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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amerie Hordert. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business app. As traders look for

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Speaker 2: clarity on the path ahead for raid cards, the team

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Speaker 2: of Morgan Stanley writer the following. We maintain our call

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Speaker 2: for an additional twenty five basis point cut in December,

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Speaker 2: but the key question is what the data the FED

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Speaker 2: will actually have before December. A prolonged shutdown as a

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Speaker 2: risk to our view of more consecutive cuts. Mike Gape

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Speaker 2: of Matt Hornback of Morgan Stanley join us now for more.

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Speaker 2: Jent's going to see you both from here morning. Michael's

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Speaker 2: going to come to you first. The data we don't

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Speaker 2: have my right now, dis government shutdown, it makes it

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Speaker 2: less likely we get right cuts in December?

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Speaker 3: Is that right?

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Speaker 4: Well, I think we're just reflecting what Powell said that

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Speaker 4: if you're driving a car in the fog, should you

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Speaker 4: should slow down? So he was saying there is a

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Speaker 4: case to be made where if you don't have the data, maybe.

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Speaker 5: You can't act.

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Speaker 4: My view would be that if we're still in December

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Speaker 4: and the shutdowns in play and we don't have the data,

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Speaker 4: I'd be really surprised if the FED doesn't cut. I

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Speaker 4: think the drag from a government shutdown at that point

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Speaker 4: could mean growth is essentially zero in the quarter, and

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Speaker 4: I would be surprised if there weren't some spillovers in

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Speaker 4: the limited data that we see. So I think if

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Speaker 4: we don't have data, it's because the government shut down,

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Speaker 4: and I think that probably still justifies a cut.

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Speaker 1: Well, good to Matt in just one second.

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Speaker 6: But Michael, from the economic perspective, do you get the

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Speaker 6: sense of this is an economy that needs right cuts,

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Speaker 6: especially give the fact that the slow growth, slow higher

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Speaker 6: low fire kind of churn has been going on for

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Speaker 6: quite a while and may have a lot to do

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Speaker 6: with other factors outside of just a trajectory of US economy.

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Speaker 4: So We came into the year thinking, no, you probably

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Speaker 4: don't need to cut rates this year, that you would

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Speaker 4: want to ensure that any inflation rise from tariffs's transitory,

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Speaker 4: and then we thought the rate cuts would come in

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Speaker 4: twenty twenty six. So my view is, maybe we don't

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Speaker 4: need it. There's certainly a discrepancy between the data and attention,

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Speaker 4: between the activity and the labor market data, but I'm

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Speaker 4: not on the committee. I don't get to make the choice.

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Speaker 4: The view is the balance of risks shifted and policy

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Speaker 4: needs to be recalibrated.

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Speaker 5: So they've made that decision.

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Speaker 4: They want to move closer to neutral, and I'm just

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Speaker 4: thinking that the data will justify another step in that

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Speaker 4: direction in December, Matt, are you.

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Speaker 1: Already seeing that?

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Speaker 6: Is with respect to how the bond market is responding

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Speaker 6: to recent weakness and this idea that it seems as

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Speaker 6: though everyone's buying the transitory story again, they're just not saying.

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Speaker 1: The T word.

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Speaker 7: Well, it feels to me as if the market had

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Speaker 7: to adjust its pricing for the December meeting based on

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Speaker 7: what we got out of the.

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Speaker 5: Meeting last week.

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Speaker 7: But the market is also at the same time hesitant

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Speaker 7: of completely taking the December meeting off of the table,

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Speaker 7: because I think investors are starting to look at the

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Speaker 7: bigger picture. They're saying, hey, twenty twenty six might be

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Speaker 7: a better year, but we have to get through the

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Speaker 7: end of twenty twenty five first. And the government shutdown

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Speaker 7: is starting to slowly creep into the mindset of investors

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Speaker 7: and they're thinking, gosh, if the data do come in

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Speaker 7: on the weaker side going into the December meeting, then

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Speaker 7: the Fed should very well continue its gradual move back

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Speaker 7: to a neutral stance.

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Speaker 1: Day thirty six, longest in history.

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Speaker 8: The President is now talking to Senate Republicans saying they

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Speaker 8: should just blow up the filibuster in order to do this.

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Speaker 8: Is there a line in the sand where the government

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Speaker 8: shutdown would need to end for you to really think

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Speaker 8: that December's back on the table because all that data

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Speaker 8: will start flowing through again.

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Speaker 7: Well, I think to the point that Mike made, they're

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Speaker 7: going to get some data. Even if the government does

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Speaker 7: stay shut down for the next couple of weeks.

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Speaker 5: We might not get as.

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Speaker 7: Much official government data as we would like to get,

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Speaker 7: but we will still get a set of economic data

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Speaker 7: like the data that we got this morning. We'll get

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Speaker 7: another round there, and we're going to get of course

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Speaker 7: the state unemployment claims data as well, so they're going

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Speaker 7: to have something to work with, and so you know,

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Speaker 7: to us, it's ultimately it's going to be the totality

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Speaker 7: of whatever they have in hand.

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Speaker 3: That will lead them to decide what to do in December,

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Speaker 3: Mikae and week on the annex.

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Speaker 2: That's what we can go on, and we can talk

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Speaker 2: to corporate executives, and we've spoken to a fue already

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Speaker 2: this morning. One bank executive come on the program and

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Speaker 2: said things are okay, better than okay, there's no real

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Speaker 2: damage in our loan book, and we expect reacceleration into

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Speaker 2: the new year. This runs counter to the view that

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Speaker 2: you have on the labor market. Can you just flesh

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Speaker 2: out what you do expect to see in the labor

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Speaker 2: market the months to come.

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Speaker 4: Yeah, So there's certainly a tension in the data. The

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Speaker 4: activity data solid AI related spending, you know, off the charts,

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Speaker 4: upper income households doing well. You were emphasizing that in

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Speaker 4: the previous segment, but the labor market data looks different.

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Speaker 4: So our view is we're maybe a third of the

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Speaker 4: way through the process of firms passing tariffs onto the consumer,

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Speaker 4: so that's going to extend at least into the first.

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Speaker 5: Quarter of next year.

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Speaker 4: While that's happening, I think there'll be great reluctance higher.

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Speaker 4: We've seen that the low higher, low fire labor market.

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Speaker 4: The ADP report's very consistent with that. So while that's

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Speaker 4: going on, we think the unemployment rate creeps higher. And

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Speaker 4: we have the federal workers who took the early retirement

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Speaker 4: package who will be rolling off payrolls in October to

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Speaker 4: the tune of about one hundred and fifty thousand. So

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Speaker 4: we think the unemployment rate could finish this year around

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Speaker 4: four five, four six. And if that's you know, it's

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Speaker 4: not a meaningfully higher move. That's still a very low

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Speaker 4: unemployment rate. But the direction of that move I think

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Speaker 4: is enough for a FED chaer who says he now

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Speaker 4: a little more data dependent to say, let's take another step.

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Speaker 4: So modest deterioration, modest continued cooling is what we think

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Speaker 4: that message will be out of the labor market.

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Speaker 2: Give me for referencing your world, colleagues. I want to

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Speaker 2: talk about Bank for America just a little bit. I

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Speaker 2: want to talk about what Brian Moynahan's going to be

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Speaker 2: discussing later on this morning. He's talking about less labor

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Speaker 2: intensive revenue growth, and I wonder if we need to

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Speaker 2: focus on less labor intensive GDP growth, And I just

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Speaker 2: wonder what that means for the Federal Reserve. And I'm

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Speaker 2: going to get to what it means for the bond

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Speaker 2: market too, because I don't know if fixed incomes should

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Speaker 2: trade on the jobs numbers or GDP. What's it going

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Speaker 2: to mean for the Federal Reserve in the quarters to

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Speaker 2: count well?

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Speaker 5: It's this is also part of the fog story.

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Speaker 4: This rolling in is a difficult thing to understand and

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Speaker 4: manage in real time. I'm not sure in the short

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Speaker 4: run it changes there thinking all that much, it'll have

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Speaker 4: an implication on the labor market. If it's a supply side,

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Speaker 4: productivity driven story. It'll also be something that brings inflation

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Speaker 4: down right, so that it would reinforce that I'll use

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Speaker 4: the T word, the transitory inflation story. It would reinforce that.

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Speaker 4: I think it would give you more confidence that inflation

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Speaker 4: should be coming back down. And if anything, it would

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Speaker 4: leave this kind of load dynamic labor market in place.

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Speaker 4: I think both of those would say the Fed will

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Speaker 4: have a gradual easing bias.

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Speaker 2: If this has market consequences, of course, yes, if you

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Speaker 2: look at payros, there should be some kind of loose

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Speaker 2: relationship between what happens with jobs and what happens with earnings.

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Speaker 2: But this year, at least, we've managed to have a

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Speaker 2: massive step down in jobs growth and earnest growth has

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Speaker 2: been obsolutely fantastic. So equity lands can ignore what happens

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Speaker 2: with jobs? Can the bond market? What should the bond

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Speaker 2: markets right on jobs? So GDP, Well, the bond market

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Speaker 2: typically trades on the Fed. So if the Fed is

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Speaker 2: going to continue to lower its policy rate, then you

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Speaker 2: would expect the bond market to trade in kind. Now

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Speaker 2: we all know that the bond market is priced for

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Speaker 2: a very gradual easing of policy.

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Speaker 5: The issue, though, is if the Fed delivers.

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Speaker 7: On what the market forwards are telling you today about

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Speaker 7: the path of Fed policy. It's not as if the

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Speaker 7: market forwards are just going to sit there and shrug

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Speaker 7: their shoulders. They're going to move and that's the typical

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Speaker 7: behavior in the bond market. When the Fed follows the forwards,

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Speaker 7: the forwards don't sit there. They keep moving in that

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Speaker 7: same direction. So from our vantage point, if the FED

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Speaker 7: delivers an easing cycle in line with what Mike believes

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Speaker 7: and in line with close to what the market forwards

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Speaker 7: are pricing, the forwards are going to keep moving and

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Speaker 7: that's going to continue to weigh on bond yields. Already,

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Speaker 7: we have a your yield right around four percent. We're

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Speaker 7: the only house on the street that I thought that

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Speaker 7: would happen this year. So as the FED continues to deliver,

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Speaker 7: we do think that bond yields will continue to fall.

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Speaker 6: At what point are you starting to get more concerned

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Speaker 6: about longer term inflation and a longer term pushback.

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Speaker 1: In US treasuries? I'm looking right now.

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Speaker 6: Mike pointed out Michael McKee parsing through the auctionary funding announcement,

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Speaker 6: pointing out that they do plan to increase their T

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Speaker 6: bills and their low duration instruments, and there's this feeling

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Speaker 6: that the Fed's going to monetize, that the Fed's going

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Speaker 6: to increasingly buy that debt, call it whatever you will,

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Speaker 6: in order to keep rates low while also pegging rates

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Speaker 6: to a fairly low level. At what point does that

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Speaker 6: pose a risk to longer term treasuries and the potential

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Speaker 6: for this to backfire in terms of some investor appetite.

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Speaker 5: Yeah, I think.

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Speaker 7: I think you're talking about the bond vigilantes that show

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Speaker 7: up every now and again and typically lose money at

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Speaker 7: the end of the day. You know, from my vantage point,

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Speaker 7: you know, we're going to have to see in the data. Okay,

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Speaker 7: if the FED is lowering interest rates and inflation is

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Speaker 7: moving higher, that would be the type of environment that

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Speaker 7: I think would get bond investors very, very nervous. We're

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Speaker 7: not really seeing that, right, We're seeing a committee that

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Speaker 7: is divided on what to do in this inflationary environment.

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Speaker 7: But if the inflationary environment turns out as we're forecasting,

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Speaker 7: people should be very relaxed about owning high quality duration

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Speaker 7: and the bond market. And by the way, just on

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Speaker 7: the Treasury refunding that happened this morning, that's very much

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Speaker 7: in line with our projections, not just for this refunding,

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Speaker 7: but for the next several refundings. We don't believe that

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Speaker 7: the US Treasury is going to increase their coupon issuance

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Speaker 7: until February of twenty twenty seven.

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Speaker 5: I mean, for all.

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Speaker 7: Intents and purposes, that's a lifetime away. And a lot

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Speaker 7: of things will happen between now and then, so we

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Speaker 7: don't really see an issuance problem for the investor base

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Speaker 7: and for the bond market.

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Speaker 6: Mike, I'm just wondering what's the fuzz mandate right now,

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Speaker 6: because if the man date is low unemployment, then right

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Speaker 6: now you could make an argument that maybe it is

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Speaker 6: a positive thing for them to ease, but if it's

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Speaker 6: for financial stability and the idea of inflation acid price

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Speaker 6: inflation will at some point trickle into the real economy,

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Speaker 6: especially in AI and energy costs and some of these

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Speaker 6: other kinds of issues. How do you square whether they're

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Speaker 6: potentially adding fuel to the fire.

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Speaker 4: Well, and they're risking that right They are taking out

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Speaker 4: insurance right now against what they see is downside risk

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Speaker 4: to employment, and insurance comes at a cost, and that

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Speaker 4: cost is what you just mentioned, the risk of higher

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Speaker 4: inflation over time, that you're a more inflation tolerant fed

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Speaker 4: or you fuel animal spirits and asset markets. But Powell

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Speaker 4: has said many times we do not have good choices

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Speaker 4: right now. So they think risks are higher to the

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Speaker 4: unemployment rate, to the upside of inflation, and there are

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Speaker 4: concerns about animal spirits and financial markets. So they're taking

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Speaker 4: out in insurance against the labor market. They're betting that

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Speaker 4: the cost of that won't materialize. But that's what markets

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Speaker 4: and investors are concerned about.

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Speaker 2: Mat can we finish on the FX market? But it's

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Speaker 2: not a strength come back in the last five days.

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Speaker 2: How does your medium term view snack out with your

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Speaker 2: shield term view on the US dollar?

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Speaker 7: Indeed, Yeah, so we came into this year very barished

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Speaker 7: on the dollar. We held that view until last week.

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Speaker 7: So given what we're seeing from the Committee at this

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Speaker 7: moment in time, in the absence of a full set

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Speaker 7: of economic data, we decided to peel back on that

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Speaker 7: view temporarily. It's a tactical adjustment in what we think

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Speaker 7: will be a trend that extends into twenty twenty six.

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Speaker 1: It doesn't have.

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Speaker 5: To play out that way.

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Speaker 7: One of the things that we're debating as a house

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Speaker 7: today alongside my colleagues in economics is what does twenty

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Speaker 7: twenty six and twenty twenty seven look like That can

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Speaker 7: be a game changer for the US dollar. We're still

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Speaker 7: debating that. But in the meantime, if the FED continues

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Speaker 7: to cut rates, the dollar should have a little bit

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Speaker 7: more room to move left or before possibly swinging higher

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Speaker 7: in the second half of next year.

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Speaker 2: Stay with us more Bloomberg Surveillance coming up after this

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Speaker 2: Democratic Socialist so rum Mumdowney winning the New York City

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Speaker 2: mayoral race with fifty point four percent of the vote.

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Speaker 2: Catherine Wild, CEO of the Partnership for New York City,

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Speaker 2: writing the following. Ultimately, the impact of the election on

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Speaker 2: business will depend on the extent to which Mumcdowney appoints

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Speaker 2: competent deputies and commissioners to run city agencies.

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Speaker 3: Catherine joins us now for more. Catherine Gimmrnic Good.

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Speaker 2: Morning, Thank you for being here with us in New

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Speaker 2: York City. Let's talk about some of this. What did

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Speaker 2: New York just vote for?

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Speaker 9: Well, I think number one, we have to look at

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Speaker 9: the fact that more voters came out to vote for

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Speaker 9: mayor than we've seen in the fifty six years since

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Speaker 9: nineteen sixty nine, which was my first election in New

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Speaker 9: York when John Lindsay was elected on the Liberal line. Actually,

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Speaker 9: so this was a big turnout, and I think it

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Speaker 9: reflects the frustration of the New York City voters with

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Speaker 9: a couple of things. Number one the high cost of

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Speaker 9: living and doing business in New York City, and which

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Speaker 9: Zoram Mamdanni.

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Speaker 1: Spoke very effectively to and it.

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Speaker 9: Reflects a frustration with a series of politicians who have

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Speaker 9: disappointed New Yorkers.

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Speaker 8: Those high marks in terms of the how many people

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Speaker 8: came out to vote was fueled by support of mam

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Speaker 8: Donni but also those that were against him. There's a

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Speaker 8: lot in the business community, have a lot of concerns.

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Speaker 8: Has he assuaged those concerns yet?

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Speaker 9: I cannot say that he has asswaged those concerns completely.

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Speaker 9: After the primary election, when everybody was shocked that he

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Speaker 9: beat Andrew Cuomo by thirteen points in that primary in June,

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Speaker 9: he reached out, actually called me right away and said,

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Speaker 9: tell me which business leaders I should meet with to

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Speaker 9: learn from them and to show them that I'm not

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Speaker 9: going to socialize their business.

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Speaker 1: What did you advise he meet with.

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Speaker 9: I gave him a number of I gave him a

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Speaker 9: long list of people. I mean, our co chairs of

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Speaker 9: the partnership, Rob Spire and Albert Burla and Jamie Dimond,

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Speaker 9: obviously Larry Fink. Leaders from across come from across the

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Speaker 9: industry as well as the small business representatives, the borough

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Speaker 9: Chambers of Commerce, the Restaurant Hospitality Association, so a mix.

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Speaker 8: We have a lot of reporting that what business leaders

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Speaker 8: wanted to see was to him to tap Jessica Tish

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Speaker 8: to continue to lead the NYPD be the commissioner.

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Speaker 1: There is it your understanding that she's going to stay.

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Speaker 9: Well, I think she's going to stay, and I will

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Speaker 9: say that that was the number one priority. It was

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Speaker 9: an important signal both to the business community about the

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Speaker 9: public safety. As employers, they want the city to be safe,

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Speaker 9: and jesse has done a great job. They just announced

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Speaker 9: this week that crime is down again this month another

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Speaker 9: six and a half percent on her watch, so that

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Speaker 9: was a big app And the fact that her family

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Speaker 9: is iconic in the city's Jewish community. I think it

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Speaker 9: was also another important piece of that. Mom Donnie did

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Speaker 9: say that he would retain her. I know they have spoken,

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Speaker 9: and she was not going during the campaign. She was

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Speaker 9: not going to make it commitment one or the other

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Speaker 9: because she doesn't think it's professional in her job as

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Speaker 9: police commissioner to participate in campaigns. But I'm hopeful and

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Speaker 9: optimistic that she will stay. She loves her job, she

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Speaker 9: says her mission is not finished. So I'm very hopeful.

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Speaker 6: You've been in the city a long time tracked its

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Speaker 6: politics have been in exus between business and the political sphere,

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Speaker 6: and I'm just wondering if you've seen real evidence of

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Speaker 6: people leaving the city in fear of higher taxes or

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Speaker 6: some sort of regime that makes it less desirable for them.

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Speaker 1: Well, people are.

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Speaker 9: Leaving the city because of high costs in general, and

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Speaker 9: taxes are part of that. And for those who think

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Speaker 9: and a big concern about our incoming mayor is that

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Speaker 9: he may think that somehow spending more government money is

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Speaker 9: going to make the city more affordable, when in fact

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Speaker 9: it's exactly the opposite. City and state budget spending has

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Speaker 9: gone up over fifty percent in the past decade, and

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Speaker 9: that's driving.

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Speaker 1: Our affordability crisis.

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Speaker 9: So hopefully we will be successful in finding other ways

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Speaker 9: to fund some of the new mayor's priorities.

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Speaker 6: Is there any evidence that that's on his docket because

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Speaker 6: he talked about raising taxes on the wealthiest individual as

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Speaker 6: he talked about paying for it that way. Is there

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Speaker 6: any sense that there is some sort of awareness of

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Speaker 6: the debt and sort of the debt cycle that cities

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Speaker 6: can get into that can make things less affordable.

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Speaker 9: Well, New York City has a legal debt limit, and

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Speaker 9: we also, since the financial crisis of the nineteen seventies,

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Speaker 9: if the mayor gets too aggressive about his spending, a

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Speaker 9: financial control board comes into place and the state takes

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Speaker 9: over the city finances, so we don't have to worry

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Speaker 9: about New York City going bankrupt again.

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Speaker 1: So that's a check on that.

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Speaker 9: In the conversations with him about the danger of raising

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Speaker 9: taxes in terms of New York's competitiveness, I mean, right now,

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Speaker 9: those of US professionals in New York are paying fifty

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Speaker 9: five percent of their income in taxes to federal, state,

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Speaker 9: and city government. You move to Florida or Texas, you're

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Speaker 9: paying thirty eight percent. So that's a pretty big number

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Speaker 9: that we have to take into consideration. So I think

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Speaker 9: that he's going to become more practical as he sees

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Speaker 9: the implications.

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Speaker 1: He has said, I have my goals.

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Speaker 3: I want to achieve them.

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Speaker 9: But I'm wide open on how to do that, And

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Speaker 9: that's an opening, I think for business expertise to help

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Speaker 9: him figure this out well.

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Speaker 1: To achieve them.

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Speaker 8: He says he's going to raise taxes, but governor, Hokles says,

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Speaker 8: I can't lose any more people to Palm Beach to

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Speaker 8: your point, looking at the tax differentials, So can he

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Speaker 8: even attempt to raise taxes without the governor on board.

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Speaker 9: He cannot raise corporate or personal income taxes without well,

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Speaker 9: that's not a city prorogative, that is a state prerogative.

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Speaker 9: He can raise real estate taxes, but he has said

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Speaker 9: as he's thought about the implications of freezing the rent,

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Speaker 9: he has said he will actually do property tax reform

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Speaker 9: and try and reduce taxes on rent regulated commercial buildings,

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Speaker 9: multi family buildings. So I am I think that as

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Speaker 9: we see who his appointments are and how he takes

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Speaker 9: input on his appointments. Last night, I was very pleased

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Speaker 9: that the tax word was not mentioned in his acceptance

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Speaker 9: speech as mayor, so that was a good sign. And

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Speaker 9: he also started out how he's going to achieve his

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Speaker 9: goals is we're going to reduce the cost of government

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Speaker 9: and reduce bureaucracy. So he's sounding more and more like

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Speaker 9: Mike Bloomberg.

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Speaker 2: Stay with us multiple IMPEG. Savannah's coming up after this.

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Speaker 2: The US Supreme Court hearing garguments today challenging the galaxy

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Speaker 2: of some of President Donald Trump's tariffs. If overturned, the

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Speaker 2: government may face refunding billions of dollars in a blow

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Speaker 2: to the nation's finances. Lisa, This in many ways is

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Speaker 2: about the bond market more than anything else.

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Speaker 6: If you don't get the four hundred billion dollars of

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Speaker 6: annual revenues that we seem to be on track for

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Speaker 6: from the tariffs, what does that mean for the deficit picture.

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Speaker 6: For some of the bond vigilantes that have gone into

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Speaker 6: hiding and are covering their heads, there is this feeling

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Speaker 6: that they might reassert themselves and push back against some

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Speaker 6: of the recent price action. Again, it's not going to

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Speaker 6: be until at the end of this year that we

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Speaker 6: get a ruling, maybe the beginning of next year, and

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Speaker 6: by then we might have a sense of what the

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Speaker 6: cocktail of additional tariff measures might be to replace this income.

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Speaker 1: This is going to be tough for the Supreme Court.

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Speaker 8: They're going to look at the US Court of International

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Speaker 8: Trade and they said, the US Constitution makes it clear

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Speaker 8: that this authority.

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Speaker 1: Of commerce is up to Congress.

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Speaker 8: And they go on to say, it's not that we

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Speaker 8: are not passing judgment on the wisdom or likely effectiveness

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Speaker 8: of the President's policy, but just that it's not constitutional,

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Speaker 8: which is why the administration is trying to make out

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Speaker 8: that these are three big emergencies when it comes to fentanyl,

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Speaker 8: the trade deficit, and having that ability to say have

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Speaker 8: a thread against China when it comes to our Earth's

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Speaker 8: that they need this authority to be within the executive brand.

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Speaker 2: On the president's list of priorities this week, including what's

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Speaker 2: happened in Virginia, New Jersey and here in New York

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Speaker 2: City was this number one's hearing of the Supreme Court.

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Speaker 8: He's called it life or death for the US economy,

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Speaker 8: and he said in that CBS sixty minutes interview that

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Speaker 8: the economy will go to hell his words, if AIPA

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Speaker 8: does not withstand the Supreme Court.

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Speaker 1: So for him this is paramount.

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Speaker 8: But you talk to people in the administration, there are

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Speaker 8: other ways they can act tariff palsy. It's just not

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Speaker 8: going to be as clean. It's not going to be

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Speaker 8: as a blunt of an instrument. But they could still

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Speaker 8: use other orders like they are using right now. They're

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Speaker 8: using two thirty twos, there are.

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Speaker 1: Three or ones.

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Speaker 8: There are other instruments they can use, but it's not

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Speaker 8: as easy.

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Speaker 3: Let's stay on the story.

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Speaker 2: Regardless of the Supreme Court ruling, the former commis department

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Speaker 2: official and azec NICACTA expecting Trump's tariffs to live on

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Speaker 2: writing the administration has several other souls that they can

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Speaker 2: implement to execute that trite agenda. And I was like,

442
00:21:02,160 --> 00:21:04,400
Speaker 2: joins us now for more, welcome to the program. Let's

443
00:21:04,440 --> 00:21:07,199
Speaker 2: just talk about that. What is it actually at state today?

444
00:21:07,280 --> 00:21:08,840
Speaker 2: If the President could just make how the moves out

445
00:21:08,840 --> 00:21:11,720
Speaker 2: swheat to achieve the same means, well, I.

446
00:21:11,720 --> 00:21:13,320
Speaker 1: Think the g and it's good to be with you.

447
00:21:13,359 --> 00:21:17,600
Speaker 10: The big question is this international Emergency Economics powers out

448
00:21:17,600 --> 00:21:20,280
Speaker 10: of nineteen ninety seven, that nineteen seventy seven that allows

449
00:21:20,280 --> 00:21:25,200
Speaker 10: the president to regulate imports during peacetime and take measures

450
00:21:25,200 --> 00:21:29,280
Speaker 10: to address unusual and extraordinary threats. The core question is

451
00:21:29,400 --> 00:21:33,360
Speaker 10: really the limitations of the president's power. Does the president

452
00:21:33,440 --> 00:21:37,000
Speaker 10: have vast sweeping authority to impose tariffs in a way

453
00:21:37,160 --> 00:21:42,119
Speaker 10: regulate financial aspects of the United States, or is it

454
00:21:42,320 --> 00:21:45,760
Speaker 10: Congress that holds the cards there and can only delegate

455
00:21:46,119 --> 00:21:50,280
Speaker 10: financial revenue raising authority to the president when it expressly

456
00:21:51,320 --> 00:21:54,680
Speaker 10: says so. Those are the Coole main questions. The Supreme

457
00:21:54,760 --> 00:21:57,720
Speaker 10: Court has never heard an aep A case before, It's

458
00:21:57,800 --> 00:22:01,600
Speaker 10: never interpreted the language. So the main question is does

459
00:22:01,640 --> 00:22:06,000
Speaker 10: this law give the president sweeping authority to regulate imports

460
00:22:06,200 --> 00:22:09,800
Speaker 10: through taxes which we through tariffs which are deemed to

461
00:22:09,800 --> 00:22:14,720
Speaker 10: be taxes by the judges, or is a president's authority

462
00:22:14,960 --> 00:22:16,600
Speaker 10: much more restrained.

463
00:22:16,520 --> 00:22:17,159
Speaker 1: Going into this?

464
00:22:17,200 --> 00:22:19,240
Speaker 8: What is your base case for how the Supreme Court

465
00:22:19,240 --> 00:22:19,680
Speaker 8: will rule?

466
00:22:21,520 --> 00:22:24,640
Speaker 10: You know, it's really difficult to say. This is a very,

467
00:22:24,760 --> 00:22:28,880
Speaker 10: very difficult question. You've got the major questions doctrine which

468
00:22:28,960 --> 00:22:32,520
Speaker 10: is going to be at heart of this issue which

469
00:22:32,560 --> 00:22:37,360
Speaker 10: the Supreme Court has to decide. Look constitutional interpretation. If

470
00:22:37,400 --> 00:22:41,520
Speaker 10: Congress intended to give the president vast political authority over

471
00:22:41,600 --> 00:22:45,679
Speaker 10: political and economic questions, does it need to expressly states? So,

472
00:22:46,119 --> 00:22:49,560
Speaker 10: think about the impact of all the other statutes. How

473
00:22:49,680 --> 00:22:51,920
Speaker 10: much can the executive branch read into this?

474
00:22:52,119 --> 00:22:53,480
Speaker 1: Right and right now, we.

475
00:22:53,520 --> 00:22:58,160
Speaker 10: Have three pillars of the US government that are at

476
00:22:58,160 --> 00:23:01,000
Speaker 10: odds with one another. The President has moved in a

477
00:23:01,280 --> 00:23:05,480
Speaker 10: very unusual way to read the statute very broadly. Congress

478
00:23:05,520 --> 00:23:09,000
Speaker 10: and large part has remained silent, even though with respect

479
00:23:09,040 --> 00:23:12,080
Speaker 10: to the care offs in Brazil, Congress has spoken up

480
00:23:12,320 --> 00:23:15,600
Speaker 10: and has used its lawmaking powers to restrain the president's

481
00:23:15,640 --> 00:23:18,960
Speaker 10: authority there, and now you've got the judicial branch who

482
00:23:19,040 --> 00:23:22,480
Speaker 10: has to make sense of it all. And again, implications

483
00:23:22,520 --> 00:23:25,480
Speaker 10: are going to be significant with this much revenue at stake.

484
00:23:25,720 --> 00:23:28,879
Speaker 8: The administration has talked about why they're using AIPA emergency

485
00:23:28,920 --> 00:23:31,439
Speaker 8: responses to the trade deficit, to what's going on in

486
00:23:31,520 --> 00:23:35,280
Speaker 8: terms of China trying to enact export controls on rare earths,

487
00:23:35,280 --> 00:23:38,080
Speaker 8: and then on fentanyl. Do you think one out of

488
00:23:38,119 --> 00:23:40,240
Speaker 8: any of those others have more of a case in

489
00:23:40,280 --> 00:23:44,000
Speaker 8: terms of an emergency authority needed to combat those issues.

490
00:23:44,680 --> 00:23:47,600
Speaker 10: Yeah, that's a great question. And this really goes back

491
00:23:47,640 --> 00:23:51,240
Speaker 10: to the sort of the history of AEPA. AIPA has

492
00:23:51,320 --> 00:23:55,200
Speaker 10: traditionally been used over the decades is really sanctions authority, right,

493
00:23:56,080 --> 00:24:00,919
Speaker 10: maximum economic pressure campaign on countries to do not do things.

494
00:24:01,119 --> 00:24:04,320
Speaker 10: So it really depends on how the US government argues it.

495
00:24:04,560 --> 00:24:07,399
Speaker 10: The tariffs on India, these AIPA tariffs on India is

496
00:24:07,440 --> 00:24:11,639
Speaker 10: a maximum pressure campaign because they're buying Russian Russian energy.

497
00:24:11,840 --> 00:24:13,280
Speaker 1: We have sanctions on Russia.

498
00:24:13,600 --> 00:24:18,080
Speaker 10: The IEPA tariffs used against India feel like sanctions.

499
00:24:18,400 --> 00:24:20,000
Speaker 1: They might for the fentanel.

500
00:24:19,600 --> 00:24:25,679
Speaker 10: Crisis also feel like a maximum pressure sanctions type legal authority.

501
00:24:25,920 --> 00:24:28,920
Speaker 10: But if the President just doesn't like a trade deficit

502
00:24:29,520 --> 00:24:32,360
Speaker 10: with a country, can he use AIPA? I think that

503
00:24:32,440 --> 00:24:35,080
Speaker 10: the courts may very likely say there's different.

504
00:24:35,000 --> 00:24:36,120
Speaker 1: Legal authority for that.

505
00:24:36,440 --> 00:24:40,760
Speaker 10: If Congress gaves the president distinct legal authority to address

506
00:24:40,800 --> 00:24:44,359
Speaker 10: a specific fact pattern, that can he use other legal

507
00:24:44,400 --> 00:24:47,120
Speaker 10: authorities that are a little bit vague to address that

508
00:24:47,200 --> 00:24:48,240
Speaker 10: same fact pattern?

509
00:24:48,640 --> 00:24:49,040
Speaker 1: And Azak.

510
00:24:49,119 --> 00:24:51,920
Speaker 6: From a markets perspective, it's important to ask how much

511
00:24:51,960 --> 00:24:55,360
Speaker 6: has actually changed since preliberation day. You're looking at an

512
00:24:55,400 --> 00:24:57,840
Speaker 6: overall terrorfrate that's gone from twelve and a half or

513
00:24:57,840 --> 00:24:59,560
Speaker 6: from two and a half percent to about twelve and

514
00:24:59,600 --> 00:25:03,119
Speaker 6: a half versus the headline figure that something closer to

515
00:25:03,160 --> 00:25:05,560
Speaker 6: twenty percent, and a lot of some of the measures

516
00:25:05,640 --> 00:25:08,119
Speaker 6: with respect to China in particular have been walked back.

517
00:25:08,480 --> 00:25:11,159
Speaker 6: How much have the walls truly been put up in

518
00:25:11,200 --> 00:25:15,560
Speaker 6: a way that do indicate some sort of separation of

519
00:25:15,560 --> 00:25:17,000
Speaker 6: the world's two biggest economies.

520
00:25:17,960 --> 00:25:21,240
Speaker 10: This is the economic impact, at least first to the

521
00:25:21,359 --> 00:25:25,600
Speaker 10: United States, right. I think partially what the president is

522
00:25:25,640 --> 00:25:29,040
Speaker 10: thinking he's doing is really balancing fair trade, but then

523
00:25:29,080 --> 00:25:32,119
Speaker 10: getting trade deals to bring countries closer into the United

524
00:25:32,160 --> 00:25:36,080
Speaker 10: States orbits right, And maybe this relationship with China is

525
00:25:36,119 --> 00:25:37,919
Speaker 10: still up in the air. But I really want to

526
00:25:37,960 --> 00:25:41,320
Speaker 10: underscore the massive economic impact. We have ninety about ninety

527
00:25:41,359 --> 00:25:45,760
Speaker 10: billion dollars collected in the AIPA tariffs alone. Think about

528
00:25:45,760 --> 00:25:48,800
Speaker 10: the economic impact of either way that the court rules.

529
00:25:49,040 --> 00:25:53,120
Speaker 10: If the court invalidates AIPA, you've got importers, US importers

530
00:25:53,119 --> 00:25:54,800
Speaker 10: in large parts who are paying the tariffs, but they

531
00:25:54,840 --> 00:25:59,080
Speaker 10: pass through those tariffs in some significant respects to their customers.

532
00:25:59,320 --> 00:26:02,320
Speaker 10: So if the court invalidates i EBA, you've got the

533
00:26:02,359 --> 00:26:06,159
Speaker 10: importers getting this massive sudden windfall of money, but then

534
00:26:06,240 --> 00:26:09,639
Speaker 10: their customers aren't getting anything. We'll present one major shock

535
00:26:09,680 --> 00:26:14,760
Speaker 10: to the economy, and it's the course uphold IEBA.

536
00:26:13,560 --> 00:26:15,480
Speaker 1: Then then these.

537
00:26:15,320 --> 00:26:17,359
Speaker 10: Importers are not going to get the money that they

538
00:26:17,359 --> 00:26:21,240
Speaker 10: were expecting. Yet another major shock to the economy. And

539
00:26:21,320 --> 00:26:24,360
Speaker 10: going back, if the court does invalidate AEBA, and now

540
00:26:24,400 --> 00:26:28,040
Speaker 10: you've got importers in line to not only recover the

541
00:26:28,119 --> 00:26:31,800
Speaker 10: teriffs that they've paid plus interest, because that's how this works.

542
00:26:31,880 --> 00:26:35,240
Speaker 10: If you actually paid tariffs that the course have invalidated.

543
00:26:35,359 --> 00:26:37,880
Speaker 10: You're not only entitled to get the tariff revenue back,

544
00:26:38,359 --> 00:26:40,679
Speaker 10: you have to get the tariff revenue back plus interest.

545
00:26:40,960 --> 00:26:44,240
Speaker 10: Think about the sudden shock to the economy depending on

546
00:26:44,560 --> 00:26:46,879
Speaker 10: either way, based on how the Supreme Court rules.

547
00:26:47,080 --> 00:26:48,240
Speaker 1: What are you advising clients?

548
00:26:48,280 --> 00:26:50,359
Speaker 6: Are they lining up and figuring out how exactly to

549
00:26:50,400 --> 00:26:52,000
Speaker 6: request their money back from the government.

550
00:26:53,480 --> 00:26:53,960
Speaker 1: Yes, and no.

551
00:26:54,520 --> 00:26:56,560
Speaker 10: There's a lot of importers who are thinking about you,

552
00:26:56,720 --> 00:26:59,479
Speaker 10: watching this very closely and figuring out how they're going

553
00:26:59,560 --> 00:27:01,960
Speaker 10: to line up up and what the process is because

554
00:27:02,000 --> 00:27:05,199
Speaker 10: you can't have a stampede all at once for all

555
00:27:05,240 --> 00:27:07,840
Speaker 10: these importers, right, ninety billion dollars trying to get the

556
00:27:07,880 --> 00:27:09,600
Speaker 10: money back at the same time. So the courts are

557
00:27:09,600 --> 00:27:11,880
Speaker 10: going to look for a process. We're looking very much

558
00:27:11,880 --> 00:27:14,000
Speaker 10: into what kind of process is going to be set

559
00:27:14,080 --> 00:27:16,160
Speaker 10: up for importers to get their revenue.

560
00:27:16,400 --> 00:27:17,320
Speaker 1: But also we.

561
00:27:17,240 --> 00:27:20,400
Speaker 10: Represent a lot of the businesses in the United States

562
00:27:20,480 --> 00:27:23,080
Speaker 10: who've already paid those tariffs, and even if the importers

563
00:27:23,119 --> 00:27:27,040
Speaker 10: of record get that revenue back, a lot of our clients,

564
00:27:27,080 --> 00:27:28,800
Speaker 10: a lot of the businesses aren't going to get that

565
00:27:28,880 --> 00:27:31,080
Speaker 10: revenue back because of those go to the importers and

566
00:27:31,119 --> 00:27:33,360
Speaker 10: then that's a private transaction issue.

567
00:27:33,480 --> 00:27:33,960
Speaker 1: Whether the.

568
00:27:35,760 --> 00:27:38,400
Speaker 10: Businesses are going to demand from their importers to get

569
00:27:38,400 --> 00:27:41,520
Speaker 10: some of that back very unlikely because then that becomes

570
00:27:41,560 --> 00:27:46,720
Speaker 10: an accounting issue. But there's going to be a stampede,

571
00:27:46,760 --> 00:27:50,439
Speaker 10: and hopefully the government figures out an orderly process only

572
00:27:50,480 --> 00:27:53,240
Speaker 10: if the Supreme Court invalidates the terror. But look, the

573
00:27:53,280 --> 00:27:56,199
Speaker 10: Supreme Court, is this the textual issue? Is this a

574
00:27:56,240 --> 00:27:59,320
Speaker 10: constitutional issue? Is it a foreign policy issue? All of

575
00:27:59,320 --> 00:28:02,000
Speaker 10: this is going to the way how the Supreme Court

576
00:28:02,040 --> 00:28:02,399
Speaker 10: looks at this?

577
00:28:03,280 --> 00:28:03,920
Speaker 3: Stay with us.

578
00:28:04,240 --> 00:28:16,639
Speaker 2: More Bloomberg surveillance coming up after this. The Pollo Global

579
00:28:16,640 --> 00:28:19,920
Speaker 2: Management just posted third quarter runings that surpassed Wall Street estimates,

580
00:28:20,040 --> 00:28:23,320
Speaker 2: as the firm edges closer to reaching one trillion dollars

581
00:28:23,320 --> 00:28:26,199
Speaker 2: of assets. The Apollo president, Jim's out joined us now

582
00:28:26,240 --> 00:28:27,600
Speaker 2: for more. Jim good Mornic, Good morning.

583
00:28:27,600 --> 00:28:28,280
Speaker 5: I was good to be here.

584
00:28:28,320 --> 00:28:30,399
Speaker 2: Congratulations. We choked when you walked in. What happens when

585
00:28:30,440 --> 00:28:33,360
Speaker 2: you hear a trillion? Does Mark run around popping champagne?

586
00:28:33,359 --> 00:28:34,080
Speaker 3: How does this work?

587
00:28:34,560 --> 00:28:34,800
Speaker 5: Well?

588
00:28:34,880 --> 00:28:38,280
Speaker 11: Listen, as we said yesterday, we've said before, assets under

589
00:28:38,320 --> 00:28:40,640
Speaker 11: management are just a great vote of confidence for great

590
00:28:40,640 --> 00:28:44,360
Speaker 11: performance and if you deliver for investors. Over time, we

591
00:28:44,400 --> 00:28:48,360
Speaker 11: find ourselves that the flywheel of our business is really

592
00:28:48,440 --> 00:28:52,400
Speaker 11: in place, whether it was capital formation, whether it was origination.

593
00:28:53,720 --> 00:28:56,120
Speaker 11: You know, we just find that our business model is

594
00:28:56,160 --> 00:28:59,640
Speaker 11: really hitting the mark right now and accelerating, and we're

595
00:28:59,760 --> 00:29:02,240
Speaker 11: very happy with the quarter, but feel very good about

596
00:29:02,240 --> 00:29:03,280
Speaker 11: the trajectory of the business.

597
00:29:03,280 --> 00:29:05,240
Speaker 2: In runt of us, there's a phrase that you entertain used,

598
00:29:05,240 --> 00:29:06,960
Speaker 2: we are what we originate. Can we talk about that

599
00:29:06,960 --> 00:29:10,120
Speaker 2: a little bit more sure? Your capacity to scale? Can

600
00:29:10,160 --> 00:29:12,480
Speaker 2: you just flesh them out? How things attracting at the moment.

601
00:29:13,640 --> 00:29:15,120
Speaker 5: Well, they're tracking very well.

602
00:29:15,120 --> 00:29:17,240
Speaker 11: But I think you know, if you go back to

603
00:29:17,280 --> 00:29:19,320
Speaker 11: our investor to day six years ago, in a year ago,

604
00:29:19,520 --> 00:29:23,600
Speaker 11: we really put a pin in the key attribute of

605
00:29:23,640 --> 00:29:27,760
Speaker 11: success in our business. As we see the financing markets evolve,

606
00:29:27,840 --> 00:29:30,680
Speaker 11: when we see the evolution of banking system, when they

607
00:29:30,720 --> 00:29:34,520
Speaker 11: see the evolution of private capital. You know, many in

608
00:29:34,560 --> 00:29:36,400
Speaker 11: our industry and we're guilty of it quite a bit.

609
00:29:36,400 --> 00:29:38,400
Speaker 11: In fact, your first question, we're guilty of it. It's

610
00:29:38,440 --> 00:29:41,200
Speaker 11: all about AUM. It's not about AUM. It's about your

611
00:29:41,240 --> 00:29:47,440
Speaker 11: ability to really generate very strong, proprietary, scalable origination across

612
00:29:47,440 --> 00:29:51,000
Speaker 11: the spectrum. Whether it's investment grade, private credit or private

613
00:29:51,040 --> 00:29:54,960
Speaker 11: equity transactions and everything in between. And we have taken

614
00:29:55,000 --> 00:29:57,360
Speaker 11: that to heart. We have invested a tremendous amount of

615
00:29:57,360 --> 00:30:01,120
Speaker 11: money in terms of our origination platform. And I think

616
00:30:01,200 --> 00:30:03,680
Speaker 11: that's what when investors come to us today on the

617
00:30:03,680 --> 00:30:07,040
Speaker 11: institutional side, when sovereign funds come to us to partner,

618
00:30:07,080 --> 00:30:10,120
Speaker 11: when insurance companies come to partner, Yes, it's because of

619
00:30:10,120 --> 00:30:13,000
Speaker 11: our investor returns, but it's because of our origination.

620
00:30:13,080 --> 00:30:15,760
Speaker 5: And I just think that's the bigger story here.

621
00:30:15,800 --> 00:30:19,800
Speaker 11: People want to talk about this company, that company, First Brands, Tricolor.

622
00:30:20,120 --> 00:30:23,080
Speaker 11: You know, it's been sixteen years since the Great GFC.

623
00:30:23,560 --> 00:30:26,920
Speaker 11: The real story is the evolution of modern finance and

624
00:30:27,000 --> 00:30:30,000
Speaker 11: the role that we all play. And so I think

625
00:30:30,080 --> 00:30:33,280
Speaker 11: that's the thread and the theme that investors are really

626
00:30:33,880 --> 00:30:36,640
Speaker 11: engaging in today. I got back from nine countries in

627
00:30:36,640 --> 00:30:38,560
Speaker 11: two and a half weeks, which I'm happy to talk about.

628
00:30:38,880 --> 00:30:42,800
Speaker 11: And the impact around the globe of this model evolving

629
00:30:42,880 --> 00:30:43,520
Speaker 11: is really the story.

630
00:30:43,600 --> 00:30:45,160
Speaker 2: We'll spend some time on that. Just for the record,

631
00:30:45,160 --> 00:30:47,200
Speaker 2: you brought up First Brand and Strike Color before we did.

632
00:30:47,240 --> 00:30:48,840
Speaker 2: We'll get to that in just a moment. So you

633
00:30:48,840 --> 00:30:51,120
Speaker 2: want to talk about origination. Let's talk about it that

634
00:30:51,160 --> 00:30:54,040
Speaker 2: you originated. You talked about this a bit yesterday. What

635
00:30:54,080 --> 00:30:56,400
Speaker 2: was the average rating and are you able to maintain

636
00:30:56,440 --> 00:30:58,160
Speaker 2: excess spread as you scale up.

637
00:30:58,440 --> 00:30:58,640
Speaker 5: Yeah.

638
00:30:58,640 --> 00:31:00,560
Speaker 11: So if you look at our we think about the

639
00:31:00,600 --> 00:31:04,520
Speaker 11: world investment grade and non investment grade, not private in public.

640
00:31:04,920 --> 00:31:07,240
Speaker 11: And when you think about the spreads that we garnered

641
00:31:07,240 --> 00:31:10,520
Speaker 11: in terms of our non in our investment grade business,

642
00:31:10,920 --> 00:31:13,280
Speaker 11: you know, it's in the mid three hundreds, and we've

643
00:31:13,280 --> 00:31:16,240
Speaker 11: been able to really create that spread over the last

644
00:31:16,320 --> 00:31:19,240
Speaker 11: twenty four months with a little degradation of fifteen to

645
00:31:19,280 --> 00:31:22,120
Speaker 11: twenty basis points year over year. On the non investment

646
00:31:22,120 --> 00:31:24,720
Speaker 11: grade side, it's in the mid four hundreds, and again

647
00:31:24,760 --> 00:31:26,760
Speaker 11: we've been able to generate that spread over the last

648
00:31:26,800 --> 00:31:30,040
Speaker 11: twenty four months. And again it's not just the direct

649
00:31:30,160 --> 00:31:32,280
Speaker 11: private lending, but it's all the things you do to

650
00:31:32,320 --> 00:31:35,440
Speaker 11: a sponsor. So our origination put foot print is about

651
00:31:35,440 --> 00:31:39,360
Speaker 11: eighty percent investment grade, twenty percent non investment grade. But

652
00:31:39,560 --> 00:31:43,360
Speaker 11: really it's the change of the model in the last

653
00:31:43,360 --> 00:31:47,480
Speaker 11: twenty thirty years. As a credit investor or fixed income investor,

654
00:31:48,040 --> 00:31:52,800
Speaker 11: you were an agent in the market whatever the origination

655
00:31:52,960 --> 00:31:54,040
Speaker 11: machine wanted to deliver.

656
00:31:54,160 --> 00:31:56,080
Speaker 5: You it was only price.

657
00:31:55,800 --> 00:31:58,480
Speaker 11: That you actually had to negotiate, and so you were

658
00:31:58,600 --> 00:32:02,480
Speaker 11: an agent, was really not a lot of the ability

659
00:32:02,520 --> 00:32:05,520
Speaker 11: to really conduct and have the outcome. In our model

660
00:32:05,520 --> 00:32:08,920
Speaker 11: where we're the origination principle, where we actually have an impact,

661
00:32:08,960 --> 00:32:11,920
Speaker 11: it allows you really to have a much greater degree

662
00:32:11,920 --> 00:32:15,320
Speaker 11: of control of documentation and return and yield, and that's going.

663
00:32:15,240 --> 00:32:16,400
Speaker 5: To suit us well over time.

664
00:32:16,480 --> 00:32:20,280
Speaker 11: So it's this principal agent issue, and we find ourselves

665
00:32:20,320 --> 00:32:24,080
Speaker 11: really in the leading pack of the origination principal model

666
00:32:24,400 --> 00:32:26,960
Speaker 11: versus the old model of an agent or vendor model.

667
00:32:27,040 --> 00:32:28,480
Speaker 6: And Jim, what this does is it allows you to

668
00:32:28,480 --> 00:32:29,960
Speaker 6: look at a lot of documents. It allows you to

669
00:32:29,960 --> 00:32:31,440
Speaker 6: look at a lot of companies. It allows you to

670
00:32:31,480 --> 00:32:34,880
Speaker 6: see a broad swath of the economy to understand exactly

671
00:32:34,960 --> 00:32:37,920
Speaker 6: where the pitfalls may be. Do you find some of

672
00:32:37,920 --> 00:32:41,280
Speaker 6: these arguments about cockroaches and in growing weakness in the

673
00:32:41,280 --> 00:32:44,240
Speaker 6: economy credible or are you just not seeing it in

674
00:32:44,280 --> 00:32:46,400
Speaker 6: what you're viewing even among the things that you're rejecting.

675
00:32:47,280 --> 00:32:50,520
Speaker 11: You're fifteen sixteen years in a credit cycle right now

676
00:32:50,560 --> 00:32:53,960
Speaker 11: in terms of the expansion since the GFC, You're going

677
00:32:54,040 --> 00:32:56,640
Speaker 11: to find issues and challenges in the last five to

678
00:32:56,760 --> 00:33:00,240
Speaker 11: seven years, you've had companies like SVB and First freeblic

679
00:33:00,280 --> 00:33:03,200
Speaker 11: Bank and so yes, these are clearly idiosyncratic.

680
00:33:03,560 --> 00:33:05,600
Speaker 5: We're seeing a much larger.

681
00:33:05,200 --> 00:33:09,320
Speaker 11: Theme of a strong economy Towrdson talked about yesterday in

682
00:33:09,400 --> 00:33:12,800
Speaker 11: terms of a K shape economy. We're seeing an administration

683
00:33:12,880 --> 00:33:17,360
Speaker 11: it's very pro business anti not a very regulatory friendly,

684
00:33:17,760 --> 00:33:20,560
Speaker 11: want to push rates lower, and so all of those

685
00:33:20,600 --> 00:33:26,040
Speaker 11: things where you will see challenges in certain companies late

686
00:33:26,120 --> 00:33:29,000
Speaker 11: in a cycle. But we are not seeing any kind

687
00:33:29,040 --> 00:33:33,120
Speaker 11: of credit cycle on the horizon that's waning anytime soon.

688
00:33:33,200 --> 00:33:34,160
Speaker 5: We are not seeing it.

689
00:33:34,240 --> 00:33:36,880
Speaker 6: Are you seeing a scary allocation of resources?

690
00:33:36,920 --> 00:33:38,040
Speaker 1: And I say this given.

691
00:33:37,800 --> 00:33:39,560
Speaker 6: The fact that it has been very top heavy to

692
00:33:39,600 --> 00:33:42,640
Speaker 6: AI related endeavors. Deutsche Bank this morning a story in

693
00:33:42,680 --> 00:33:45,000
Speaker 6: the Financial Times looking for ways to hedge against some

694
00:33:45,040 --> 00:33:48,600
Speaker 6: of their data center loans because they're worried about the

695
00:33:48,640 --> 00:33:51,280
Speaker 6: overall concentration the risks that you're seeing overnight.

696
00:33:51,280 --> 00:33:52,160
Speaker 1: Are you staying away from that?

697
00:33:52,360 --> 00:33:54,640
Speaker 11: Well, I think what you're talking about is whenever you

698
00:33:54,760 --> 00:33:58,600
Speaker 11: see a massive impulse infusion of capital into a sector

699
00:33:58,920 --> 00:34:02,360
Speaker 11: dark fiber E and p shale in the US software

700
00:34:02,440 --> 00:34:06,920
Speaker 11: enterprises and now AI in the brought ecosystem, you have

701
00:34:07,000 --> 00:34:10,760
Speaker 11: to think about debt and equity returns on invested capital,

702
00:34:11,200 --> 00:34:14,319
Speaker 11: and there's been a tremendous rise in valuations on the

703
00:34:14,360 --> 00:34:16,279
Speaker 11: debt side, on the equity side in the last twenty

704
00:34:16,280 --> 00:34:19,359
Speaker 11: four months, and certainly the assumptions that you're making on

705
00:34:19,400 --> 00:34:22,520
Speaker 11: the debt side as an investor and a lender to

706
00:34:22,560 --> 00:34:26,520
Speaker 11: those companies, you're taking more residual risks than you did six, twelve,

707
00:34:26,600 --> 00:34:27,359
Speaker 11: eighteen months ago.

708
00:34:27,480 --> 00:34:29,840
Speaker 5: So valuations are high, you have.

709
00:34:29,800 --> 00:34:31,840
Speaker 11: To be a bit more cautious, you want to be

710
00:34:31,880 --> 00:34:34,520
Speaker 11: a lot more senior, you want to be secured, and

711
00:34:34,600 --> 00:34:37,080
Speaker 11: so I think there's going to be a dispersion between

712
00:34:37,120 --> 00:34:39,920
Speaker 11: returns between the investment grade and non investment grade market.

713
00:34:40,200 --> 00:34:42,440
Speaker 11: But that's just late cycle behavior. And when you look

714
00:34:42,440 --> 00:34:45,879
Speaker 11: around the globe, as we talked about yesterday, their valuations

715
00:34:45,880 --> 00:34:49,440
Speaker 11: are high, geopolitical risks are a bit greater, and we

716
00:34:49,520 --> 00:34:53,040
Speaker 11: don't see rates dramatically lower in the next twenty four months.

717
00:34:53,040 --> 00:34:58,240
Speaker 11: So that tells us take the risk down on subordinated credit,

718
00:34:58,520 --> 00:35:00,640
Speaker 11: lean into senior investment grade opportunities.

719
00:35:00,719 --> 00:35:03,960
Speaker 2: Jim, We've seen these capex cychos throughout economic history. You've

720
00:35:04,000 --> 00:35:06,120
Speaker 2: lift a few of them for a long career as well.

721
00:35:06,239 --> 00:35:08,719
Speaker 2: But there's something different about this one. And you're well

722
00:35:08,800 --> 00:35:10,799
Speaker 2: versed in this in a way that I'm not. Some

723
00:35:10,880 --> 00:35:14,520
Speaker 2: of these assets depreciate rapidly for you and the team.

724
00:35:14,520 --> 00:35:16,799
Speaker 2: Does that change how you put together some of these

725
00:35:17,000 --> 00:35:17,759
Speaker 2: deals that you make?

726
00:35:17,920 --> 00:35:18,600
Speaker 5: It does? I mean?

727
00:35:18,800 --> 00:35:21,360
Speaker 11: I think you're raising a really interesting point. Are we

728
00:35:21,480 --> 00:35:23,720
Speaker 11: thinking is the right way to think about a data

729
00:35:23,760 --> 00:35:28,600
Speaker 11: center utility lines and electrical lines seventy eighty ninety years

730
00:35:28,640 --> 00:35:31,880
Speaker 11: ago when day one all you were doing is wiring

731
00:35:31,920 --> 00:35:35,240
Speaker 11: the house for lights, and then you wired the house

732
00:35:35,280 --> 00:35:38,000
Speaker 11: for a dishwasher, a TV and everything else that goes

733
00:35:38,040 --> 00:35:41,200
Speaker 11: with it, And how do you think about that technology

734
00:35:41,200 --> 00:35:43,680
Speaker 11: and what really is the advantage of that data center

735
00:35:43,680 --> 00:35:47,080
Speaker 11: in five, ten, fifteen years with the power supply. I

736
00:35:47,200 --> 00:35:50,759
Speaker 11: differentiate that with how you might finance a portfolio of

737
00:35:50,840 --> 00:35:54,719
Speaker 11: chips GPUs that rapidly appreciate over three to five years.

738
00:35:55,040 --> 00:35:58,640
Speaker 11: And they might still all. They might both be in technology,

739
00:35:58,880 --> 00:36:01,520
Speaker 11: but how you fund and structure both of those is very,

740
00:36:01,600 --> 00:36:04,560
Speaker 11: very different. And I think that's the subtlety behind behind

741
00:36:04,600 --> 00:36:08,040
Speaker 11: the headlines, which is going to differentiate the winners and losers,

742
00:36:08,080 --> 00:36:11,040
Speaker 11: Because in every industry. Even the last twenty years that

743
00:36:11,080 --> 00:36:15,000
Speaker 11: I just mentioned, those are all sectors that grew in

744
00:36:15,160 --> 00:36:18,520
Speaker 11: a tremendous amount of capital and you really don't know

745
00:36:18,560 --> 00:36:20,600
Speaker 11: who the winner is from the debt and equity side

746
00:36:20,640 --> 00:36:24,080
Speaker 11: for a few years. And so certainly with valuations as

747
00:36:24,200 --> 00:36:26,719
Speaker 11: high as they are in this cycle right now, you

748
00:36:26,880 --> 00:36:29,280
Speaker 11: have to take a step back and pause and say, Okay,

749
00:36:29,520 --> 00:36:31,520
Speaker 11: do I want to be a lender? Do I want

750
00:36:31,520 --> 00:36:34,520
Speaker 11: to be an equity owner? What's the residual value assumptions

751
00:36:34,520 --> 00:36:37,080
Speaker 11: that I'm making. That's really what will differentiate the winners

752
00:36:37,080 --> 00:36:37,480
Speaker 11: and losers.

753
00:36:37,520 --> 00:36:39,479
Speaker 3: I'm not sure how many people have taken a step back, Lisa.

754
00:36:39,800 --> 00:36:40,879
Speaker 3: At the moment right.

755
00:36:40,800 --> 00:36:43,520
Speaker 6: Now, it seems like absolutely nobody. Those debt offerings are

756
00:36:43,600 --> 00:36:46,399
Speaker 6: absolutely flooding, and frankly, there is a real question about

757
00:36:46,400 --> 00:36:49,880
Speaker 6: whether there's behavior that potentially isn't as prudent as what

758
00:36:49,920 --> 00:36:52,399
Speaker 6: you're doing, that could potentially pose some sort of risk

759
00:36:52,480 --> 00:36:53,280
Speaker 6: the rest of the market.

760
00:36:53,520 --> 00:36:55,840
Speaker 11: Well, if you think about the Meg seven, in the

761
00:36:55,920 --> 00:36:58,600
Speaker 11: last five to seven years, they have been a very

762
00:36:58,719 --> 00:37:02,279
Speaker 11: very small participant of the IG new issue market. In

763
00:37:02,320 --> 00:37:04,759
Speaker 11: the last two months, there's been a handful of these

764
00:37:04,840 --> 00:37:08,880
Speaker 11: companies that have been issued very very large benchmark transactions.

765
00:37:09,360 --> 00:37:12,040
Speaker 11: And again that's not a zip code. We play in

766
00:37:12,120 --> 00:37:14,520
Speaker 11: day in and day out. But you have to wonder

767
00:37:14,560 --> 00:37:19,840
Speaker 11: as a CFO, are they being very strategic about accessing

768
00:37:19,880 --> 00:37:23,839
Speaker 11: that financing and what's the long term return of those opportunities.

769
00:37:24,080 --> 00:37:26,399
Speaker 2: Jamie Timon at JP Morgan has said, we survived build

770
00:37:26,440 --> 00:37:28,520
Speaker 2: a Blasia will survive this. How do you even the

771
00:37:28,520 --> 00:37:29,760
Speaker 2: tame think about this development?

772
00:37:30,440 --> 00:37:32,239
Speaker 11: You know, we're committed. I've been in New York forty years.

773
00:37:32,280 --> 00:37:34,839
Speaker 11: I'm a committed New Yorker. The campaign is over now

774
00:37:34,880 --> 00:37:37,680
Speaker 11: it's about the action plan and he needs to bring

775
00:37:37,719 --> 00:37:40,400
Speaker 11: people together. He needs to get a leadership team that

776
00:37:40,440 --> 00:37:42,879
Speaker 11: can take on the challenges of the most complicated city

777
00:37:43,080 --> 00:37:46,319
Speaker 11: in America. And if you're in New Yorker, you want

778
00:37:46,320 --> 00:37:51,399
Speaker 11: to see success in this administration. The campaign's over all

779
00:37:51,440 --> 00:37:54,160
Speaker 11: the great promises. Now it's about delivering. It's like when

780
00:37:54,160 --> 00:37:56,040
Speaker 11: you buy a company, you don't celebrate the day you

781
00:37:56,080 --> 00:37:57,920
Speaker 11: buy it. You celebrate the day you sell it in

782
00:37:57,920 --> 00:38:00,200
Speaker 11: three to five years. So I think there needs to

783
00:38:00,200 --> 00:38:02,439
Speaker 11: be a change in tone and he needs to bring

784
00:38:02,440 --> 00:38:05,080
Speaker 11: the city together. That's the big objective. Bring the city

785
00:38:05,120 --> 00:38:08,640
Speaker 11: together and bring the best and the brightest to city.

786
00:38:08,400 --> 00:38:09,359
Speaker 5: Hall to work with him.

787
00:38:09,600 --> 00:38:12,400
Speaker 8: Bill Ackman said, this is an individual who spent a

788
00:38:12,400 --> 00:38:14,279
Speaker 8: lot of money trying to defeat him. Said, let me

789
00:38:14,320 --> 00:38:15,920
Speaker 8: know what I can do. So that's the approach. It

790
00:38:15,960 --> 00:38:18,960
Speaker 8: sounds like Apollo is taking What would you advise him?

791
00:38:19,560 --> 00:38:23,439
Speaker 11: Well, again, I think number one, you've heard it. People think,

792
00:38:23,560 --> 00:38:26,719
Speaker 11: you know, public safety is the number one fiscal stimulus.

793
00:38:26,760 --> 00:38:29,759
Speaker 11: And there's a lot of concerns about the campaign and

794
00:38:29,800 --> 00:38:32,239
Speaker 11: what was said about public safety and the focus on that.

795
00:38:32,400 --> 00:38:35,680
Speaker 11: So I would focus on bringing leadership together. I would

796
00:38:35,680 --> 00:38:38,600
Speaker 11: focus on really making sure that the city is safe

797
00:38:38,600 --> 00:38:41,719
Speaker 11: for all citizens and then try to create a very

798
00:38:41,800 --> 00:38:44,000
Speaker 11: logical engagement with all the constituents.

799
00:38:44,160 --> 00:38:45,080
Speaker 5: That's day one.

800
00:38:45,320 --> 00:38:45,960
Speaker 3: That's day one.

801
00:38:46,080 --> 00:38:48,120
Speaker 2: Let's talk about what's happening right now in this CID economy,

802
00:38:48,200 --> 00:38:51,840
Speaker 2: which is what gop Mounttowney elected. Affordability. You want to

803
00:38:51,840 --> 00:38:54,120
Speaker 2: talk about the transmission of monetary policy as well. I

804
00:38:54,120 --> 00:38:56,239
Speaker 2: think this is an important point. What can we do

805
00:38:56,320 --> 00:39:01,360
Speaker 2: to support this economy and not exacerbate existing problems.

806
00:39:00,280 --> 00:39:01,440
Speaker 5: And laid it out well yesterday.

807
00:39:01,920 --> 00:39:04,160
Speaker 11: If he is right, which I believe he is, about

808
00:39:04,200 --> 00:39:08,680
Speaker 11: the KA economy in terms of the differentiation between those

809
00:39:08,719 --> 00:39:11,040
Speaker 11: at the highest twenty percent and the bottom twenty percent

810
00:39:12,239 --> 00:39:14,719
Speaker 11: for the last fifteen Really, since a GFC around the

811
00:39:14,760 --> 00:39:18,160
Speaker 11: globe and especially in the US, we've leaned politicians have

812
00:39:18,280 --> 00:39:21,360
Speaker 11: sort of stood back and wanted the monetary policy to

813
00:39:21,400 --> 00:39:24,400
Speaker 11: solve all the problems. There is only so much that

814
00:39:24,480 --> 00:39:29,160
Speaker 11: monetary policy can do. The fiscal impact of leadership, not

815
00:39:29,280 --> 00:39:31,160
Speaker 11: only in the US but in Western Europe.

816
00:39:31,200 --> 00:39:32,320
Speaker 5: I was there last week.

817
00:39:32,600 --> 00:39:34,799
Speaker 11: They really need to step up and have a plan

818
00:39:34,920 --> 00:39:40,200
Speaker 11: about technology, investment, employment, education, and a variety of attributes

819
00:39:40,200 --> 00:39:43,920
Speaker 11: that are not really monetary policy impacts. So again I

820
00:39:43,920 --> 00:39:46,959
Speaker 11: think I'm not suggesting that we're not really focused on

821
00:39:47,400 --> 00:39:49,279
Speaker 11: what the next move of the FED are. They are

822
00:39:49,320 --> 00:39:54,040
Speaker 11: critically important, but we are skeptical that even a lower

823
00:39:54,760 --> 00:39:57,319
Speaker 11: impact at any kind of lower rates, it's really just

824
00:39:57,360 --> 00:39:59,360
Speaker 11: going to fuel what's going on right now in the

825
00:39:59,440 --> 00:40:05,560
Speaker 11: asset frenzy, rather than having real impact on affordability and housing.

826
00:40:06,400 --> 00:40:09,400
Speaker 11: Taking FED funds down twenty five d basis points, it

827
00:40:09,440 --> 00:40:12,240
Speaker 11: doesn't havel your housing crisis. You have a national housing

828
00:40:12,280 --> 00:40:15,319
Speaker 11: crisis with affordability. So I think there needs to be

829
00:40:15,360 --> 00:40:18,719
Speaker 11: a massive pivot away from what monetary policy can do

830
00:40:19,160 --> 00:40:23,800
Speaker 11: and how really executive leadership and fiscal policy will have

831
00:40:23,840 --> 00:40:24,520
Speaker 11: a bigger impact.

832
00:40:24,560 --> 00:40:25,759
Speaker 1: Should in will are two different things.

833
00:40:25,840 --> 00:40:27,840
Speaker 6: And right now it seems like the FED is probably

834
00:40:27,920 --> 00:40:30,560
Speaker 6: going to cut rates once more this year and then

835
00:40:30,600 --> 00:40:33,520
Speaker 6: again several times next year, especially potentially with new leadership.

836
00:40:33,840 --> 00:40:36,600
Speaker 6: Are you saying that you don't buy the argument that

837
00:40:36,600 --> 00:40:38,799
Speaker 6: that's going to help the shoppers at Chipotle and the

838
00:40:38,800 --> 00:40:41,719
Speaker 6: shoppers at Kava be able to afford their burritos and

839
00:40:41,760 --> 00:40:46,120
Speaker 6: the Mediterranean salad bowls more efficiently, and instead it's going

840
00:40:46,160 --> 00:40:49,719
Speaker 6: to exacerbate the K and cause act price inflation that

841
00:40:49,840 --> 00:40:52,520
Speaker 6: leads to a potential threat to financial stability.

842
00:40:52,840 --> 00:40:56,960
Speaker 5: Yeah, I don't see. I've got a couple of I've got.

843
00:40:56,800 --> 00:40:59,960
Speaker 11: A couple of twenty four to twenty nine year old

844
00:41:00,400 --> 00:41:04,000
Speaker 11: not suggesting that their consumer attributes are going to change

845
00:41:04,040 --> 00:41:06,759
Speaker 11: by you know, what the FED does. But I just

846
00:41:06,880 --> 00:41:11,680
Speaker 11: don't see how the FED policy of this quarter or

847
00:41:11,719 --> 00:41:14,560
Speaker 11: the next two quarters is going to have a real

848
00:41:14,600 --> 00:41:18,320
Speaker 11: impact on the accentuation of the K economy.

849
00:41:18,360 --> 00:41:20,560
Speaker 5: I just don't see it. I see it. I see

850
00:41:20,560 --> 00:41:21,680
Speaker 5: it much much broader.

851
00:41:21,719 --> 00:41:24,440
Speaker 11: And again, I do think getting back to New York City,

852
00:41:25,120 --> 00:41:28,319
Speaker 11: we have a portion of the economy and a portion

853
00:41:28,400 --> 00:41:35,280
Speaker 11: of the demographics that is really focused on you know, education, jobs, employment, affordability,

854
00:41:35,320 --> 00:41:37,160
Speaker 11: and I just think we've got to think a much

855
00:41:37,200 --> 00:41:38,279
Speaker 11: longer perspective here.

856
00:41:38,320 --> 00:41:40,759
Speaker 6: As an investor, if the FED does cut, do you

857
00:41:40,880 --> 00:41:42,920
Speaker 6: lean into the bubble? Do you say, all right, well,

858
00:41:43,200 --> 00:41:45,440
Speaker 6: if you can't beat it, join it. And the idea

859
00:41:45,600 --> 00:41:47,680
Speaker 6: is you've got to take more risk and get more returns.

860
00:41:47,800 --> 00:41:48,520
Speaker 5: That's not what we do.

861
00:41:48,640 --> 00:41:51,040
Speaker 11: That's you know, there's folks who spend their day spending

862
00:41:51,080 --> 00:41:54,160
Speaker 11: time about where the equity market's going this hour, this day,

863
00:41:54,200 --> 00:41:56,719
Speaker 11: this week. That's just not what we do. We're much

864
00:41:56,760 --> 00:42:01,239
Speaker 11: more focused on financing the global industrial renaissance transactions we

865
00:42:01,280 --> 00:42:04,560
Speaker 11: announced with ORSTED last week or earlier this week, what

866
00:42:04,680 --> 00:42:07,680
Speaker 11: we did in Europe with ourwe I was in Germany

867
00:42:07,680 --> 00:42:11,200
Speaker 11: in the last ten days. Massive global industrial capital needs.

868
00:42:11,239 --> 00:42:13,360
Speaker 11: That's what we're focusing our time today. And that's what

869
00:42:13,400 --> 00:42:17,360
Speaker 11: our investors want to They want safe, robust, long duration yield.

870
00:42:18,000 --> 00:42:21,040
Speaker 11: Whether the return on investing capital of XYZ Data Center

871
00:42:21,040 --> 00:42:22,839
Speaker 11: in fifteen years works, that's not.

872
00:42:22,840 --> 00:42:23,239
Speaker 5: What we do.

873
00:42:23,360 --> 00:42:25,400
Speaker 2: There was a headline yesterday and what you didn't do,

874
00:42:25,640 --> 00:42:28,160
Speaker 2: and that was take Papa John's private You probably don't

875
00:42:28,160 --> 00:42:29,839
Speaker 2: want to talk about that directly, But can we talk

876
00:42:29,840 --> 00:42:32,919
Speaker 2: about that broader business because ALSA mentioned Carver and what's

877
00:42:32,920 --> 00:42:36,399
Speaker 2: happened with Chipottele, Like, how tough is that business right now?

878
00:42:36,400 --> 00:42:37,400
Speaker 3: How difficult ethics?

879
00:42:37,880 --> 00:42:41,440
Speaker 11: I think as a principal investor in equity, in private

880
00:42:41,440 --> 00:42:43,600
Speaker 11: equity and private capital, you think you need to think

881
00:42:43,640 --> 00:42:47,759
Speaker 11: about long term consumer trends and what's going to have

882
00:42:47,840 --> 00:42:51,160
Speaker 11: an impact on various business models. And for us, you know,

883
00:42:51,160 --> 00:42:53,960
Speaker 11: we've had a real value discipline purchase price matters for

884
00:42:54,000 --> 00:42:57,760
Speaker 11: the last thirty five years. It served us extremely well,

885
00:42:58,200 --> 00:42:59,960
Speaker 11: and so you know, I think that you have to

886
00:43:00,160 --> 00:43:04,680
Speaker 11: think about the evolution of consumer sentiments, consumer behavior and

887
00:43:04,719 --> 00:43:06,720
Speaker 11: what your impact is on different business models.

888
00:43:06,719 --> 00:43:07,799
Speaker 3: We've got about a minute left.

889
00:43:08,000 --> 00:43:09,560
Speaker 2: Can we finish on what I believe is a pr

890
00:43:09,600 --> 00:43:11,960
Speaker 2: battle between you and the banks at the moment.

891
00:43:11,719 --> 00:43:12,560
Speaker 3: Not you directly.

892
00:43:12,760 --> 00:43:15,120
Speaker 2: It just feels like everyone's trying to say the cockroaches

893
00:43:15,120 --> 00:43:17,520
Speaker 2: are somewhere else. And I was listening to you yesterday.

894
00:43:17,560 --> 00:43:19,799
Speaker 2: Was something that you said about it doesn't matter whether

895
00:43:19,880 --> 00:43:22,439
Speaker 2: debt originates, so the asset manager or the bank.

896
00:43:22,600 --> 00:43:24,040
Speaker 3: Why is that such an important point?

897
00:43:24,239 --> 00:43:26,960
Speaker 11: Because I think we've collectively lost our way. We sit

898
00:43:27,000 --> 00:43:29,880
Speaker 11: on top of this amazing economy. And what we have

899
00:43:30,040 --> 00:43:34,040
Speaker 11: just found is the litmus test of quality is not

900
00:43:34,640 --> 00:43:37,560
Speaker 11: public or private. We sort of have collectively lost our way.

901
00:43:37,880 --> 00:43:40,400
Speaker 11: The litmus test was how good the company is and

902
00:43:40,440 --> 00:43:42,240
Speaker 11: how they will perform in their business model.

903
00:43:42,680 --> 00:43:43,880
Speaker 5: And again, you've got.

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00:43:43,680 --> 00:43:46,200
Speaker 11: Great investors in credit, you've got great banks, you've got

905
00:43:46,239 --> 00:43:49,800
Speaker 11: great insurance companies. There will be a dispersion of returns

906
00:43:49,840 --> 00:43:53,520
Speaker 11: over a more challenging cycle. So we're committed to open architecture.

907
00:43:53,800 --> 00:43:57,080
Speaker 11: We have amazing relationships and partnerships with many, many banks,

908
00:43:57,440 --> 00:43:59,760
Speaker 11: some of which are public, many of which are private,

909
00:44:00,160 --> 00:44:02,440
Speaker 11: and we're going to continue that and it really helps

910
00:44:02,480 --> 00:44:05,520
Speaker 11: us our origination. But I think the longer story that

911
00:44:05,560 --> 00:44:08,680
Speaker 11: gets written will really be about credit quality and the

912
00:44:08,760 --> 00:44:12,160
Speaker 11: sustainability or business rather than something is public private.

913
00:44:12,239 --> 00:44:13,919
Speaker 5: That's not the litmus test.

914
00:44:14,880 --> 00:44:18,440
Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best

915
00:44:18,440 --> 00:44:22,000
Speaker 2: in markets, economics, angiopolitics. You can watch the show live

916
00:44:22,120 --> 00:44:25,120
Speaker 2: on Bloomberg TV weekday mornings from six am to nine

917
00:44:25,160 --> 00:44:28,880
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

918
00:44:28,920 --> 00:44:31,520
Speaker 2: anywhere else you listen, and as always on the Bloomberg

919
00:44:31,600 --> 00:44:33,479
Speaker 2: Terminal and the Bloomberg Business app