Guggenheim's Schwartz Concerned Private Credit Will Crack

Summary

Alan Schwartz discusses surging US power demand from AI and electrification, arguing data centers can help lower electricity costs. He expresses concern that the private credit market may crack, but believes it won't be systemic and has raised capital to take advantage. He praises Kevin Warsh as next Fed chair and highlights fiscal policy challenges.

• Schwartz says US power demand is surging due to electrification and AI.
• He argues data centers and hyperscalers should be seen as partners in lowering long-term electricity costs.
• He is concerned that private credit will crack and has raised capital to take advantage of potential opportunities.
• He believes top private credit managers like Apollo and KKR are sophisticated and less likely to cause systemic issues.
• He praises Kevin Warsh as the right person to lead the Fed.
• He notes a productivity revolution that may affect market reactions to interest rates.
• He warns that fiscal policy is politically difficult to reform.
• He points out that consumer credit deleveraging post-crisis was unusual and interest rate relief is fading.