Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Speaker 1: Week inside from the reporters and editors who bring you
Speaker 1: America's most trusted business magazine, plus global business, finance and
Speaker 1: tech news. The Bloomberg Business Week Podcast with Carol Messer
Speaker 1: and Tim Stenebeck from Bloomberg Radio.
Speaker 2: We want to get to another story that was happening
Speaker 2: late Wednesday as well, and that has to do with
Speaker 2: one of the AI darlings.
Speaker 3: Yeah.
Speaker 4: Of course, we were talking yesterday about the departure of
Speaker 4: Chief Technology Officer Mira Morati, chief research officer Bob McGrew,
Speaker 4: and we've been hearing from Sam Altman from Open Ai
Speaker 4: as well, talking about executive departures at the startup being
Speaker 4: unrelated to restructuring that's happening at the company as it
Speaker 4: considers moving to a for profit structure. Bloomberg Today reporting
Speaker 4: that open Ai is discussing giving Sam Altman a seven
Speaker 4: percent equity stake in the company as part of that restructuring.
Speaker 4: Bring in co host of Bloomberg Technology, Ad Ludlow his
Speaker 4: Nor San Francisco Bureau for more on this. Hey, Ed,
Speaker 4: great to have you back on. I mean, let's try
Speaker 4: and put all these pieces together, right, Are the executive departures,
Speaker 4: as far as we know, linked to the restructuring that's
Speaker 4: being discussed at open Ai.
Speaker 5: Yeah, we don't know. And Sam Altman, you know, fortunately
Speaker 5: walked in front of a camera twelve hours after the
Speaker 5: news broke and had every opportunity to explain it, and
Speaker 5: he said, no, that they're relating to the individuals involved,
Speaker 5: their personal lives and their professional lives and wanting to
Speaker 5: do something new. But I would say that, you know,
Speaker 5: sources were very clear that inside open ai, which is
Speaker 5: a really important technology company, right, there's a lot at
Speaker 5: stake here and the people that work there know that,
Speaker 5: and they saw what these people who decided to leave
Speaker 5: the company said, and internal slack channels and other comms
Speaker 5: tools were basically like what is going on? Like this
Speaker 5: is dodge, Like this is weird. But the long and
Speaker 5: short of it is, no, we do not know if
Speaker 5: they are linked.
Speaker 6: You know, we talk about open Ai.
Speaker 2: The only reason I feel like we are talking so
Speaker 2: much about open ai is when you go back almost
Speaker 2: two years, right, and that big investment by Microsoft that
Speaker 2: got us all talking about and focusing on this company.
Speaker 2: Having said that, should we assume they're a big investor.
Speaker 2: Should we assume that what's going on now kind of
Speaker 2: has some consultation for Microsoft or not necessarily.
Speaker 5: Yeah, So this is actually the opportunity to clarify something
Speaker 5: that's really important. Microsoft is the single biggest investor into
Speaker 5: open ai at this stage, and at one time it
Speaker 5: held forty nine percent of the entity in which you
Speaker 5: could invest, but it probably is less than forty nine
Speaker 5: percent now because of the additional rounds of capital that
Speaker 5: open ai has raised. And if I make a Carol,
Speaker 5: I also would like to explain, like the structure of
Speaker 5: open ai as it stands, so its origin was not
Speaker 5: for profit, okay, and how it works right now is
Speaker 5: you have a nonprofit in this country America, a five
Speaker 5: oh one C three, a charity, and the for profit
Speaker 5: business is a subsidiary of that. And the way that
Speaker 5: open ai operates. And to answer your question is that
Speaker 5: it now has a board who do not hold any
Speaker 5: equity at all, and that board includes Sam Altman. So
Speaker 5: there are two things that I'm answering here. One, Microsoft
Speaker 5: owns a pretty big chunk of it, therefore doesn't have
Speaker 5: a board seat. Sam Altman has a board seat. But
Speaker 5: if he's to own equity. It raises a question about
Speaker 5: him continuing to be on the board. And the whole
Speaker 5: mechanism was put in place because they didn't want the
Speaker 5: vested interests of shareholders to be competing with the mission
Speaker 5: statement of the company, which is more around building artificial
Speaker 5: intelligence that benefits society at large. Goodness, what a mouthful.
Speaker 4: But how would that change if they did move to
Speaker 4: the public benefit corporation status? How would that mission be
Speaker 4: altered apart from what you and colleagues have been reporting about,
Speaker 4: you know, potential equity stake and questions ever, Sam Oltman.
Speaker 5: Yeah, again, I think it's really important state We just
Speaker 5: don't know. I was on your show yesterday. You may
Speaker 5: remember talking about Meta and there was a Reuter's report
Speaker 5: that open Ai was moving to a for profit model,
Speaker 5: was moving to a B corp. And what happened was
Speaker 5: I was driving home from Menlo Park. I almost got
Speaker 5: to the Golden Gate Bridge and a source phoned me
Speaker 5: and told me what was going on, but clarified that
Speaker 5: nothing legally has changed. Open ai is looking at all
Speaker 5: kinds of mechanisms, so they haven't actually taken any action.
Speaker 5: I think the Reuter's report probably went too far. But
Speaker 5: the bee corp instrument is interesting. At the very basics
Speaker 5: of a bee corp are that you are a for
Speaker 5: profit business. There are examples out there like Patagonia. I'm
Speaker 5: a Patagonia wearer. The apparel you may be familiar with it.
Speaker 5: But in the by laws of the company, the sort
Speaker 5: of lofty, big picture wildly goals and missions of the
Speaker 5: company are codified. They're written down so you can pursue profit,
Speaker 5: but you're also mandated to pursue those other goals as
Speaker 5: well because they're in the by laws of your company.
Speaker 2: Well, first of all, thank you for reminding me you
Speaker 2: were the great reporter on Meta yesterday. I had forgotten
Speaker 2: and and I'm just gonna say, open up a every
Speaker 2: time we talk about it, I feel like it's just
Speaker 2: a great B school case study because of just these
Speaker 2: twists and turns, the ousting of Sam Altman, he's back
Speaker 2: like it's just unbelievable, and it ain't over, that's for sure.
Speaker 2: Ed Ludlow, you're the best co host of Bloomberg Technology
Speaker 2: joining us. Of course, you can catch it out Bloomberg
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Speaker 6: All right, we are so looking forward to our next guest.
Speaker 2: He's got a great vantage point in the global economy,
Speaker 2: global mining, climate change. Just this past week for Toscue,
Speaker 2: the world's fourth biggest iron ore miner, saying it will
Speaker 2: pay two point eight billion to replace two thirds of
Speaker 2: its fleet of hollage trucks and equipment in Western Australia
Speaker 2: with EV versions as it seeks to cut diesel consumption
Speaker 2: and meet ambitious emissions reduction targets.
Speaker 6: There's a lot going on.
Speaker 4: Yeah, they're sure is. And look we've got lots to
Speaker 4: talk to Andrew Forrest about it, joins us in studio,
Speaker 4: executive chairman and billionaire of Perth, Australia based Fordescu in
Speaker 4: ten this week during the UN General Assembly and Climate
Speaker 4: Week as well. Welcome to Bloomberg Business Week. How are you.
Speaker 7: I'm on fire?
Speaker 3: Thank you.
Speaker 4: I'm just an exciting place right now. It certainly is.
Speaker 4: And look at a time that we're going to talk
Speaker 4: about your climate transition plan a moment, because that's a
Speaker 4: really interesting conversation. We've spent all week talking about China
Speaker 4: and the stimulus efforts being made there, and this is
Speaker 4: a story that's very central to your business as well.
Speaker 4: Imported iron ore used in roughly of eighty percent of
Speaker 4: Chinese steel production. Talk to us about the picture that
Speaker 4: you're seeing of the Chinese economy from your side of
Speaker 4: the business and the demand. How bad is it?
Speaker 7: Oh?
Speaker 4: Good is I mean?
Speaker 7: Basically, you've had mining companies being fat, dumb and happy
Speaker 7: for a very long time because the anal price has
Speaker 7: been so good, so we're all heroes. But now, oh
Speaker 7: my god, the annual price is fallen, which means it's
Speaker 7: a lot better value, by the way, for the customer,
Speaker 7: and we have to work a lot harder as mine is.
Speaker 7: We have to work harder to actually make a margin.
Speaker 7: And that's a good thing. And when people think that
Speaker 7: one throe, they think, well, how do I lower my margins? Well,
Speaker 7: one third of my cost is diesel fuel, one third, right,
Speaker 7: one third? Imagine if we get rid of that.
Speaker 3: Oh, by the way, we'd also.
Speaker 7: Be going zero missions if we did that. So we've
Speaker 7: been working on this for years and years and years,
Speaker 7: and to give you an idea of how strong that
Speaker 7: demand is because people are looking hard at their operating costs. Now,
Speaker 7: we took years and years to get up at three
Speaker 7: hundred and sixty truck order. Now these are big trucks, right,
Speaker 7: You've got the hub caps starting at the roof here.
Speaker 7: And yesterday we signed another hundred and got walkins for
Speaker 7: another four hundred in our day. So from three or
Speaker 7: four years, three sixty for a day for another five hundred.
Speaker 7: So this is showing you that the mining industry is saying, hey,
Speaker 7: we've got to really look at operating costs. And FORESCU
Speaker 7: at middle is driven because it wanted to go zero missions,
Speaker 7: because we bloody will have to as a human race.
Speaker 7: But then we also have to prove that it's highly commercial.
Speaker 7: And what you're seeing happen yesterday and today is that
Speaker 7: going zero missions is highly commercial.
Speaker 4: Just say you're not worried about China.
Speaker 7: I mean, I've just come from China and I've just
Speaker 7: I mean, I get accused when I'm in Chinese, when
Speaker 7: I'm a China being very pro North American. When I'm
Speaker 7: in North America, I get accutes of being v being
Speaker 7: very pro China.
Speaker 4: So no, but this is interesting. Look and love you both.
Speaker 4: The narrative is so negative and has been for so large.
Speaker 7: The problem I'm afraid you're wrong.
Speaker 3: You are wrong. I mean.
Speaker 7: Here in North America you have a completely different system.
Speaker 7: You get lag effects and lowering interest rates and things
Speaker 7: like that, and it's it's macroeconomic policy and it works
Speaker 7: really well over a long time.
Speaker 3: If they want to.
Speaker 7: Hit the accelerator, hit the brakes, you know, you see
Speaker 7: the impact straight away. So they did a little bit
Speaker 7: of priming, not much. I got to say, as a
Speaker 7: percentage of GDP, you'd be hard to measure it. But
Speaker 7: that is kicked investments straight away. It's kicked the iron
Speaker 7: or price's kicked iron or demand.
Speaker 4: It's a five percent growth nar a concern. It's going
Speaker 4: to happen.
Speaker 7: Look, I'm completely not worried about it. And by the way,
Speaker 7: if it's four or six, I know big countries who'd
Speaker 7: love to get two or three. So you know, for
Speaker 7: our demand, I'm seeing the iore price come down and
Speaker 7: I'm saying good.
Speaker 2: So Andrew, Basically, what you're saying is China's like, okay,
Speaker 2: if it still isn't enough.
Speaker 6: We're going to do more.
Speaker 3: Yeah.
Speaker 7: And also, you know, I love North America because we're
Speaker 7: aligned with North America. I love China because they're actually
Speaker 7: leading the world on going green. I mean, they are
Speaker 7: way ahead of their own plan. And you know everyone,
Speaker 7: I mean North America and China kicking the hell out
Speaker 7: of each other is really bad for the overall human race.
Speaker 7: This geostrategic war between North America precipitate, I want to
Speaker 7: put it bluntly by North America. And look, China does
Speaker 7: all these things wrong too, And you can jump on
Speaker 7: their toes, but you jump on their toes in private.
Speaker 7: You don't do it by shouting at them from New
Speaker 7: York or Washington DC.
Speaker 2: Well, does that then worry you about who's in the
Speaker 2: White House come November? Because there is people who have
Speaker 2: a softer touch and people who don't.
Speaker 7: Fortescue has a policy that we deal with any elected
Speaker 7: leadership that usuckers want to put up right. So you know,
Speaker 7: if you want to put up Trump, I've got to
Speaker 7: say this Ukraine badge. If there's a deal cut which
Speaker 7: rewards an invader for invading a country which you've had
Speaker 7: as an enemy for eighty years and you go cut
Speaker 7: a deal and reward a bad guy for being bad.
Speaker 7: We're down in the Pacific and we're going to say,
Speaker 7: hold the phone. If you're going to trade Ukraine against Russia,
Speaker 7: where do we sit with North America? I mean, where
Speaker 7: do we sit? I mean, who do we now call
Speaker 7: a friend? If you if you're going to turn around
Speaker 7: and do that to Europe.
Speaker 4: Right, I mean, you're obviously very plugged into geopolitical tensions
Speaker 4: because it's part of what affects your business as well.
Speaker 4: When you're thinking about global climate solutions, and you gave
Speaker 4: us some of the outlines of your plan there as well.
Speaker 4: There's some people that are going to think it's highly
Speaker 4: ironic that a mining company would be looking at a
Speaker 4: green transition.
Speaker 3: I agree with them.
Speaker 4: What you know, green iron or what is that is?
Speaker 4: That is? Do these things really make a difference when
Speaker 4: it comes to the bottom line of limiting climate change.
Speaker 7: Let's start with three million tons of carbon docks, so
Speaker 7: I'm not going out in the atmosphere. I mean, let's
Speaker 7: just start there, and then then let's realize that no
Speaker 7: one's ever going to make green iron or green steel,
Speaker 7: which is ten percent of the carbon budget Now we're
Speaker 7: talking huge unless you start with green iron or so
Speaker 7: the fact we're going to green iron or within a
Speaker 7: few years means that we can then go to green
Speaker 7: iron or green steel. Now that's starting to have a
Speaker 7: massive impact because we do that economically, then the pollution
Speaker 7: which is currently suffered all over the world, particularly in
Speaker 7: China where they're where they put their steel mills on
Speaker 7: the outskirts of their cities central plan, but their cities
Speaker 7: grew so much bigger. So now the steel mills inside
Speaker 7: the city, we send them totally pollution free metal. Their
Speaker 7: pollution problem goes out the window.
Speaker 4: So that there is a.
Speaker 7: Really big impact on this slow, lethargic backward industry called mining,
Speaker 7: ironically leading the world to go green, and it's hitting
Speaker 7: where the pollution is worse, and it's not saying, oh, well,
Speaker 7: we've got to continue burning all in gas because there's
Speaker 7: such lovely people and we have to look after and
Speaker 7: we're saying, actually, oil and gas has got us into
Speaker 7: this manure. We've got to stop doing what we've always
Speaker 7: done if we want a different result, and switch off
Speaker 7: the oil and gas, and then we'll get a different result.
Speaker 7: And that's like green steel that's like green shipping.
Speaker 2: Exactly though, is green iron ore? And what does it
Speaker 2: cost versus other iron ore? And is it cost competitive?
Speaker 7: Yeh, No, it's going to cost less, man, because we
Speaker 7: can make it for less because we're not chopping through
Speaker 7: a billion a billion leaders of diesel, like nearly five
Speaker 7: hundred million gallons of diesel. We're not going to buy anymore,
Speaker 7: you know, because we're making it ourselves.
Speaker 6: So is it cost competitive already?
Speaker 3: Yeah?
Speaker 7: Hell yeah, yeah yeah, that's the beauty of it, which
Speaker 7: is why I'm saying, listen, stop looking at gying green,
Speaker 7: stop looking at zero missions as Oh you're a really
Speaker 7: nice guy, what a lovely chief executive, what a lovely
Speaker 7: politician thinking of the kids, not himself. Actually, get out
Speaker 7: of your hole. This is a great investment. You should
Speaker 7: be doing this for your shareholders. And if you say
Speaker 7: you can't go green, well you're right. Get off the
Speaker 7: stage and let on someone smarter who can.
Speaker 4: But why isn't everyone doing it? If the case is
Speaker 4: that simple.
Speaker 6: And done it sooner?
Speaker 7: Because everything starts somewhere, right, everything starts somewhere. I'm in
Speaker 7: the suit, you're you're getting started with a thread, mate.
Speaker 7: It turned out to be a suit. So we're the thread.
Speaker 4: Talking about the conversations you're having here in New York
Speaker 4: as well. Are people getting the message? People are getting
Speaker 4: the message? Yeah, I mean, you know, we look at
Speaker 4: we look at the pullback on green, agender and so
Speaker 4: many parts of the world at the moment we see
Speaker 4: it reflected and polling and election results.
Speaker 7: Is that playing that's an opportunity for us. Okay, that's
Speaker 7: a serious opportunity. I mean, we are pushing head going
Speaker 7: green as quickly as possible. We've got technology which can
Speaker 7: take the water in here side a stirly water bottle,
Speaker 7: turn it into the most powerful fuel the walls ever had,
Speaker 7: which is hydrogen. When we turn it from gas liquid
Speaker 7: to really serious energy except soackt water. And we're working
Speaker 7: out how to produce that. It's not pure we call
Speaker 7: it in dustrial huydgen, but a fraction of the cost.
Speaker 7: Where we've worked out already how to charge cars not
Speaker 7: in twenty two hours or even eight hours, but in
Speaker 7: twenty two seconds. Okay, And these are the fastest electric
Speaker 7: cars in the world, like Formula E winners all the time.
Speaker 7: We've worked out how to charge our huge trucks in
Speaker 7: twenty four minutes, and I've had your US generals say
Speaker 7: to me, hey, hey, you understand the US military can
Speaker 7: never go green. I said, why is that, man? They said, well,
Speaker 7: our tanks they're fifty sixty tons and they've got to
Speaker 7: go fifty mile. And I said, well, hang on, mate,
Speaker 7: our trucks are four hundred tons and they've got to
Speaker 7: go sixty mile an out they're green. And they've said, well,
Speaker 7: you know, shipping shipping our warships. Our warships are like
Speaker 7: one hundred meters long. Andrew I said, honestly, mate, we
Speaker 7: could put three of your warships on the back of
Speaker 7: our iron ore carriers. They're three hundred and thirty meters long,
Speaker 7: and we're sending them green so everyone can go green.
Speaker 2: I am curious if you guys are going to be
Speaker 2: also building wind farms, solar forums right next farms, excuse me,
Speaker 2: right next to some of your mind to help supply
Speaker 2: green power. Like, what's is that part of the process.
Speaker 4: Yeah, it is.
Speaker 7: It is absolutely and will supply power us and power
Speaker 7: of others. Right now, we're operating a green grid. It's
Speaker 7: the first fully independent green grid in the world. It
Speaker 7: will be the largest of course, because it'll be producing
Speaker 7: enough power the size of small countries, and it'll be
Speaker 7: a full grid, but it'll be off the standard grid,
Speaker 7: and that means that we can put this all over
Speaker 7: the world.
Speaker 4: I want to come back to hydrogen because it's been
Speaker 4: talked about for many years. It's been a lot of
Speaker 4: money put behind us yet to yield results. Where are
Speaker 4: the obstacles? How far away is it from being Some
Speaker 4: mean it's going to be widespread, available, and more heavily
Speaker 4: used as an energy for them.
Speaker 7: Okay, the only thing stopping the production of green heighten
Speaker 7: North America. I mean, let's just remember that there's more
Speaker 7: people employed in the renewable energy sector in the fossil
Speaker 7: fuel old state of Texas than there are now is
Speaker 7: by fossil fuel. So everything is changing. What we're seeing
Speaker 7: now is the whole growth, this massive growth of green
Speaker 7: heighten green energy being held up by perfect getting in
Speaker 7: the road of the good in the IRA. And if
Speaker 7: we don't fix what a little thing called forty five V,
Speaker 7: which is where the fossil fuel sector's got these environmental
Speaker 7: independent lobbyists to say, hey, look we should have things
Speaker 7: like ali matching. Well, okay, that's perfect.
Speaker 4: Parts of your own industry are working against this.
Speaker 7: Yeah, I mean, but it's not my industry. It's the
Speaker 7: environmental lobby is paid ball by fossil fuel. It's the
Speaker 7: same same draw cards, same playbook as tobacco used. They
Speaker 7: get so called scientists and to say tobacco doesn't kill you, mate, So.
Speaker 6: It's money again, it's politics and it's lobby.
Speaker 7: Yeah, and we have to, Carol, we have to look
Speaker 7: straight through that and say to your legislators and your legislators,
Speaker 7: I've got to say, actually, we're not going to let
Speaker 7: perfect kill off the good. We No green hydrant is
Speaker 7: the answer. We will have weekly month matching or monthly matching.
Speaker 7: But hourly matching just means the person who came up
Speaker 7: with that's never driven or operated anything more complex than
Speaker 7: a bloody computer, not these one two three mile long
Speaker 7: plants which I have to operate.
Speaker 6: So thirty seconds left?
Speaker 2: Are you more optimistic after your time here in New
Speaker 2: York and talking with global leaders North American leaders, US leaders?
Speaker 2: Are you more pessimistic?
Speaker 6: Just quickly?
Speaker 4: No, I'm more optimistic. I'm more optimist.
Speaker 7: Because they trust what someone does more than what someone says,
Speaker 7: and they can see we're doing it. They can see
Speaker 7: Australia's high sharehold return company ever is going fully green
Speaker 7: and there's got to be a reason for that. And
Speaker 7: they're making huge sales and they're profitable.
Speaker 6: So we want to be smart and fun. When you
Speaker 6: came in, did we do it?
Speaker 3: Yeah?
Speaker 4: You're smart and funny.
Speaker 6: I love such pressure.
Speaker 2: Andrew Forrest, thank you so much, Executive chair of course
Speaker 2: at FORDESK.
Speaker 6: You joining us right here on Bloomberg Business Week.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 8: We are very.
Speaker 2: Global all this week here on Bloomberg Business Week, and
Speaker 2: we've had this week the opportunity to focus on economic
Speaker 2: issues in different regions of the world and how the
Speaker 2: changing climate is altering many countries trajectories.
Speaker 4: Well.
Speaker 2: The African Development Bank finances projects across the continent in
Speaker 2: areas including agriculture, energy, also the private sector development, and
Speaker 2: we know those African countries something we talk about a
Speaker 2: lot here at Bloomberg are among those most affected by
Speaker 2: climate change. So that is some of what we wanted
Speaker 2: to talk about here on Business Week.
Speaker 4: Yeah, indeed to discuss that. We're joined in the Androxer
Speaker 4: Brokers studio by doctor i can win At, a senior
Speaker 4: who is the president of the African Development Bank. Thank
Speaker 4: you very much to see we've also got Blomberg Chief
Speaker 4: Africa correspondent Jennifer Sabassage with us in Studio two to
Speaker 4: join the conversation. Doctor Absina, Welcome to New York. Great
Speaker 4: to have here. You were here having conversations with global
Speaker 4: leaders for Climate Week and you and General Assembly, what
Speaker 4: are you trying to get out of this week?
Speaker 9: Well, first and foremost is just to make sure Africa's
Speaker 9: issues on the top of the agenda, because when you
Speaker 9: talk about climate change, Africa only accounts for no more
Speaker 9: than three percent of emissions. But actually so for as
Speaker 9: just proportionately from a negative consequences, it loses five, seven
Speaker 9: to fifteen billion dollars a year and the current trend continues,
Speaker 9: that's going to rise to fifty billion dollars a year,
Speaker 9: but it's not getting the amount of financing that it needs.
Speaker 3: You know, Africa needs roughly.
Speaker 9: About two seventy seven billion dollars a year to tackle
Speaker 9: climate change, but it gets no more than thirty.
Speaker 3: Billion dollars, so it's a big gap there.
Speaker 9: So but most of what is needed there, it's really
Speaker 9: to adapt to climate change. It's not so much on mitigation,
Speaker 9: but it's adapting to climate change other things that I
Speaker 9: wanted to get out of. Most of this is actually
Speaker 9: how we tackle Africa's debate is because at the end
Speaker 9: of the day, you know, you can run up a
Speaker 9: heel if you're carrying a back back of sand, and
Speaker 9: so you can have development in which you have highly
Speaker 9: in deatded countries. And so we have to make sure
Speaker 9: that African countries facing a lot of challenges in terms
Speaker 9: of climate, in terms of also conflict, also in terms
Speaker 9: of high inflation and strength in fiscal space, but they
Speaker 9: have the space they need to be able to invest
Speaker 9: in education, health, water, sanitation, gales, education and all of
Speaker 9: those things. So dead climate for me, a very very
Speaker 9: very important part of my conversation here.
Speaker 8: This week, and doctor Argerstina, I mean part of that.
Speaker 10: I want to start with climate change, maybe because you
Speaker 10: have talked a lot about in particular the IMS special
Speaker 10: drawing rights and channeling more of those towards addressing climate
Speaker 10: change on the continent. Where is the progress on that?
Speaker 10: Did you make any progress this week while here in
Speaker 10: New York?
Speaker 9: Well, actually, just to think about they specially doing rights
Speaker 9: at the IMF, you know when we started, everybody for well,
Speaker 9: actually that's what thinks you put on the balance sheet
Speaker 9: essentially as reserve assets of central But we felt that
Speaker 9: actually these assets were actually simply latent assets that I
Speaker 9: was convinced that we can actually do better in terms
Speaker 9: of seeing how we can turn those into assets that
Speaker 9: can lock a lot of capital through the motilateral development banks.
Speaker 9: And the model that we develop basically was, you know,
Speaker 9: to see, okay, if you actually reachannel the SDRs to
Speaker 9: us are strip or air rated financial institutions. That's actually
Speaker 9: a hybrid capital that we can use and say perpetuals
Speaker 9: in that stage on a balance sheet, so we can
Speaker 9: actually leverage now four times, it can even go to
Speaker 9: photo eight times. And so we're very delighted, myself and
Speaker 9: the president of Inter American Development Bank, we walk together
Speaker 9: very collaboratively to solve some of the technicals. So there
Speaker 9: are some technical issues about whether what's the reserve assets
Speaker 9: status of it, and if you want to collect it back,
Speaker 9: how can you get it back? So we had to
Speaker 9: deal with some technical issues. We solve all those technical issues,
Speaker 9: and I was delighted that the IMA board actually approved
Speaker 9: twenty billion dollars of SDRs to we do channel through
Speaker 9: and mo't lateral development banks.
Speaker 3: That's hybrid capital. Now now the issue is now, how
Speaker 3: do we get that money? Yeah?
Speaker 9: So to get all that money out, yeah, exactly. You know,
Speaker 9: we have to actually put together a group of five
Speaker 9: We need five SDR rich countries that will agree to
Speaker 9: rechannel that through the African Development Bank and the Inter
Speaker 9: American Development Bank. But also we have to make sure
Speaker 9: we have a group of others that are in Europe.
Speaker 9: For example, European countries can't do it because of restrictions
Speaker 9: by the European Central Bank on monetary policy outside of
Speaker 9: the EU and so but we set up a very
Speaker 9: nicht to structure, which is called Liquidity Support Agreement, in
Speaker 9: which they can just essentially guarantee those that have given
Speaker 9: it to you.
Speaker 3: Okay, that's still allowed.
Speaker 9: So that's where we are. We're making progress in terms
Speaker 9: of the countries. We're talking to them and I'm hoping
Speaker 9: that you know, by the time we do G twenty
Speaker 9: will have gone a long way in making sure that way.
Speaker 6: Or will you actually have access to the funds?
Speaker 9: Well, actually you know the long ways to get access
Speaker 9: to the funds, so which means there has to be
Speaker 9: agreement that that thing. It's not just easy just like
Speaker 9: can give it to you. Their legal things they have
Speaker 9: to go through in their country is to make sure
Speaker 9: that that gets done. So we we know that President
Speaker 9: Lula as the presidency of the G twenty, as I
Speaker 9: spoke at the event just yesterday, that the STRs used
Speaker 9: okay for hybrid capital and getting it out to us
Speaker 9: is stop on the agenda for G twenty.
Speaker 4: This is something that I mean, we're deep in the
Speaker 4: weeds of international financial machinery here and hand the money
Speaker 4: to do public This is something you know. I was
Speaker 4: at the EU Africa sulmost two and a half years
Speaker 4: ago when this idea was sort of advanced to a
Speaker 4: level where the reallocation would be able to happen. The
Speaker 4: political will was there from under a manual macroan all
Speaker 4: the time. Is the political will still there to action
Speaker 4: this and to make sure that that transmission happens as
Speaker 4: quickly as possible.
Speaker 3: I remember, there are two things we were talking about here.
Speaker 9: That is the one in which you you know, there
Speaker 9: was a request to make sure that some amount of
Speaker 9: money actually given okay through the IMF. You know three
Speaker 9: is probably achieve reduction and growth, trust and residence and
Speaker 9: so saliability trust. So that's that's money that's been given
Speaker 9: to IMF. That's that's a different thing the one that
Speaker 9: I'm talking about, and that's going very well. I think
Speaker 9: they have probably one hundred billion dollars they're looking for
Speaker 9: of SDR. The one we're looking for is how the
Speaker 9: seas gets re channel through the multilateral development so we
Speaker 9: can actually leverage that.
Speaker 3: You know.
Speaker 9: The thing is that you know when you when the
Speaker 9: money goes to IMF. IMF is very very great. Crystal
Speaker 9: Nam sister has been mostly helpful. But you know, for us,
Speaker 9: it's a it's a wonderful thing. You know, every dollar
Speaker 9: becomes forth, it's good for you as a shareholder, it's
Speaker 9: good for a tax for us, and you don't lose
Speaker 9: all the money. And so the progress has been made
Speaker 9: is phenomenal. Progress been made. But I think we just
Speaker 9: have to tie the nots and make sure the money
Speaker 9: actually comes home and we can continue to do. I
Speaker 9: just tell you one thing that I can do. I
Speaker 9: take the case of, you know, our jad Bank. President
Speaker 9: of the World Bank and I go together during the
Speaker 9: Spring meeting and we said, look, I said, we still
Speaker 9: have six hundred million Africans that don't have access to electricity.
Speaker 3: That doesn't make any sense.
Speaker 9: You can't grow in the dark, you can industrialize in
Speaker 9: the dark, and you cannot be competitive without electricity.
Speaker 3: So I said, we're going to have to deal with it.
Speaker 9: And so we both agreed and we launched what's called
Speaker 9: Mission three hundred, which is to connect three hundred million
Speaker 9: Africans to electricity by twenty thirty. Now, universal access to
Speaker 9: electricity in Africa is going to require one ninety billion dollars,
Speaker 9: okay by year. Now here's where the SDR connection comes in.
Speaker 9: Because if you actually have fifty billion dollars of SBRs
Speaker 9: and you can leverage it at four times because they
Speaker 9: have rid capital for you, that means that problem is
Speaker 9: solved once and for all.
Speaker 3: That is two hundred billion dollars at least to solve
Speaker 3: that problem.
Speaker 9: So that's the connection that we are trying to make
Speaker 9: and President Lulan as President of the G twenty. It's
Speaker 9: also we've raised the issue also about he has something
Speaker 9: called the Global Alliance against Poverty and Hunger, Okay, and
Speaker 9: so it's the same thing. You know, you use this
Speaker 9: SVR as well a lock massive amount of capital to
Speaker 9: deal with all the things. We say, we have a
Speaker 9: Pact of the Future.
Speaker 2: So do you hope you say think that within six
Speaker 2: months twelve months you have that capital or that you
Speaker 2: can move forward.
Speaker 9: I believe that we will because I think that's the
Speaker 9: most difficult part. We've gone over that. So it's a
Speaker 9: question now of how we're going to use it and
Speaker 9: how we can get it out. So I think so yes, absolutely, Yeah.
Speaker 2: Well, you know, one of the other things I'm just
Speaker 2: curus other parts of the world where you you know,
Speaker 2: look to access you know, partnerships money. You guys have
Speaker 2: been working with the Arab Bank for Economic Developments on
Speaker 2: some key projects. What can you tell us about further
Speaker 2: expansion there. We're also curious about, you know, the relationship
Speaker 2: with China and money coming in from China. What can
Speaker 2: you tell us in those those two aspects.
Speaker 9: Yeah, you know, they are bank for Ecomic Development in
Speaker 9: Africa is a very great partner of the African Development
Speaker 9: Bank and we have joint projects that we do together.
Speaker 3: We do more, Oh yeah, we will do more.
Speaker 9: And we walk in education and water, in sanitation, in
Speaker 9: agriculture and infrastructure and so on, and so that you're
Speaker 9: celebrated at fifture down in Vastary. I was one of
Speaker 9: the keynote speakers to speak there. They've also invested in
Speaker 9: one of the things that we up call it Alliance
Speaker 9: for Green Infrastructure in Africa, which is if they could
Speaker 9: that we just put together to mobilize ten billion dollars
Speaker 9: of private capital going into greening the infrastructure space, greening
Speaker 9: the gribbing, the green transport, green hydrogen, green Amumonia and
Speaker 9: also making sure that we can basically have you know,
Speaker 9: climate resilient infrastructure all across Africa. So we have a
Speaker 9: lot together. We've done, you know, together about almost eight
Speaker 9: hundred and thirty five million dollars of joint projects in
Speaker 9: the last seven years and we've putting six hundred million
Speaker 9: dollars into that. So we have great partners and I
Speaker 9: look forward to us doing more together.
Speaker 2: What about China, you know, over the years we've talked
Speaker 2: about the investments China has done some of it.
Speaker 6: You know, they're concerned about their access.
Speaker 2: Certainly to raw materials, basic minerals and so on to
Speaker 2: what can you tell us on that front?
Speaker 9: Well, I think, you know, China invests quite a lot
Speaker 9: in infrastructure in Africa, and people get to ask me
Speaker 9: a lot of questions about that, you know, but the
Speaker 9: question really is that you know, Africa, Africa's infrastructure gap
Speaker 9: is so massive. You know, Africa needs at least sixty
Speaker 9: two one of an eight billion dollars a year. You know,
Speaker 9: not to talk of different now, not to talk of
Speaker 9: even the challenges you have.
Speaker 3: You know, you're doing.
Speaker 9: The infrastructure and all of a suddenly you have all
Speaker 9: these cyclones and hurricanes and all these things that are
Speaker 9: happening that's actually setting you back, right and so, but
Speaker 9: I think that what has happened is on the infrastructure space.
Speaker 9: What I just know more generally is a lot being
Speaker 9: done is by governments. And I don't think that infrastructure
Speaker 9: shill always be carried by governments. I think you need
Speaker 9: to have a lot more private capital moving into infrastructure.
Speaker 9: I think you have to make sure that the debt
Speaker 9: bodings from infrastructure are reduced. I also think it is
Speaker 9: very very important to make sure that the infrastructure being
Speaker 9: done in any case should be infrastructure that you can recycling.
Speaker 9: Know that words governments, if you've actually taken a lot
Speaker 9: of loans to do infrastructure, why not just do asset
Speaker 9: recycling basically, just recycle that into private cycle and then
Speaker 9: free or more capital to be able to do more.
Speaker 9: And so that's how I look at it. And and
Speaker 9: I think that for US a African development, in the
Speaker 9: last seven years or so, we've put in more than
Speaker 9: fifty five fifty five billion dollars into Africa.
Speaker 3: We are the largest by far.
Speaker 9: What's large roal financial institution investing in infrastructure.
Speaker 10: When you talk to international investors, doctor Odistina, I know
Speaker 10: you were meeting with a few of them while you
Speaker 10: were here this week. I mean, is what is their concern?
Speaker 10: Because we hear a lot about risk in investing potentially
Speaker 10: in a lot of these infrastructure projects that you're talking about.
Speaker 10: I mean, what is it that international investors are hoping
Speaker 10: to see in order to penetrate more into more of
Speaker 10: these markets.
Speaker 9: Yeah, you know, if you take a look at it,
Speaker 9: we don't get that much of private capital moving into
Speaker 9: infrastructure right in Africa. But the issue is people talk
Speaker 9: about risk, well, life is about risk return. People forget
Speaker 9: about the return part of that, and so it's a
Speaker 9: risk return world. And I take a look at Africa
Speaker 9: and I don't think Africa is risk here than any
Speaker 9: other parts of the world. Don't believe me, Just believe
Speaker 9: the data that was an assessment that was done by
Speaker 9: Moody's analytics would look that the cumulative losses on infrastructure
Speaker 9: are financing globally, not just in Africa. And what they
Speaker 9: find they look at fourteen years of non performing loans
Speaker 9: and debt and they found that in Africa the non
Speaker 9: performing loans was one point nine percent, in North America
Speaker 9: it was six point six percent, in Latin America it
Speaker 9: was about ten percent, and you know, Eastern Europe about
Speaker 9: twelve point four percent, and Western Asia mo Albost four
Speaker 9: point five percent. So Africa is not as risky as
Speaker 9: people say. Perception is not reality.
Speaker 6: How do we change that perception?
Speaker 2: Because I think you've got this really smart global audience
Speaker 2: right now, and I think we think of emerging world
Speaker 2: and we think, oh, yeah, Africa, what is what's the
Speaker 2: message you would like to get out to the audience
Speaker 2: who's listening right now.
Speaker 9: Well, first and foremost is that you know the fact
Speaker 9: that I said, you know it's about risk return. What
Speaker 9: doesn't mean they are no risk, you know. So first
Speaker 9: and foremost is that we have the vehicles to do
Speaker 9: rest those things. So we have project risk, market risk,
Speaker 9: and whether there are also political risk insurance that we
Speaker 9: can actually provide the fact the African.
Speaker 6: Development and say we have a little political rest.
Speaker 3: Yeah, yeah, we can, we can do there.
Speaker 9: So I'll stay with within my lane. But but but
Speaker 9: but we're trying to put all of our instruments, so
Speaker 9: partial risk guarantee instruments, partial credit guarantee instruments that we
Speaker 9: do for counterparties with our government private sector. We're trying
Speaker 9: to put all that together into what we call an
Speaker 9: African Insurance and Guarantee Agency. So so so private sector
Speaker 9: needing those risk instruments don't have to run in every
Speaker 9: everywhere to lower their transaction costs to do it. And
Speaker 9: that would be a game changer because we also provide
Speaker 9: insurance against equity investments. If we provide insurance for you,
Speaker 9: when you actually also have political insurance and insure you
Speaker 9: against climate climate sharks. And the last thing I'll say
Speaker 9: about this particulating is just that when investors are looking
Speaker 9: to invest, they're asking the question, were the bankablele projects?
Speaker 3: Right?
Speaker 9: You have to be able to have a whole series
Speaker 9: of bankable projects, and we're doing very well on that.
Speaker 3: We have. For example, an institution that.
Speaker 9: I actually share is bo It's called Africa fifty is
Speaker 9: a private equity vehicle that has about now one point
Speaker 9: one billion dollars and portfolios of eight billion dollars on
Speaker 9: infrastructure assets. And basically what it does, it's a part
Speaker 9: of a company is to it's called Project development company
Speaker 9: and so you developed bank abook projects that it can sell, right,
Speaker 9: it doesn't matter what it is. So we're trying to
Speaker 9: make project development a business issue, not just the development.
Speaker 6: Issue, the financial the private sector involvement.
Speaker 3: Right, that's right, that's right.
Speaker 9: And the last now I just say about investing in infrastructure,
Speaker 9: it's important of local currency financing. You know, we talk
Speaker 9: about debt just now, but if you actually look at
Speaker 9: the assets that people are investing in, the revenue streams
Speaker 9: are going to becoming in local currencies and the currencies
Speaker 9: are actually depreciating very much. So Locot currency bonds are
Speaker 9: very going to be very important for financing that and
Speaker 9: also synthetic local currency instruments are going to be there
Speaker 9: and as well as you know, we at the bank,
Speaker 9: we support financial institutions in Africa that actually learn in
Speaker 9: local currency. But we take the shu ensure you, We
Speaker 9: give you the risk, you'll lend it and we pay.
Speaker 9: We'll be able to risk ourselves.
Speaker 10: Right, we're seeing a lot of that volatility with currencies
Speaker 10: all over the continent. Doctor Ardisina, we were just talking
Speaker 10: briefly about how this is potentially this is your last
Speaker 10: un ga as president of the African Development Bank. I
Speaker 10: wonder how you think about your time in office over
Speaker 10: the past decade or so. You talked about how it
Speaker 10: the bank looks a lot differently than how you inherited it.
Speaker 10: I mean, how would you assess it?
Speaker 9: Well, first and forms it is the greater owner of
Speaker 9: my life to be asked by shareholders. You know, we've
Speaker 9: got any one shareholders to go and actually you have
Speaker 9: the resources, you have the confidence, you have the support,
Speaker 9: and guess what, go change the continent of my birth.
Speaker 9: And that's not for me a job, that is a
Speaker 9: mission I take it as a mission and so that's
Speaker 9: that's how I look at it every single day. Now,
Speaker 9: look at what has happened to the bank since we
Speaker 9: actually started. You know, for example, you know when we started,
Speaker 9: I said that we'll have to have a clarity about
Speaker 9: how the bank tackles issues.
Speaker 3: Day to day issues of people.
Speaker 9: People shouldn't really look you know, you have African Development Bank.
Speaker 9: The issue for me is not just the bank. We
Speaker 9: don't how to run the bank is the issue is
Speaker 9: the development part, right, And so we actually set out
Speaker 9: to actually say five priorities for Africa. Light of empower Africa,
Speaker 9: universal access to electricity, feed Africa, inte great Africa, infrastructure
Speaker 9: wise industrialized Africa so Africa can be competitive with global
Speaker 9: value chains, okay, and increase his share of global manufacturing.
Speaker 9: And then of course improved the quality of life of
Speaker 9: the people of Africa the things that we all care about, water, sanitation, education,
Speaker 9: e skillits job for young people and all of that.
Speaker 9: So we in the last time, since last seven years,
Speaker 9: that work has impacted on more than four hundred million people.
Speaker 9: The second is what we've done in terms of raising
Speaker 9: more capital for the bank. When I was elected president.
Speaker 9: First at the bank. Quite first term, the capital of
Speaker 9: the bank was ninety three billion dollars. Today the capital
Speaker 9: of the bank is nine three hundred and eighteen billion
Speaker 9: dollars franks.
Speaker 3: And last year, last year just one point.
Speaker 9: Last year, the African Development Bank was ranked as the
Speaker 9: best mortalized for a financialite institution in the world.
Speaker 3: And last year and this year we were.
Speaker 9: Ranked also as the most transporting financialite institution in the world.
Speaker 3: So I think that you know, we've done pretty well.
Speaker 9: I think my staff I've been fantastic, but most importantly,
Speaker 9: my shareholders have just been phenomenal. When I was re elected,
Speaker 9: I was re elected with one hundred percent of the votes,
Speaker 9: so which was fantastic.
Speaker 2: Well, it's certainly a part of the world that we
Speaker 2: focus on so much. Gend knows this as she spent
Speaker 2: so much time on it as well. Doctor Adisina, thank
Speaker 2: you so much. Thank you for finding time for us.
Speaker 2: Jens Abazagia, thank you as well for joining us and
Speaker 2: on this conversation.
Speaker 6: That's going to do it.
Speaker 2: Of course, the president of the Africa Development Bank, a
Speaker 2: brother Marco.
Speaker 1: The journal Now about you let me drive no no, no, no, please, honey,
Speaker 1: please gravel I want to.
Speaker 8: It's a good question.
Speaker 4: This is the Drive to the Clone done well.
Speaker 3: On Bloomberg radios.
Speaker 2: All right, we've got just eighteen minutes to go for
Speaker 2: the Thursday trading session.
Speaker 6: Charlie breaking down the numbers.
Speaker 2: We're kind of bouncing around a little bit off our
Speaker 2: best levels of the session. When you look at all
Speaker 2: of the major equity averages, we're wondering whether or not
Speaker 2: we see another record on the S and P five
Speaker 2: hundred didn't happen yesterday, but could it possibly happen today?
Speaker 2: So let's get to it with the markets. It does
Speaker 2: feel like we're almost in this. Do you guys ever
Speaker 2: feel that like over London? Like sometimes we're going from
Speaker 2: FED to FED meeting yea, or we're going from earning
Speaker 2: season to earning season.
Speaker 4: Yeah, basically it's like and this is we're in the
Speaker 4: in between.
Speaker 6: It's exactly right. We're just kind of waiting for some direction.
Speaker 2: Let's see what Brooke May has to say about all
Speaker 2: of it. She's managing partner at the independent advisory firm
Speaker 2: Evans May Wealth. They've got one point four billion in
Speaker 2: assets under management. She joins us from Carmel Indiana. Is
Speaker 2: it Carmel or caramel.
Speaker 8: It's caramel caramel.
Speaker 6: Okay, I had a feeling I might have said it wrong.
Speaker 2: You're not alone having been to Carmel in California, But hey,
Speaker 2: tell us about what's top of mind for folks in
Speaker 2: that part of the world. I love it when we
Speaker 2: talk to people that aren't necessarily on one of the
Speaker 2: major costs, but tell us what's top of mind when
Speaker 2: it comes to the economy, when it comes to the
Speaker 2: investing environment.
Speaker 6: Just kind of set the scene for us.
Speaker 8: Yeah, you know, right now, clients are concerned about the
Speaker 8: elevated levels in the market. When you ask our investors,
Speaker 8: they feel pretty good about their personal situation. However, they're
Speaker 8: concerned about the broad economy, and so as we navigate that,
Speaker 8: you know, we're looking at earnings and we're trying to
Speaker 8: figure out what's the right level for the market to
Speaker 8: be trading at. Our urine price target was fifty six
Speaker 8: hundred to fifty eight hundred, and we're there a little
Speaker 8: earlier than expected, but we think the market could go higher.
Speaker 8: When you look at the amount of cash on the sidelines,
Speaker 8: there's about six trillion sitting in cash and money markets.
Speaker 8: While we don't think all of that would flow back
Speaker 8: into the market. About one point trillion went into markets
Speaker 8: in twenty twenty three alone. So if people didn't buy
Speaker 8: corporate bonds at buy percent a year ago, are they
Speaker 8: going to buy them at three and a half percent.
Speaker 8: We think that could be another tailwind in addition to
Speaker 8: earnings growth.
Speaker 4: So I mean, what's going to motivate that money off
Speaker 4: the sidelines?
Speaker 3: Though? I mean, if.
Speaker 4: We're looking at the SMP potentially heading for a forty
Speaker 4: second records closed this year, I mean, what what's going
Speaker 4: to do better that's going to motivate that money out
Speaker 4: of cash?
Speaker 8: Well, I think that they'll be pushed out by lower
Speaker 8: money market rates and looking for higher earning alternatives. And
Speaker 8: while they might not get that in the very near term,
Speaker 8: over time, they're going to make more inequities than they
Speaker 8: would sitting in a money marketer in cash.
Speaker 2: All right, So then you know, having said that, you know,
Speaker 2: someone comes to you with some new investment money, where
Speaker 2: do they put it?
Speaker 6: In your views?
Speaker 2: And it is you know, Steph and I kind of
Speaker 2: kicked it off saying we're in this interesting, interesting, you
Speaker 2: know time period. Right, we just got through a major
Speaker 2: FED meeting. We wait for the next one. We're getting
Speaker 2: ready for earnings to really kick off. So do you say,
Speaker 2: wait and hold, we've got elections just around the corner.
Speaker 8: What do you say, we're dollar cost averaging over the
Speaker 8: next year. For new money, our clients who are invested,
Speaker 8: we're staying invested. It's difficult to time the market, but
Speaker 8: at these elevated levels, and the fact that when you
Speaker 8: look at earnings relative to where the market is, you know,
Speaker 8: we feel like we're fully priced in right now, so
Speaker 8: we're not getting out of the market. But for new money,
Speaker 8: we're dollar cost averaging in and we're doing it over
Speaker 8: the next year.
Speaker 4: When we're thinking about you know, earning season and the
Speaker 4: sort of signals we're going to start getting from the
Speaker 4: big companies now about what comes towards the end of
Speaker 4: the year. What are the key things that you're watching
Speaker 4: out for. Where are you digging into the detail.
Speaker 8: We're looking at revenues. You know, companies in this challenging
Speaker 8: environment have been able to maintain their profit margins. It's
Speaker 8: been impressive. But at this point, if we see the
Speaker 8: value trade where people are looking more for value, there
Speaker 8: there's some compression there, and so we want to see
Speaker 8: companies grow the revenues. When we look at this last
Speaker 8: earning season, seventy nine percent of companies beat on earnings,
Speaker 8: which is well above the historical average, but only sixty
Speaker 8: percent of companies beat on revenue. So clearly there's some
Speaker 8: concern there and that's one of the factors that we're
Speaker 8: going to be looking at going forward.
Speaker 2: Do you like big tech still though we do?
Speaker 7: We do.
Speaker 8: We also like the broad market though. When you look
Speaker 8: at going into twenty twenty four, the earnings growth expectation
Speaker 8: for big tech was twenty eight percent, and the other
Speaker 8: four hundred and ninety three names earnings were only expected
Speaker 8: to be up about seven percent. Going into twenty twenty five,
Speaker 8: we think big tech earnings will be up seventeen to
Speaker 8: eighteen percent, but the rest of the market to be
Speaker 8: up about thirteen percent, So we're seeing a broadening in participation.
Speaker 8: Corporate earnings are healthy right now, and when you talk
Speaker 8: to CEOs, their outlook is stable. They think that wages
Speaker 8: will be up a little over three percent over the
Speaker 8: next year. They think that hiring will be stable. And
Speaker 8: when you listen to those earnings calls, the word inflation
Speaker 8: was only mentioned about on about fifty percent of the time,
Speaker 8: so we think that really the CEO sentiment is relatively stable,
Speaker 8: and they're the ones that are doing the hiring and firing.
Speaker 4: What about those companies for the economy one of those
Speaker 4: companies that are most exposed to the consumer as well,
Speaker 4: because I mean, there was a time when we were
Speaker 4: a little bit worried about some of the credit card
Speaker 4: data and a couple of secmdals in the page book
Speaker 4: about you know, some consumer bumps to come. They haven't
Speaker 4: really materialized. Yes, what's your view?
Speaker 8: I agree, you know, Unfortunately there's a bifurcation right now
Speaker 8: though in the environment where lower income households are really
Speaker 8: being squeezed. However, Middle America and really the high end
Speaker 8: consumer haven't struggled nearly as much. They're looking at their
Speaker 8: four one K balances and they're at all time highs.
Speaker 8: They feel good about the value in their house and
Speaker 8: so really it's a tale of really two cities. When
Speaker 8: we look at default rates, for example, it's in the
Speaker 8: subprime area, specifically mostly in low income. So there are
Speaker 8: pockets of the economy that are struggling, but when you
Speaker 8: look at the broad economy, it's relatively healthy. Unemployments at
Speaker 8: four point two percent. Granted, that's well above the sub
Speaker 8: three point nine percent we saw for two years, but
Speaker 8: when you compare it to an historical average, it's really
Speaker 8: low and we don't see it ticking up much more.
Speaker 8: With FED rate cuts coming, that's going to bode well
Speaker 8: and we think that unemployment is going to be relatively stable.
Speaker 2: Hey, Brooke, just got about forty five seconds left here.
Speaker 2: One of the most read stories on the Bloomberg is
Speaker 2: an exclusive. It's about City Group and Apollo Global Management
Speaker 2: teaming up in the fast growing credit private market. They're
Speaker 2: going to work together on twenty five billion dollars worth
Speaker 2: of deals over the next five years.
Speaker 6: Private credit, private credit.
Speaker 2: You are dealing with I'm assuming higher or high net
Speaker 2: worth individuals. How much do they want to be in
Speaker 2: kind of the alterative investment space. And again, just got
Speaker 2: about thirty seconds left here.
Speaker 8: Yeah, it's a new entry point for us. Over the
Speaker 8: last few years, private credit has become a buzzword and
Speaker 8: most of the mutual fund and investment firms that we're
Speaker 8: talking to are talking to us about private credit. So
Speaker 8: there's growing demand there. Yields are very attractive and whenever
Speaker 8: the economy is this strong, the DeVault risk isn't. Isn't
Speaker 8: what it would be in a struggling economy.
Speaker 2: All right, Got to leave it on that note. Listen
Speaker 2: so appreciate it, take care, enjoy the rest of the week.
Speaker 2: Brook May, Managing partner at Evans Maywelthyre and independent advisory firm.
Speaker 2: They've got one point four billion in assets.
Speaker 1: This is the Bloomberg Business Week Podcast. I'll a little Apple,
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