Brian Levitt:
Welcome to Rethink Markets, a series from the Greater Possibilities podcast. I'm Brian Levitt, and with me as always is Jodi Phillips. Hey, Jodi.
Jodi Phillips:
Hey, Brian. So today we're going to be connecting with Michael Oliveros, who is the head of global small cap equities at Invesco. And we're going to have a conversation on Chinese AI, European space travel, and any other futuristic topics we can think of.
Brian Levitt:
Futuristic? Feels like the future is now, Jodi.
Jodi Phillips:
It does feel that way, doesn't it?
Brian Levitt:
Yeah. Maybe this isn't even us speaking on the podcast. Is the real Jodi sitting on a beach somewhere?
Jodi Phillips:
Oh my goodness, how I wish. Sipping a nice cocktail. That sounds glorious. But no, it's me. I'm here.
Brian Levitt:
You're here?
Jodi Phillips:
And to prove it... Yeah, I'm here. So to prove it, I will not be doing this podcast in 27 different languages as a proper AI avatar would do, but-
Brian Levitt:
Yeah, I think my avatar might even be above 27 now, if I can one-up you.
Jodi Phillips:
Oh, nice. Well, yeah, go ahead. I mean, I'm probably going to stumble over half of these English words myself. So sorry, no avatars.
Brian Levitt:
This is really us, and I do like the idea of talking about exciting things. I'm looking forward to this. There's just way too much negativity in the news flow. When you speak to people like Michael, you realize how many positive things are happening in the world.
Jodi Phillips:
No, that is very true. But even when we are presented with exciting developments and exciting topics of conversation, some people may feel it's all too good to be true, inserting that negativity back in.
Brian Levitt:
Yeah. Actually, I'm feeling that way about the New York Knicks right now. It's all too good to be true.
Jodi Phillips:
Well, we'll find a definitive answer to that shortly. See how that turns out. But what are you hearing in terms of investor sentiment?
Brian Levitt:
Yeah, some of it was just conversations I was having with people at the proverbial Memorial Day barbecues or early June days on the golf course, comments like, "It can't keep going like this," or when I'm looking at my business-related social media feeds, the permabears seem all too happy to tell us that we're going to have high oil prices forever or high interest rates forever or high inflation. It's all here. They've been waiting for it forever. They've been warning us. Henny Penny, the sky is falling. It's all happening.
Jodi Phillips:
Wow, you throw a really fun Memorial Day barbecue, Brian, I have to say. You couldn't just keep talking about the Knicks?
Brian Levitt:
Yeah, seriously.
Jodi Phillips:
Yeah. Look, no, I certainly don't want to sound like a permabear, but each of those things that you just mentioned, the higher oil prices, the higher rates, the higher inflation expectations, that all did happen.
Brian Levitt:
Yeah. Operative word, happened. I like that you put that in the past tense. They did all happen. The interesting thing, though, is in the past weeks, they've all peaked. Hopefully we don't have to edit that by the time this comes out. But no, they've all peaked and come down, oil prices, inflation expectations, and interest rates. And so what makes the current pessimism particularly puzzling is that a lot of it's happening at a moment when a lot of the key macro pressures seem to be easing.
Jodi Phillips:
Well, and a lot of people would say, and I've heard you say it before, that the pessimists do tend to sound smart.
Brian Levitt:
Oh. Oh my God, yeah. When I'm an optimist in the world, I feel like people think I'm hiding something or making things up. Yeah, they for sure sound smart. And look, one day they will be right. I mean, that's the thing about it is that the permabears are always right at one moment and they become famous for a brief moment. But the problem is that by the time that moment arrives, markets can be significantly higher than where they are today.
Jodi Phillips:
Okay. And that brings us to our first segment...
Speaker 3:
Trending conversations.
Jodi Phillips:
All right, Brian, what's trending?
Brian Levitt:
I think it's the market moves. Talk about from negativity to positivity, the 18.5% move in the S&P 500 Index in April and May.
Jodi Phillips:
Yeah, let's dig into that. I mean, this goes back to your point about the naysayers. By the time they were getting negative about Iran, the Strait of Hormuz, oil prices, the market had already bottomed.
Brian Levitt:
Yeah, that's what makes it hard. I mean, that's how it usually goes, and that's what makes it so hard to time the markets. And then by the time it happens, now they're skeptical that it can happen again.
Jodi Phillips:
So have they missed it? I mean, an 18.5% gain is a big one.
Brian Levitt:
Well, so look, we looked at... I knew that this was going to come up with investors, and so we looked at the 18 prior periods since 1957 when the S&P 500 Index rose by 18.5% or more over a two-month span. Returns were positive, Jodi, over the following six months in 16 of those instances. So 16 of 18 instances, you were positive six months after gaining 18.5% in two months. That's a pretty good hit rate. And the average gain over those subsequent six months was over 10.5%. Again, not too shabby.
Jodi Phillips:
No, not at all. Sometimes facts do get in the way of a naysayer's good story then.
Brian Levitt:
They almost always do.
Jodi Phillips:
Well, so then what are they missing? What are the naysayers not seeing?
Brian Levitt:
Yeah, two things. Number one, earnings, earnings, and earnings.
Jodi Phillips:
Is that the equity investor equivalent of location, location, location?
Brian Levitt:
Yeah, exactly. And no, that's not three things. That's all number one is earnings, earnings, and earnings. I mean, look, we've said this before, we said it in the last episode, US corporate earnings grew by 28% in the first quarter. Stunning. You usually don't get that type of move unless you're coming out of a recession. That's like coming out of COVID-level of earnings growth. That was way above market expectations that were in the mid single digits. And prices are up, but they're not up 28%. So prices haven't climbed at the same pace. That means valuations have actually fallen over that time period.
Jodi Phillips:
So if earnings are clearly number one, what's number two?
Brian Levitt:
Well, I would say the discount rate. I mean, look, market came into this year expecting lower interest rates, and so we had to adjust to a less accommodative Fed path. Now, you even went from pricing in a less accommodative Fed path to maybe even one rate hike, with very little incident for the market. And in actuality, inflation expectations have generally been moving lower. We talked about how things have peaked. So it's very difficult for me to see the Fed raising rates in this environment.
So that's what the naysayers are missing. You've got strong earnings growth and a Fed that's relatively comfortable with price stability. They're not convinced, but they're relatively comfortable.
Jodi Phillips:
Well, you've always said that market cycles tend to end when the Fed kills them with rate hikes.
Brian Levitt:
Yeah. I don't think we're killing this thing anytime soon.
Jodi Phillips:
Good. All right. And that brings us to...
Speaker 3:
Phone a friend.
Jodi Phillips:
So we caught up with Michael Oliveros on investing as a global small cap manager. And so first we asked him about the changing macro environment and how that impacts his view as a small cap manager. And here's what he had to say.
Michael Oliveros:
Two ways to answer that. One is it's made the job harder in one respect, and the other, it's made the job way more interesting. Why is that?
If you kind of take a step back, we have geopolitics. Geopolitics, what is that really ultimately going to be? It's a supply constraint. So you're interrupting the free flow of goods and services. And if we take a step back, a really obvious example of that is Strait of Hormuz. So you can't get goods to where things need to be, it becomes a bit more expensive ultimately because you don't have the supply.
Why does that matter? Why does it matter? Ultimately the effect of it is diseconomies of scale, typically more constraint for large companies. So if you were a large company, you had a factory in China, you were exporting to the rest of the world, that was a good thing. All of a sudden, you can't do that anymore because you have post-COVID and you have a situation where it's not necessarily a guarantee that you'll be able to get goods out of the country, but then you sort of layer on top of that tariffs. So what does that ultimately mean? It means that you're going to have to have additional supply that's coming from additional factories, and that's code for diseconomies of scale. And that's ultimately to the disadvantage of big companies.
The opposite is actually happening for smaller companies. So you had a situation where... I'll take an example. Not going to talk about names, but you'll have, and I know this company quite well, it's a German manufacturer of a component that goes onto a transformer. It's a little piece that connects the high-tension wire to the cable, and it's a very critical component. Used to source that from China primarily. As we all know, you have significant build-out of electrification across the world, the US, Europe, India, and you suddenly have 150% tariff on that Chinese part. If you were a German supplier in the previous world, you couldn't compete on that cost space. Now you can. And you layer on top of that the concept of “friend shoring,” so preferential agreements, and all of a sudden your economic profile changes like that. And why I'm saying this is these two things are happening at the same time, but they're driven along the same axis, which is sort of an acknowledgement that we have to think about where the goods are coming from. So what does that mean? It just means that the economic pie is shifting, and that's a really interesting place to be as an investor.
Jodi Phillips:
Next we asked him about his recent trip to China where he spent a week, asking him what brought him to China, what he was there to learn, and what did he come away with. And here are his thoughts.
Michael Oliveros:
The direct answer, why I was there was because I knew that I had to see for myself what was happening. I can see the effects of China, let's call it Chinese technological advancement and just Chinese industrial capacity, impacting European markets in a very direct way, and I needed to understand why that was happening. So it wasn't just share shifts between competition; it was actually one step removed. It was the customers of customers that were being disrupted. And there was something happening, I didn't know what it was, and I had to go see it for myself.
So it was two parts. One was to meet companies, and it was a range of companies from everything from yeast manufacturing to robotics and AI. And I had the great fortune of going on an AI tour around Shanghai where I met large language model companies and autonomous driving companies, and I got driven around, taxied around the city by a car with nobody in it except myself, which was scary. It's scary for two minutes, and then it's pretty fun, actually. And then it's just a ride in a car. But yeah, that was the reason for being there, and I learned all kinds of things from that experience.
Brian Levitt:
And what were the biggest takeaways from it?
Michael Oliveros:
Yeah, so what I would say, super important to understand, and I'll speak specifically to artificial intelligence, one, very different approaches. If we talk US frontier labs, and there are other friends that you can phone that are the experts on the US labs, but ultimately at the end of the day, the US labs are very much engaged in a race for super intelligence and AGI. So it's universal scaling principles, trying to throw more compute, more parameters to get to the AGI, and then we'll figure out what we're going to do with it later.
Chinese labs are different, and I think it's at least partially because they can't compete in that race. They don't have the chips. They don't have the compute. So they have to be resourceful for what they can do. And what they do have a lot of is a lot of engineering talent. And they also have quite an advantage, and I learned this, with visual data, and specifically training visual systems. And so the approach that they have taken is much more multimodal, so not just text-based, but visual, audio, touch. And their view is ultimately that AGI will end up being embodied. So it's not an AGI in a box that you speak to, it's an AGI that is walking around doing things. And that's going to require the ability to move around in physical space, which ultimately needs multimodal.
And so that leads me to the second thing, which is very different attitudes to adoption. You don't need me to tell you, you can see it around you, there is a increasingly adversarial attitude towards AI in the West. Certainly in Europe where I live, you can see it in the papers. Pick your major city. In China, you don't really get that feeling. So it feels like more of a natural progression of, we were doing one thing, and then we got mobile phones, and then we got self-driving cars, and oh, yeah, of course we're going to have robots amongst us. It's less incongruous because of the trajectory of their growth.
Where that ultimately leads, it's hard to say, but I can just say that in terms of where you see it on the day-to-day... Again, a huge market. It seems something that you, again, you need to be there to see it because there's some opportunities that are worth paying attention to.
Brian Levitt:
So what are other ways that they embody AI? That's what you're talking about with robotics? And then what becomes, just succinctly, what are the most investible areas when you think about it?
Michael Oliveros:
We can answer this at the use case level. Think about anything that a person is doing that is ultimately repetitive enough that a robot can do it, because that's the first step before you have to get to true artificial intelligence where you have an intellectual layer that's trying to decide what to do. So what is driving? We have Waze. We have map apps. So we know how to get from point A to point B. You just need a set of instructions to get it there with a cat running across the street or a stoplight or whatever. And these are things that you can program, and so it's not surprising to see that deployment in autos.
But start from the end use case and then work backwards. How do you enable that? Well, you're going to need a set of sensors to take the information in, you're going to need some processing capability, then you're going to need the intelligence or the software layer. And I think that's kind of the way that we're approaching it, just what are the easiest tasks to deploy? Start two-dimensional, then move to three-dimensional, and then work through that supply chain to say, "Where are the most critical components?"
But then the next would be almost like edge AI applications, so a camera. You can see them now. You can buy... Apple's talking about a device that's just sitting, recording. And it's like, why is that going to be, and why are they going to put a camera in your AirPods? And it's because it can take visual context and then run it through an LLM. So it doesn't have to be a Terminator. There's a whole set of small steps in between where you say, "If you could splice in another bit of information, could we then apply intelligence in that way that can automate tasks?" And I think if you sort of open your mind that way, you can see opportunities perhaps that maybe weren't so obvious in the first instance.
Jodi Phillips:
And finally, we asked Michael about space. Obviously it's very interesting on a human level and an investor level. So is space actually an investible theme? And here's what he said.
Michael Oliveros:
TBD, to be determined. Every time I see a SpaceX rocket launch and then land itself on the launchpad, I'm amazed. I was just like, it's a marvel of engineering. So the hype component of that is certainly there, and it's very visual and visceral, which is important.
But underlying that, there's two things that I would say it's worth paying attention to. Launch costs when you can relaunch a rocket and land it every two days fall exponentially. They're planning at the launch cadence of one an hour. It's going to be the same as an EasyJet flight, except you're launching payloads into space. So think about that. What happens when the cost of delivering a kilogram to low earth orbit is the same as air freight? What could you do with that? What suddenly becomes economic that wasn't before?
And why I say that is there are certain advantages to space from a business model perspective. Energy is free when you're in solar synchronous orbit. You don't need a battery because you're in solar synchronous... You don't need a cooling fan or liquid cooling if you have a data center there because it's cold in space. The gating constraint then becomes the launch. But again, if you drop that piece, suddenly all kinds of things open up. And I think that's number one.
If you take that as a given, and it's not a given that Starship will work, but if it works and that is in fact true, another very important thing happens: Space moves from a project-based industry to industrialization. So I just met a rocket company today. Historically, it was a program from a national government for something. It would be a one-off project and it would be $20 billion or $100 billion, whatever it is. And then you would design that ship and then you would hope there would be another project. If you move to a cadence where all of a sudden you're producing at a constant rate, you can start to serialize things. When you start to serialize, you industrialize, the profit potential goes like that.
And again, my gig is small cap, and what I like about all of this is whenever you kind of disrupt the order, new winners will emerge, and they can become big companies or they can be small companies. And so the playing field for competition becomes a little bit flatter.
But I think if I take a step back, yes, there's hype, and we got to be careful about valuations, but underlying it, there is something very real that you have to consider. And when you start to think about these business models, I would put it through the lens of, what is the gating constraint for this business model to be successful? If the answer was launch, then... I'll tell you, if the Starship works, economics are going to shift. And the other is, where can you see significant changes in the profit pool because of industrialization? And you're probably going to ask me where; satellites is an obvious one, but all kinds of things, like communications in space. So when you have a data center in space, how do they talk to each other? A communication system that works in space. How do you deal with cybersecurity in space? There's like, how do you service those things in space? So all kinds of things that you take for granted in terrestrial space, you have to think about, what happens when I can't service that the way that I do? And again, your perception of where the opportunities lie might shift a little bit, and I think that's an interesting place to be.
Jodi Phillips:
Thank you, Michael, for joining us. And that brings us to...
Speaker 3:
I disagree.
Jodi Phillips:
All right Brian, who is it this time that you disagree with?
Brian Levitt:
I'm going with Jamie Dimon, CEO of JPMorgan, on interest rates: They could be much higher than they are today. I disagree.
Jodi Phillips:
Well, this certainly isn't the first time you've disagreed with Jamie Dimon.
Brian Levitt:
No, it's not. And rest assured, I have all the respect in the world for what he's accomplished as JPMorgan's CEO, so this is not a knock on Jamie Dimon. It's just I've disagreed with him a handful of times on some of the bolder outlook comments he's made. If you remember, he said in 2018, "The world isn't prepared for 7% interest rates." I disagreed then. The good news is we're probably still not prepared for 7% interest rates, but we don't have to worry about that. In 2022, he said, "Brace yourself for an economic hurricane." I didn't agree with that one. And in 2025, he said, "When you see one cockroach, there's probably more." I didn't agree... That was about private credit. That was around the first brand default. I didn't agree with that one either. So it's not the first time. You're right.
Jodi Phillips:
Well, I suppose as a bank CEO, one always needs to be thinking about the risks.
Brian Levitt:
Yeah. Right. That's the job. But here's why I disagree on why interest rates are not going to go much higher than they are right now. I would say the recent move in rates, so what caused it, in my opinion, it was more of a recalibration of Fed expectations than about things that would give you more cost for concern if you had significantly higher inflation expectations or even, forbid, a bad bond auction. Those are the types of things that you would worry about with the sustained moving rates. Like we said, inflation expectations are relatively contained. We have not had bad bond auctions by any stretch of the imagination. The reality is the 10-year Treasury rate, which the benchmark rate should reflect the nominal growth potential of the US economy. So if you're a person who thinks real GDP is going to be 2%, inflation's going to be 2%, 2.5%, then there's nothing wrong with a 4.5% 10-year rate. And you would expect it to move within a band, given where the Fed's going to anchor the short rates.
So it suggests today's rates are quite reasonable. If nominal growth were to improve, rates were to drift higher, that's not a bad thing, but that's... Again, I don't think that this is a world where we should expect significantly higher interest rates.
Jodi Phillips:
Okay. And with that, let's put Brian on...
Speaker 3:
The hot seat.
Jodi Phillips:
All right, Brian, are you ready?
Brian Levitt:
Yeah, let's do it.
Jodi Phillips:
First question, a prominent memory chip company recently became the fastest company to go from a $500 billion market capitalization to $1 trillion market capitalization. Is that an ominous sign?
Brian Levitt:
No. That same company is now trading at 10 times forward earnings, so that's roughly half of the broad market's forward earning multiples. So, look, that's not an investment recommendation, but just a reminder, to put things into context, yes, 500 billion to a trillion sounds large, but the company's trading at 10 times forward earnings.
Jodi Phillips:
Okay. Next, are you concerned that new Federal Reserve chair, Kevin Warsh, is going to be tested by the market early in his tenure, as we've seen so many times?
Brian Levitt:
Yeah, I would actually view the narrative that new Fed chairs get tested as nothing more than a coincidence. October '87 is an example that people use, the stock market crash two months after Alan Greenspan took office. And then you had Bernanke coming in in the early housing downturn. Janet Yellen walked in right after the taper tantrum. But I would say a lot of those examples speak to specific times rather than necessarily testing a new Fed chair. You know, as I like to do, we run the data on these types of things. The average six-month return on the S&P 500 following the start of the last six Fed chairs is +3.6%, so there's nothing to suggest that these people necessarily get tested. Janet Yellen was positive, Jerome Powell was positive, and those are our last couple of examples.
Jodi Phillips:
Okay. Next, you've consistently highlighted how tight credit spreads are. Do you think we're seeing any structural changes that are underneath this, particularly related to the growth of the private credit market?
Brian Levitt:
Yeah, actually, interestingly enough, public credit spreads, so if you're looking at the Bloomberg Corporate Bond or US High Yield Index, those spreads have actually tightened since the conflict with Iran began. I don't know how many people had that on their bingo cards. To me, I still view that as our best real-time signal of the underlying strength of US businesses in the broader economy. I take it as a very positive sign.
It is true, obviously, that if there were stress in the private markets, they would emerge more slowly, although people have been waiting for them for quite a while now and they have not seemed to be emerging. But I would argue, Jodi, if there were systemic issues developing in private credit, you would almost certainly see it reflected in public markets through the wider spreads, rising credit default swaps, and that's because you have a lot of overlap in borrowers across these ecosystems, and you just have not seen it.
Jodi Phillips:
All right. Well, you're off the hot seat. So now we're going to conclude with one of our newer segments, Think, Rethink. So, Brian, tell me something that many people think that you believe they should rethink.
Brian Levitt:
The think is the markets have been very concentrated again this year.
Jodi Phillips:
Okay.
Brian Levitt:
You've had some weeks of it, but let me just rethink it for you. It's had its moments, like I said, particularly in the early days after the Iran conflict began. But year to date, through May, MSCI ACWI, ex-US, and the Russell 2000 Small Cap Index are both outperforming the S&P 500 Index. When people say it's concentrated, I think a lot of people would immediately go to, "Oh, it's only the S&P that's working." No, small caps are outperforming; non-US stocks and US dollar terms are outperforming.
Jodi Phillips:
All right. Well, that's it. We did it, Brian. We got through it. No avatars required.
Brian Levitt:
How do you know this wasn't my avatar?
Jodi Phillips:
So before we go... Yeah, I won't dig into that one too hard. But before we go, Brian, where can our listeners follow you or your avatar for more?
Brian Levitt:
Which language do you want me to read it in?
Jodi Phillips:
Your choice. Your choice.
Brian Levitt:
Yeah, thanks, Jodi. I'll stick with English. I don't want to show off. All right, visit invesco.com/brianlevitt to read my latest commentaries. And of course, you can follow me on LinkedIn and on X @BrianLevitt.
Jodi Phillips:
Thanks for joining. We'll see you next time.
Brian Levitt:
Thanks, Jodi.
Important information
You've been listening to Invesco's Greater Possibilities podcast, Rethink Markets.
The opinions expressed are those of the speakers, are based on current market conditions as of June 2, 2026, and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions. Should this content contain any forward looking statements, understand that they are not guarantees of future results. They involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from expectations.
All investing involves risk, including the risk of loss.
Past performance does not guarantee future results.
Investments cannot be made directly in an index.
In general, stock values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic and political conditions.
Artificial Intelligence (AI) technology companies are sensitive to specific risks such as small markets, business cycle changes, economic growth, technological progress, obsolescence, and regulation. These companies may have limited products, markets, resources, or personnel, making their securities more volatile, especially for smaller start-ups. Rapid technological changes can adversely affect their results. AI companies often rely on patents, copyrights, trademarks, and trade secrets to protect their technology, but there is no guarantee these protections will be sufficient. Significant research and development spending doesn’t ensure product or service success.
Investments in companies located or operating in Greater China are subject to the following risks: nationalization, expropriation, or confiscation of property, difficulty in obtaining and/or enforcing judgments, alteration or discontinuation of economic reforms, military conflicts, and China’s dependency on the economies of other Asian countries, many of which are developing countries.
Stocks of small- and mid-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.
Oil price discussions based on the price per barrel of US West Texas Intermediate Crude Oil, which peaked on April 7, 2026. Interest rate discussions based on the 10-year US Treasury rate, which peaked on May 19, 2026. Inflation expectations based on the 5-year US Treasury inflation breakeven, which peaked on May 4, 2026. Data sourced from Bloomberg as of May 29, 2026.
The S&P 500 Index bottomed on March 30, 2026, then gained 18.5% from March 30, 2026, to May 26, 2026. Sourced from Bloomberg, L.P., as of May 29, 2026.
Discussions about past periods when the S&P 500 Index rose by at least 18.5% sourced from Bloomberg, L.P., and Invesco as of May 29, 2026. Based on daily data from December 31, 1956, to May 28, 2026. The study examines periods where both the 2-month return on the S&P 500 exceeded 18.5% and the subsequent 6-month return was positive. Adjacent trading days where these conditions are true are excluded from the analysis.
Discussions about US corporate earnings and stock prices sourced from Bloomberg, L.P., as of May 29, 2026. Based on the earnings per share and price of companies in the S&P 500 Index and on Bloomberg consensus forecasts.
Comments about inflation expectations moving lower sourced from Bloomberg, L.P., as of May 29, 2026, based on the 3- and 5-year US Treasury inflation breakeven.
Discussion of a memory chip company hitting a $1 trillion market capitalization based on Micron Technologies as of May 29, 2026. Forward earnings comparisons of Micron to the broad market based on the price-to-forward earnings of the company compared to the S&P 500 Index. Sourced from Bloomberg, L.P. The mention of specific companies is not intended as investment advice.
The average 6-month S&P 500 Index return following the start of tenure of the last six Fed Chairs sourced from Bloomberg L.P.
Comments about public credit spreads tightening sourced from Bloomberg, L.P., as of May 18, 2026. Based on the option-adjusted spread of the Bloomberg US Corporate High Yield Bond Index.
Year-to-date returns of the S&P 500 Index were 11.00%, compared to the MSCI All Country World Index ex-US at 13.46% and the Russell 2000 Index at 18.95%, sourced from Bloomberg, L.P., as of May 28, 2026.
AGI stands for artificial general intelligence, a theoretical type of artificial intelligence that can learn, reason, and adapt like humans across any intellectual task.
LLM stands for large language model, a type of artificial intelligence designed to understand, process, and generate human language.
A credit default swap (CDS) is a financial derivative that allows an investor to offset or swap their credit risk with that of another investor.
Credit spread is the difference in yield between bonds of similar maturity but with different credit quality.
The discount rate is the interest-rate backdrop investors use to figure out what future earnings are worth in today’s dollars.
Earnings per share (EPS) refers to a company’s total earnings divided by the number of outstanding shares.
Monetary easing refers to the lowering of interest rates and deposit ratios by central banks.
Tightening monetary policy includes actions by a central bank to curb inflation.
Taper Tantrum refers to the market panic that occurred in 2013 when the Federal Reserve started to wind down its quantitative easing program.
West Texas Intermediate (WTI) is a type of light, sweet crude oil that comes from the US.
Gross domestic product (GDP) is a broad indicator of a region’s economic activity, measuring the monetary value of all the finished goods and services produced in that region over a specified time period.
Breakeven inflation is the difference in yield between a nominal Treasury security and a Treasury Inflation-Protected Security of the same maturity.
Option-adjusted spread (OAS) is the yield spread that must be added to a benchmark yield curve to discount a security’s payments to match its market price, using a dynamic pricing model that accounts for embedded options.
The Russell 2000® Index measures the performance of small-capitalization stocks and is a trademark/service mark of the Frank Russell Co.®
The Bloomberg US Corporate High Yield Bond Index measures the US dollar-denominated, high yield, fixed-rate corporate bond market.
The MSCI All Country World ex USA Index is an unmanaged index considered representative of large- and mid-cap stocks across developed and emerging markets, excluding the US.
Rethink Markets and the Greater Possibilities Podcast are brought to you by Invesco Distributors, Inc.
