what are the ripple effects of how CoreWeave bonds are trading to the rest?

Yeah, I, I think it's, it's the natural process of sort of repricing risk, right? I think the, um, one of the common themes we've been having here at Janus Henderson ever since the Fed started raising rates was the return of cost to capital.

And I think what investors are starting to do is every AI dollar going to infrastructure spend isn't gonna be the same.

We're gonna now start putting cost of capital differences between companies, and that, that's a healthy sign.

Um, how quickly this has happened and, and now where, where CoreWeave bonds are trading, you talk about technicals or, you know, longs and shorts, et cetera, but I think ultimately what's ended up happening is we're repricing the risk.

Um, some of the uncertainty that Dan was just talking about two seconds ago, about the winners and losers and neo clouds even being needed, that... those are real questions you have to ask when you're lending, you think about CapEx budgets of some of these companies, um, you think about CoreWeave's needs over the next 12 months, um, where is it coming from? How are they gonna finance it? Is it, is it secured debt or unsecured debt? Will it be converts? Will it be equities? And the whole e- the whole ecosystem sort of starts hurting itself as bonds start underperforming, so do the, so do the stocks, and, and then there, there goes your, your equity issuance, uh, possibility as well.

I think what's been interesting, too, is this isn't just applying to what we're seeing with CoreWeave, right? You can even, you can even dig into the IG market today and just look at Oracle.

Uh, what do you think that means on a macro level, if anything? I mean, is it really gonna slow the CapS- CapEx push to, to GDP? And, and fascinatingly, this all happened when we got two hot inflation reports and Treasury yields are dramatically lower.

What's your essential read on the interplay of what the bond market and stock market are doing right now?

The interesting part about it is I think if you just peel back the onion very, very little on the S&P 500, you are seeing the rate sensitive markets actually under pressure.

Right.

REITs, small cap, biotech, utilities.

We're starting to see some of the even banks, even banks.

starting to flow through as far as performance is concerned.

So I don't think it's more about that we're not seeing it in the equity market.

On the other hand, it's not as if longer-term yields are out of whack historically relative to Fed funds rate or nominal GDP.

So is there a lot of risk here? Is this a safer way to invest in this, this AI build-out?

Yeah.

I, it, it depends on your, what, what your angle is.

I, I think that, one, you have to understand what a convert buyer, buyer is doing, right? You're, you're buying an underlying bond, and you're buying a call option of a stock.

So downside protection if things don't work out, 'cause ultimately you're, you're, you're senior to the common if things don't work out.

But ultimately what you're doing is, is making a call on the upside of the stock if you're just going along with the convert itself.

I think you really have to unpack it and say, "Who's actually buying these instruments, and, and what are they doing on the other side?" In many instances, right, it's just a play for volatility.

But on the flip side of that, does the other side of it starts to go bad on these Neoclouds or Oracle, that sort of thing? Might it kind of just, I don't know, pull back a little bit demand for this sort of debt anyway, one way or another?

Uh, "They can easily cover [laughs] this stuff." How is the market treating this, uh, uh, in terms of this new source of supply?

Yeah, it, it's a great question.

We, we became a little bit more bearish IG tech issuance actually at the end of last year as, as we are looking kind of forward into 2026, we thought maybe the market had un- underestimated not only CapEx budgets, but, but frankly their need for IG corporate credit.

I think we're starting to see some of that come to fruition, um, more recently with, with deals that just came in the past few weeks.

Um, really the, the word of the day is indigestion, right? It, it's, it's the market really kind of struggling through what we all knew was coming, um, but spreads weren't really reacting.

So when we became a little bit more bearish November of last year, spreads were flat.

Industrials to tech were relatively flat.

... perhaps, that there was this indigestion?

That did have some major market moves, but what were the biggest takeaways for you?

Uh, just the increase in price, I think.

Uh, actually Seth and I were- we- we were just talking about this before you started the interview.

Uh, the increase in price, um, kind of was- was interesting.

I mean, 4.40 in corn and- and 11 handle in beans.

Uh, outside of that, I mean, increases to, uh, to Argentina, increases to Brazil.

You know, I, I don't...

Why?

yeah we often talk about the bifurcation in this market you're saying that you're seeing it in consumer credit as well just talk us through what you're taking note of

Yeah, it's been an interesting—from a risk perspective, it's been clear that we do and are seeing some stressors on lower-income consumers in America.

You're seeing that with some delinquency rates.

You're seeing that with later payments, etc.

We haven't seen that so much on the higher end, on the consumer side, but it is something to watch.

And when you think about sort of what in many cases, some of the changes that the administration is looking to do as far as affordability, I think it really is attacking some of the stretch and perhaps stressors that we're seeing on that lower end.

So, yeah, we're seeing some bifurcation in the market.

I'm just wondering when you approach fixed income, how you be selective in this sort of environment when it looks like the government is basically just throwing spaghetti at the wall and trying to wait to see what sticks here.