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The big story today, and that is the rebound that we're seeing almost across the board here after recession fears plunge the markets into that three-day route. Weaker than expected jobs data pointing to concerns over maybe cracks in the labor market, and that was enough to send jitters throughout global markets. So is that an overreaction or could we see a steep economic slowdown? For that we want to bring in Thorson Slok. He's chief economist at Apollo Global Management. Thorson, it's great to have you here. So let me put that question right to you. When you take a look at maybe the market's reaction to that weaker than expected labor data print that we got out on Friday morning, was that a bit of an overreaction? What are you seeing within the jobs market?

I think that's right, Gianna. If you look at as Jay Powell said last week, the totality of the data. Yes, it is correct that the unemployment rate did go up last Friday, and we did see a slightly weaker headline non-farm payrolls at 114,000. But if you look at, in particular, some of the high frequency data, daily data for how many people fly in airplanes as of last Friday is still strong. Daily data from open table for how many people go to restaurants is still strong. Weekly data for retail sales from Redbook is also still strong. Hotel occupancy rates, the weekly data, also still strong. And across the board, there's just not much evidence of the economy either being in a recession or being on its road to entering a recession. So we think that again, with Jay Powell's emphasis on the totality of the data, that the market is overreacting to just one data point.

Well, then just in because Thorson, it's not just of course the labor market. There are several factors that lead to a route like this, including what we saw with the carry trade and, of course, earnings. I want to point a chart out that you included in one of your recent notes and it's about the number of AI mentions on earnings calls declining. If this market sell-off that we are seeing right now is in part driven by the unwind that we are currently seeing in the AI rally, does the Fed care? I mean, that seems like a market's issue.

Absolutely. And I do think therefore, exactly that AI stocks are going down for two reasons. They're partly going down because valuations got so stretched and earnings and earnings expectations were simply inconsistent with where valuations were. So when earnings just came in a bit weaker for a few of the magnificent seven, the market was reassessing that maybe expectations were too high and maybe expectations were too strong for what these companies could actually deliver. And the second reason why you're seeing the AI stocks going down is because of, exactly as you're highlighting, the carry trade unwinding. You've seen a reversal of a lot of trades where essentially investors were borrowing in yen. Remember, in yen interest rates up until literally two weeks ago, interest rates were zero. Now they went up to 25 basis points, but when you borrow at zero and you invest, first this trade was going into fixed income, then it broadened out to buying other asset classes including AI and stocks, in particular asset classes with momentum. Then you now, of course, with a significant unraveling of the trade simply because dollar yen has moved from 161 down to 144. That means that if I borrowed in yen, now I need to pay back in yen. If yen is more expensive, that means that I need to pay back more. So that's why it is not only about fundamentals that have been softening for the magnificent seven. It's also about the reversal of the carry trade that a lot of investors who borrowed in yen and use that money to buy including the magnificent seven are now reversing those trades. So that's why the unwind of the carry trade, it becomes important to discuss how many days, how many weeks will it take before we get to the end of that.