Dan Ivascyn

All this AI investment is looking to feast on old economy businesses, businesses that had the so-called moats.

They had attractive current cash flows.

They did so much of what we're used to them doing.

Professional services, tax, lawyers, financial services, software, all of these areas of the market that are likely to be disrupted and disrupted with

increasing frequency.

And I think the point we want to make is that that time has arrived.

You're going to see higher realized losses that we've seen in quite some time.

And those losses are going to be somewhat independent of the strength of the economy.

You have this very, very unique situation where the more productive AI is at the economic

economy level, the more disruptive it's going to be.

It's almost necessary.

It's a tautology.

It almost has to be that way.

So that's what you're going to have.

And then I want to be careful, too, because it always comes across as overly alarmist if left there.

We think it's a steady stream of losses now, not a wave.

If you combine this AI disruption with a negative growth shock to the economy, especially if it's stagflationary or put more simplistically,

this is a risky macro setup in that almost all of that debt that we talked about that did so well in 2022 is floating rate.

If you don't get that short rate down or if that short interest rate or the policy rate has to go higher, now you have companies that are facing AI disruption.

They already have a lot of debt.