Financing The AI Boom: Masters in Business

Bob Michele argues that fixed income is more of a science than equities because cash flows, maturities, and yields can be modeled, and that makes active bond management especially valuable. He traces his own path from classical languages and natural sciences at Penn to banking by accident, then explains how the 2008 crisis reinforced the need to be a fiduciary, to do deep credit work, and to think about whether clients will actually get their capital back.

He sees today’s bond market as closer to the pre-crisis 2000s than the zero-rate era, with capital again carrying a real cost. In his view, the Federal Reserve and other central banks are becoming more vigilant on inflation than growth, while higher real yields, deficits, geopolitics, and fiscal uncertainty are all pushing investors to demand more compensation. He also says Treasury yields and mortgage rates are normalizing rather than reverting to the extraordinary lows of the last 25 years.

A big part of the conversation focuses on financing the AI buildout. Michele says JPMorgan Chase has been leaning into AI for more than three years and sees strong demand for data-center and hyperscaler financing across debt markets, private credit, and currencies. He also likes local emerging-market debt and municipal bonds, and he sees only an 85% probability of U.S. economic expansion, not recession, thanks to a broad capex cycle and still-resilient corporate profits.