Apollo's Torsten Slok: The biggest underappreciated risk is that we're not done fighting inflation

Economic Outlook - The current economic landscape is characterized by a K-shaped recovery, where some sectors, particularly industrials, are thriving while consumers face challenges due to rising import costs from China [2][5] - The booming industrial sectors include data center buildouts, energy, infrastructure, and defense, indicating strong growth in these areas [4] Consumer Challenges - Consumers are experiencing headwinds, particularly related to affordability and the rising costs of goods, which are exacerbated by tariffs on imports from China [3][5] - There is an increasing concern regarding subprime auto loans, which may impact the retail sector and overall consumer spending [3] Labor Market Dynamics - The labor market is showing signs of weakness, with slow job growth, which raises questions about whether this is due to reduced immigration or a broader economic slowdown [7][9] - Despite the soft labor market, consumer spending and capital expenditure (capex) remain robust, suggesting that GDP growth is still on track [10][11] Inflation and Monetary Policy - There are rising inflationary pressures due to tariffs and a weaker dollar, which could complicate the Federal Reserve's decision-making regarding interest rate cuts [12][15] - The consensus anticipates inflation to be around 3% over the next 12 months, significantly above the Fed's target of 2%, indicating potential risks for monetary policy [14][15] Gold Market Insights - Gold prices are rising due to ongoing inflation risks, significant purchases by Chinese households, and central banks diversifying away from US treasuries [18][19] - The demand for gold in China is particularly strong, driven by a lack of alternative investment options, leading to a shift towards gold as a preferred asset [21][22]