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