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Apollo 2023 Economic and Capital Markets Outlook

2023 Economic and Capital Markets Outlook By Torsten Sløk, PhD Apollo Chief Economist December 2022 KEY TAKEAWAYS The central themes of 2022—namely high inflation, potential The sequencing of how the Fed reaches its dual mandate economic recession, and dislocated asset prices—are (taming inflation and maintaining full employment) is key expected to continue to be with us as we head into 2023. for capital markets. Receding inflation first, moderating But the story of those elements will be different, as the employment later means that the need for “demand fast-and-furious tightening of monetary conditions by the destruction” on the part of the Fed decreases. Federal Reserve in 2022 has begun to take effect across the macroeconomic spectrum—from inflation, to spending, hiring, A less aggressive Fed—or a potential Fed “pivot” in and capital expenditures—as well as in the capital markets. 2023—should be bullish for asset prices (public and private) ranging from rates, to credit, to equities. That This is how we believe 2023 will differ from 2022: said, capital markets will likely remain vulnerable in 2023 and volatility will likely persist because capital remains US inflation appears to have peaked in June 2022, with scarce and expensive, and high-yield primary credit the Consumer Price Index (CPI) showing us good reason markets will likely stay virtually shut down for the time to believe that we’re now in the beginning of a downward being. Selectivity in asset selection, valuations, and entry trend. The decline in inflation in recent months has points will be paramount. been driven mainly by the goods sector, while prices of services have proven stickier. The downtrend is welcome Also, many investors—weary and battered after a news for markets and the Fed, but it doesn’t mean that we disastrous performance of 60/40 portfolios of public will get back to the Fed’s 2% annual target anytime soon. equities and bonds in 2022—are likely to turn to private In fact, history shows it could take up to two years for us markets as they adjust their holdings in 2023. Purchase to get there. price matters and we see a historic entry point in private credit and attractive opportunities in private equity for The decline in inflation is taking place without a sharp investors able to be providers of capital in a time of increase in the unemployment rate, which points to a stressed and distressed markets. higher probability that the Fed might engineer a much- desired soft landing of the US economy, a scenario that many thought very unlikely just a few months ago. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. @ 2022 APOLLO GLOBAL MANAGEMENT, INC. ALL RIGHTS RESERVED.

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Inflation is unlikely to come back to the Fed’s 2% target in 2023 but a soft landing is possible Will inflation come back to the Fed’s 2% target in 2023? No, Unfortunately, no constituency—from central banks to chief it is highly unlikely. It will probably take two or three years economists—has been able to forecast inflation accurately for that to happen. Given that outlook, will the Fed be able to over the last 18 months (Exhibit 2). One of the main reasons engineer a soft landing in 2023? Typically, the obvious place for that disconnect seems to be that the root causes of this to start trying to answer this question would be by looking at latest wave of price increases remain elusive. Why? Because consensus expectations for inflation and economic growth we have been going through a series of unexpected and (Exhibit 1). Over the last year-and-a-half, inflation expectations monumental exogenous shocks to the economy—the Covid have gone up and expectations for GDP growth have come pandemic, unprecedented monetary stimulus, the war in down. As we enter 2023, the consensus seems to be saying Ukraine. These developments have flummoxed even the most that we are standing at the brink of possible stagflation— finely tuned forecasting models. rising prices paired with declining economic growth. Exhibit 1: We enter 2023 with consensus expectations of higher inflation and lower growth BLOOMBERG CONSENSUS FORECASTS FOR 2023 ­o­ ­o­ .5 .5 .0 .0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 1 1 1 1 1 1 2 2 2 2 2 0.0 2 2 2 2 2 2 2 2 2 2 2  r n g t c  r n g t e p u u c e e p u u c      D      US gross domestic product (GDP) Core Personal Consumption Expenditures (PCE) price index Source: Bloomberg, Apollo Chief Economist. Data as of November 14, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 02

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Exhibit 2: Consensus forecasts of lower US inflation have been inaccurate Consensus oreas­s %YoY %YoY 10 10 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 1 1 1 2 2 2 0 9 9 9 0 0 0 2 2 2 3 3 3 1 1 1 2 2 2 2 2 2 2 2 2 y n y p n y p n a p n y p n y p a a e a a e a e a a e a a e J M S J M S J M S J M S J M S Headline Consumer rie nde C Core C Source: Cleveland Fed, Bloomberg, Haver Analytics, Apollo Chief Economist. Data as of September 30, 2022. In Exhibit 2, the solid lines show actual inflation, while the The bottom line is that it will likely take two to three years— dotted lines show the consensus forecasts at any given and more Fed hikes—to bring inflation under control. That point of time. When inflation started rising in April of last being said, the Fed’s 2022 rate hikes are already showing year, most, including the Federal Reserve, thought it would signs of working, with various inflation measures moderating be transitory. With each subsequent increase in the CPI, the near year-end. The fact that inflation is coming down before consensus said the same thing—This is the peak, it’s going we see any deterioration in the labor market is very important to come down from this point forth—but the consensus has for markets and for the economic outlook. With less pressure been wrong. This gives us good reason to be cautious about on the Fed to forcefully fight inflation going forward, we think current forecasts as well. the likelihood of a soft landing in 2023 is real. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 03

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Inflation Outlook: Higher prices remain a real concern for the Fed Although upward pressure on US inflation was moderating raised rates six times in 2022, taking the federal funds rate 1 at year-end 2022, it remained broad-based, with four-out-of- target from 0.25% to 4.0%. Will they continue with such an every-five components of the inflation basket showing price aggressive pace throughout 2023? We think not, but the growth of 5% or more (Exhibit 3) and “sticky” components of exact timing of when we might see a less aggressive Fed—or, the CPI continuing to rise (Exhibit 4). That explains why the better yet, a Fed “pivot”—remains uncertain. That said, as of Federal Reserve continues to step on the brakes. Through this writing, we see the Fed reaching “peak rates” in mid-2023 November, the Federal Open Market Committee (FOMC) had around 5.5%. Exhibit 3: US inflation has become broad-based… % % 100 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 CPI components above 5% Note: Year-over-year growth used. Source: Bureau of Labor Statistics (BLS), Haver Analytics, Apollo Chief Economist. Data as of October 31, 2022. Exhibit 4: …while “sticky” components continue to rise % % 20 20 15 15 10 10 5 5 0 0 -5 -5 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Atlanta Fed flexible CPI 12 mnt Atlanta Fed tic CPI 12 mnt Source: Federal Reserve Bank (FRB) of Atlanta, Bloomberg, Apollo Chief Economist (Note: sticky-price consumer price index (CPI)—a weighted basket of items that change price relatively slowly; The flexible cut of the CPI – a weighted basket of items that change price relatively frequently). Data as of October 31, 2022. 1. https://www.federalreserve.gov/monetarypolicy/openmarket.htm 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 04

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK The root causes of inflation have been extremely But it’s not entirely clear whether that was the case. US and difficult to discern European inflation (Exhibit 5) over the past two years, for example, have been almost identical despite the fiscal response Why has inflation risen around the world? The short answer to Covid (Exhibit 6) being double the size in the US relative to to that question is obvious: Because there has been upward Europe. If this were primarily a monetary problem, a much more pressure on the price of most things, from raw materials to aggressive fiscal response in the US should have led to higher shipping to labor. The long answer isn’t so clear: That upward headline and core inflation in the US than in Europe. But that pressure is the result of a combination of demand- and hasn’t happened. In fact, US inflation has begun to moderate, supply-driven factors. while EU inflation continues to surge. Those who think inflation is mostly demand-driven point The similar path of inflation in the US and Europe strongly to the fiscal response to Covid in the US: stimulus checks, suggests that price rises have not been entirely driven higher unemployment benefits, childcare tax credits, and by demand but at least partly by supply-chain problems Paycheck Protection Program (PPP) loans. If those were the associated with Covid as well. primary reasons behind inflation—fiscal stimulus led to higher disposable income led to excess demand—then the solution If supply-chain problems were the primary culprit—increased to inflation would be “demand destruction,” something the cost of imported goods, especially from China; increased Federal Reserve and other central banks have been trying to costs of shipping from ports to trucking and otherwise—then engineer through rate increases. the rational course would have been for policymakers to just wait for those issues to sort themselves out. Exhibit 5: Root causes of inflation are hard to pinpoint: US and EU prices rising at comparable paces… % YoY % YoY 9.6 9.6 4.6 4.6 -0.4 -0.4 Jan 19 Apr 19 Jul 19 Oct 19 Jan 20 Apr 20 Jul 20 Oct 20 Jan 21 Apr 21 Jul 21 Oct 21 Jan 22 Apr 22 Jul 22 US headline inflation Euro area headline inflation Source: Bloomberg, Apollo Chief Economist. Data as of October 31, 2022. Exhibit 6: …despite the fiscal response to Covid being twice as large in the US vs the EU % of GDP 0.0 -10.0 - % -% -20.0 -1% -12% 2020 2021 US federal surplus/deficit (% GDP) EA19 eeral oeret surplus/deficit (% GDP) Source: Office of Management and Budget (OMB), European Central Bank (ECB), Haver Analytics, Apollo Chief Economist. Euro Area (EA) 19 countries include Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain. Data as of April 26, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 05

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Whatever its cause, the trajectory of inflation has the past few years. The latest data, however, have begun to proven difficult to forecast provide some clarity about the overall picture of inflation as well as the prognosis going forward. While it would seem a very important distinction which argument one believes—Was it demand or supply that After spiking during Covid, inflation of goods has fallen has driven prices up?—it’s crucial to realize that both sharply in recent months, while inflation in the service sector explanations are seeking to explain the past, or that which remains on the rise (Exhibit 7). After briefly—and violently— has already happened. But there’s a related, and arguably swapping trajectories during the pandemic (Exhibit 8), more crucial, issue: Has either side of the argument been spending on goods is slowing because growth in both goods able to use their understanding to accurately predict the production and sales were very high during Covid, and the future, that which hasn’t happened yet? As shown in Exhibit sector consists of the more interest rate-sensitive components 2, forecasting has proven remarkably difficult for economists of GDP, such as housing, autos, and capital expenditures. amid unprecedented economic and market disruptions over Exhibit 7: Inflation in the services sector, which accounts for roughly 80% of GDP, has been especially stubborn %Yo %YoY Y 11 11 6 6 1 1 -4 -4 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Goods sector inflation Service sector inflation Source: Bureau of Labor Statistics (BLS), Haver Analytics, Apollo Chief Economist (Note: Goods = Commodities Less Food & Energy Commodities; Service = Services Less Energy Services). Data as of October 31, 2022. Exhibit 8: After taking the lead from services spending during quarantine, spending on goods is poised to relinquish it once again PERSONAL CONSUMPTION EXPENDITURES PRICE INDEX % Goods spending ( erices spending ( % 36 71 69 34 67 32 65 30 1 1 2 5 7 7 1 2 5 7 1 2 2 63 3 4 4 6 8 9 0 0 1 1 3 3 4 1 6 6 1 8 9 9 0 2 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 0 0 0 0 0 0 0 l l t l t r t l r t r t l r t n c r n t l r n t l r n c u p n c u p n c u p n c p n c a u p a c u p a c u p a J a J a J a u a J O J A J O J A J O J A J O A J O A J O A J O J A J O Source: Bureau of Labor Statistics (BLS), Haver Analytics, Apollo Chief Economist (Note: Goods = Commodities Less Food & Energy Commodities; Service = Services Less Energy Services). Data as of October 31, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 06

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK The services sector, on the other hand, is headed in the other Clarity is also emerging on the supply side of the inflation direction. That presents a challenge for policymakers, as equation: Some of the sourcing issues for goods are already services sector inflation is notoriously difficult to cool down, resolving themselves as supply chains ease. Indeed, recent and would seem especially hard to do so at this particular data suggest that transportation costs are normalizing, as the moment in history. After spending much of the past two years costs of transport by ship (Exhibit 10), truck (Exhibit 11), and cooped up inside our houses, we all want to go out and see even air freight (Exhibit 12) are coming down, although air our friends and families, so it’s going to be hard to bring down freight rates are still more than double pre-pandemic levels. spending on travel, hotels, airlines, restaurants, concerts, and (Tightness in the labor market—a topic we will address in the sporting events. That suggests that there is, and will remain, next section—may take more time to resolve.) a big tailwind to consumption (and therefore inflationary pressure) in the services sector. The Fed will likely wait for Housing, for its part, makes up roughly 40% of the CPI 2 inflation in the services sector to slow down before taking its basket, so the Fed needs housing inflation to come down foot off the brakes, and that is not happening yet. as well. While rents rose sharply in 2021, October data from Redfin showed year-over-year changes in rents growing at Commodity prices, of course, have also been a significant the slowest pace in over a year, with median US asking rents 3 driver behind key non-core inflation components (Exhibit 9). dropping below $2,000 for the first time in six months. While While the upward trajectory of gasoline prices has moderated there are some issues about how long it takes before this in recent months, overall commodity prices remain at their shows up in the CPI, this news supports the narrative that we highest levels in a generation. have the peak in inflation behind us. Exhibit 9: Higher commodity prices are still putting upward pressure on key non-core inflation components CRB US SPOT COMMODITY INDEX Index Index 700 700 650 650 600 600 550 550 500 500 450 450 400 400 350 350 300 300 250 250 200 1 2 5 7 1 2 5 7 1 2 200 3 4 6 8 9 0 1 1 3 4 1 6 1 8 9 0 2 0 0 0 0 0 0 0 0 0 1 0 0 1 1 0 1 0 1 1 2 0 2 0 0 0 0 0 0 0 0 0 0 2 2 0 0 2 0 2 0 0 0 2 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Source: Bloomberg, Apollo Chief Economist. Data as of November 11, 2022. 2. https://www.bls.gov/cpi/tables/relative-importance/2021.htm 3. https://www.redfin.com/news/redfin-rental-report-october-2022/ 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 07

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Exhibit 10: Container freight rates are falling… Rate per 40-foot box (in US ontainer freit rate Rate per 40-foot box (in US 16,000 o poite ­o €nele to Sanai 16,000 14,000 ‚eƒ „or… to Rotter†a Rotter†a to ‚eƒ „or… 14,000 Rotter†a to Sanai Sanai to ‡enoa 12,000 Sanai to ­o €nele Sanai to ‚eƒ „or… 12,000 Sanai to Rotter†a 10,000 10,000 8,000 8,000 6,000 6,000 4,000 4,000 2,000 2,000 0 5 5 7 7 1 1 2 2 0 3 3 4 4 1 1 6 6 1 1 8 8 9 9 0 0 2 2 1 1 1 1 1 1 1 1 1 1 2 2 2 2 l l l n l n l n u n l n u n l n l n l n u n l a u a u a J a u a J a u a u u a J a u J J J J J J J J J J J J a J J J J J Source: WCI, Bloomberg, Apollo Chief Economist. Data as of December 1, 2022. Exhibit 11: ...Truck transportation costs are declining as well… $ Average rates per mile $ 4.0 4.0 Eipment an late e­rigerate Spe€iali‚e tr€ƒing 3.5 3.5 3.0 3.0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 5 5 7 7 7 1 1 1 2 2 2 1.0 4 4 4 5 6 6 6 1 1 1 8 8 8 9 9 9 0 0 0 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 y y n y p n y p n y p n a p n y p n y p n y p n a p n y p a a e a a e a a e a e a a e a a e a a e a e a a e J M S J M S J M S J M S J M S J M S J M S J M S J M S Source: Bloomberg, Apollo Chief Economist. Data as of November 25, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 08

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Exhibit 12: ...Air freight rates, while still high, are down from their recent peak $/kg Drewry air freigh average rae i ollar $/kg 8 8 7 7 6 6 5 5 4 4 3 3 2 1 1 1 2 2 2 7 7 7 1 1 1 2 2 2 8 9 9 9 0 0 0 1 1 1 1 1 1 3 3 3 4 4 4 5 5 5 6 6 6 1 1 1 8 8 8 9 9 9 0 0 0 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 0 0 0 0 r l l l l r l v r v r l v r l v r l v r l r v r l r l l r v r l v r l v a u v a u o a u a u a u a u a u v a u o a u v a u v r u v a u a u o a u o J o J J o J o J o J o J o J J o J o a J o J o J N M J N M N M N M N M N M N M N M N M N M N M N M N M N M Source: Bloomberg, Apollo Chief Economist. Data as of September 30, 2022. The implication for markets is that the Fed and the European The bottom line: US inflation has begun to slow (Exhibit 13), but Central Bank (ECB) may not need to do much additional it is likely to remain above the Fed’s 2% target for some time. “demand destruction” to get inflation down. In that scenario, The pattern seen in the early 1970s suggests that it can take central banks will not be under so much pressure to keep another two years (Exhibit 14) for inflation to get there, and the rates high for an extended period. That is a key reason why Fed won’t consider its mission accomplished until it does. the FOMC could start downshifting their rate hikes and ultimately pause, most likely in the first quarter of 2023. But that should not be construed as a wavering on the part of the Fed to its 2% inflation target. Exhibit 13: It’s a long way back down to 2% FRB NY SURVEY OF CONSUMER EXPECTATIONS % % 7.0 7.0 6.0 6.0 5.0 5.0 4.0 4.0 3.0 3.0 2.0 2.0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Median three-year ahead expected inflation rate Median one-year ahead expected inflation rate Source: Federal Reserve Board (FRB), Haver Analytics, Apollo Chief Economist. Data as of October 31, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 09

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Exhibit 14: If history is any guide, it could take two years for inflation to return to 2% % Yo % YoY Y CPI (LS) 1966–1982 (RS) 11 15 14 9 13 12 7 11 10 5 9 8 3 7 6 5 1 4 In the 1970s it took 2 es 3 -1 o intion to noi e 2 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: BLS, Bloomberg, Apollo Chief Economist. Data as of October 31, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 10

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Economic Outlook: Can the Fed engineer a soft landing of the US economy in 2023? Against the inflation backdrop described in the previous from considering the consensus forecast regarding the section, let’s turn to its corollary: economic growth. As probability of recession over the next 12 months. According previously discussed, the Fed has been laser-focused on to Bloomberg’s consensus (a measure of 81 chief economists cooling down the economy in a bid to slow the pace of price on Wall Street), the probability of recession in the US, UK, and increases. Still, as monetary conditions remain tight (and still the EU over the next year is already above 50% (Exhibit 15)— tightening), a question arises: Is the Fed cooling the economy they think it more likely than not that those economies will down too much? start shrinking in 2023. Setting aside the inability of forecasters to accurately predict the path of inflation, there is still much to glean Exhibit 15: Consensus probability of economic recession rising in US, Western Europe CONSENSUS PROBABILITY OF A RECESSION WITHIN 12 MONTHS % Probability of reeion % 100 100 90  S  90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 1 1 1 1 1 1 2 2 2 2 2 2 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 r y l v r l n r y l p v n a a u p n a y u p v a a a u e o a J e o a a J e o J M M J S N J M M S N J M M S N Source: Bloomberg, Apollo Chief Economist. Data as of November 11, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 11

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK The economists are not alone in their pessimism. CEO business profits (Exhibit 16). The next shoe to drop would seem to be confidence has also fallen sharply, in tandem with corporate earnings expectations, which remain stubbornly high. Exhibit 16: Corporate profits and CEO confidence are on the decline % YoY Index 60 90 50 80 40 30 70 20 60 10 0 50 -10 40 -20 30 -30 -40 2 2 2 2 2 20 6 8 0 4 6 8 0 4 6 8 0 4 6 8 0 1 4 6 8 0 7 7 8 8 8 8 8 9 9 9 9 9 0 0 0 0 0 1 0 1 1 1 2 2 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 Corporate profits (LH C siness onfiden e­ o€era‚‚ (ƒH Source: The Conference Board, Haver Analytics, Apollo Chief Economist. Data as of October 27, 2022. Investors looking for signs that the economy is truly subprime borrowers are delinquent (Exhibit 17). But that’s slowing don’t have that many examples to choose from at only subprime borrowers, who don’t account for much of the the moment. An analysis of auto loans, credit cards, and total of consumer spending. We are not seeing signs of things mortgages does show that an increasing percentage of slowing down in near-prime or above. Exhibit 17: Subprime credit quality is deteriorating, but not so much to be the harbinger of a broad-based slowdown, at least not yet Auto Loans Credit Cards Mortgages +60 day deliquency rate +90 day deliquency rate Distribution of deliquency Oct. Sep. Oct. Oct. Oct. Sep. Oct. Oct. Oct. Sep. Oct. Oct. 2022 2022 2021 2019 2022 2022 2021 2019 2022 2022 2021 2019 Super Prime 0.00% 0.00% 0.00% 0.00% Super Prime 0.00% 0.00% 0.00% 0.00% Current 95.30% 95.40% 96.30% 93.40% Prime Plus 0.01% 0.01% 0.01% 0.01% Prime Plus 0.01% 0.01% 0.01% 0.01% 30-59 DPD 2.60% 2.60% 1.90% 3.50% Prime 0.13% 0.13% 0.10% 0.14% Prime 0.18% 0.18% 0.15% 0.19% 60-89 DPD 1.30% 1.20% 1.00% 1.90% Near Prime 0.50% 0.50% 0.46% 0.44% Near Prime 1.08% 1.02% 0.87% 1.20% 90+ 0.70% 0.70% 0.70% 1.00% Subprime 11.80% 12.10% 10.16% 8.21% Subprime 18.60% 17.90% 13.30% 18.92% Foreclosure 0.10% 0.10% 0.10% 0.20% Total 1.86% 1.86% 1.44% 1.40% Total 2.02% 1.91% 1.22% 2.02% Source: Transunion Monthly Industry Snapshot, October 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 12

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK In keeping with the demand-side argument for inflation, savings post-Covid (Exhibits 18, 19). Combined with solid job strong consumer spending in the US has clearly been and wage growth, we expect it will take many quarters before supported by the fact that households still have significant household savings are back at pre-pandemic levels. Exhibit 18: Still-high personal savings suggest US consumer resilience… €bn eronal avng tra avng urng ­ov 600 500 400 Su‚ oƒ etra „oue„ol  avng 300 urng ­ov … €2†6trn 200 100 0 -100 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 l n b r r y n l g p t v c n b r r y n l g p t v c n b r r y n u g p t v c n b r r y n l g p t a e a p a u u u e c o e a p u c a e a p a u J u e c o e a a p a u c J A J J a e a u J u e o e J F A J O J e u J u e F M M A S O N  J F M A M J A S O N  M M A S N  F M A M J A S O Source: Bloomberg, Apollo Chief Economist. Data as of October 2022. Exhibit 19: …with record-high $3 trillion in excess savings $ trn $ trn 20 20 18 18 16 16 14 14 12 12 10 10 8 $3trn in excess 8 6 savings in 6 4 checking accounts 4 2 2 0 5 7 1 5 7 1 5 7 1 5 7 1 0 9 3 9 3 9 1 3 1 1 9 2 8 8 8 9 9 9 9 9 0 0 0 0 0 0 1 0 1 0 9 9 9 9 9 9 9 9 0 0 0 0 0 2 0 0 0 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 Deposits: all coercial anks Source: Federal Reserve Board (FRB), Haver Analytics, Apollo Chief Economist. Data as of November 2, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 13

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Further complicating the Fed’s efforts to slow the economy, of unemployed sat at six million. It is clearly difficult for outside of some high-profile technology sector layoffs, the employers to find workers and the labor market remains tight, labor market remains strong (Exhibit 20). The Fed is trying meaning that upward pressure on wages will likely continue. to slow down hiring to curb inflation. But rate hikes are That said, one discerning aspect of this cycle is worth pointing not having a notable negative impact on the labor market. out: Labor market overheating has been characterized more The employment report for October showed job growth by excessive job openings than excessive actual employment. in the housing sector, despite rising rates, as well as in In other words, the excess comes from companies seeking manufacturing, despite the rising dollar. to hire workers rather than companies actually hiring them. The former is much easier to unwind than the latter, and In mid-November, the civilian labor force was currently four it corroborates the current scenario of easing inflationary million workers below the pre-pandemic trend (Exhibit 21). pressures with a still-low unemployment rate. That’s a high number considering that the total number Exhibit 20: US unemployment rate remains fairly steady despite tightening monetary conditions… UNEMPLOYMENT RATE % % 16 16 14 14 12 12 10 10 8 8 6 6 4 4 2 2 0 0 2016 2017 2018 2019 2020 2021 2022 Source: Bureau of Labor Statistics (BLS), Haver Analytics, Apollo Chief Economist. Data as of October 1, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 14

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Exhibit 21: …while the civilian labor force remains below pre-pandemic levels Millions US civilian labor force Millions 175 4mn workers 175 170 “missin” 170 165 165 160 160 155 155 150 150 145 145 140 1 2 5 7 1 2 5 7 1 2 140 0 3 4 6 8 9 0 1 1 3 4 1 6 1 8 9 0 2 0 0 0 0 1 1 1 1 1 1 2 2 0 0 0 0 0 0 n n n n n n n n n n n n n n n n n n a n n n a n n a a a a a a a a a a a a a J a a a a a J a a J J J J J J J J J J a J J J J J J J J J J J Source: Bureau of Labor Statistics (BLS), Haver, Apollo Chief Economist. Data as of November 30, 2022. Ultimately, the Fed’s primary mandate is to fight inflation. Its inflation declines in the face of a strong US labor market—that second mandate is to maintain full employment and try to points to a higher probability that we will get a soft landing, avoid recessions. The sequencing of that dual mandate is which would be bullish for both credit and equities. extremely important from a market perspective. If we were facing rising unemployment with inflation still going up, that The bottom line: The probability of a recession is rising, would increase the probability of a hard landing because then particularly in Western Europe because of the added pressure we would need more “demand destruction” from the Fed. from higher commodity prices. But the US consumer remains But the fact that inflation is coming down before we see any resilient, with ample savings to draw on, and the overall US deterioration in the labor market is very important for markets. labor market remains strong. While the global economy is If the Fed can get inflation down without a sharp increase in slowing, areas of resilience could support a soft landing, the unemployment rate—a very distinct possibility given recent especially in the US. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 15

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Capital Markets Outlook: What are the implications for public and private markets? Let’s start by taking stock of current monetary conditions. Quantitative Easing, or QE, is to lower rates and incentivize The Fed hiked rates much faster in 2022 than they have ever investors to buy risky assets. The goal of QT is the opposite: To done, going all the way back to World War II (Exhibit 22). This push long rates higher, widen credit spreads, and, as a result, trajectory is likely to continue into at least part of 2023. reduce the attractiveness of riskier assets. At the same time, we can expect Quantitative Tightening (QT) to be a central theme in 2023 (Exhibit 23). The goal of Exhibit 22: As it continues to grapple with stubbornly high inflation, the Fed is raising rates at a historic pace… CHANGE IN EFFECTIVE FED FUNDS RATE DURING FED TIGHTENING CYCLES % pts 5.00 1994 1999 2004 2015 2022 Fed SEP projetions 4.00 3.00 2.00 1.00 0.00 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 Months from first Fed hike Source: Federal Reserve Bank (FRB), Haver Analytics, Apollo Chief Economist. Data as of October 31, 2022. Exhibit 23: …while QT is further exacerbating tightening conditions CENTRAL BANK ASSET PURCHASES $bn, 6-month moving $bn, 6-month moving average average 1,300 1,300 800 800 300 300 -200 1 2 5 7 1 2 -200 8 9 0 1 1 3 4 1 6 1 8 9 0 2 3 0 0 1 0 0 1 1 0 1 0 1 1 2 0 2 2 0 0 0 2 2 0 0 2 0 2 0 0 0 2 0 0 2 2 2 2 2 2 2 2 2 2 2 BoE BoJ Fed EB ota Source: Bloomberg, Apollo Chief Economist. Pace of purchases for 2021: BOE: £3.4bn per week until mid-December 2021, FED: USD120 bn per month with wind down from December 2021 with purchases ended in March 2022, ECB: Euro 90bn per month (20 bn asset purchase programme + 60 bn pandemic emergency purchase programme (PEPP)), PEPP until March 2022, Euro 40bn in April, Euro 30bn in May and Euro 20bn in June, and only redemptions reinvested from August. BOJ: USD 70bn per month. For 2022: All programs are expected to wind down linearly from January 2022 to December 2022. Fed QT USD 95bn per month from May 2022. BoE starts to sell £80 bn in the next 12 months and ECB starts QT in 2Q23. Data as of October 31, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 16

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK The upshot of this dramatic switch? The annual net supply of growing supply of Treasuries. What’s more, this increasing Treasuries before the pandemic was $500 billion. In 2023, it supply of bonds—the amount of US government debt held is expected to be $1.5 trillion, with $1 trillion coming from the by the public is already at record highs (Exhibit 24)—is at 4 budget deficit and $500 billion coming from QT. That is a lot risk of crowding out demand for other types of fixed income, of supply that needs to be absorbed by market participants. including investment grade, high yield, loans, and mortgages. The implication is that there is some upside risk to long- term interest rates not only from inflation but also from the Exhibit 24: The amount of US government debt held by the public is at record-highs DEBT HELD BY PUBLIC $trn $trn 24 24 19 19 14 14 9 9 4 4 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: US Treasury, Bloomberg, Apollo Chief Economist. Data as of September 11, 2022. This combination of higher rates and QT has been a primary example, through mid-November, the typical 60/40 public cause of the increasing correlation among asset classes that stock-bond portfolio was down 16% (Exhibit 25). has wreaked havoc on traditional portfolios in 2022. As an Exhibit 25: Tighter monetary conditions have prompted massive value destruction in public markets 60/40 PUBLIC STOCK-BOND PORTFOLIO DOWN 16% IN 2022 01 Jan 2022 = 100 01 Jan 2022 = 100 100 100 90 90 80 2 2 2 2 2 2 2 2 2 80 2 2 2 2 2 2 2 2 2 n b r r y n l g p a e a p a u u u e J F M A M J J A S Bloomberg US equity/fie inome 0/0 ine Source: Bloomberg, Apollo Chief Economist. The Bloomberg US BMA6040 Index rebalances monthly to 60% equities and 40% fixed income. Data as of October 11, 2022. 4. Source: CBO, FRB, Haver Analytics, Apollo Chief Economist. Note: Estimate of QT includes redemptions from the Fed’s System Open Market Account, which serves to manage assets, with cap assumed $60 billion per month in 2023. CBO data as of May 26, 2022 and FRB data as of December 2, 2022. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 17

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Here’s another situation that will surely need to unwind: A high, will need to come down than it is for GDP growth growing disconnect between earnings expectations for S&P forecasts to rise. While we are increasingly confident that 500 companies and overall GDP growth (Exhibit 26). It’s more the Fed might engineer a soft landing, we are still facing an likely that earnings expectations, which have been stubbornly economic slowdown. Exhibit 26: Consensus points to a divergence between S&P 500 earnings and GDP growth expectations o  4.5 245 240 4.0 235 230 3.5 225 220 3.0 215 210 2.5 205 200 2.0 1 1 1 1 1 1 1 2 2 2 2 2 2 195 2 2 2 2 2 2 2 2 2 2 2 2 2 n l g p t v c n b r r y n u u u e c o e a p a J J a e u A S O N D J F M A M J looberg conenu 2022 D­ €orecat ‚ƒ„S… S†­ 500 12‡ontˆ €or‰arŠ ‹­S eŒpectatŽon ‚‘„S… Source: Bloomberg, Apollo Chief Economist. Data as of November 11, 2022. How can investors position themselves for 2023? destruction” on the part of the Fed will decrease. We think that is already happening in the US. History shows that when inflation declines, the stock market rallies. Unfortunately, the toughest part—calling the turn and We believe a less aggressive Fed—or a potential Fed “pivot” the speed of the decline in inflation—is extra-complicated later in 2023—should be bullish for asset prices (public and in today’s environment, given the unique combination of private) ranging from rates, to credit, to equities. That said, disruptions to the global economy (the pandemic, conflict in capital markets will remain vulnerable in 2023 and volatility Europe) and monetary interventions of unprecedented scale. will likely persist because with inflation at high levels and the Fed keeping rates elevated, capital will remain scarce and In the face of such atypical market forces, as well as the expensive, and high-yield primary credit markets will stay higher-than-average degree of uncertainty in the outlooks virtually shut down for the time being. Selectivity in asset for inflation and economic growth, many investors will likely selection, valuations, and entry points will be paramount. be reconsidering their asset allocation decisions as we enter 2023. We see a number of opportunities to turn uncertainty Many investors—weary and battered after a disastrous into opportunity. performance of 60/40 portfolios of public equities and bonds in 2022—are likely to turn to private markets as they To recap: The sequencing of how the Fed reaches its dual adjust their holdings in 2023. Purchase price matters and mandate (taming inflation and maintaining full employment) we see a historic entry point in private credit and attractive is key for capital markets. Receding inflation first, moderating opportunities in private equity for investors able to be employment later would mean that the need for “demand providers of capital in time of stressed and distressed markets. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 18

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK The rout in equity markets has been widely discussed. At the 29), leaving companies with less-than-investment-grade same time, though, credit markets have become increasingly balance sheets in need of alternative sources of funding. This volatile (Exhibit 27), creating opportunities in stressed and is why the private credit markets are so active at the moment, distressed investments. In 2022, the public debt markets have presenting numerous opportunities for providers of capital to been closed to all but the highest-rated companies (Exhibit step in where the public credit markets will not. 28). Indeed, high-yield issuance has fallen off a cliff (Exhibit Exhibit 27: Higher rates and QT have created a strong disconnect between rates and equity markets Index MOVE S VI S Index 160 90 140 80 70 120 60 100 50 80 40 60 30 20 40 10 20 1 1 1 1 1 1 2 2 2 2 2 2 0 9 9 9 9 9 9 0 0 0 0 0 0 2 2 2 2 2 2 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 l n r y l p v n r y l p v n r y u p v n r y l p v a a a u e o a u a a a J e o a a a u o J M J a a J e o J M S J J e M S N J M M S N M N M M S N The Merrill Lynch Option Volatility Estimate (MOVE) Index is an interest-rate volatility barometer. The Cboe VIX Index is a gauge of equity volatility. Source: Bloomberg, Apollo Chief Economist. Data as of December 1, 2022. Exhibit 28: Only highest-rated companies have been able to access the public debt markets 2022 vs 2021 YTD % hange in issane volme 0% -20% -4% -40% -60% -80% -80% -100% -89% US investment grade US high yield Leveraged loans Source: JPMorgan, “US Corporate Credit Issuance Monthly, October 2022”. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 19

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Exhibit 29: High-yield bond market mostly shut down for new issuers HY ISSUANCE BY RATING bn 70 60 50 40 30 20 10 0 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 l n b r r y n l g p t v c n b r r y n l p t v c n b r r y n u g p t v c n b r r y n l g a e a p a u u u e c o e a p u g c a e a p a u J u e c o e a a p a u J A J J a e a u J u e o e J F A J O J e u J u F M M A S O N  J F M A M J A S O N  M M A S N  F M A M J A     or loer N Source: Standard & Poor’s Leveraged Commentary & Data (S&P LCD), Apollo Chief Economist. Data as of August 31, 2022. One piece of good news? While it’s clear that the era of low of investment-grade and high-yield issuers have enough rates seems over for the foreseeable future, most corporate capital on hand to weather the coming volatility in credit borrowers managed to shore up their balance sheets before markets (Exhibits 30, 31). the window for public borrowing slammed shut. The majority Exhibit 30: The maturity wall is manageable for investment grade… INVESTMENT-GRADE MATURING DEBT $bn Fixed Floating 2,000 1,500 1,000 500 0 2022.2H 2023 2024 2025 2026 2027 Maturity year Source: S&P Global Ratings Research, Apollo Chief Economist. Data as of July 1, 2022. Includes issuers’ investment-grade bonds, loans, and revolving credit facilities that are rated by S&P Global Ratings. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 20

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK Exhibit 31: …and high-yield issuers SPECULATIVE-GRADE MATURING DEBT $bn Fixed Floating 1,000 800 600 400 200 0 2022 2023 2024 2025 2026 2027 Maturity year Source: S&P Global Ratings Research, Apollo Chief Economist. Data as of July 1, 2022. Includes issuers’ speculative-grade bonds, loans, and revolving credit facilities that are rated by S&P Global Ratings. What’s the bottom line for asset prices going forward? • Higher energy prices will continue to accelerate the energy transition as well as investments in green energy Against the macro and capital-markets backdrop outlined in and renewables. this paper, we believe the following trends are heading into 2023: • The private market opportunity is strong for investors able to deploy capital as high-yield and syndicated- • Sharp dislocations in public stocks and investment-grade loan issuance remains challenged. Until 2022, public bonds have generated opportunities in those asset classes. market financing was plentiful and cheap, but now it’s In historical recessions, market bottoms typically occur scarce and expensive, with 2022 third-quarter high-yield only after earnings estimates have been cut, which leads volume collapsing to the lowest level since 2008. Private, us to believe that markets will continue to be choppy. directly originated finance solutions offer a strong value Investors with a short-term credit allocation could consider proposition for borrowers—including large corporations— buying floating short rates high-quality large-cap credit. and for businesses in distress. • Credit selection and stock picking are key in turbulent • Creative structuring offers lenders and other providers markets. Purchase price matters and in 2022, many things of capital the opportunity to buy businesses at, and have become a lot cheaper, particularly in the equity sometimes even cheaper than, intrinsic value. Indeed, the markets. risk-return dynamics in large corporate private credit have never been better, with double-digit unlevered yields on • Companies with cash flow and the ability to service offer for senior secured risk. debt are generally not borrowing in public markets right now—it’s too expensive. They are waiting for interest • We believe large corporate origination acts as a rates to stabilize but that will only happen once inflation complementary component in a credit portfolio and comes down further. The deals happening in the large lending to large corporate borrowers offers a level of capitalization space right now are mergers & acquisitions stability as we move into an increasingly volatile and (M&A), leveraged buyouts (LBO), corporate carve-outs, uncertain environment. and public-to-private transactions, with spreads the widest they have been in a long time. • The conditions that have fueled momentum-based private equity strategies—low inflation, rising valuations, plentiful 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 21

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK financing, and low financing costs—are reversing. Market sourcing approach will be able to pounce when market growth and multiple expansion-based investing strategies opportunities present themselves. won’t work as well in coming years. What will? We believe strategies with a “purchase price matters” discipline that • The pipeline of corporate carve-outs should grow as CEO focus on operational improvement and free cash-flow confidence continues to wane and corporates look to put generation in order to generate value. cash on their balance sheets and simplify their businesses during market volatility. • Volatility in the public markets has driven significant demand for public-to-private (P2P) transactions. • Prices of real estate and infrastructure should retain As valuations fall, demand for P2P market should support as investors continue seeking inflation hedges. pick up. Capital providers with a relationship-based Conclusion As we head into 2023, it is increasingly clear that the wisdom that it takes 12 to 18 months before Fed hikes have Fed’s rate hikes are starting to cool the economy via three their biggest effect on the economy. transmission channels: interest rate-sensitive components of GDP are slowing down (housing, autos, capex); the tech From an inflation perspective, higher rates are cooling sector is in turmoil because of higher risk-free rates, and layoff housing and car prices, which can push down overall inflation announcements are rising; and high-yield primary markets over the coming months. As a result, the Fed might soon be are essentially closed, which is having a negative impact on done with raising rates. issuing firms in both the goods and service sectors. All that said, we expect it will still take some time for the The bottom line is that monetary policy is working as capital markets to normalize. In the meantime, we believe the intended. The Fed started raising rates in March 2022, and window of opportunity in the private markets should remain these three transmission channels confirm the conventional open for well-positioned capital providers. 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 22

2023 ECONOMIC AND CAPITAL MARKETS OUTLOOK About the author Torsten Sløk joined Apollo in August 2020 as Chief Economist, and he leads Apollo’s macroeconomic and market analysis across the platform. Prior to joining, Mr. Sløk worked for 15 years as Chief Economist at Deutsche Bank where his team was top ranked in the annual Institutional Investor survey for a decade. Prior to joining Deutsche Bank, Mr. Sløk worked at the IMF in Washington, DC and at the OECD in Paris. Mr. Sløk has a PhD in Economics and has studied at the University of Copenhagen and Princeton University. Torsten Sløk, PhD Apollo Chief Economist 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 author(s) and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information. 23

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