in terms of their spending, consumers are holding up very well...as the weather has come out and has come out and spring has finally arrived, our seasonal products are selling very well. So when the sun's out, the business has been very good." – Tractor Supply (TSCO 0.00%↑) President Harry Lawton

"But in general, the consumer metrics have held up pretty well. And then the consumer's demand for financial products is still there, right?" – TransUnion (TRU 0.00%↑) CEO Christopher Cartwright

"I think, like consumer pullback in the U.S., we have not seen that as of yet. It feels like people are hanging in there just fine." – KKR (KKR 0.00%↑) Co-President Scott Nuttall

The resilience has been surprising
"If you and I had been sitting here a year ago, and you had said to me, imagine a circumstance where your biggest market gets to a 52-year low in consumer confidence, how do you think about RevPAR...I don't know what my answer would have been, I'm fairly certain it wouldn't have been north of 4% RevPAR growth." – Marriott International (MAR 0.00%↑) CEO Anthony Capuano

But the impact of tariffs may be hitting with a lag
"I would say the biggest thing that we are missing here in the United States is the inflationary backdrop. If the tariffs are instituted over the next five months, I think we’re going to see very elevated inflation. Recent economic activity is already showing a weakening...Right now, we’re seeing decisions and outcomes skewed toward pessimism. And that’s why I’m concerned." – BlackRock (BLK 0.00%↑) CEO Larry Fink

Consumption growth has slowed
"Category growth rates in the U.S. have slowed from around 4% last calendar year to about 2%." – Procter & Gamble (PG 0.00%↑) CFO Andre Schulten

Employment trends may also be slowing
"The only, I think, concern that we see at this point is with the unemployment rate, if you unbundle the number, the percentage of consumers that are working part-time but wish they could work more hours has increased in a material way. And that could be an early indicator of a slowdown in the jobs market." – TransUnion (TRU 0.00%↑) CEO Christopher Cartwright

“We expect to reduce up to 7,000 non-manufacturing roads or approximately 15% of our current non-manufacturing workforce. The productivity benefits from these steps to better focus the portfolio and to streamline our operations and the organization are incremental to what we outlined in Supply Chain 3.0." – Procter & Gamble (PG 0.00%↑) CFO Andre Schulten

There's growing concern about the deficit
"After 223 years of being a nation, in 2000, the deficits in the United States were $8 trillion. It took 223 years to create an $8 trillion deficit. And in the last 25 years, both parties are guilty of this—our deficits are now at $36 trillion. Now we have a pending tax bill that's going to add $2.3 to $2.4 trillion on the back of that. To me, if we don't find a way to grow at 3% a year—real growth, real growth at 3% a year—we're going to hit the wall." – BlackRock (BLK 0.00%↑) CEO Larry Fink

"$37 trillion of debt in the United States going to a $2 trillion deficit. And I don't know one Republican that wants to get in front of that freight train to stop it where every single one of those people should be willing to stop it. And if you sit down and talk with them, they're not going to and they can't." – CME Group (CME 0.00%↑) CEO Terrence Duffy

Trump and Elon broke up
"The Trump tariffs will cause a recession in the second half of this year." – Elon Musk

International