Sam Watkins

All of that said, our view is that the impact of AI is uncertain and the timing of the impact of AI is uncertain.

What is certain at the moment is that we're in something of a capital expenditure super cycle, and we can see that playing out today.

We can see the very large investments that are being made.

The question is, when are we going to get that dividend and how is that dividend going to be spread across the winners and the losers from AI?

So, what we're seeing is uneven, is the best way to describe it.

And I would say that in the most recent earnings season, both the one in Australia that we've had and the one in the US that we're most of the way through, where you have had stocks that have hit or exceeded expectations, they've been very well rewarded by the market.

where there has been a meet with a soft outlook or a miss, the reaction has been brutal.

And I think that that's really what you're seeing at the moment is a level of concern, of risk pricing that's being reflected.

And so uneven would be my comment to you right now.

And I think also what many people are

very much on edge watching for is announcements related to AI.

So whether they be either on the job cuts and efficiency side, where there might be a bottom line expense driven benefit, or alternately from any of the Mag7, if there's any comments that are made around the slowing of demand or a question around the return on investment that they're making that is so substantial at the moment, that's another thing which we're seeing, you know,

cause a lot of volatility in markets.

Look, the base case for PIMCO is that we have a slowing of growth, but not a recession, and that we have interest rates, as I mentioned before, that would be broadly stable, so unchanged, let's call it, within a tight range within that 12-month period.

But at the same time, what we'll have in the background is a high level of uncertainty that's reflected in meaningful amount of volatility in markets.

Yes, is my short answer.

The question is time horizon.

And I think that that time horizon is different for each government because of a number of things.

For the US, for example, they are and we think will remain the core currency for transactions around the world.

And that status of the US dollar is something that allows them perhaps to have a slightly different runway than other governments like the UK government.