WEBVTT - Bloomberg Surveillance: Apollo's Best Year Ever 0:00:05.120 --> 0:00:08.480 This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along 0:00:08.520 --> 0:00:12.319 with Jonathan Ferroll and Lisa Abramowitz. Join us each day 0:00:12.400 --> 0:00:16.840 for insight from the best and economics, geopolitics, finance and investment. 0:00:17.280 --> 0:00:22.119 Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 0:00:22.320 --> 0:00:26.600 anywhere you get your podcasts, and always on Bloomberg dot Com, 0:00:26.640 --> 0:00:29.880 the Bloomberg Terminal, and the Bloomberg Business App. 0:00:30.120 --> 0:00:33.200 We are at Apollo HQs and am please to say 0:00:33.200 --> 0:00:35.839 that joining us now is Mark Rowan, the c e 0:00:36.080 --> 0:00:36.720 O Market. 0:00:36.800 --> 0:00:39.400 Morning's here, Good morning all, great to thank you for coming. 0:00:39.479 --> 0:00:41.159 Great to be here and great to have you with us. 0:00:41.159 --> 0:00:43.600 So let's just go straight to the top of this conversation, 0:00:44.360 --> 0:00:48.640 private markets versus public markets and why you believe the 0:00:48.640 --> 0:00:50.160 big opportunity. 0:00:49.600 --> 0:00:52.480 Right now is in the former and not the latter. 0:00:53.040 --> 0:00:55.520 Look, we've had a sea change, not just over a year, 0:00:55.560 --> 0:00:58.200 We've had it over fifteen years. So much of our 0:00:58.200 --> 0:01:01.200 public markets are index and corel related eighty percent of 0:01:01.280 --> 0:01:03.680 volume s and P five hundred sixty percent of the 0:01:03.680 --> 0:01:06.880 market ETFs one hundred percent of our returns this year 0:01:06.920 --> 0:01:09.640 are from ten stocks, which constitute thirty five percent of 0:01:09.640 --> 0:01:12.080 the S and P that traded an average PE of 0:01:12.120 --> 0:01:14.480 fifty How many of us come in every day looking 0:01:14.480 --> 0:01:15.959 to buy fifty PE stocks? 0:01:16.520 --> 0:01:17.000 Not many? 0:01:17.319 --> 0:01:19.800 And I guess what I'm suggesting to you is that 0:01:19.959 --> 0:01:24.200 if you public markets, they are so correlated an index 0:01:24.280 --> 0:01:26.440 to interest rates and to money flows that if you 0:01:26.480 --> 0:01:29.920 actually want alpha outperformance, you need to step away from 0:01:29.959 --> 0:01:33.520 public markets. And I think that's happening because we're also 0:01:33.560 --> 0:01:37.559 revisiting the notion of public being safe and private being risky. 0:01:37.920 --> 0:01:40.360 This is the framework we used to be in. Private 0:01:40.440 --> 0:01:44.720 meant venture capital, hedge funds, private equity. Now it just 0:01:44.760 --> 0:01:45.400 means less. 0:01:45.240 --> 0:01:49.880 Liquid Is that not inherently a risk? In your mind? Liquiditsy. 0:01:50.320 --> 0:01:53.560 Liquidity is a risk to everyone, but in different degrees. 0:01:53.800 --> 0:01:56.520 So if you are a retirement plan or a retirement system, 0:01:56.720 --> 0:01:59.080 you know your liquidity requirements for the next ten years. 0:01:59.080 --> 0:02:01.680 So if you can get paid for illiquidity, why not 0:02:01.720 --> 0:02:02.880 get paid for ill liquidity. 0:02:03.080 --> 0:02:04.080 If you're a wealthy. 0:02:03.800 --> 0:02:06.080 Individual, how many of them need one hundred percent of 0:02:06.120 --> 0:02:09.079 their money on Tuesday? If they don't, they should get 0:02:09.080 --> 0:02:12.560 paid for illiquidity. And we're seeing that in the performance data. 0:02:12.639 --> 0:02:15.440 If you look at the active management, active management has 0:02:15.440 --> 0:02:17.239 failed to beat the index eighty five percent of the 0:02:17.240 --> 0:02:19.519 time for twenty years, and I think it's going to 0:02:19.560 --> 0:02:22.520 get harder, not easier, to beat the index. As more 0:02:22.560 --> 0:02:25.600 and more of the market is indexed. Very little money 0:02:25.639 --> 0:02:29.520 is left to actually make up what needs to be 0:02:29.560 --> 0:02:30.680 done in active management? 0:02:31.080 --> 0:02:36.160 What is the single operational distinction between Drexel, Burnham Lambert 0:02:36.480 --> 0:02:41.160 and your Apollo? What is the micro idea you can 0:02:41.200 --> 0:02:44.200 give us of them versus now. 0:02:44.760 --> 0:02:47.200 Not just I'll give you Drexel, I'll give you Lehman Brothers, 0:02:47.200 --> 0:02:49.399 I'll give you bear Stearns, I'll give you SVB, I'll 0:02:49.400 --> 0:02:52.880 give you First Republic. The financial institutions tend to die 0:02:52.960 --> 0:02:56.040 of one of two causes, heart attack or cancer. Heart 0:02:56.040 --> 0:02:58.799 Attack is funding risk. They borrow short and they lend long. 0:02:59.600 --> 0:03:03.520 Cancer is the slow addition of poor quality assets, which. 0:03:03.600 --> 0:03:05.239 Over time undermine the system. 0:03:05.680 --> 0:03:07.960 So you look at all of those firms, All of 0:03:08.000 --> 0:03:10.600 those had an element of both heart attack and cancer 0:03:10.880 --> 0:03:12.679 funding risk as well as asset risk. 0:03:13.040 --> 0:03:14.120 You look at what we're doing. 0:03:14.360 --> 0:03:18.440 We are borrow borrowed long, and lent long. Everything is matched, 0:03:18.720 --> 0:03:21.040 everything is in a fund. There is no daily liquid, 0:03:21.080 --> 0:03:22.280 quarterly liquid money. 0:03:22.560 --> 0:03:23.080 At Apollo. 0:03:23.680 --> 0:03:26.840 We are ideally situated to take advantage of less liquid assets. 0:03:26.840 --> 0:03:29.240 We've structured ourselves that way. And then you look at 0:03:29.240 --> 0:03:32.640 the totality of what we do. Equity is a risk business. 0:03:32.720 --> 0:03:34.679 Equities go up and down every day. You can lose 0:03:34.680 --> 0:03:37.320 money in public equity. You can lose money in private equity. 0:03:37.720 --> 0:03:40.560 In the credit business. The vast, vast majority of what 0:03:40.600 --> 0:03:43.880 we do is private investment grade. 0:03:44.080 --> 0:03:47.080 When I look at the risks out there and A 0:03:47.200 --> 0:03:50.000 translated into Nazim teleban all the work you did in 0:03:50.080 --> 0:03:52.880 quant with black Swan, what are the tail risks you 0:03:53.000 --> 0:03:56.200 see right now for private equity? I mean, are you 0:03:56.320 --> 0:03:59.520 hedged perfectly? Is there next to no delta where you 0:03:59.560 --> 0:04:03.400 feel so comfortable? Are there actual tail risks in apollo? 0:04:04.080 --> 0:04:06.080 I don't think there are tail risks, and I don't 0:04:06.080 --> 0:04:08.560 think there are tail risks in private equity. I think 0:04:08.640 --> 0:04:11.560 private equity is a risk taking activity. But each of 0:04:11.600 --> 0:04:15.080 the companies, each of the situations is idiosyncratic onto itself, 0:04:15.920 --> 0:04:18.400 and over time, private equity has proven to be a 0:04:18.520 --> 0:04:21.520 very good asset class. Recognizing that in certain markets you 0:04:21.520 --> 0:04:24.360 will lose money, just like in certain public markets you 0:04:24.400 --> 0:04:25.000 will lose money. 0:04:25.040 --> 0:04:26.960 You had a test here with the way interest rates went, 0:04:27.000 --> 0:04:29.640 you had a four or five six standard deviation shock. 0:04:30.040 --> 0:04:33.400 How did your risks perform given the shock of higher 0:04:33.520 --> 0:04:36.760 rates the glide path of that? How is it along 0:04:36.760 --> 0:04:37.080 the way? 0:04:37.960 --> 0:04:39.600 Single best year in Apollo's. 0:04:39.200 --> 0:04:46.719 History, earnings, asset performance, our platform. As you think about it, 0:04:46.760 --> 0:04:49.719 we are around six hundred and fifty billion of assets 0:04:49.760 --> 0:04:53.160 under management in our asset management business. Five hundred billion 0:04:53.160 --> 0:04:58.520 of that is credit. We generally benefit from rising rates. Yes, 0:04:58.760 --> 0:05:01.159 on the equity side, some equity will be worth less 0:05:01.160 --> 0:05:03.799 than it was, but as a general rule for Apollo, 0:05:04.360 --> 0:05:07.440 credit rates going off is very strong on the retirement 0:05:07.520 --> 0:05:10.799 services side of our business, which is the Athene business 0:05:10.800 --> 0:05:12.960 just gone through the roof. Athene is up thirty percent 0:05:13.040 --> 0:05:13.720 year over year. 0:05:14.240 --> 0:05:15.880 So I'm going to steal a page from this guy 0:05:15.880 --> 0:05:18.160 because he's been talking about a zepic a lot, and honestly, 0:05:18.200 --> 0:05:19.839 I think that it's important for us to talk about it. 0:05:19.920 --> 0:05:22.400 Are you telling me something that's absolutely not And I. 0:05:22.400 --> 0:05:28.320 Just think I'm not saying that anyone is onozepic. We're 0:05:28.360 --> 0:05:31.479 talking about this as a game. Estentially, no one here 0:05:31.680 --> 0:05:33.839 is on o zepic, and we're not making any not 0:05:33.839 --> 0:05:34.839 that there's anything wrong with it. 0:05:34.880 --> 0:05:35.760 Whatever, let's move on. 0:05:36.120 --> 0:05:39.920 Here's this question about how much that transforms life expectancy, 0:05:40.160 --> 0:05:42.720 how much that transforms some of the investment thesis from 0:05:42.760 --> 0:05:45.560 your perspective and for retirement look. 0:05:45.839 --> 0:05:48.960 Over time, you would expect improvements in healthcare, improvements in 0:05:49.040 --> 0:05:54.280 health technology to improve life expectancy, but not by all 0:05:54.320 --> 0:05:58.160 that much. We tend to find other things that are 0:05:58.160 --> 0:06:01.280 bad for the human body. As one thing does not 0:06:02.200 --> 0:06:05.240 kill us, another thing does so. But I would expect 0:06:05.240 --> 0:06:07.920 the trend to continue. We are just to be clear, 0:06:08.040 --> 0:06:09.760 we are not in the insurance business. 0:06:10.360 --> 0:06:11.520 We are in We are. 0:06:11.440 --> 0:06:14.320 An insurance company that is in the retirement services business. 0:06:14.760 --> 0:06:18.520 We make money by guaranteeing people's retirement, and we earn 0:06:18.600 --> 0:06:21.119 money by earning more on our assets than we payd 0:06:21.120 --> 0:06:25.400 on our liabilities, very little exposure to longevity or any 0:06:25.440 --> 0:06:28.479 other what you would consider biometric or typical insurance risk. 0:06:28.720 --> 0:06:30.960 There's a real question here and real focus on income. 0:06:30.960 --> 0:06:32.760 And you've been talking about that. How there is risk 0:06:32.800 --> 0:06:35.400 and equity but not necessarily the same type of thing 0:06:36.000 --> 0:06:38.279 that you see in credit. And we just saw credit 0:06:38.279 --> 0:06:42.080 outperform private credit outperform private equity pretty meaningfully. Are you 0:06:42.120 --> 0:06:44.680 going to shift away from private equity more and more 0:06:44.720 --> 0:06:47.040 and just focus purely on the more credit business. 0:06:47.920 --> 0:06:50.119 No, this is the answer, but we have to step 0:06:50.160 --> 0:06:52.400 back and go back to what our business is. Our 0:06:52.440 --> 0:06:55.120 business at Apollo and for most people in the alternative 0:06:55.120 --> 0:06:58.160 asset management industry, we're not in the asset management business. 0:06:58.200 --> 0:07:01.000 We're in the excess return period at risk business. And 0:07:01.040 --> 0:07:04.480 then I ask myself where can we get access return? Well, inequity, 0:07:04.560 --> 0:07:06.279 we've gotten to one hundred and fifty billion. 0:07:07.040 --> 0:07:07.760 Is it going to grow? 0:07:07.880 --> 0:07:11.040 I think it will grow, really grow multiples. I don't 0:07:11.040 --> 0:07:13.400 think so. I think the nature of the business, if 0:07:13.440 --> 0:07:16.120 we're true to ourselves of just focusing on excess return, 0:07:16.600 --> 0:07:19.480 is slower growth. I look at the credit business. The 0:07:19.520 --> 0:07:22.680 credit business is nearly five hundred billion today. We're not 0:07:22.800 --> 0:07:26.000 relevant in the scheme and the scale of these markets. 0:07:26.200 --> 0:07:29.320 Five hundred billion is not a relevant sentiment. I assure you, 0:07:29.400 --> 0:07:31.480 when you speak to all the big bank CEOs today, 0:07:31.560 --> 0:07:33.440 they don't wake up every day wondering what the mighty 0:07:33.440 --> 0:07:34.320 Apollo is doing. 0:07:34.680 --> 0:07:37.080 There's a phrase I've used twice already this morning, in 0:07:37.120 --> 0:07:40.560 the last forty minutes one hour de Bankking, and every 0:07:40.560 --> 0:07:42.960 time I've used it I've had pushback around this table. 0:07:43.240 --> 0:07:45.600 Why don't we like that price the bankking. 0:07:45.400 --> 0:07:48.080 I personally like that phrase, Jim Zelter. It will cost 0:07:48.080 --> 0:07:50.160 me twenty dollars for just saying the word de banking, 0:07:50.360 --> 0:07:52.760 but I'm happy to pay it. I think the world 0:07:52.800 --> 0:07:56.520 is debanking, and I say it this way. Every economy, 0:07:56.600 --> 0:08:01.360 every regulatory scheme, credit is tied to GDP, and regulators 0:08:01.520 --> 0:08:04.000 have only two choices as to where credit comes from. 0:08:04.200 --> 0:08:06.560 It can come from the banking system, or it can 0:08:06.560 --> 0:08:10.200 come from the investment marketplace. There's no third choice, and 0:08:10.280 --> 0:08:12.880 everyone around the globe has made a different decision. But 0:08:12.920 --> 0:08:15.480 if you look at the trend, with the exception of China, 0:08:16.240 --> 0:08:20.680 everywhere in the world regulators are favoring investors over banks. 0:08:21.000 --> 0:08:22.840 That does not mean we're going to see us on shift. 0:08:22.960 --> 0:08:24.840 That does not mean the banking business is going out 0:08:24.880 --> 0:08:28.320 of business. On the margin, though, the growth is going 0:08:28.360 --> 0:08:32.360 to take place in the investor marketplace rather than in 0:08:32.400 --> 0:08:35.240 the banking system for good and valid reasons and for 0:08:35.320 --> 0:08:38.720 regulatory choice, not because the banking system is unsafe. 0:08:38.880 --> 0:08:40.679 So, given that you said, you don't see a lot 0:08:40.679 --> 0:08:43.080 of upside in terms of growth, tremendous amount of growth 0:08:43.080 --> 0:08:45.240 and the equity side, you said, you're irrelevant with five 0:08:45.320 --> 0:08:48.680 hundred billion dollars. How big, how relevant could you become? 0:08:49.320 --> 0:08:49.560 Well? 0:08:49.760 --> 0:08:52.640 I sat next to a senior executive from Blackrock last 0:08:52.720 --> 0:08:54.840 night at dinner and they had food in front of them, 0:08:54.840 --> 0:08:56.320 and I had no food, and I. 0:08:56.240 --> 0:08:58.120 Said, how big do you have to be to get 0:08:58.120 --> 0:09:00.440 food in front of you? And he said trillion. 0:09:00.640 --> 0:09:02.960 So that's what you're aiming forten dollars is what you're saying. 0:09:03.080 --> 0:09:04.319 Look for us. 0:09:04.320 --> 0:09:07.240 For us, this is about excess return per unit of risk. 0:09:07.320 --> 0:09:09.679 Our business plan calls for a doubling of our business 0:09:10.280 --> 0:09:12.640 and at the end of the doubling, liking who we 0:09:12.679 --> 0:09:16.600 are as a culture. Our limitter is not capital raising. 0:09:16.679 --> 0:09:19.920 Our limitter is not size of aum. Our limitter is 0:09:20.320 --> 0:09:22.280 making sure we get excess return per unit of risk, 0:09:22.320 --> 0:09:25.520 so finding assets and making sure we like our culture 0:09:25.880 --> 0:09:26.720 at the end of the day. 0:09:26.960 --> 0:09:30.439 And we all bring to this our childhoods. My childhood 0:09:30.520 --> 0:09:34.400 was a white Anglo Saxon Protestant grandmother John after her 0:09:34.440 --> 0:09:38.600 third Scotch, who would talk about how Jews couldn't go 0:09:38.679 --> 0:09:42.080 to a certain school in Massachusetts. Most of them ended 0:09:42.160 --> 0:09:46.520 up at Lisa's University of Chicago. That was a different battle. 0:09:46.920 --> 0:09:49.120 Now there is a new battle, and we address this 0:09:49.640 --> 0:09:53.120 with Mark Rowan. I am stunned at what I see 0:09:53.280 --> 0:09:56.719 at these schools, and particularly at your University of Pennsylvania. 0:09:57.080 --> 0:10:00.400 You've been vocal. What is the dialogue you have right 0:10:00.440 --> 0:10:03.760 now with the leadership of the University of Pennsylvania is 0:10:03.800 --> 0:10:06.080 they deal with this new anti Semitism? 0:10:06.920 --> 0:10:10.360 There's no dialogue with leadership at the moment. Leadership is 0:10:10.800 --> 0:10:13.120 on their way or in DC for a series of 0:10:13.160 --> 0:10:17.680 congressional hearings. But the underlying culture that permitted this to 0:10:17.720 --> 0:10:20.760 happen is just so strong and until there is a 0:10:20.800 --> 0:10:23.560 moment of self reflection where we're not dealing with just 0:10:23.600 --> 0:10:26.240 anti Semitism, we're dealing with the culture that allowed this 0:10:26.320 --> 0:10:28.680 to happen, there really is going to be no progress, 0:10:28.679 --> 0:10:30.600 and to date there's been no progress. 0:10:30.880 --> 0:10:33.280 So what is progress right? Because there's a real question 0:10:33.320 --> 0:10:36.800 around free speech versus something else? What is this something 0:10:36.840 --> 0:10:39.240 else that you're looking for some of these universities to target. 0:10:39.640 --> 0:10:42.199 There's really not a question of free speech. This is 0:10:42.240 --> 0:10:46.360 a question of favored speech and disfavored speech, and an 0:10:46.400 --> 0:10:50.400 institutional psychology and an institutional culture. So there are places 0:10:50.400 --> 0:10:52.920 where this is modeled and they're getting it right. For instance, 0:10:53.040 --> 0:10:56.320 University of Chicago. University of Chicago is getting it right. 0:10:56.920 --> 0:11:00.840 They are kicking pens butt to be candid, and it's 0:11:00.880 --> 0:11:04.120 not that hard. The institution has decided that it is 0:11:04.200 --> 0:11:07.839 institutionally neutral and that the students and professors and other 0:11:07.880 --> 0:11:09.960 actors on campus are allowed to have opinions and to 0:11:09.960 --> 0:11:14.080 speak their opinions within respectful ways. Say what you will, 0:11:14.320 --> 0:11:16.760 say what you want, allow the other side to speak. 0:11:17.440 --> 0:11:21.240 That is a culture of free speech. A culture where 0:11:21.240 --> 0:11:24.120 you shout people down, where you have ninety five percent 0:11:24.240 --> 0:11:28.120 of the professor or academia speaking in one way, where 0:11:28.160 --> 0:11:30.760 you permit violent protests, where students are unable to go 0:11:30.760 --> 0:11:34.320 to class because there's boycotts or there's pressure or other things, 0:11:34.400 --> 0:11:35.680 is not a culture of free speech. 0:11:35.760 --> 0:11:38.320 How do you understand the increase in anti semitism on 0:11:38.360 --> 0:11:41.600 the left, which is really polarized frankly the Democratic Party 0:11:41.720 --> 0:11:44.520 and created a lot of sort of soul searching. 0:11:45.120 --> 0:11:47.320 Look, this is a long time coming, but I'll start 0:11:47.320 --> 0:11:51.280 with history. The definition of antisemitism, the modern definition, the 0:11:51.280 --> 0:11:55.680 IRA definition includes anti Zionism as a form of anti semitism. 0:11:56.080 --> 0:11:58.839 This got through the Senate with many of the current 0:11:58.840 --> 0:12:01.840 senators still there are nine to zero, including most of 0:12:01.880 --> 0:12:05.680 the most progressive Democratic centers. So what we've seen is 0:12:05.720 --> 0:12:08.400 we've seen a shift in the mood of the populace, 0:12:08.640 --> 0:12:12.000 particularly on university campuses. We live in a culture on 0:12:12.040 --> 0:12:16.280 these university campuses of simplicity. You are oppressed or you 0:12:16.280 --> 0:12:19.400 are an oppressor. If you are oppressed, it does not 0:12:19.520 --> 0:12:20.200 matter what you do. 0:12:20.280 --> 0:12:21.120 You can do no wrong. 0:12:21.640 --> 0:12:24.600 If you are an oppressor, facts be damned, it does 0:12:24.640 --> 0:12:26.320 not matter what you do, you can do no right. 0:12:26.800 --> 0:12:30.560 In that kind of mindset, it does not surprise me 0:12:30.600 --> 0:12:33.840 that anti Semitism, anti Zionism has taken hold. And if 0:12:33.840 --> 0:12:38.200 you give historical context, go to the Holocaust, you have dehumanization, 0:12:38.760 --> 0:12:42.800 you have delegitimization, and then you ultimately have genocide. Now 0:12:42.840 --> 0:12:46.240 you apply that to anti Zionism, you have dehumanizing of 0:12:46.280 --> 0:12:50.199 Israelis and Jews. You have delegitimizing of Israelian Jews, and 0:12:50.240 --> 0:12:54.000 now with Hamas's attack, you have the beginnings of killings. 0:12:54.960 --> 0:12:56.960 It's not that hard to see where we are. 0:12:57.840 --> 0:13:00.640 The only thing that's hard is for the left recognize it. 0:13:01.280 --> 0:13:04.120 I have been surprised that people have been so surprised 0:13:04.960 --> 0:13:07.439 by where some of these campuses are at. And I 0:13:07.480 --> 0:13:09.880 think about the amount of tremendous philanthropy that have come 0:13:09.920 --> 0:13:13.280 from people like you, Saith over the years on these campuses, 0:13:13.880 --> 0:13:16.720 I do wonder why we allowed it to come to 0:13:16.800 --> 0:13:20.240 this mark, why it got this far when we've seen 0:13:20.240 --> 0:13:23.040 this been building for years and years and years through. 0:13:22.960 --> 0:13:23.640 A whole generation. 0:13:24.400 --> 0:13:26.400 The answer, I believe is a slow build. And it 0:13:26.480 --> 0:13:29.040 ultimately comes back to governance and leadership. If I speak 0:13:29.120 --> 0:13:32.280 just about University of Pennsylvania, the governance has actually divided 0:13:32.320 --> 0:13:36.160 between the faculty and the trustees. Except for the last 0:13:36.200 --> 0:13:38.640 twenty five years, only one of those two groups has 0:13:38.679 --> 0:13:41.440 been doing their job. And I put myself in the 0:13:41.480 --> 0:13:43.040 camp that did not do their job. I was a 0:13:43.080 --> 0:13:45.880 trustee for a long period of time. The trustees have 0:13:45.960 --> 0:13:47.800 a very important role to play in setting in the 0:13:47.800 --> 0:13:51.760 strategic direction of the university permissible and impermissible where we 0:13:51.800 --> 0:13:55.880 want to go, except it's not a governing body. Forty 0:13:55.920 --> 0:13:58.920 seven trustees really can't agree on anything. It's not set 0:13:59.000 --> 0:14:01.120 up to govern, and there's no histy of govern and 0:14:01.200 --> 0:14:05.839 so in the absence of any leadership, faculty or administration 0:14:06.200 --> 0:14:08.839 has taken these universities in direction that the. 0:14:08.840 --> 0:14:10.359 Alumni do not recognize. 0:14:10.400 --> 0:14:14.480 When you have a John Huntsman, Ronald lauder A Cliff Asnaes, 0:14:14.720 --> 0:14:17.760 and seven thousand other alumni who for their own reasons, 0:14:18.040 --> 0:14:21.920 their own political persuasions, their own belief system, all don't 0:14:21.960 --> 0:14:24.040 recognize the university that they loved. 0:14:24.520 --> 0:14:25.480 You have a problem. 0:14:25.920 --> 0:14:28.960 So first move is to stop donating. I guess we 0:14:29.000 --> 0:14:31.600 could disengage, walk away. You seem to be more constructive 0:14:31.600 --> 0:14:33.800 about the prospect of change. Shit you think there is 0:14:33.840 --> 0:14:34.720 a better path ahead. 0:14:35.360 --> 0:14:37.160 I think the worst thing that can happen to these 0:14:37.240 --> 0:14:42.440 universities is apathy. Right now, there's not apathy. Donors are engaged, 0:14:42.480 --> 0:14:45.640 they want change, they love the place. This goes on 0:14:45.760 --> 0:14:48.560 much longer, I think we will get to apathy. And 0:14:48.640 --> 0:14:51.040 once we get to apathy, I don't think the universities 0:14:51.080 --> 0:14:54.520 can recover from this. And unfortunately, all university presidents that 0:14:54.560 --> 0:14:57.320 I'm aware of, particularly at the University of Pennsylvania, they 0:14:57.320 --> 0:14:59.520 seek to wait this out. Maybe this will go away, 0:14:59.640 --> 0:15:01.840 I won't have to deal with this. That is actually 0:15:01.880 --> 0:15:04.880 a loss. They haven't internalized that that's a loss, but 0:15:04.960 --> 0:15:05.680 that is a loss. 0:15:05.880 --> 0:15:08.920 There's an understanding there's a woke adjustment going on right now. 0:15:08.920 --> 0:15:11.240 We see it in Hollywood, to collapse of many Disney 0:15:11.240 --> 0:15:14.240 movies and others that have certain messages that aren't selling 0:15:14.240 --> 0:15:17.200 to the public. The Ft has an article on your 0:15:17.240 --> 0:15:20.680 colleagues at Blackrock on ESG and how there's a woke 0:15:20.760 --> 0:15:23.240 adjustment in the ESG. How's this going to adjust the 0:15:23.280 --> 0:15:26.560 wokeness of these universities? How will it adjust? 0:15:27.000 --> 0:15:29.640 Look, this is a question ultimately a balance. This is 0:15:29.680 --> 0:15:31.760 not a question of a pendulum swing all the way back. 0:15:31.800 --> 0:15:35.000 But right now these universities are out of balance. And 0:15:35.120 --> 0:15:38.720 I believe that the trustees, the alumni, and by the way, 0:15:38.880 --> 0:15:41.880 many of the faculty. If we read Bill Ackman's letter yesterday, 0:15:41.920 --> 0:15:44.800 and the experience I'm having at the University of Pennsylvania 0:15:45.160 --> 0:15:48.240 is word for word the experience that Bill Ackman is 0:15:48.280 --> 0:15:52.760 having at Harvard. Professors don't want to be muzzled anymore. 0:15:53.160 --> 0:15:55.760 They feel that they can't speak out unless they are 0:15:55.880 --> 0:15:59.040 conforming to the narrative of the university, and the resentment 0:15:59.080 --> 0:16:02.240 is building. All we've done, all I've done, all Bill 0:16:02.280 --> 0:16:05.120 has done, is given people an opportunity to speak their 0:16:05.160 --> 0:16:07.800 minds and guess what they have a lot to say. 0:16:08.280 --> 0:16:11.120 Big election next year, let's finish on that. Is this 0:16:11.160 --> 0:16:13.840 going to change how you approach us politics? Who you 0:16:13.880 --> 0:16:15.680 would enduce for twenty twenty four? 0:16:17.280 --> 0:16:19.200 No, it's not going to change. 0:16:20.320 --> 0:16:21.440 Do you have a favorite candidate? 0:16:22.200 --> 0:16:25.120 No, it's hard to believe with three hundred and fifty 0:16:25.120 --> 0:16:26.960 million people in this country that we're down to two. 0:16:27.360 --> 0:16:29.520 You disappointed with these two personally? 0:16:29.560 --> 0:16:30.400 I'm disappointed. 0:16:30.840 --> 0:16:32.840 What is it about these two that you find so disappointing? 0:16:32.840 --> 0:16:37.320 Thing, Look, we are we have the single best hand 0:16:37.360 --> 0:16:39.720 of cards anywhere in the world. 0:16:39.800 --> 0:16:42.480 We have it all. We just play this hand poorly. 0:16:43.560 --> 0:16:44.280 What does that mean? 0:16:45.360 --> 0:16:47.200 Think about it? People want to come here. 0:16:48.120 --> 0:16:51.840 We have an incredible knowledge base, We have abundant energy, 0:16:52.240 --> 0:16:55.760 we're leaders in technology. We have a massive domestic market 0:16:55.920 --> 0:16:59.640 with the strongest military power. And yet we have challenges 0:17:00.080 --> 0:17:02.320 that we have not been able to as a result 0:17:02.440 --> 0:17:05.119 of lack of leadership, as a result of political consensus 0:17:05.160 --> 0:17:07.760 to address. We have a retirement crisis, we have a 0:17:07.840 --> 0:17:11.760 healthcare crisis, we have a budgetary crisis. We are inconsistent 0:17:11.800 --> 0:17:15.320 to our allies around the world. We have important decisions 0:17:15.320 --> 0:17:17.359 to make without weighing in as to what's going on 0:17:17.440 --> 0:17:19.919 in Ukraine and what's going on in the Middle East, 0:17:20.600 --> 0:17:23.080 all of which seems to be caught in a little 0:17:23.080 --> 0:17:23.840 bit of a morass. 0:17:24.359 --> 0:17:28.520 Is United Nations experience important for a presidential. 0:17:27.920 --> 0:17:30.560 Candidate United Nations know, Okay, it's. 0:17:30.440 --> 0:17:32.520 Trying to give them good That was delicate. This is delicate. 0:17:32.720 --> 0:17:34.359 That that was a sensitive sight. 0:17:34.440 --> 0:17:35.680 I thought, I responded, delicate. 0:17:37.280 --> 0:17:39.760 Thank you, thanks for having us. It's going to catch up. 0:17:39.800 --> 0:17:40.320 Total pleasure. 0:17:40.320 --> 0:17:43.360 Thank you very much. Mak Robin at the CEO of Apollo. 0:17:53.760 --> 0:17:56.040 Jim's out that joins us now the co president of 0:17:56.040 --> 0:17:58.840 Apollo Global Management, Jim Gimmonisia. 0:17:58.359 --> 0:17:59.919 Good morning and welcome to Apollo. 0:18:00.119 --> 0:18:01.560 Thank you for having us. Thank you for having us. 0:18:01.560 --> 0:18:03.040 I said, the coffee is good and the price is 0:18:03.040 --> 0:18:03.440 even better. 0:18:03.520 --> 0:18:05.200 Right, the coffee is good and the price is free 0:18:05.200 --> 0:18:05.720 and we like that. 0:18:06.240 --> 0:18:09.840 Yeah, to see it right to David Tip jerk believe money. 0:18:11.119 --> 0:18:13.840 Oh, this is called this is the you're making the 0:18:13.880 --> 0:18:15.639 show today from our Contrarian cafes. 0:18:15.760 --> 0:18:17.520 So we welcome you nice and you have a great 0:18:17.560 --> 0:18:18.320 line up this morning. 0:18:18.359 --> 0:18:20.600 So we're excited to have you here and tell you 0:18:20.640 --> 0:18:21.399 more about our story. 0:18:21.520 --> 0:18:23.680 That great lineup begins with you. I mentioned a little 0:18:23.680 --> 0:18:25.560 bit earlier. There is a call on the cycle that 0:18:25.600 --> 0:18:27.600 we can talk about. There's also a call on the industry. 0:18:27.720 --> 0:18:30.359 Let's start with the industry. That phrase I mentioned moments ago, 0:18:30.760 --> 0:18:34.160 D banking perfect place to start. What is D banking 0:18:34.359 --> 0:18:36.800 and what does it mean for you in the same well, 0:18:36.840 --> 0:18:37.720 you know, I. 0:18:37.680 --> 0:18:40.600 Don't use that term. I really use the evolution of finance. 0:18:41.040 --> 0:18:43.639 The reality is that we the last forty years, we 0:18:43.720 --> 0:18:48.119 had amazing tail wins with globalization and technology and lower rates. 0:18:48.840 --> 0:18:53.320 Banks became they were advisors for decades. In the nineties 0:18:53.320 --> 0:18:56.520 and the two thousands, they became large global institutions. Oh 0:18:56.560 --> 0:18:59.600 eight or nine happens, and there's a tremendous amount of 0:18:59.720 --> 0:19:03.239 Legg dot frank to change their business model. But at 0:19:03.240 --> 0:19:06.320 the same time rates were lower, and in the last 0:19:06.320 --> 0:19:08.719 fifteen years, CEOs, the CEOs you're going to have on 0:19:08.760 --> 0:19:12.040 today from Wells and from other places, they're focused on 0:19:12.280 --> 0:19:15.439 ROE and their shareholder return. And as they're focused on 0:19:15.680 --> 0:19:20.080 ROE and shareholder return, there's a massive gap where companies 0:19:20.160 --> 0:19:23.399 need to find capital, and firms like Apollo we've been 0:19:23.440 --> 0:19:25.800 at the front of the front of the parade in 0:19:25.880 --> 0:19:30.000 terms of providing capital across our business and when you 0:19:30.040 --> 0:19:34.200 put that together with our funding model of LP capital 0:19:34.240 --> 0:19:38.159 from around the globe plus our retirement services, we're just 0:19:38.200 --> 0:19:40.479