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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, SoundCloud, Bloomberg dot Com,

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Speaker 1: and of course on the Bloomberg Terminal. A bit of

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Speaker 1: a surprise early in the morning as I scroll through,

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Speaker 1: and it's real simple discussion of consulates in the Baltic

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Speaker 1: States that sets up an important conversation with the European

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Speaker 1: Commissioner for Trade. He's a former Prime Minister of his

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Speaker 1: lat Via. Waldis Dombrowskis joins us right now and we've

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Speaker 1: had many conversations over the years, Mr Dombroskas, I have

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Speaker 1: to rip up the script and speak to you of

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Speaker 1: the sea changes from Lithuania to Latvia, up to Estonia

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Speaker 1: and across the Finland. Your area is in a tumuth

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Speaker 1: we've really never seen since World War Two? What do

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Speaker 1: you need from America, from NATO and from your Brussels

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Speaker 1: frankly to provide courage to your lat Via and for

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Speaker 1: that matter, couraged Sweden in Finland. Good morning, Indeed, Russia's

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Speaker 1: aggression against Ukraine is having implications across the entire region,

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Speaker 1: and it actually undermines the entire European security architecture. And

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Speaker 1: clearly what country since the region, like Baltic states like

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Speaker 1: Poland are looking for is a NATO's presence on the ground,

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Speaker 1: strengthening of defense capabilities and clearly also support for Ukraine,

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Speaker 1: because it's clear that if we do not stop putting

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Speaker 1: in Ukraine, he will venture further in his aggressive war.

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Speaker 1: So that's why it's so important also to make sure

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Speaker 1: that we provide all necessary support to Ukraine to stop

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Speaker 1: the war there, but at the same time also step

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Speaker 1: up the preparedness in the region. Your Latvia does not

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Speaker 1: touch upon this exclave of kleining Grid, it touches Lithuania

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Speaker 1: and Poland, but it seems to be front and center.

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Speaker 1: Explain to Bloomberg's global audience, how we defend ourselves against

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Speaker 1: the reality that Mr. Putin wants some form of bridge

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Speaker 1: to his exclaim he can only get there by water.

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Speaker 1: Compare that to what we see now on the shores

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Speaker 1: of the Black Sea and the path from Russia to Crimea. Well,

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Speaker 1: first of all, uh, it's uh more than excuse than

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Speaker 1: any real concern, because reality is that Russia has a

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Speaker 1: corridor past ability to transport people and goods between mainland

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Speaker 1: Russia and Kaliningrad, anclave doing so boss with railway and

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Speaker 1: with road transport, and already also now when EU is

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Speaker 1: putting lots of sanctions against Russia, this corridor is not

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Speaker 1: being subjected to sanctions. So that's indeed more as an

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Speaker 1: excuse which Russia is trying to to use potentially to

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Speaker 1: close down what is called Chowaki Corridor, which is connecting

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Speaker 1: Poland and Leuthania. But it's worth noting that it's all

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Speaker 1: a territory of NATO. So that's why it's very important

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Speaker 1: that their proper NATO deference plans in a place also

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Speaker 1: against this kind of scenario. And you also raised questions

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Speaker 1: concerning Finland and Sweden as we know, but those countries

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Speaker 1: are currently considering a possible application to actually join NATO.

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Speaker 1: Right now, we're talking also about the potential consequences additional

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Speaker 1: consequences for Russia. A number of European nations have called

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Speaker 1: for a full embargo of oil from Russia. What would

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Speaker 1: that do to member states in terms of economics? Uh? Well, Indeed,

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Speaker 1: since the beginning of Russia's aggression, EU has implemented already

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Speaker 1: five rounds of sanctions against Russia, and now we're discussing

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Speaker 1: possible next sanctions, which among others include a possibility of

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Speaker 1: some kind of oil embargo in one form or another.

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Speaker 1: We held done this assessment of what implications it's going

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Speaker 1: to help for the European economy if there is a

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Speaker 1: sudden cutting off of Russia's hydrocarbons, not only oil, but

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Speaker 1: also gas, and as a conclusion is that not without problems,

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Speaker 1: European Union can cope with this scenario. Well, as regards oils,

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Speaker 1: there is a global oil market, so there is a

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Speaker 1: possibility to find another suppliers. As regards gas, we are

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Speaker 1: now working very intensively to diversify guards supplies, including from allergy,

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Speaker 1: including from the United States, but also to accelerate the

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Speaker 1: green transition rolling out of renewable energy, so basically working

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Speaker 1: at full speed to reduce a dependency on Russian hydrocarbons.

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Speaker 1: And well, these you talked about potential oil embargo in

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Speaker 1: one form or another. There have been some questions about

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Speaker 1: how severe these embargoes could actually be given the reluctance

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Speaker 1: by Germany, namely to really go forward with this because

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Speaker 1: of their dependence on Russia, yes, for gas, but also

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Speaker 1: for oil. How quickly could something be implemented and how

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Speaker 1: strict could this embargo be? Well, in terms of speed,

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Speaker 1: we are actually ready to move up very fast, as

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Speaker 1: as regards that take Nicol work. So it's mainly the

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Speaker 1: question of reaching political agreement because sanctions are agreed in

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Speaker 1: the EU at the principle of unanimity of all member states,

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Speaker 1: so all twenty seven member states need to agree. That's

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Speaker 1: why those political consultations are now ongoing very intensively. But

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Speaker 1: technically we are ready to move very fast. As our

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Speaker 1: first sanctions packages had shown, we are ready to put

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Speaker 1: them placed in a one or two days. So cut

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Speaker 1: to the chase, Mr Dombraska's with your twenty four seven

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Speaker 1: work and the work of everyone in Europe. Are you

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Speaker 1: essentially waiting for the outcome of the French election? Are

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Speaker 1: people like you essentially and hold until Monday? Well, uh,

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Speaker 1: it must be said, absolutely not. And as you noted before,

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Speaker 1: France has actually voiced its support for oil embargo, so

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Speaker 1: it's not something which is holding us back, and that

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Speaker 1: was not something which was holding us back for example,

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Speaker 1: to presenting the fifth sanctions package. Also in this very

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Speaker 1: same pre election context, it must be said that there

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Speaker 1: is quite a degree of determination and unity in the

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Speaker 1: EU to stop Russia's aggression, to put pressure on Russia

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Speaker 1: through sanctions, through other means, and to provide a maximum

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Speaker 1: possible support for Ukraine. Varius, do you get the impression

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Speaker 1: that the Europeans have finally learned a lesson of dealing

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Speaker 1: with Russia, given what happened at the end of the

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Speaker 1: first decade of this millennium, warning one Georgia, another one

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Speaker 1: in Crimea, and yet the Germans it was just businesses usual,

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Speaker 1: business as usual with the German government. Have we finally

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Speaker 1: learned that lesson? Well, clearly, I think there is now

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Speaker 1: quite a broad acknowledgment that there were mistakes made also

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Speaker 1: not reacting in a firm and determined way against Russia,

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Speaker 1: aggression against Georgia, annexation of Crimea and other events. So

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Speaker 1: from that point point of view, one can say, yes,

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Speaker 1: this lesson is finally learned. And actually, as you knows

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Speaker 1: that Central East and European countries had been ringing alarm

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Speaker 1: bells already for many years, so finally it's hurt and

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Speaker 1: there is a firm, undetermined action, and it's important that

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Speaker 1: fast stays. Of course, that we stay consistent and make

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Speaker 1: sure that this war is really stop and Russia's aggression fails.

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Speaker 1: Commissioner even a good friend to this program every years,

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Speaker 1: Thank you very much for him with us again this morning,

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Speaker 1: Farriston Brodsky, the European Commission. Come on, Claudia, you're killing

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Speaker 1: me out of the University of Michigan Inflation combine with

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Speaker 1: Matt Superior, Claudia Ship, Claudia Shapiro, Claudius sum joins us

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Speaker 1: this morning with Jane Institute. Claudia, I want to cut

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Speaker 1: to the chase you are legit pro out of the

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Speaker 1: Michigan Combine and the effect of inflation across the different

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Speaker 1: death styles of America, Mary Daily and others. They can

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Speaker 1: look from sixty feet the working class, the middle class,

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Speaker 1: the subclass, the rich, all those partitions, how are they

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Speaker 1: affected by this historic inflation? Right? Well, you're absolutely correct.

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Speaker 1: Inflation does not affect us all in the same way.

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Speaker 1: I mean, frankly, just the thin inflation prices are not

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Speaker 1: this big blob of an aggregate number. It's everybody like

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Speaker 1: what we put in our shopping basket. It differs right

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Speaker 1: in a lot of ways, and what you have to

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Speaker 1: pay for it. Say, there's people who working class, even

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Speaker 1: up into the middle class, they spend a lot more

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Speaker 1: on necessities, on gas, on food right now. I mean

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Speaker 1: for a while, housing that have been just not affordable.

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Speaker 1: And they're the they're the things we talk about that

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Speaker 1: are the prices are rising and and rich people they're

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Speaker 1: they're doing okay, Like I'm not worried about them. But

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Speaker 1: inflation is complicated because it has you know, it can

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Speaker 1: benefit people that have a lot of credit card debt.

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Speaker 1: Ain't so good for bond holders, right, So, like there's

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Speaker 1: a lot going on, but the big thing is high prices,

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Speaker 1: high inflation. They're disruptive, like they make life challenging. And

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Speaker 1: this is important. Come on, Michigan has owns a high

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Speaker 1: ground on this. You studied there. Allan Meltzer's rolling over

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Speaker 1: in his grave at Carnegie Mellon because Allen Meltzer wants

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Speaker 1: to go aggregate. Mary Daily is going aggregate. Chairman Powell's

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Speaker 1: going aggregate. Can we beat seven percent inflation going aggregate?

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Speaker 1: Or do we need a FED that actually has to

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Speaker 1: understand the death style and impact. So I firmly believe

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Speaker 1: in the FED on this one. Like, if anybody knows

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Speaker 1: how to get this under control, it's j Powell and

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Speaker 1: his team. Now, I will say, what is very disconcerting,

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Speaker 1: and you talked about the war in Ukraine just earlier

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Speaker 1: in the show. Food gas prices are totally out of

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Speaker 1: control of the FED, right those they don't they would

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Speaker 1: have to cut demand in a way that would be

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Speaker 1: absolutely frightening, to get people not to drive to work

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Speaker 1: as much and bring gas down, or you know, tighten

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Speaker 1: the belt and not feed the kids as much. So

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Speaker 1: that but there's a lot they can do on all

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Speaker 1: the rest of the stuff we buy, right So there

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Speaker 1: and and they're making progress. The last Consumer Price Index

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Speaker 1: report month over month was kind of encouraging. Okay, a

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Speaker 1: long way to go. But but but Claudia, let's say,

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Speaker 1: I mean the idea here is that perhaps you don't

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Speaker 1: believe that the FED has to go quite as quickly

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Speaker 1: as some of the more aggressive hawks out there. I

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Speaker 1: do wonder, though, how much you have to reassess when

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Speaker 1: you do see things like housing prices continue to climb,

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Speaker 1: our housing starts continuing to climb beyond expectations despite the

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Speaker 1: tightening that we're seeing in content in financial conditions right. Well,

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Speaker 1: to be clear, I mean I my baseline is fifty

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Speaker 1: base this points in May and June. Right, I think

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Speaker 1: it's pretty clear they're signaling two moves, not just one.

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Speaker 1: I think that's appropriate. The housing mortgage rates, I mean

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Speaker 1: they have gone up the februaries basis point mortgage rates

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Speaker 1: are up two percentage points, right, it is clear that

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Speaker 1: there is some of this. I'm gonna buy now before

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Speaker 1: prices go even higher. So I think it's going to

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Speaker 1: take a little while for us to see the cooling.

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Speaker 1: And but like j Powe cannot print houses, right, Like,

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Speaker 1: we have a big problem, and we have had a

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Speaker 1: big problem for decades of affordable housing and underbuild. So

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Speaker 1: maybe this is a wake up call, like build the houses, Claudia.

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Speaker 1: What do you think would be a restrictive policy rate?

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Speaker 1: I so I wouldn't the FED, and I don't think

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Speaker 1: they'll do this if they really um start running out

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Speaker 1: of the gate. I know Jim Bullard was putting out

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Speaker 1: a hypothetical, but I think like to seventy five basis

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Speaker 1: point moves would over do it. I mean, particular, we're

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Speaker 1: going to keep getting saved by the June meeting a

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Speaker 1: lot more information about the economy. I mean it is

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Speaker 1: if they go too hard and the world serves us up,

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Speaker 1: you know, a particular set of conditions. But we could

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Speaker 1: have an undershoot next year. I mean I think that'd

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Speaker 1: be okay. But I mean you don't, like, you can't

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Speaker 1: overdo it. You gotta see the data, you know, adjust

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Speaker 1: to the data. It's absolutely clear they need to go harder, um,

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Speaker 1: but not too much. Like that's that's a big cold.

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Speaker 1: That is, if they went too hard, we can have

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Speaker 1: an undershoot of their inflation target next year. What would

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Speaker 1: too hard to be to get inflation back below two? Recession?

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Speaker 1: I mean they need recession? You think would achieve that?

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Speaker 1: I mean the reason ask that is because some people

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Speaker 1: think that you could actually get a contraction and growth. Well,

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Speaker 1: prices are still anovcting above Yeah, good luck with that. Um,

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Speaker 1: I mean anything can happen at this point. You know,

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Speaker 1: nuclear winter is inflationary right like, so I'm not things

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Speaker 1: could be bad, but right now and we lose sight

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Speaker 1: of this, we have an economy that is back on track.

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Speaker 1: We are on trend for inflation adjusted consumers spending inflation

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Speaker 1: adjusted business investment. We never got that after the Great Recession,

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Speaker 1: the labor market jobs there there, so inflation, Claude, we're

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Speaker 1: running out of time in the clock here. Pharall's got

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Speaker 1: to close out the hour. But we're among friends here.

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Speaker 1: What's Larry Summers get wrong on this? I mean you

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Speaker 1: just basically said the stag inflation hypothesis is nuts. What's

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Speaker 1: he get wrong? Well? I think I haven't heard Larry

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Speaker 1: talk about COVID for a very long time. I don't

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Speaker 1: think there's a serious discussion about the Ukraine. I don't

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Speaker 1: know how you miss that, you know whatever. It's useful

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Speaker 1: to have somebody going around saying the world is you know,

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Speaker 1: stag inflation, inflation, recession. You know it's worth talking about.

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Speaker 1: But his story just does not stand up. It's not

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Speaker 1: the nineteen seventies Thursday Morning wrestling. I can I can

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Speaker 1: see a panel development here. Some you think we get

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Speaker 1: the former Trustury secretary on alongside, we can get Simon

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Speaker 1: Summers on stage of Davos n step back to you

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Speaker 1: can let them do their think and not get involved

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Speaker 1: for about six hour's calldy some that of the Jain

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Speaker 1: Family Institute done joins US. Now, so down, let's start

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Speaker 1: with the broader picture. We were trying to work out

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Speaker 1: whether we had a Netflix problem or a market problem.

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Speaker 1: Which one is it. I think it's a Netflix problem,

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Speaker 1: and I think you have a Facebook problem as well.

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Speaker 1: I think we you see more and more it's a

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Speaker 1: bifurcated tech teape and I think the work from home

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Speaker 1: beneficiaries are going to continue to trade off. I think

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Speaker 1: that's catch a falling knife. But what we see, but Tessa,

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Speaker 1: we'll see what Apple next week, Microsoft, cyber Semmys, that's

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Speaker 1: gonna lead tech hire. I just view it as a

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Speaker 1: have and I have not, and Netflix is clearly I

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Speaker 1: have not. It's not a market problem, it's companies for

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Speaker 1: if I believe it's a strong techer earnings next month.

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Speaker 1: You mentioned Facebook that was down yesterday by seven point

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Speaker 1: eight percent. That was brutal. You mentioned Apple as well,

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Speaker 1: So let's talk about the relationship between say Apple and

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Speaker 1: a tesla. Right now, it's China down. I think the

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Speaker 1: China story is so important. Namura overnight cut GDP for

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Speaker 1: China this year, their forecast to a three handle down.

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Speaker 1: How important to the issues in Shanghai? And do you

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Speaker 1: think they get them worked out well. I mean that

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Speaker 1: was the key from last night because for tests. So

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Speaker 1: that's the hearts and lungs of the bull story. In

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Speaker 1: terms of Gigga Shanghai, you know obviously the three weeks shutdown,

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Speaker 1: but must talk about I mean it's ramping quickly coming

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Speaker 1: out of the gate, you know now that it's reopening.

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Speaker 1: I think that's gonna be similar what we see with

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Speaker 1: Apple next week. And I think the street they're viewing

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Speaker 1: this is sort of a contained issue. Of course, you

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Speaker 1: can still have zero COVID issues in China, but overall

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Speaker 1: supply chain I think slightly improving. And that's actually gonna

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Speaker 1: be something that the were of Mapple next week, which

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Speaker 1: is I think, you know the boost for Group Retina Dan,

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Speaker 1: how confident are you that they can compete well against

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Speaker 1: the new upstart electric carmaker Ford. Look, I think fundamentally,

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Speaker 1: you know, when you look what's happened right now in

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Speaker 1: the e V landscape, it's Howso's world and everyone else's

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Speaker 1: paying rent. And I think what you're seeing here is

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Speaker 1: they're further flexing their muscles to a manufacturing perspective, and

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Speaker 1: even despite Category five hurricane headwinds in China. I mean

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Speaker 1: those numbers last night, that's a billion dollar beat, and

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Speaker 1: I think it just shows the raising for you. You

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Speaker 1: talk about raising prices, they're raising prices and demands increasing.

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Speaker 1: It just showed that's an important dynamic right now, demand

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Speaker 1: out strip and supply aby about Then, how do you

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Speaker 1: determine what a reopening story is and what's fundamental at

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Speaker 1: a time when so many people went into cars, bought cars,

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Speaker 1: bought new ones because gas prices were climbing, or because

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Speaker 1: they didn't want to take public transportation, or they weren't

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Speaker 1: traveling on airplanes internationally, how much is that also a

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Speaker 1: reopening story versus some kind of set killer shift. Yeah,

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Speaker 1: it's a great We take basically what we believe it

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Speaker 1: was like a pull forward dynamic, and we saw that

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Speaker 1: with obviously some tech names, even like a Microsoft. And

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Speaker 1: then what's the sustainable demand trend? And what we're actually

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Speaker 1: seeing is the sustainable demand trend for names like tass

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Speaker 1: On EVS and I think in tach in terms of

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Speaker 1: the cloud, digital transmission a quarter of fourth Industrial Revolution,

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Speaker 1: it's unpowered to anything we've seen the last twenty two years. Damn,

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Speaker 1: Netflix ran into some competition, whether it's puny paramount ors,

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Speaker 1: others that are more sustainable, any number of ev articles,

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Speaker 1: and I'm gonna go to Mazda here and their idea

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Speaker 1: of sustainable zoom zoom. Everybody wants to compete with Tesla.

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Speaker 1: Are you telling me they're going to maintain revenue integrity

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Speaker 1: given all that competition, I think it's gonna be a

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Speaker 1: rising tie. Is gonna lift a lot of boots, not

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Speaker 1: just a zero some game that they're gonna sustain their

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Speaker 1: unit dynamics. I think it's gonna Apple five because I

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Speaker 1: think we're gonna tempercent automotive that the e v s

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Speaker 1: and they're gonna have a bigger and bigger piece of that.

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Speaker 1: And the difference just when you compare to Hastings and

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Speaker 1: Netflix Hubris, the continue to raipe prices, others all eventually

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Speaker 1: kind of caught up, and the difference of testsa from

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Speaker 1: the battery technology and continuing to build out factors. That's

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Speaker 1: the difference between someone like a Musk and the Hastings

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Speaker 1: seeing far ast to the trees. They're one step ahead.

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Speaker 1: That's why we saw last night's numbers and I wanted

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Speaker 1: no one on the cool Laska at switch up. Look,

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Speaker 1: I think right now that was one where you know,

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Speaker 1: no one wanted to spoil the party, you know, in

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Speaker 1: terms of obviously a test of focused earnings. Obviously on Twitter,

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Speaker 1: it's the cleer elephant in the room, you know, the

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Speaker 1: collateralized stock in terms of what he's alteringly gonna need

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Speaker 1: to do with the musk with Tessa as well as SpaceX.

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Speaker 1: But I do believe there will be other times to

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Speaker 1: ask that, because there's soap proper just starting in terms

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Speaker 1: going to and sometimes spoil the party. You know, that's

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Speaker 1: just how these things work, done of wet push. Then

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Speaker 1: I screwed to catch up. So Jonathan Gray, thank you

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Speaker 1: for joining us here. I want to start here with

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Speaker 1: you on that real estate business, because no business did

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Speaker 1: better for you than opportunistic and core plus real estate.

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Speaker 1: And so when you're looking at this market, this soaring

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Speaker 1: real estate pricing market, how long does that dynamic last

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Speaker 1: for socitionale? It's great to be here. I think in

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Speaker 1: real estate it is a bit of a tale of

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Speaker 1: two cities. Um A number of areas of real estate

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Speaker 1: actually are still facing big pressure. If you think about

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Speaker 1: older office buildings and cities, if you think about regional

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Speaker 1: malls where the fundamentals are challenged, where rising rates will

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Speaker 1: put pressure on these assets, it's not as good a story.

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Speaker 1: We fortunately have some good neighborhoods to deploy capital and

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Speaker 1: real estate. We've really focused on global logistics, which has

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Speaker 1: been by far our biggest theme. Rental housing, life science,

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Speaker 1: office buildings increasingly making a bed on a recovery in

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Speaker 1: hotels and in those areas where you have shorter duration leases,

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Speaker 1: strong demand um income can continue to grow to offset

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Speaker 1: these inflationary pressures. So there are headwinds from rising rates,

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Speaker 1: but owning hard assets in the right sectors in this

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Speaker 1: kind of environment can be a good thing. John, you're

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Speaker 1: being a little meek in terms of how much exactly

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Speaker 1: you've invested in the last year in housing thirteen billion dollars.

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Speaker 1: Two days ago, you announced in all cash for campus

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Speaker 1: housing six billion dollars. Last year for single family rental

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Speaker 1: that was seven thousand houses at the time, and this

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Speaker 1: year another six billion dollars on an apartment community business.

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Speaker 1: So if anyone knows what's happening in a tight housing market,

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Speaker 1: it's you. How big of a problem are these rising

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Speaker 1: prices for the American HomeBuyer? So the challenge on housing

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Speaker 1: has been many years in the making. If you step

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Speaker 1: back and look at the supply picture, we have been

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Speaker 1: building housing at half the rate we did prior to

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Speaker 1: the financial crisis as a percentage of population. So for

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Speaker 1: a decade we've built up probably a five million home shortage,

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Speaker 1: and that imbalance, particularly after all the stimulus that came

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Speaker 1: out from COVID. People's focus on where they live, has

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Speaker 1: led to this sharp increase in pricing, and so I

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Speaker 1: think that's going to take a while to work through.

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Speaker 1: Mortgage rates going up, it's gonna make it harder, costs

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Speaker 1: going up for builders, who is gonna make it harder?

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Speaker 1: And it's really about new supply coming online. We think

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Speaker 1: capital moving into the space helps, you know, encourage new building,

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Speaker 1: which is really fundamental Hair. But you're right at some

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Speaker 1: point there are some limitations in terms of how much

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Speaker 1: folks can charge for a new home or rental prices

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Speaker 1: because of earnings. But the long term picture for housing

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Speaker 1: in America from a value standpoint is pretty good because

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Speaker 1: of this long term shortfall that's built up, John, I

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Speaker 1: want to shift gears a little bit here because a

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Speaker 1: lot of the troubles we saw that we heard from

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Speaker 1: the biggest banks, the idea of deal slowing down, We're

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Speaker 1: not seeing it right away in your performance. In fact,

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Speaker 1: you're part of one of the largest, the largest deal

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Speaker 1: announced and talked about this year for Atlantea. So what

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Speaker 1: does this mean about your propensity to deploy capital and

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Speaker 1: how big can you see yourself going when it turns

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Speaker 1: when it comes to buying assets, where are you looking

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Speaker 1: for opportunities? So I would say it really speaks to

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Speaker 1: the breath of our platform, and we did announce uh

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Speaker 1: this year four large chan in actions that share some characteristics,

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Speaker 1: but they speak to our global reach. We committed to

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Speaker 1: buy the largest casino company in Australia, the biggest last

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Speaker 1: mile logistics business in Europe, um also in Europe, you

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Speaker 1: mentioned the large transportation infrastructure company, and then the student

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Speaker 1: housing deal that we've talked about as well. These are

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Speaker 1: all big businesses, they're not all One of them involved

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Speaker 1: our private equity business. A couple of them involved our

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Speaker 1: real estate business, also our infrastructure business. And we do

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Speaker 1: this globally and that allows us to deploy capital. We also,

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Speaker 1: because of the scale of our funds, can do things

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Speaker 1: that are bigger and where we have high conviction, we

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Speaker 1: lean in and in these areas. These are hard assets,

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Speaker 1: they've got good underlying fundamentals, not as much exposure to

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Speaker 1: input costs, and as a result, we feel good about

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Speaker 1: investing in these areas. So I think one of the

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Speaker 1: things for individual investors to think about is in a

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Speaker 1: volatile market like as you know, do I want to

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Speaker 1: sit on the sidelines and just hold cash with inflation?

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Speaker 1: I think that's actually risky. So owning hard assets and

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Speaker 1: things you have high conviction and makes sense. And what

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Speaker 1: you're seeing is an expression of that high conviction. John,

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Speaker 1: there's assets you're willing to buy, but then there are

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Speaker 1: deals you may pass up on. The Financial Times reported

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Speaker 1: this week that Blackstone is probably gonna pass when it

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Speaker 1: comes to Elon Musk in the bid to buy Twitter.

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Speaker 1: What does this mean in terms of what opportunities you

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Speaker 1: might pass up on, whether it's in private equity or

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Speaker 1: in direct lending. Well, we don't really comment on individual deals,

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Speaker 1: but you know, every transaction we look at the merits

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Speaker 1: of a potential transaction based on the risk return for

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Speaker 1: our investors, and that's been our story for a long

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Speaker 1: time as investors. You know, it's it's like a batter

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Speaker 1: sitting there in the batter's box. You don't swing at

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Speaker 1: every pitch. There are things that make sense and you

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Speaker 1: look at through the lens of what are the risks

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Speaker 1: out there? What is the environment look like today? Of course,

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Speaker 1: the inflationary prism, the rising rate prism very important as

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Speaker 1: you deploy capital, But I wouldn't look into any individual

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Speaker 1: transaction is assigned to what we're doing. So before I

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Speaker 1: let you go here, i'd love for you to comment

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Speaker 1: on the geop political tensions. I know you don't have

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Speaker 1: any investments in Russia, but you have worked very closely

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Speaker 1: with China over the years, and there's a lot of

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Speaker 1: questions both about the slowdown you're seeing there in terms

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Speaker 1: of growth and the relationship between China and Russia. What

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Speaker 1: does this mean for you in the way you're thinking

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Speaker 1: about investing in China. Well, in China, I would start

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Speaker 1: by saying, this is the second largest economy in the world. Um,

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Speaker 1: we subscribe to what the Commerce Secretary said, which is

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Speaker 1: engagement through business helps mitigate tensions. UM. That being said,

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Speaker 1: you've got to be mindful that there are tensions today

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Speaker 1: on both sides and be selective and where you deploy

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Speaker 1: capital in China. We primarily have invested in the domestic economy,

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Speaker 1: mostly in real estate, mostly in logistics, which has been

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Speaker 1: our big sector around the globe, and we've been pleased

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Speaker 1: with that. But they are facing headwinds near term. You

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Speaker 1: have to acknowledge what's happening in COVID, what's happening in

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Speaker 1: their housing market, their capital markets. All of that means

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Speaker 1: it's a more difficult environment. But long term, I think

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Speaker 1: China will grow quite a bit. John, thank you so

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Speaker 1: much for your time. We're looking forward to catching up

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Speaker 1: with you again soon. That's Jonathan Great, President and CEO

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Speaker 1: of Black Zone, very close to becoming a one trillion

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00:27:35,240 --> 00:27:41,760
Speaker 1: dollar asset manager. This is the Bloomberg Surveillance Podcast. Thanks

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00:27:41,760 --> 00:27:45,040
Speaker 1: for listening. Join us live weekdays from seven to ten

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00:27:45,119 --> 00:27:49,600
Speaker 1: am Eastern on Bloomberg Radio and on Bloomberg Television each

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Speaker 1: best and economics, finance, investment, and international relations. And subscribe

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Speaker 1: to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com,

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Speaker 1: and of course on the terminal. I'm Tom keene In.

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Speaker 1: This is Bloomberg m