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Home September 2025

Apollo Answers

Apollo Answers: 10 Questions for Private Credit

Apollo Answers

From loan vintages and leverage ratios to payment-in-kind interest and manager alignment, these and other critical factors can help evaluate private credit opportunities. Alex Wright, Partner and Global Wealth Strategist at Apollo, explores 10 key questions to ask private credit managers in our latest episode of “Apollo Answers.” Watch it now.

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The information herein is provided for educational purposes only and should not be construed as financial or investment advice, nor should any information in this document be relied on when making an investment decision. Opinions and views expressed reflect the current opinions and views of the authors and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information.


Important Disclosure Information

This presentation is for educational purposes only and should not be treated as research. This presentation may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”).

The views and opinions expressed in this presentation are the views and opinions of the author(s) of the White Paper. They do not necessarily reflect the views and opinions of Apollo and are subject to change at any time without notice. Further, Apollo and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this presentation. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially, and should not be relied upon as such. Target allocations contained herein are subject to change. There is no assurance that the target allocations will be achieved, and actual allocations may be significantly different than that shown here. This presentation does not constitute an offer of any service or product of Apollo. It is not an invitation by or on behalf of Apollo to any person to buy or sell any security or to adopt any investment strategy, and shall not form the basis of, nor may it accompany nor form part of, any right or contract to buy or sell any security or to adopt any investment strategy. Nothing herein should be taken as investment advice or a recommendation to enter into any transaction.

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Certain information contained herein may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such information. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology.

The Standard & Poor’s 500 (“S&P 500”) Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies by market value.

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Strong Economy, but Weak Labor Market Because of Lower Immigration?

Daily and weekly data for the US economy shows that:

1) Trade policy uncertainty is returning to more normal levels

2) Economic policy uncertainty is returning to more normal levels

3) Restaurant bookings remain solid

4) US air travel remains robust

5) Las Vegas visitor volumes and total nights occupied remain solid

6) Same-store retail sales remain solid

7) Hotel bookings remain solid

8) Banks’ loan growth is increasing

9) Bankruptcy filings are stable

10) Broadway attendance and visits to the Statue of Liberty remain at normal levels

Maybe the reason the labor market is softening is because of lower immigration and not because of a slowdown in the broader economy?

Trade policy uncertainty improving
Sources: Economic Policy Uncertainty, Macrobond, Apollo Chief Economist
Economic policy uncertainty improving
Sources: Economic Policy Uncertainty, Macrobond, Apollo Chief Economist
Consumer expectations to business conditions
Sources: Conference Board, Macrobond, Apollo Chief Economist
Daily data for restaurant bookings
Sources: OpenTable, Apollo Chief Economist
Daily data for US air travel
Sources: US Department of Homeland Security, Macrobond, Apollo Chief Economist
Las Vegas tourism
Sources: Bloomberg, Macrobond, Apollo Chief Economist
Weekly data for same-store retail sales
Sources: Redbook Research Inc., Macrobond, Apollo Chief Economist
Weekly data for hotel demand
Sources: STR, Haver Analytics, Apollo Chief Economist
Weekly loan growth for banks
Sources: Federal Reserve, Macrobond, Apollo Chief Economist
Weekly bankruptcy filings
Note: Filings are for companies with more than $50 mn in liabilities. For week ending on September 4th, 2025. Sources: Bloomberg, Apollo Chief Economist
Weekly Broadway show attendance
Sources: The Broadway League, Macrobond, Apollo Chief Economist
Visits to the Statue of Liberty
Sources: irma.nps.gov, Apollo Chief Economist

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Daily Data Shows Consumer Spending Slowing Down on Goods Impacted by Tariffs

Daily data for consumer spending shows growth is slowing in discretionaries and on goods that are impacted by tariffs, see tables below.

Our chart book with daily data for consumer spending is available here.

Consumer spending momentum: Essentials and Discretionary
Note: Stable is defined as growth falling between 0.5 to -0.5 standard deviation of the past 90 days, rising momentum is higher than 0.5 standard deviation and falling momentum is -0.5 standard deviation. Past week ends on 29th August 2025. Sources: US Bloomberg Consumer Spending, Apollo Chief Economist
Note: Stable is defined as growth falling between 0.5 to -0.5 standard deviation of the past 90 days, rising momentum is higher than 0.5 standard deviation and falling momentum is -0.5 standard deviation. Past week ends on 29th August 2025. Sources: US Bloomberg Consumer Spending, Apollo Chief Economist.

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No Alpha Left in Public Markets

There are fewer public companies to invest in, and firms that decide to do an IPO are getting older and older.

In 1999, the median age of IPOs was five years. In 2022, it was eight years, and today, the median age of IPOs has increased to 14 years, see chart below.

The rise in the age of companies going public is not only a result of the Fed raising interest rates in 2022, but also the consequence of more companies wanting to stay private for longer to avoid the burdens of being public.

Combined with the domination of passive investing, failure of active managers and high correlation in public markets, and high concentration in a few stocks, the reality is that there is no alpha left in public markets.

The median age of IPOs is currently 14 years
Sources: Jay Ritter, University of Florida, Apollo Chief Economist

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Extreme Concentration in the S&P 500

Our chart book—available here—documents the extreme AI concentration within the S&P 500’s market cap, returns, earnings and capex.

Another measure of market cap concentration
Sources: Bloomberg, Apollo Chief Economist
Performance of tech index relative to S&P 500 higher than tech bubble
Sources: Bloomberg, Macrobond, Apollo Chief Economist
Earnings growth concentrated in the Magnificent 7 and slowing down
Sources: FactSet, Apollo Chief Economist
The AI bubble today is bigger than the IT bubble in the 1990s
Note: Data as of July 2025. Top 4 and top 10 companies are by market cap. Sources: Bloomberg, Apollo Chief Economist
Hyperscalers’ capital expenditure share of US private domestic investment has doubled since 2023
Sources: Bloomberg, Apollo Chief Economist
Capital expenditure share of GDP much higher for hyperscalers today vs. telecom companies during dot-com bubble
Note: Hyperscaler companies include Oracle, Microsoft, Meta, Amazon and Google. Telecom companies include Level 3 Communications, WorldCom, Global Crossing, Nortel Networks, Verizon, AT&T, Nokia, Cisco Systems, Williams Companies and XO Communications. Sources: Bloomberg, FactSet, Apollo Chief Economist

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AI Adoption Rate Trending Down for Large Companies

The US Census Bureau conducts a biweekly survey of 1.2 million firms, and one question is whether a business has used AI tools such as machine learning, natural language processing, virtual agents or voice recognition to help produce goods or services in the past two weeks. Recent data by firm size shows that AI adoption has been declining among companies with more than 250 employees, see chart below.

The bottom line is that the biweekly Census data is starting to show a slowdown in AI adoption for large companies.

AI adoption rates starting to decline for larger firms
Note: Data is six-survey moving average. The survey is conducted biweekly. Sources: US Census Bureau, Macrobond, Apollo Chief Economist

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Job Growth Negative in Tariff-Impacted Sectors

Splitting employment growth into tariff-impacted sectors and sectors not directly impacted by tariffs shows that the slowdown in job growth is broad-based, and job growth in tariff-impacted sectors is now negative, see chart below.

Job growth negative in tariff-impacted sectors
Note: Sectors impacted by tariffs include manufacturing, mining and logging, construction, wholesales trade, retail trade, transportation and warehousing. Sources: US Bureau of Labor Statistics (BLS), Macrobond, Apollo Chief Economist

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Securitization Is a Key Part of a Modern Financial System

One important reason why growth is structurally lower in Europe is that the European financial system is less developed.

Importantly, securitization accounts for 50% of GDP in the US and 7% in Europe, see also here.

Securitization lowers the costs of borrowing for consumers and firms, enhances credit availability, distributes risk and creates new investment opportunities for investors.

The bottom line is that expanding the securitization market in Europe would unlock significant GDP growth and benefit European consumers, firms and retirees.

For more discussion, see here and here.

Securitization: Europe still far behind the US
Note: US is the sum of ABS and agency and nonagency MBS. Europe includes EU, UK and Switzerland. Sources: SIFMA, AFME, Apollo Chief Economist

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US Housing Outlook

Demand for housing is slowing because of high home prices, high mortgage rates and declining immigration, see charts below.

Housing supply is steady because existing homeowners are reluctant to sell their homes, since they’re locked into lower mortgage rates and don’t want to take on higher ones. Housing supply of new homes is rising, see again charts below.

The bottom line is that there is downward pressure on home prices coming from falling demand and rising supply.

Traffic of prospective homebuyers
Sources: National Association of Home Builders, Macrobond, Apollo Chief Economist
Monthly mortgage payment on a new mortgage: $2,813
Note: Calculation of monthly payment using the 30-year purchase loan application size and the 30-year effective rate. Sources: Bloomberg L.P., Apollo Chief Economist
Homebuyer and homebuilder confidence lower because of affordability
Sources: University of Michigan, National Association of Home Builders, Macrobond, Apollo Chief Economist
Household formation slowing down
Note: Household formation estimates for 2025 and 2026 are based on projected natural population growth and legal immigration. We assume unauthorized immigration drops to zero under potential Trump policy scenario. To reflect this, we use natural population growth plus 65% total net migration—based on CBO estimates and Migration Policy Institute’s estimates of 0.9 million rise in unauthorized immigrants in 2023—divided by the average US household size. Sources: Census Bureau, Haver, Apollo Chief Economist
International homebuyers
Note: Based on transactions in the 12 months ending March of each year. Sources: National Association of Realtors (NAR), Apollo Chief Economist
Total housing inventory per person is very low
Sources: US Census Bureau, Macrobond, Apollo Chief Economist
New and existing home sales lower than normal because of affordability and low inventory
Sources: NAR, US Census Bureau, Macrobond, Apollo Chief Economist
New homes supply indicates slower market turnover
Sources: US Census Bureau, Macrobond, Apollo Chief Economist

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Downside Risks to Job Growth Over the Coming Months

Sentiment indicators for consumers and firms are pointing to a weaker employment report for August.

First, consumer sentiment about the outlook for the labor market has historically been a leading indicator for job growth. Using the historical relationship to predict the August employment report suggests that nonfarm payrolls on Friday could come in lower than the 90,000 expected by the consensus, see the first chart below.

Second, small businesses saying that they are experiencing poor sales has also been a leading indicator for the unemployment rate, and the current reading suggests the unemployment rate could rise over the coming months, see the second chart.

The bottom line is that sentiment indicators are suggesting that the labor market will continue to weaken.

Downside risks to nonfarm payrolls over the coming months
Note: University of Michigan’s expected change in unemployment during the next year August numbers are preliminary estimates. Sources: US Bureau of Labor Statistics (BLS), University of Michigan, Macrobond, Apollo Chief Economist
Upside risks to the unemployment rate over the coming months
Sources: National Federation of Independent Business, US Bureau of Labor Statistics (BLS), Macrobond, Apollo Chief Economist

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