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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along

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Speaker 1: with Jonathan Ferroll and Lisa Abramowitz. Join us each day

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Speaker 1: for insight from the best and economics, geopolitics, finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

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Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com,

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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App.

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Speaker 2: We are at Apollo HQs and am please to say

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Speaker 2: that joining us now is Mark Rowan, the c e

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Speaker 2: O Market.

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Speaker 3: Morning's here, Good morning all, great to thank you for coming.

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Speaker 4: Great to be here and great to have you with us.

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Speaker 2: So let's just go straight to the top of this conversation,

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Speaker 2: private markets versus public markets and why you believe the

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Speaker 2: big opportunity.

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Speaker 4: Right now is in the former and not the latter.

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Speaker 5: Look, we've had a sea change, not just over a year,

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Speaker 5: We've had it over fifteen years. So much of our

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Speaker 5: public markets are index and corel related eighty percent of

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Speaker 5: volume s and P five hundred sixty percent of the

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Speaker 5: market ETFs one hundred percent of our returns this year

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Speaker 5: are from ten stocks, which constitute thirty five percent of

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Speaker 5: the S and P that traded an average PE of

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Speaker 5: fifty How many of us come in every day looking

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Speaker 5: to buy fifty PE stocks?

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Speaker 3: Not many?

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Speaker 5: And I guess what I'm suggesting to you is that

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Speaker 5: if you public markets, they are so correlated an index

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Speaker 5: to interest rates and to money flows that if you

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Speaker 5: actually want alpha outperformance, you need to step away from

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Speaker 5: public markets. And I think that's happening because we're also

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Speaker 5: revisiting the notion of public being safe and private being risky.

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Speaker 5: This is the framework we used to be in. Private

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Speaker 5: meant venture capital, hedge funds, private equity. Now it just

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Speaker 5: means less.

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Speaker 4: Liquid Is that not inherently a risk? In your mind? Liquiditsy.

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Speaker 5: Liquidity is a risk to everyone, but in different degrees.

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Speaker 5: So if you are a retirement plan or a retirement system,

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Speaker 5: you know your liquidity requirements for the next ten years.

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Speaker 5: So if you can get paid for illiquidity, why not

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Speaker 5: get paid for ill liquidity.

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Speaker 3: If you're a wealthy.

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Speaker 5: Individual, how many of them need one hundred percent of

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Speaker 5: their money on Tuesday? If they don't, they should get

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Speaker 5: paid for illiquidity. And we're seeing that in the performance data.

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Speaker 5: If you look at the active management, active management has

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Speaker 5: failed to beat the index eighty five percent of the

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Speaker 5: time for twenty years, and I think it's going to

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Speaker 5: get harder, not easier, to beat the index. As more

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Speaker 5: and more of the market is indexed. Very little money

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Speaker 5: is left to actually make up what needs to be

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Speaker 5: done in active management?

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Speaker 1: What is the single operational distinction between Drexel, Burnham Lambert

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Speaker 1: and your Apollo? What is the micro idea you can

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Speaker 1: give us of them versus now.

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Speaker 5: Not just I'll give you Drexel, I'll give you Lehman Brothers,

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Speaker 5: I'll give you bear Stearns, I'll give you SVB, I'll

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Speaker 5: give you First Republic. The financial institutions tend to die

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Speaker 5: of one of two causes, heart attack or cancer. Heart

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Speaker 5: Attack is funding risk. They borrow short and they lend long.

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Speaker 5: Cancer is the slow addition of poor quality assets, which.

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Speaker 3: Over time undermine the system.

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Speaker 5: So you look at all of those firms, All of

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Speaker 5: those had an element of both heart attack and cancer

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Speaker 5: funding risk as well as asset risk.

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Speaker 3: You look at what we're doing.

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Speaker 5: We are borrow borrowed long, and lent long. Everything is matched,

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Speaker 5: everything is in a fund. There is no daily liquid,

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Speaker 5: quarterly liquid money.

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Speaker 3: At Apollo.

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Speaker 5: We are ideally situated to take advantage of less liquid assets.

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Speaker 5: We've structured ourselves that way. And then you look at

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Speaker 5: the totality of what we do. Equity is a risk business.

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Speaker 5: Equities go up and down every day. You can lose

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Speaker 5: money in public equity. You can lose money in private equity.

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Speaker 5: In the credit business. The vast, vast majority of what

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Speaker 5: we do is private investment grade.

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Speaker 1: When I look at the risks out there and A

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Speaker 1: translated into Nazim teleban all the work you did in

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Speaker 1: quant with black Swan, what are the tail risks you

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Speaker 1: see right now for private equity? I mean, are you

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Speaker 1: hedged perfectly? Is there next to no delta where you

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Speaker 1: feel so comfortable? Are there actual tail risks in apollo?

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Speaker 5: I don't think there are tail risks, and I don't

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Speaker 5: think there are tail risks in private equity. I think

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Speaker 5: private equity is a risk taking activity. But each of

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Speaker 5: the companies, each of the situations is idiosyncratic onto itself,

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Speaker 5: and over time, private equity has proven to be a

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Speaker 5: very good asset class. Recognizing that in certain markets you

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Speaker 5: will lose money, just like in certain public markets you

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Speaker 5: will lose money.

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Speaker 1: You had a test here with the way interest rates went,

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Speaker 1: you had a four or five six standard deviation shock.

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Speaker 1: How did your risks perform given the shock of higher

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Speaker 1: rates the glide path of that? How is it along

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Speaker 1: the way?

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Speaker 3: Single best year in Apollo's.

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Speaker 5: History, earnings, asset performance, our platform. As you think about it,

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Speaker 5: we are around six hundred and fifty billion of assets

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Speaker 5: under management in our asset management business. Five hundred billion

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Speaker 5: of that is credit. We generally benefit from rising rates. Yes,

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Speaker 5: on the equity side, some equity will be worth less

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Speaker 5: than it was, but as a general rule for Apollo,

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Speaker 5: credit rates going off is very strong on the retirement

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Speaker 5: services side of our business, which is the Athene business

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Speaker 5: just gone through the roof. Athene is up thirty percent

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Speaker 5: year over year.

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Speaker 6: So I'm going to steal a page from this guy

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Speaker 6: because he's been talking about a zepic a lot, and honestly,

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Speaker 6: I think that it's important for us to talk about it.

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Speaker 5: Are you telling me something that's absolutely not And I.

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Speaker 6: Just think I'm not saying that anyone is onozepic. We're

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Speaker 6: talking about this as a game. Estentially, no one here

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Speaker 6: is on o zepic, and we're not making any not

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Speaker 6: that there's anything wrong with it.

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Speaker 3: Whatever, let's move on.

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Speaker 6: Here's this question about how much that transforms life expectancy,

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Speaker 6: how much that transforms some of the investment thesis from

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Speaker 6: your perspective and for retirement look.

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Speaker 5: Over time, you would expect improvements in healthcare, improvements in

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Speaker 5: health technology to improve life expectancy, but not by all

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Speaker 5: that much. We tend to find other things that are

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Speaker 5: bad for the human body. As one thing does not

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Speaker 5: kill us, another thing does so. But I would expect

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Speaker 5: the trend to continue. We are just to be clear,

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Speaker 5: we are not in the insurance business.

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Speaker 3: We are in We are.

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Speaker 5: An insurance company that is in the retirement services business.

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Speaker 5: We make money by guaranteeing people's retirement, and we earn

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Speaker 5: money by earning more on our assets than we payd

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Speaker 5: on our liabilities, very little exposure to longevity or any

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Speaker 5: other what you would consider biometric or typical insurance risk.

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Speaker 6: There's a real question here and real focus on income.

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Speaker 6: And you've been talking about that. How there is risk

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Speaker 6: and equity but not necessarily the same type of thing

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Speaker 6: that you see in credit. And we just saw credit

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Speaker 6: outperform private credit outperform private equity pretty meaningfully. Are you

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Speaker 6: going to shift away from private equity more and more

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Speaker 6: and just focus purely on the more credit business.

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Speaker 5: No, this is the answer, but we have to step

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Speaker 5: back and go back to what our business is. Our

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Speaker 5: business at Apollo and for most people in the alternative

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Speaker 5: asset management industry, we're not in the asset management business.

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Speaker 5: We're in the excess return period at risk business. And

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Speaker 5: then I ask myself where can we get access return? Well, inequity,

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Speaker 5: we've gotten to one hundred and fifty billion.

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Speaker 3: Is it going to grow?

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Speaker 5: I think it will grow, really grow multiples. I don't

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Speaker 5: think so. I think the nature of the business, if

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Speaker 5: we're true to ourselves of just focusing on excess return,

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Speaker 5: is slower growth. I look at the credit business. The

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Speaker 5: credit business is nearly five hundred billion today. We're not

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Speaker 5: relevant in the scheme and the scale of these markets.

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Speaker 5: Five hundred billion is not a relevant sentiment. I assure you,

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Speaker 5: when you speak to all the big bank CEOs today,

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Speaker 5: they don't wake up every day wondering what the mighty

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Speaker 5: Apollo is doing.

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Speaker 2: There's a phrase I've used twice already this morning, in

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Speaker 2: the last forty minutes one hour de Bankking, and every

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Speaker 2: time I've used it I've had pushback around this table.

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Speaker 4: Why don't we like that price the bankking.

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Speaker 5: I personally like that phrase, Jim Zelter. It will cost

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Speaker 5: me twenty dollars for just saying the word de banking,

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Speaker 5: but I'm happy to pay it. I think the world

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Speaker 5: is debanking, and I say it this way. Every economy,

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Speaker 5: every regulatory scheme, credit is tied to GDP, and regulators

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Speaker 5: have only two choices as to where credit comes from.

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Speaker 5: It can come from the banking system, or it can

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Speaker 5: come from the investment marketplace. There's no third choice, and

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Speaker 5: everyone around the globe has made a different decision. But

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Speaker 5: if you look at the trend, with the exception of China,

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Speaker 5: everywhere in the world regulators are favoring investors over banks.

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Speaker 5: That does not mean we're going to see us on shift.

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Speaker 5: That does not mean the banking business is going out

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Speaker 5: of business. On the margin, though, the growth is going

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Speaker 5: to take place in the investor marketplace rather than in

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Speaker 5: the banking system for good and valid reasons and for

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Speaker 5: regulatory choice, not because the banking system is unsafe.

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Speaker 6: So, given that you said, you don't see a lot

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Speaker 6: of upside in terms of growth, tremendous amount of growth

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Speaker 6: and the equity side, you said, you're irrelevant with five

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Speaker 6: hundred billion dollars. How big, how relevant could you become?

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Speaker 7: Well?

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Speaker 5: I sat next to a senior executive from Blackrock last

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Speaker 5: night at dinner and they had food in front of them,

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Speaker 5: and I had no food, and I.

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Speaker 3: Said, how big do you have to be to get

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Speaker 3: food in front of you? And he said trillion.

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Speaker 6: So that's what you're aiming forten dollars is what you're saying.

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Speaker 3: Look for us.

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Speaker 5: For us, this is about excess return per unit of risk.

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Speaker 5: Our business plan calls for a doubling of our business

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Speaker 5: and at the end of the doubling, liking who we

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Speaker 5: are as a culture. Our limitter is not capital raising.

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Speaker 5: Our limitter is not size of aum. Our limitter is

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Speaker 5: making sure we get excess return per unit of risk,

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Speaker 5: so finding assets and making sure we like our culture

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Speaker 5: at the end of the day.

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Speaker 1: And we all bring to this our childhoods. My childhood

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Speaker 1: was a white Anglo Saxon Protestant grandmother John after her

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Speaker 1: third Scotch, who would talk about how Jews couldn't go

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Speaker 1: to a certain school in Massachusetts. Most of them ended

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Speaker 1: up at Lisa's University of Chicago. That was a different battle.

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Speaker 1: Now there is a new battle, and we address this

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Speaker 1: with Mark Rowan. I am stunned at what I see

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Speaker 1: at these schools, and particularly at your University of Pennsylvania.

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Speaker 1: You've been vocal. What is the dialogue you have right

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Speaker 1: now with the leadership of the University of Pennsylvania is

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Speaker 1: they deal with this new anti Semitism?

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Speaker 5: There's no dialogue with leadership at the moment. Leadership is

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Speaker 5: on their way or in DC for a series of

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Speaker 5: congressional hearings. But the underlying culture that permitted this to

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Speaker 5: happen is just so strong and until there is a

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Speaker 5: moment of self reflection where we're not dealing with just

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Speaker 5: anti Semitism, we're dealing with the culture that allowed this

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Speaker 5: to happen, there really is going to be no progress,

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Speaker 5: and to date there's been no progress.

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Speaker 6: So what is progress right? Because there's a real question

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Speaker 6: around free speech versus something else? What is this something

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Speaker 6: else that you're looking for some of these universities to target.

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Speaker 5: There's really not a question of free speech. This is

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Speaker 5: a question of favored speech and disfavored speech, and an

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Speaker 5: institutional psychology and an institutional culture. So there are places

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Speaker 5: where this is modeled and they're getting it right. For instance,

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Speaker 5: University of Chicago. University of Chicago is getting it right.

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Speaker 5: They are kicking pens butt to be candid, and it's

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Speaker 5: not that hard. The institution has decided that it is

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Speaker 5: institutionally neutral and that the students and professors and other

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Speaker 5: actors on campus are allowed to have opinions and to

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Speaker 5: speak their opinions within respectful ways. Say what you will,

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Speaker 5: say what you want, allow the other side to speak.

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Speaker 5: That is a culture of free speech. A culture where

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Speaker 5: you shout people down, where you have ninety five percent

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Speaker 5: of the professor or academia speaking in one way, where

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Speaker 5: you permit violent protests, where students are unable to go

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Speaker 5: to class because there's boycotts or there's pressure or other things,

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Speaker 5: is not a culture of free speech.

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Speaker 6: How do you understand the increase in anti semitism on

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Speaker 6: the left, which is really polarized frankly the Democratic Party

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Speaker 6: and created a lot of sort of soul searching.

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Speaker 5: Look, this is a long time coming, but I'll start

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Speaker 5: with history. The definition of antisemitism, the modern definition, the

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Speaker 5: IRA definition includes anti Zionism as a form of anti semitism.

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Speaker 5: This got through the Senate with many of the current

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Speaker 5: senators still there are nine to zero, including most of

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Speaker 5: the most progressive Democratic centers. So what we've seen is

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Speaker 5: we've seen a shift in the mood of the populace,

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Speaker 5: particularly on university campuses. We live in a culture on

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Speaker 5: these university campuses of simplicity. You are oppressed or you

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Speaker 5: are an oppressor. If you are oppressed, it does not

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Speaker 5: matter what you do.

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Speaker 3: You can do no wrong.

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Speaker 5: If you are an oppressor, facts be damned, it does

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Speaker 5: not matter what you do, you can do no right.

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Speaker 5: In that kind of mindset, it does not surprise me

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Speaker 5: that anti Semitism, anti Zionism has taken hold. And if

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Speaker 5: you give historical context, go to the Holocaust, you have dehumanization,

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Speaker 5: you have delegitimization, and then you ultimately have genocide. Now

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Speaker 5: you apply that to anti Zionism, you have dehumanizing of

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Speaker 5: Israelis and Jews. You have delegitimizing of Israelian Jews, and

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Speaker 5: now with Hamas's attack, you have the beginnings of killings.

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Speaker 5: It's not that hard to see where we are.

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Speaker 3: The only thing that's hard is for the left recognize it.

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Speaker 2: I have been surprised that people have been so surprised

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Speaker 2: by where some of these campuses are at. And I

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Speaker 2: think about the amount of tremendous philanthropy that have come

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Speaker 2: from people like you, Saith over the years on these campuses,

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Speaker 2: I do wonder why we allowed it to come to

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Speaker 2: this mark, why it got this far when we've seen

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Speaker 2: this been building for years and years and years through.

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Speaker 4: A whole generation.

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Speaker 5: The answer, I believe is a slow build. And it

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Speaker 5: ultimately comes back to governance and leadership. If I speak

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Speaker 5: just about University of Pennsylvania, the governance has actually divided

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Speaker 5: between the faculty and the trustees. Except for the last

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Speaker 5: twenty five years, only one of those two groups has

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Speaker 5: been doing their job. And I put myself in the

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Speaker 5: camp that did not do their job. I was a

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Speaker 5: trustee for a long period of time. The trustees have

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Speaker 5: a very important role to play in setting in the

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Speaker 5: strategic direction of the university permissible and impermissible where we

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Speaker 5: want to go, except it's not a governing body. Forty

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Speaker 5: seven trustees really can't agree on anything. It's not set

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Speaker 5: up to govern, and there's no histy of govern and

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Speaker 5: so in the absence of any leadership, faculty or administration

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Speaker 5: has taken these universities in direction that the.

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Speaker 3: Alumni do not recognize.

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Speaker 5: When you have a John Huntsman, Ronald lauder A Cliff Asnaes,

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Speaker 5: and seven thousand other alumni who for their own reasons,

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Speaker 5: their own political persuasions, their own belief system, all don't

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Speaker 5: recognize the university that they loved.

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Speaker 3: You have a problem.

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Speaker 2: So first move is to stop donating. I guess we

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Speaker 2: could disengage, walk away. You seem to be more constructive

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Speaker 2: about the prospect of change. Shit you think there is

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Speaker 2: a better path ahead.

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Speaker 5: I think the worst thing that can happen to these

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Speaker 5: universities is apathy. Right now, there's not apathy. Donors are engaged,

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Speaker 5: they want change, they love the place. This goes on

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Speaker 5: much longer, I think we will get to apathy. And

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Speaker 5: once we get to apathy, I don't think the universities

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Speaker 5: can recover from this. And unfortunately, all university presidents that

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Speaker 5: I'm aware of, particularly at the University of Pennsylvania, they

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Speaker 5: seek to wait this out. Maybe this will go away,

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Speaker 5: I won't have to deal with this. That is actually

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Speaker 5: a loss. They haven't internalized that that's a loss, but

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Speaker 5: that is a loss.

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Speaker 1: There's an understanding there's a woke adjustment going on right now.

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Speaker 1: We see it in Hollywood, to collapse of many Disney

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Speaker 1: movies and others that have certain messages that aren't selling

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Speaker 1: to the public. The Ft has an article on your

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Speaker 1: colleagues at Blackrock on ESG and how there's a woke

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Speaker 1: adjustment in the ESG. How's this going to adjust the

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Speaker 1: wokeness of these universities? How will it adjust?

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Speaker 5: Look, this is a question ultimately a balance. This is

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Speaker 5: not a question of a pendulum swing all the way back.

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Speaker 5: But right now these universities are out of balance. And

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Speaker 5: I believe that the trustees, the alumni, and by the way,

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Speaker 5: many of the faculty. If we read Bill Ackman's letter yesterday,

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Speaker 5: and the experience I'm having at the University of Pennsylvania

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Speaker 5: is word for word the experience that Bill Ackman is

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Speaker 5: having at Harvard. Professors don't want to be muzzled anymore.

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Speaker 5: They feel that they can't speak out unless they are

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Speaker 5: conforming to the narrative of the university, and the resentment

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Speaker 5: is building. All we've done, all I've done, all Bill

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Speaker 5: has done, is given people an opportunity to speak their

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Speaker 5: minds and guess what they have a lot to say.

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Speaker 2: Big election next year, let's finish on that. Is this

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Speaker 2: going to change how you approach us politics? Who you

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Speaker 2: would enduce for twenty twenty four?

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Speaker 3: No, it's not going to change.

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Speaker 4: Do you have a favorite candidate?

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Speaker 5: No, it's hard to believe with three hundred and fifty

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Speaker 5: million people in this country that we're down to two.

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Speaker 4: You disappointed with these two personally?

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Speaker 3: I'm disappointed.

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Speaker 4: What is it about these two that you find so disappointing?

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Speaker 5: Thing, Look, we are we have the single best hand

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Speaker 5: of cards anywhere in the world.

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Speaker 3: We have it all. We just play this hand poorly.

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Speaker 4: What does that mean?

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Speaker 3: Think about it? People want to come here.

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Speaker 5: We have an incredible knowledge base, We have abundant energy,

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Speaker 5: we're leaders in technology. We have a massive domestic market

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Speaker 5: with the strongest military power. And yet we have challenges

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Speaker 5: that we have not been able to as a result

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Speaker 5: of lack of leadership, as a result of political consensus

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Speaker 5: to address. We have a retirement crisis, we have a

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Speaker 5: healthcare crisis, we have a budgetary crisis. We are inconsistent

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Speaker 5: to our allies around the world. We have important decisions

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Speaker 5: to make without weighing in as to what's going on

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Speaker 5: in Ukraine and what's going on in the Middle East,

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Speaker 5: all of which seems to be caught in a little

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Speaker 5: bit of a morass.

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Speaker 1: Is United Nations experience important for a presidential.

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Speaker 3: Candidate United Nations know, Okay, it's.

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Speaker 4: Trying to give them good That was delicate. This is delicate.

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Speaker 1: That that was a sensitive sight.

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Speaker 3: I thought, I responded, delicate.

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Speaker 4: Thank you, thanks for having us. It's going to catch up.

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Speaker 3: Total pleasure.

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Speaker 4: Thank you very much. Mak Robin at the CEO of Apollo.

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Speaker 2: Jim's out that joins us now the co president of

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Speaker 2: Apollo Global Management, Jim Gimmonisia.

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Speaker 7: Good morning and welcome to Apollo.

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Speaker 4: Thank you for having us. Thank you for having us.

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Speaker 7: I said, the coffee is good and the price is

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Speaker 7: even better.

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Speaker 4: Right, the coffee is good and the price is free

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Speaker 4: and we like that.

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Speaker 7: Yeah, to see it right to David Tip jerk believe money.

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Speaker 8: Oh, this is called this is the you're making the

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Speaker 8: show today from our Contrarian cafes.

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Speaker 7: So we welcome you nice and you have a great

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Speaker 7: line up this morning.

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Speaker 8: So we're excited to have you here and tell you

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Speaker 8: more about our story.

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Speaker 2: That great lineup begins with you. I mentioned a little

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Speaker 2: bit earlier. There is a call on the cycle that

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Speaker 2: we can talk about. There's also a call on the industry.

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Speaker 2: Let's start with the industry. That phrase I mentioned moments ago,

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Speaker 2: D banking perfect place to start. What is D banking

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Speaker 2: and what does it mean for you in the same well,

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Speaker 2: you know, I.

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Speaker 8: Don't use that term. I really use the evolution of finance.

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Speaker 8: The reality is that we the last forty years, we

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Speaker 8: had amazing tail wins with globalization and technology and lower rates.

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Speaker 8: Banks became they were advisors for decades. In the nineties

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Speaker 8: and the two thousands, they became large global institutions. Oh

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Speaker 8: eight or nine happens, and there's a tremendous amount of

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Speaker 8: Legg dot frank to change their business model. But at

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Speaker 8: the same time rates were lower, and in the last

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Speaker 8: fifteen years, CEOs, the CEOs you're going to have on

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Speaker 8: today from Wells and from other places, they're focused on

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Speaker 8: ROE and their shareholder return. And as they're focused on

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Speaker 8: ROE and shareholder return, there's a massive gap where companies

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Speaker 8: need to find capital, and firms like Apollo we've been

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Speaker 8: at the front of the front of the parade in

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Speaker 8: terms of providing capital across our business and when you

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Speaker 8: put that together with our funding model of LP capital

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Speaker 8: from around the globe plus our retirement services, we're just

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Speaker 8: a very unique player in that's going on.

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Speaker 2: We've got to get into how big the addressable market

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Speaker 2: is and what are private markets. Typically we think of leverage, finance,

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Speaker 2: macro and your colleague and we'll catch up with a

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Speaker 2: little bit later this morning talks about basically everything that's

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Speaker 2: on a bank balance sheet.

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Speaker 4: How big is this going to be?

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Speaker 8: You know, when most people talk about and you did

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Speaker 8: a great job, right, they're talking about private capital and

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Speaker 8: private markets. Most people when they talk about private credit today,

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Speaker 8: they talk about direct origination, which is about a trillion

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Speaker 8: five it's about a third of the high yield and

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Speaker 8: loan markets.

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Speaker 7: We think the definition.

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Speaker 8: Of private capital and private credit is around a forty

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Speaker 8: trillion number, and that would consist of you know, solar finance,

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Speaker 8: inventory finance, trade finance, franchise finance, along with a lot

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Speaker 8: of this corporate lending and investment grade privates that a

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Speaker 8: lot of banks used to hold large chunks on their

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Speaker 8: balance sheet. But again, in their search for roe and

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Speaker 8: appropriate returns, they're not the right place to hold that.

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Speaker 8: They may be the right place to originate it, but

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Speaker 8: they're certainly not the right place to hold it long term.

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Speaker 1: In our three hours with you, I think I want

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Speaker 1: to get out of the way right away. The stereotype,

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Speaker 1: it's high flute and fancy derivatives, fancy structures, mezzaning.

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Speaker 7: Everybody walks around says.

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Speaker 1: Mezzaning that we have mezzoning coffee, we have mezzoning Danish.

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Speaker 1: But the reality is a shocking and conservative. On your

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Speaker 1: website you lead with retirement service, How conservative, how measured,

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Speaker 1: how prudent?

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Speaker 8: Is Apollo well and the end of the day, we

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Speaker 8: do not like to lose money, and that even means

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Speaker 8: a penny. The reality is, if you look at our

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Speaker 8: firm today, six hundred and thirty billion, about one hundred

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Speaker 8: billion in private equity, about one hundred billion in real

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Speaker 8: estate and infrastructure, four hundred plus billion in credit, a

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Speaker 8: vast mass majority of that is investment grade. And in

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Speaker 8: this year alone, whether it's Air France, Venovia, AT and T,

440
00:21:27,119 --> 00:21:30,280
Speaker 8: we're loaning money to great companies that are a lot

441
00:21:30,280 --> 00:21:32,840
Speaker 8: of them are investment grade. And it's interesting, you know,

442
00:21:32,880 --> 00:21:34,600
Speaker 8: you talk around the globe right now, in the last

443
00:21:34,600 --> 00:21:37,720
Speaker 8: six seven weeks, you know, buying investment grade debt of

444
00:21:37,760 --> 00:21:40,680
Speaker 8: companies like Merk and Meta and many, many others. You've

445
00:21:40,680 --> 00:21:43,480
Speaker 8: been making a double digit return between the compression of

446
00:21:43,560 --> 00:21:46,800
Speaker 8: spreads and otherwise. Now that's in the public markets. But

447
00:21:46,840 --> 00:21:50,080
Speaker 8: back to the private credit. To your point, we lend

448
00:21:50,119 --> 00:21:54,080
Speaker 8: to large companies, mostly investment grade, and for our perspective,

449
00:21:54,119 --> 00:21:56,320
Speaker 8: back to Jonathan's question, it's not a one and a

450
00:21:56,359 --> 00:21:57,480
Speaker 8: half trillion opportunity.

451
00:21:57,480 --> 00:21:59,120
Speaker 7: It's really a forty trillion opportunity.

452
00:21:59,119 --> 00:22:00,800
Speaker 6: So let's talk about where we are. You don't like

453
00:22:00,800 --> 00:22:03,000
Speaker 6: to lose a petty and yet you've been focused on

454
00:22:03,040 --> 00:22:05,840
Speaker 6: investment grade, which is underperformed. High yield risk has done

455
00:22:05,960 --> 00:22:09,880
Speaker 6: a lot better than lower risk securities. Where are we

456
00:22:10,080 --> 00:22:12,200
Speaker 6: in terms of where you can make the most money.

457
00:22:12,280 --> 00:22:14,280
Speaker 6: Is it's still an investment grade despite where we are

458
00:22:14,359 --> 00:22:15,760
Speaker 6: right now, Well, it's.

459
00:22:15,400 --> 00:22:18,200
Speaker 7: In higher quality credit. The reality is there's still this debate.

460
00:22:18,280 --> 00:22:21,200
Speaker 8: You'll have it with Torston later on soft landing hard landing,

461
00:22:22,080 --> 00:22:23,040
Speaker 8: your friend mister Slock.

462
00:22:23,280 --> 00:22:25,640
Speaker 7: But the reality is the economy.

463
00:22:25,119 --> 00:22:26,879
Speaker 8: Is we're sort of a little bit in this interesting

464
00:22:26,920 --> 00:22:31,560
Speaker 8: goldilocks period right now. Concern about a slowdown has been

465
00:22:31,680 --> 00:22:34,640
Speaker 8: on everybody's mind the last six seven months. Fed's actually

466
00:22:34,680 --> 00:22:37,840
Speaker 8: done a really nice job of maintaining higher rates. So

467
00:22:37,920 --> 00:22:40,960
Speaker 8: I would argue that the FED put is back in the.

468
00:22:40,920 --> 00:22:41,760
Speaker 7: Market right now.

469
00:22:42,080 --> 00:22:44,320
Speaker 8: And the reality is you can make is people are

470
00:22:44,359 --> 00:22:47,439
Speaker 8: worrying about soft and hard landing in credit. You've been

471
00:22:47,480 --> 00:22:50,600
Speaker 8: making double digit returns in the last six and nine months.

472
00:22:50,320 --> 00:22:52,280
Speaker 6: So the FED put is back. We can't let that go.

473
00:22:52,840 --> 00:22:54,600
Speaker 6: What exactly does that mean? Does that mean that we're

474
00:22:54,600 --> 00:22:56,119
Speaker 6: not going to have the same kind of credit cycle

475
00:22:56,119 --> 00:22:58,399
Speaker 6: that now you are a believer no on' soft landing.

476
00:22:58,720 --> 00:23:00,520
Speaker 8: I think what you're going to see is you're going

477
00:23:00,560 --> 00:23:02,959
Speaker 8: to see an economy that there's going to be winners

478
00:23:02,960 --> 00:23:06,320
Speaker 8: and losers, certainly like an inflation. You're seeing it right

479
00:23:06,320 --> 00:23:09,439
Speaker 8: now in the goods section, goods area where goods prices

480
00:23:09,440 --> 00:23:11,840
Speaker 8: are lower but services are a bit higher. And I'm

481
00:23:11,880 --> 00:23:15,280
Speaker 8: just saying is that the economy is navigating what's going

482
00:23:15,320 --> 00:23:18,240
Speaker 8: on right now. The FED is maintained at fairly high rates.

483
00:23:18,640 --> 00:23:21,000
Speaker 8: The market's gotten ahead of it, if you will, and

484
00:23:21,080 --> 00:23:24,560
Speaker 8: if there were any kind of challenging economic backdrop, the

485
00:23:24,640 --> 00:23:27,280
Speaker 8: FED does have a loaded gun that they can use

486
00:23:27,400 --> 00:23:30,280
Speaker 8: as needed and as appropriate. I'm not assuming it's going

487
00:23:30,320 --> 00:23:32,360
Speaker 8: to happen. I think you're going to see what we're

488
00:23:32,400 --> 00:23:35,199
Speaker 8: all expecting. You know, we're students of history. We expect

489
00:23:35,200 --> 00:23:37,200
Speaker 8: to happen in a way to happen. Again, I don't

490
00:23:37,200 --> 00:23:38,600
Speaker 8: think you're going to see that happen right now. I

491
00:23:38,600 --> 00:23:41,600
Speaker 8: think the actually reality is the banking system in the US,

492
00:23:41,840 --> 00:23:44,800
Speaker 8: the envy of the world, is actually quite robust. There

493
00:23:44,840 --> 00:23:47,480
Speaker 8: are signs of the economy that are a bit more challenging.

494
00:23:47,720 --> 00:23:49,440
Speaker 8: There are a lot of bios that have been done

495
00:23:49,440 --> 00:23:51,600
Speaker 8: that will have a challenging time, but you're just going

496
00:23:51,640 --> 00:23:53,720
Speaker 8: to have to navigate it with a really broad toolbox.

497
00:23:53,800 --> 00:23:56,600
Speaker 1: I mean, in the history on an almost cultural basis,

498
00:23:56,640 --> 00:23:59,040
Speaker 1: one of my themes is we had seventy three seventy

499
00:23:59,040 --> 00:24:02,080
Speaker 1: four Pittsburgh role you and I lived it in western

500
00:24:02,119 --> 00:24:04,960
Speaker 1: New York. And the bottom line is then we had

501
00:24:05,000 --> 00:24:08,479
Speaker 1: seventy seven a second leg of a great bullmarket starting

502
00:24:08,520 --> 00:24:11,640
Speaker 1: into the eighty two expansion. Is that the analog right

503
00:24:11,680 --> 00:24:14,600
Speaker 1: now that after the gloom of the pandemic and the churney,

504
00:24:14,960 --> 00:24:16,960
Speaker 1: that there's something new here, constructive.

505
00:24:17,440 --> 00:24:19,080
Speaker 8: Well, there's no doubt in the you know, if you

506
00:24:19,080 --> 00:24:23,560
Speaker 8: talk about those four tailwinds that I talked about globalization,

507
00:24:23,720 --> 00:24:28,080
Speaker 8: lower rates, deregulation. The fourth is technology, and there are

508
00:24:28,080 --> 00:24:29,679
Speaker 8: those who know a lot more about it than I do,

509
00:24:29,760 --> 00:24:31,800
Speaker 8: but they would argue that we are on the precipice

510
00:24:31,840 --> 00:24:35,879
Speaker 8: with what's going on with AI, cost structure, education and

511
00:24:35,920 --> 00:24:38,040
Speaker 8: the breadth of that that that could have a huge impact.

512
00:24:38,359 --> 00:24:40,520
Speaker 8: But the reality is the cost of capital is going

513
00:24:40,560 --> 00:24:42,359
Speaker 8: to be higher for the next five or seven years.

514
00:24:42,560 --> 00:24:44,840
Speaker 7: We are in a higher cost of capital environment.

515
00:24:45,240 --> 00:24:47,919
Speaker 8: And it's how you navigating back to your original question, Like,

516
00:24:48,160 --> 00:24:50,960
Speaker 8: the reality is the bank the banking system around the

517
00:24:50,960 --> 00:24:53,600
Speaker 8: globe is evolving. The US is in the front of that.

518
00:24:54,119 --> 00:24:56,160
Speaker 8: And as you'll hear about this morning, we think we're

519
00:24:56,400 --> 00:25:00,960
Speaker 8: we are the player as that industry contain used to evolve.

520
00:25:01,200 --> 00:25:02,440
Speaker 2: We've got to set it up for the rest of

521
00:25:02,480 --> 00:25:04,399
Speaker 2: this morning. There will be people at home asking this

522
00:25:04,400 --> 00:25:06,800
Speaker 2: following question, So how to answer it. Are we not

523
00:25:06,880 --> 00:25:09,479
Speaker 2: just transferring the risk from banks and the risk they

524
00:25:09,520 --> 00:25:12,200
Speaker 2: post the economy to places like this, Well.

525
00:25:12,080 --> 00:25:15,119
Speaker 8: We're actually taking the risk that was consolidated on a

526
00:25:15,119 --> 00:25:18,560
Speaker 8: bunch of financial institutions and bringing it to a much

527
00:25:18,640 --> 00:25:23,640
Speaker 8: much broader system where we're diversifying that risk because our

528
00:25:23,680 --> 00:25:27,200
Speaker 8: investors at the end of the day are either sovereign

529
00:25:27,440 --> 00:25:30,639
Speaker 8: or other pension funds that don't own these assets on leverage,

530
00:25:31,040 --> 00:25:35,000
Speaker 8: or there are other retirement services. So we're going higher

531
00:25:35,040 --> 00:25:38,240
Speaker 8: quality assets and we're diversifying the risk of the system.

532
00:25:38,320 --> 00:25:40,760
Speaker 8: It's actually making the system less risky.

533
00:25:41,080 --> 00:25:43,080
Speaker 4: Jim, this was awesome, Thanks for having us.

534
00:25:42,960 --> 00:25:44,760
Speaker 7: Thank you here, well, welcome today and we look forward

535
00:25:44,760 --> 00:25:45,399
Speaker 7: to a great morning.

536
00:25:45,440 --> 00:25:47,439
Speaker 2: It's going to be fantastic. Jim's down to the of

537
00:25:47,480 --> 00:25:49,640
Speaker 2: Apollo Global Management.

538
00:25:52,800 --> 00:25:55,879
Speaker 1: Joining usself. Someone you are very familiar with, Torsten Slock,

539
00:25:55,960 --> 00:25:58,920
Speaker 1: of course holding court at Deutsche Bank for years, dragged

540
00:25:59,000 --> 00:26:02,879
Speaker 1: over to Apollo to provide economic wisdom, and we're thrilled

541
00:26:02,880 --> 00:26:06,359
Speaker 1: that he would host us here today. Nice coffee, We're

542
00:26:06,400 --> 00:26:09,840
Speaker 1: coming next week. You have one single sentence in your

543
00:26:09,880 --> 00:26:13,080
Speaker 1: report this time around. It's not the Friday jobs report,

544
00:26:13,160 --> 00:26:16,960
Speaker 1: it's the Thursday Friday jobs report. Because the optimists are

545
00:26:17,000 --> 00:26:20,440
Speaker 1: hanging on claims. How important are claims?

546
00:26:20,560 --> 00:26:22,919
Speaker 9: Well, that's really a critical question when it comes to

547
00:26:22,960 --> 00:26:27,280
Speaker 9: this employment report on Friday for November. Jobless claims has

548
00:26:27,320 --> 00:26:31,040
Speaker 9: been surprisingly resilient for a very long period. No, it's

549
00:26:31,040 --> 00:26:32,760
Speaker 9: beginning to look more not like a soa if Daniel

550
00:26:32,760 --> 00:26:35,200
Speaker 9: Hard landing bore more like a long term landing. We're

551
00:26:35,240 --> 00:26:37,719
Speaker 9: waiting more and more and more for any evidence of

552
00:26:37,760 --> 00:26:40,520
Speaker 9: either shop ors lowdown or acceleration, and what we do

553
00:26:40,600 --> 00:26:42,919
Speaker 9: have on the label market on the slowdown side is

554
00:26:42,960 --> 00:26:44,880
Speaker 9: as we'll get today. The jold Stata has been showing

555
00:26:44,920 --> 00:26:47,960
Speaker 9: the quits rate has been coming down, meaning the number

556
00:26:48,000 --> 00:26:51,200
Speaker 9: of people who voluntarily quits their jobs has been declining.

557
00:26:51,440 --> 00:26:53,800
Speaker 9: The number of job openings has been coming down, the

558
00:26:53,880 --> 00:26:57,000
Speaker 9: work week has been coming down. Wages for job switches

559
00:26:57,160 --> 00:27:00,000
Speaker 9: relatives to job stay us has been converging. In other words,

560
00:27:00,160 --> 00:27:02,040
Speaker 9: you no longer have as much bargaining power if you

561
00:27:02,160 --> 00:27:04,520
Speaker 9: change jobs, combined with a number of people who are

562
00:27:04,560 --> 00:27:07,679
Speaker 9: changing jobs for permanent reasons has also been changing. So

563
00:27:07,720 --> 00:27:10,760
Speaker 9: the concrusion is we still have more and more evidence

564
00:27:10,800 --> 00:27:13,200
Speaker 9: pointing the direction of the labor markets, oftening one indicator

565
00:27:13,280 --> 00:27:16,320
Speaker 9: job this claims yes, still good, but basically everything else

566
00:27:16,400 --> 00:27:18,840
Speaker 9: is pointing a direction of what you would expect, namely

567
00:27:19,080 --> 00:27:19,720
Speaker 9: a week of lab.

568
00:27:19,720 --> 00:27:21,960
Speaker 1: Okay, I want a single point nine farm payils estimate,

569
00:27:22,000 --> 00:27:24,359
Speaker 1: but they won't serve me the bacon John was talking about,

570
00:27:24,400 --> 00:27:26,920
Speaker 1: So let me go to this is the whisper number

571
00:27:27,040 --> 00:27:30,040
Speaker 1: finally turning towards it. So looked down a set. There

572
00:27:30,119 --> 00:27:31,760
Speaker 1: was a John one hundred and eight eight thousand word.

573
00:27:32,000 --> 00:27:35,360
Speaker 4: That's consensus, maybe an estimate. Yeah we wait w which

574
00:27:35,400 --> 00:27:37,160
Speaker 4: is a fact a whisper.

575
00:27:36,800 --> 00:27:39,040
Speaker 1: Number coming down instead of going up this time.

576
00:27:39,160 --> 00:27:40,720
Speaker 9: Well, if you readly back up and think about what's

577
00:27:40,760 --> 00:27:42,920
Speaker 9: going on. The FED high rates in March of twenty

578
00:27:42,960 --> 00:27:45,080
Speaker 9: twenty two, and your textbook would tell you when you

579
00:27:45,200 --> 00:27:47,840
Speaker 9: raise interest rates, you should expect to see consumption begin

580
00:27:47,960 --> 00:27:49,840
Speaker 9: to slow down, cap ex spending begins to slow down,

581
00:27:49,920 --> 00:27:52,119
Speaker 9: credit growth on the banking sector begins to slow down,

582
00:27:52,200 --> 00:27:54,359
Speaker 9: and all those things are happening, and all those things

583
00:27:54,400 --> 00:27:57,760
Speaker 9: should also be expected to hit in particular lower rated credits,

584
00:27:57,800 --> 00:28:01,000
Speaker 9: smaller companies, middle market companies. And that's exactly where you're

585
00:28:01,040 --> 00:28:03,600
Speaker 9: beginning to these signs of weaker labor demand. So you

586
00:28:03,600 --> 00:28:05,639
Speaker 9: should expect to see non farm payrolls over the next

587
00:28:05,680 --> 00:28:08,640
Speaker 9: several months do what the FED is expecting it to do.

588
00:28:08,840 --> 00:28:10,440
Speaker 9: Let me gradually be soft and softer.

589
00:28:10,760 --> 00:28:12,080
Speaker 4: Is this labor market right now?

590
00:28:12,160 --> 00:28:13,840
Speaker 2: And this is a no doubts a question if for

591
00:28:13,880 --> 00:28:16,480
Speaker 2: a ram Mack, is this labor market right now less

592
00:28:16,520 --> 00:28:18,359
Speaker 2: of a reason to be hawkish at the Federal reserve,

593
00:28:18,480 --> 00:28:21,080
Speaker 2: even if we are printing two hundred k on payrolls.

594
00:28:21,160 --> 00:28:23,360
Speaker 9: Well, as Jim was saying earlier, if it put is back,

595
00:28:23,520 --> 00:28:26,000
Speaker 9: because think about it, we have now a situation where

596
00:28:26,040 --> 00:28:28,280
Speaker 9: the market is spending so much time on the Fed's

597
00:28:28,440 --> 00:28:32,440
Speaker 9: ministerial small changes in their communication, and if the Fed

598
00:28:32,480 --> 00:28:35,160
Speaker 9: is now beginning to say, well, we still don't think

599
00:28:35,160 --> 00:28:37,040
Speaker 9: that we are there yet, the market says, well, okay,

600
00:28:37,040 --> 00:28:38,840
Speaker 9: we are there yet, and you come to that conclusion.

601
00:28:39,040 --> 00:28:40,840
Speaker 9: But we've had that pivot so many times, and it

602
00:28:41,160 --> 00:28:44,000
Speaker 9: remains to be seen whether that pivot this time is right.

603
00:28:44,360 --> 00:28:46,400
Speaker 9: But the way I think we should be looking at

604
00:28:46,400 --> 00:28:48,320
Speaker 9: it is in the deal mandate. Should we be focusing

605
00:28:48,360 --> 00:28:51,120
Speaker 9: on inflation or employment. Inflation is moving in the right direction.

606
00:28:51,440 --> 00:28:54,480
Speaker 9: Employment is moving gradually in the right direction. But if

607
00:28:54,480 --> 00:28:56,280
Speaker 9: the labor market does start to have more than a

608
00:28:56,320 --> 00:28:58,920
Speaker 9: soft landing, then we will certainly have a sentiment change

609
00:28:58,960 --> 00:28:59,480
Speaker 9: in markets.

610
00:28:59,600 --> 00:29:01,520
Speaker 6: So I never thought that i'd get to the place

611
00:29:01,520 --> 00:29:03,720
Speaker 6: for Torston Slock and Ben Ladler would agree. I think

612
00:29:03,720 --> 00:29:05,800
Speaker 6: of you as a perennial pessimist. I always open your

613
00:29:06,120 --> 00:29:07,800
Speaker 6: uh your emails that I.

614
00:29:07,800 --> 00:29:08,560
Speaker 8: Kind of enjoy.

615
00:29:08,800 --> 00:29:11,400
Speaker 3: No, I actually risk exactly.

616
00:29:11,440 --> 00:29:13,400
Speaker 6: So you're worrying about risks and you're pointing to all.

617
00:29:13,320 --> 00:29:15,600
Speaker 4: These risks you're responsible. And then you.

618
00:29:15,480 --> 00:29:17,600
Speaker 6: Say, you know there's a FED put So does that

619
00:29:17,680 --> 00:29:19,400
Speaker 6: mean that Goldilocks is back on the table.

620
00:29:20,360 --> 00:29:23,000
Speaker 9: Well, but the issue here is that the market has

621
00:29:23,040 --> 00:29:25,600
Speaker 9: been interpreting the FED in so many different ways for

622
00:29:25,680 --> 00:29:27,840
Speaker 9: the last year, and the FED pivot has come I

623
00:29:27,880 --> 00:29:30,320
Speaker 9: mean seven out of the last nine times, as you will,

624
00:29:30,400 --> 00:29:32,520
Speaker 9: so a variant of the old joga of how many

625
00:29:32,520 --> 00:29:34,360
Speaker 9: times can you come with the same story that now

626
00:29:34,480 --> 00:29:35,960
Speaker 9: is the time, Now is the time for the Feds

627
00:29:36,000 --> 00:29:38,400
Speaker 9: or turn dubbish. But they haven't turned dubbish, and I

628
00:29:38,400 --> 00:29:40,600
Speaker 9: think that's why we will have rates higher for longa

629
00:29:40,680 --> 00:29:42,840
Speaker 9: This is good for fixed income. This means that the

630
00:29:42,840 --> 00:29:45,480
Speaker 9: front end of the curve should be still cutting coupons.

631
00:29:45,640 --> 00:29:48,560
Speaker 9: In terms of thinking about what is the overall outlook.

632
00:29:48,560 --> 00:29:50,840
Speaker 9: It goes to take time before we get inflation under control,

633
00:29:51,000 --> 00:29:53,280
Speaker 9: and I think that process, meaning into next year, still

634
00:29:53,320 --> 00:29:56,320
Speaker 9: means that the downside risks, so the outlook continues to.

635
00:29:56,280 --> 00:29:57,080
Speaker 7: Get a course. First.

636
00:29:57,160 --> 00:30:00,280
Speaker 1: Ronal Jim from Rochester, thanks so much for watching to

637
00:30:00,320 --> 00:30:02,080
Speaker 1: the tourist, and I'm going to cut to the chase.

638
00:30:02,120 --> 00:30:06,200
Speaker 1: There's non linearities out there along the curve. The chairman

639
00:30:06,280 --> 00:30:10,440
Speaker 1: Powell looks at where's the biggest potential non linearity. Is

640
00:30:10,440 --> 00:30:14,240
Speaker 1: it wicked short like Apollo short term paper? Is it

641
00:30:14,360 --> 00:30:17,240
Speaker 1: ten to twenty year French paper, thirty or forties? At

642
00:30:17,240 --> 00:30:19,800
Speaker 1: the Austrian piece, where's the stress?

643
00:30:19,920 --> 00:30:21,800
Speaker 9: I would look at this from a macro perspective that

644
00:30:21,800 --> 00:30:23,920
Speaker 9: the FED has high rates. We're seeing the language rates

645
00:30:23,920 --> 00:30:26,040
Speaker 9: going up on credit cards, on auto loads if.

646
00:30:25,920 --> 00:30:29,120
Speaker 1: There's no there's a slock brim all love, seeing.

647
00:30:29,360 --> 00:30:31,880
Speaker 9: Revolt rates going up on higher the loans. It's been

648
00:30:31,920 --> 00:30:33,880
Speaker 9: going up quite quickly in the last six months. You're

649
00:30:33,880 --> 00:30:37,320
Speaker 9: also seeing the bank credit growth to slow down quite substantially.

650
00:30:37,520 --> 00:30:40,440
Speaker 9: Taking those things together, all that so far looks like

651
00:30:40,480 --> 00:30:42,880
Speaker 9: a soft landing. But again, as I said it, Moll

652
00:30:42,920 --> 00:30:45,320
Speaker 9: been along landing here. But the bottom line still is

653
00:30:45,320 --> 00:30:47,800
Speaker 9: to your question, the risk is if people wake up

654
00:30:47,840 --> 00:30:50,360
Speaker 9: suddenly in the next few quarters and say, wow, maybe

655
00:30:50,400 --> 00:30:53,160
Speaker 9: there's more downside rich to consumption. Because the hit is

656
00:30:53,200 --> 00:30:55,600
Speaker 9: not only from interest rates going up. If people also

657
00:30:55,600 --> 00:30:57,760
Speaker 9: start losing their jobs and the lego markets often, which

658
00:30:57,800 --> 00:30:59,520
Speaker 9: is what the FIT has been talking about, we get

659
00:30:59,560 --> 00:31:02,080
Speaker 9: the doubleemy of both high interust rates hanging in there

660
00:31:02,080 --> 00:31:04,640
Speaker 9: at the same time while the label market finally softens,

661
00:31:04,760 --> 00:31:06,240
Speaker 9: which is what the has been waiting for.

662
00:31:06,120 --> 00:31:06,600
Speaker 7: For so long.

663
00:31:06,640 --> 00:31:08,880
Speaker 2: Okay, pause because in the last week we've just had

664
00:31:08,920 --> 00:31:12,520
Speaker 2: records spending Black Friday online Cimber month that was online

665
00:31:12,880 --> 00:31:16,880
Speaker 2: busiest day on recording US airports, and then buy now

666
00:31:16,960 --> 00:31:19,920
Speaker 2: Pay Later underpinning is bad news.

667
00:31:20,040 --> 00:31:20,840
Speaker 4: That's why I want to ask.

668
00:31:20,920 --> 00:31:26,640
Speaker 9: Okay, roughly half of the population has used by now

669
00:31:26,640 --> 00:31:28,680
Speaker 9: pay Later, and that number had just continued to go

670
00:31:28,760 --> 00:31:30,680
Speaker 9: up in the last several months. So you begin to

671
00:31:30,720 --> 00:31:32,480
Speaker 9: think about, well, is that a sign that they can't

672
00:31:32,480 --> 00:31:35,720
Speaker 9: get credited elsewhere, even on their credit cards, so rangers

673
00:31:35,800 --> 00:31:38,160
Speaker 9: tickets would find now pay Later. I know, well that's

674
00:31:38,200 --> 00:31:39,760
Speaker 9: You're probably part of that that has used it. But

675
00:31:39,800 --> 00:31:42,600
Speaker 9: I'm just saying the confusion is that we're getting to

676
00:31:42,640 --> 00:31:44,640
Speaker 9: the to the bottom line here that people are getting

677
00:31:44,640 --> 00:31:47,440
Speaker 9: stressed more on the household side, savings are mainly with

678
00:31:47,480 --> 00:31:49,880
Speaker 9: the middle and high income households. Low income houses are

679
00:31:49,920 --> 00:31:51,880
Speaker 9: getting more and more pressure, in particular when it comes

680
00:31:51,880 --> 00:31:54,560
Speaker 9: to the linkage rates. So that's of course implying that

681
00:31:54,640 --> 00:31:57,320
Speaker 9: we will see more downside pressure on consumers over the

682
00:31:57,360 --> 00:31:57,720
Speaker 9: next one.

683
00:31:57,800 --> 00:31:59,960
Speaker 2: Maybe this might be just the beginning of the can

684
00:32:00,040 --> 00:32:02,400
Speaker 2: seema leffing gun. Why isn't it that.

685
00:32:02,840 --> 00:32:04,760
Speaker 9: Well, because the backdrop here is that the FED is

686
00:32:04,760 --> 00:32:06,360
Speaker 9: not going to cut race anytime soon. So if the

687
00:32:06,400 --> 00:32:08,880
Speaker 9: cost of financing states or in FED language, you will

688
00:32:08,920 --> 00:32:11,480
Speaker 9: appreciate this. We will be above us star, which is

689
00:32:11,480 --> 00:32:13,760
Speaker 9: two and a half for a very extended very soon.

690
00:32:13,840 --> 00:32:14,360
Speaker 7: Do our start?

691
00:32:14,440 --> 00:32:15,920
Speaker 1: Come on? Well, we got twelve.

692
00:32:15,720 --> 00:32:17,480
Speaker 4: Seconds, We've got about a minute left.

693
00:32:17,280 --> 00:32:20,440
Speaker 10: Williams said, Love, I would say they have ado to

694
00:32:20,480 --> 00:32:23,280
Speaker 10: get that. We'll I'll go with the FED line here

695
00:32:23,280 --> 00:32:24,640
Speaker 10: and say two and a half percent, and if you

696
00:32:24,640 --> 00:32:27,760
Speaker 10: add five and a half, we will have restricted monetary posts.

697
00:32:27,600 --> 00:32:30,240
Speaker 9: For at least a few more years. So to Jonathan's question,

698
00:32:30,280 --> 00:32:32,560
Speaker 9: that means that consumers will be under pressure potentially for

699
00:32:32,600 --> 00:32:33,280
Speaker 9: a few more years.

700
00:32:33,320 --> 00:32:36,360
Speaker 1: A guy yesterday said he is some German bank. He said,

701
00:32:36,480 --> 00:32:39,320
Speaker 1: ECB is gonna go first. What's a bundes Bank gonna

702
00:32:39,360 --> 00:32:41,440
Speaker 1: tell the guard when she decides to cut.

703
00:32:41,920 --> 00:32:44,480
Speaker 9: That's a real wrestle inside the ECB at the moment.

704
00:32:44,520 --> 00:32:45,720
Speaker 7: But the ECB will go first.

705
00:32:45,760 --> 00:32:49,280
Speaker 9: But it's very clear that different ECB government Concile members

706
00:32:49,280 --> 00:32:51,600
Speaker 9: are showing up at the meeting and have probably having

707
00:32:51,640 --> 00:32:52,440
Speaker 9: different wish lists.

708
00:32:52,640 --> 00:32:54,800
Speaker 2: Yeah, the Federal reserves on the same page, maybe right now.

709
00:32:56,160 --> 00:33:00,080
Speaker 2: Council for the ECB tossed slock there of Apollo Toaston Fankan.

710
00:33:10,920 --> 00:33:14,960
Speaker 1: Olivia Wassner joins us now head of Sustainable Investing for

711
00:33:15,280 --> 00:33:18,480
Speaker 1: Apollo again from COP twenty eight, Olivia, thank you so

712
00:33:18,560 --> 00:33:21,280
Speaker 1: much for joining us. A big splash in the ft

713
00:33:22,080 --> 00:33:25,640
Speaker 1: is they really go after ESG and say is this

714
00:33:25,720 --> 00:33:28,240
Speaker 1: all going to work out? And part of it and

715
00:33:28,280 --> 00:33:32,360
Speaker 1: this goes to the investment of Apollo in sustainable investing.

716
00:33:32,880 --> 00:33:36,640
Speaker 1: It's you can make money at ESG. You can make

717
00:33:36,720 --> 00:33:41,440
Speaker 1: money and profit with sustainable investing. Is that what Apollos

718
00:33:41,480 --> 00:33:46,440
Speaker 1: witnessed with your investments? Have you seen money being made

719
00:33:46,680 --> 00:33:50,360
Speaker 1: by being sustainable, by doing the things Cop twenty eight's

720
00:33:50,400 --> 00:33:51,520
Speaker 1: talking about.

721
00:33:54,480 --> 00:33:56,640
Speaker 11: Absolutely? Well, first of all, thank you for having me.

722
00:33:56,760 --> 00:33:59,400
Speaker 11: Thank you for having me in from Duvine from COP

723
00:33:59,440 --> 00:34:02,560
Speaker 11: twenty eighth. I'm thrilled to be here and also be

724
00:34:02,600 --> 00:34:05,920
Speaker 11: able to beam into Apollo this morning. Absolutely, that is

725
00:34:05,960 --> 00:34:08,440
Speaker 11: what we are seeing with our investments. So if we

726
00:34:08,480 --> 00:34:10,799
Speaker 11: look at the capital we have put to work over

727
00:34:10,840 --> 00:34:15,320
Speaker 11: the last five years into sustainable investing seams, the firm

728
00:34:15,360 --> 00:34:18,040
Speaker 11: on a whole has put about thirty one billion dollars

729
00:34:18,080 --> 00:34:21,919
Speaker 11: to work, and that was really across the entire platform.

730
00:34:22,080 --> 00:34:24,960
Speaker 11: That was in real estate, that was in infrastructure, that

731
00:34:25,000 --> 00:34:27,960
Speaker 11: was in credit, that was in private equity, and all

732
00:34:28,000 --> 00:34:31,839
Speaker 11: of these deals were done in regular funds. These were

733
00:34:31,880 --> 00:34:35,000
Speaker 11: done in funds that had return targets, and we saw

734
00:34:35,080 --> 00:34:38,520
Speaker 11: great opportunities to make money for our investors to meet

735
00:34:38,520 --> 00:34:42,279
Speaker 11: the return targets of the funds while also investing in

736
00:34:42,480 --> 00:34:46,879
Speaker 11: businesses and in products and projects that are actually very

737
00:34:46,960 --> 00:34:51,560
Speaker 11: much contributing to the clean transition, the energy transition. How

738
00:34:51,600 --> 00:34:53,439
Speaker 11: we think about sustainable resource use.

739
00:34:53,400 --> 00:34:54,319
Speaker 7: Going forward.

740
00:34:57,200 --> 00:35:00,479
Speaker 1: Olivia. If you look at COP twenty eight, the twenty

741
00:35:00,600 --> 00:35:04,920
Speaker 1: nine and thirty are the financial discussions of Apollo and

742
00:35:05,040 --> 00:35:07,399
Speaker 1: other good and worthies, the great and the good if

743
00:35:07,440 --> 00:35:12,759
Speaker 1: you will, are they being overwhelmed by major polluters the

744
00:35:12,880 --> 00:35:16,640
Speaker 1: United States and also China for example on coal.

745
00:35:20,480 --> 00:35:23,160
Speaker 11: Well, So, first of all, one of my biggest surprises

746
00:35:23,320 --> 00:35:25,440
Speaker 11: of COP twenty eight so far has been that it

747
00:35:25,520 --> 00:35:28,680
Speaker 11: is not all doom and gloom. There is a lot

748
00:35:28,760 --> 00:35:31,839
Speaker 11: of really good news coming out of COP. You had

749
00:35:31,880 --> 00:35:36,200
Speaker 11: one hundred and twenty company countries commit to tripling the

750
00:35:36,239 --> 00:35:39,800
Speaker 11: amount of renewable generation by the end of the decade.

751
00:35:40,120 --> 00:35:43,600
Speaker 11: That's massive if you think about it. We've had just

752
00:35:43,680 --> 00:35:47,000
Speaker 11: so many positive announcements around capital going into the transition

753
00:35:47,520 --> 00:35:50,160
Speaker 11: from all different areas of the world. So one of

754
00:35:50,200 --> 00:35:51,800
Speaker 11: the things that has really struck me is just the

755
00:35:51,840 --> 00:35:55,800
Speaker 11: amount of capital that's really being mobilized, the ambitious commitments

756
00:35:55,800 --> 00:35:59,880
Speaker 11: that folks are really setting here, and how excited everyone is.

757
00:36:00,360 --> 00:36:02,719
Speaker 11: You know, if you look at historical cops as we

758
00:36:02,760 --> 00:36:06,440
Speaker 11: think about, you know, twenty eight, twenty nine, thirty, and

759
00:36:07,719 --> 00:36:10,520
Speaker 11: the makeup of who is here has really changed. So

760
00:36:10,560 --> 00:36:13,400
Speaker 11: when I was walking around yesterday, you know, instead of

761
00:36:13,400 --> 00:36:18,080
Speaker 11: seeing just nonprofits and government officials, you see people from

762
00:36:18,320 --> 00:36:23,600
Speaker 11: law firms, from investment banks, from asset allocators, asset managers,

763
00:36:24,000 --> 00:36:27,520
Speaker 11: consulting firms. It really is amazing to me just how

764
00:36:27,520 --> 00:36:30,040
Speaker 11: many people are here and how many people are really

765
00:36:30,080 --> 00:36:33,040
Speaker 11: thinking about how does climate finance affect what they do,

766
00:36:33,680 --> 00:36:37,120
Speaker 11: how does it affect their businesses, What are the opportunities

767
00:36:37,200 --> 00:36:39,200
Speaker 11: that are coming out of this. You know, both for

768
00:36:39,320 --> 00:36:43,320
Speaker 11: the financial institutions like Apollo as well as our corporate partners.

769
00:36:45,400 --> 00:36:48,239
Speaker 6: Olivia, I've got to be honest, I was surprised also

770
00:36:48,520 --> 00:36:51,759
Speaker 6: about just a degree of optimism, considering how much pessimism

771
00:36:51,800 --> 00:36:54,600
Speaker 6: there is around the ability to reduce the increase in

772
00:36:54,640 --> 00:36:58,640
Speaker 6: the climate by two degrees celsius. Given that, how much

773
00:36:58,760 --> 00:37:01,600
Speaker 6: are you looking to invest things like carbon capture and

774
00:37:01,719 --> 00:37:05,520
Speaker 6: other measures that go against just simply reducing emissions.

775
00:37:08,320 --> 00:37:11,760
Speaker 11: Yeah, absolutely so. So listen, we have a big challenge

776
00:37:11,760 --> 00:37:13,480
Speaker 11: ahead of us, and if you look at the amount

777
00:37:13,480 --> 00:37:16,719
Speaker 11: of capital that needs to be spent over the next

778
00:37:16,719 --> 00:37:19,440
Speaker 11: thirty years, it's massive, right, you know, we're looking at

779
00:37:19,440 --> 00:37:22,239
Speaker 11: somewhere between five and six trillion dollars a year of

780
00:37:22,320 --> 00:37:25,520
Speaker 11: capital that needs to be spent. Apollo is very much

781
00:37:25,560 --> 00:37:27,759
Speaker 11: looking at what we want to do on our end

782
00:37:27,880 --> 00:37:31,080
Speaker 11: and how we really want to lean into financing this transition.

783
00:37:31,760 --> 00:37:34,160
Speaker 11: So we've set a couple targets for ourselves. We set

784
00:37:34,200 --> 00:37:36,839
Speaker 11: a target of fifty billion by the end of twenty

785
00:37:36,920 --> 00:37:39,640
Speaker 11: twenty seven, and we set a target of one hundred

786
00:37:39,680 --> 00:37:43,520
Speaker 11: billion by the end of twenty thirty. So for us,

787
00:37:43,600 --> 00:37:46,239
Speaker 11: we're really looking at big numbers into this space. And

788
00:37:46,280 --> 00:37:48,719
Speaker 11: when you look at we've done historically again thirty one

789
00:37:48,760 --> 00:37:51,799
Speaker 11: billion over the last five years. It has been a

790
00:37:51,800 --> 00:37:54,359
Speaker 11: tremendous amount of capital. And I talked to my peers here,

791
00:37:54,440 --> 00:37:58,120
Speaker 11: I talked to financial institutions, I talk to other folks

792
00:37:58,120 --> 00:38:00,560
Speaker 11: who are here, and what you're really seeing is there's

793
00:38:00,600 --> 00:38:05,200
Speaker 11: just so much capital being really being mobilized here at

794
00:38:05,239 --> 00:38:08,040
Speaker 11: the corporate level as well. I think the world has

795
00:38:08,120 --> 00:38:11,080
Speaker 11: realized we do need to decarbonize, and now we're looking

796
00:38:11,080 --> 00:38:12,680
Speaker 11: at what is the best way to do it, and

797
00:38:12,719 --> 00:38:15,000
Speaker 11: how do we get the right fools of capital into it.

798
00:38:17,360 --> 00:38:19,440
Speaker 6: Do you feel that people are losing enthusiasm a little bit,

799
00:38:19,640 --> 00:38:21,960
Speaker 6: seems to the backlash And Tom was just talking about

800
00:38:21,960 --> 00:38:23,960
Speaker 6: how there is this rething. Have you seen any of

801
00:38:23,960 --> 00:38:31,040
Speaker 6: that backlash in terms of just a halting in institutional enthusiasm.

802
00:38:31,320 --> 00:38:34,920
Speaker 11: Yeah, you know, I haven't really certainly. You know, you

803
00:38:34,960 --> 00:38:38,279
Speaker 11: read the papers, and there is certainly some backlash. But

804
00:38:38,760 --> 00:38:40,200
Speaker 11: on a whole I just think, you know, if you

805
00:38:40,239 --> 00:38:42,600
Speaker 11: look at the quantum of people are here, at the

806
00:38:42,920 --> 00:38:45,200
Speaker 11: number of businesses, at the number of corporates, I mean,

807
00:38:45,239 --> 00:38:48,040
Speaker 11: there's just so much really good energy around this event,

808
00:38:48,480 --> 00:38:50,319
Speaker 11: and folks are really looking at, you know, what can

809
00:38:50,360 --> 00:38:52,160
Speaker 11: they do, how can they do it, how can they

810
00:38:52,200 --> 00:38:54,520
Speaker 11: best finance it? Where are the gaps? You know, we've

811
00:38:54,520 --> 00:38:56,719
Speaker 11: had a lot of discussions over the last couple of

812
00:38:56,760 --> 00:39:00,319
Speaker 11: days about the missing middle, right, how do we to

813
00:39:00,400 --> 00:39:03,439
Speaker 11: this scaling up part. You know, there's been a ton

814
00:39:03,480 --> 00:39:06,680
Speaker 11: of capital that has gone into the venture capital and

815
00:39:06,719 --> 00:39:09,120
Speaker 11: growth equity part of the value chain, and we've the

816
00:39:09,200 --> 00:39:11,759
Speaker 11: capital that's gone really into the infrastructure. So when you

817
00:39:11,840 --> 00:39:15,520
Speaker 11: have fully de risked investments, But how do we found

818
00:39:15,840 --> 00:39:18,359
Speaker 11: that part in the middle where you've got you know,

819
00:39:18,400 --> 00:39:22,360
Speaker 11: you've got technologies and companies that are proven, that are working,

820
00:39:22,760 --> 00:39:24,680
Speaker 11: but that just need a little bit of help to

821
00:39:24,760 --> 00:39:27,239
Speaker 11: kind of get to the next level. We see that

822
00:39:27,320 --> 00:39:30,520
Speaker 11: both in individual companies as well as you know, it

823
00:39:30,600 --> 00:39:33,759
Speaker 11: might be corporate carbouts of much larger companies, it may

824
00:39:33,800 --> 00:39:37,040
Speaker 11: be green financings for a larger company. There are so

825
00:39:37,120 --> 00:39:40,480
Speaker 11: many opportunities here to really help fill that gap, and

826
00:39:40,520 --> 00:39:43,240
Speaker 11: I'm excited about what Apollo's doing here. I'm also excited

827
00:39:43,239 --> 00:39:45,040
Speaker 11: about what I'm seeing so many of my peers you hear.

828
00:39:45,440 --> 00:39:49,279
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829
00:39:49,400 --> 00:39:53,600
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830
00:39:53,880 --> 00:39:58,440
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831
00:39:58,520 --> 00:40:02,239
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832
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833
00:40:06,160 --> 00:40:10,439
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834
00:40:11,080 --> 00:40:11,799
Speaker 1: is Bloomberg