Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, SoundCloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg Terminal. A bit of
Speaker 1: a surprise early in the morning as I scroll through,
Speaker 1: and it's real simple discussion of consulates in the Baltic
Speaker 1: States that sets up an important conversation with the European
Speaker 1: Commissioner for Trade. He's a former Prime Minister of his
Speaker 1: lat Via. Waldis Dombrowskis joins us right now and we've
Speaker 1: had many conversations over the years, Mr Dombroskas, I have
Speaker 1: to rip up the script and speak to you of
Speaker 1: the sea changes from Lithuania to Latvia, up to Estonia
Speaker 1: and across the Finland. Your area is in a tumuth
Speaker 1: we've really never seen since World War Two? What do
Speaker 1: you need from America, from NATO and from your Brussels
Speaker 1: frankly to provide courage to your lat Via and for
Speaker 1: that matter, couraged Sweden in Finland. Good morning, Indeed, Russia's
Speaker 1: aggression against Ukraine is having implications across the entire region,
Speaker 1: and it actually undermines the entire European security architecture. And
Speaker 1: clearly what country since the region, like Baltic states like
Speaker 1: Poland are looking for is a NATO's presence on the ground,
Speaker 1: strengthening of defense capabilities and clearly also support for Ukraine,
Speaker 1: because it's clear that if we do not stop putting
Speaker 1: in Ukraine, he will venture further in his aggressive war.
Speaker 1: So that's why it's so important also to make sure
Speaker 1: that we provide all necessary support to Ukraine to stop
Speaker 1: the war there, but at the same time also step
Speaker 1: up the preparedness in the region. Your Latvia does not
Speaker 1: touch upon this exclave of kleining Grid, it touches Lithuania
Speaker 1: and Poland, but it seems to be front and center.
Speaker 1: Explain to Bloomberg's global audience, how we defend ourselves against
Speaker 1: the reality that Mr. Putin wants some form of bridge
Speaker 1: to his exclaim he can only get there by water.
Speaker 1: Compare that to what we see now on the shores
Speaker 1: of the Black Sea and the path from Russia to Crimea. Well,
Speaker 1: first of all, uh, it's uh more than excuse than
Speaker 1: any real concern, because reality is that Russia has a
Speaker 1: corridor past ability to transport people and goods between mainland
Speaker 1: Russia and Kaliningrad, anclave doing so boss with railway and
Speaker 1: with road transport, and already also now when EU is
Speaker 1: putting lots of sanctions against Russia, this corridor is not
Speaker 1: being subjected to sanctions. So that's indeed more as an
Speaker 1: excuse which Russia is trying to to use potentially to
Speaker 1: close down what is called Chowaki Corridor, which is connecting
Speaker 1: Poland and Leuthania. But it's worth noting that it's all
Speaker 1: a territory of NATO. So that's why it's very important
Speaker 1: that their proper NATO deference plans in a place also
Speaker 1: against this kind of scenario. And you also raised questions
Speaker 1: concerning Finland and Sweden as we know, but those countries
Speaker 1: are currently considering a possible application to actually join NATO.
Speaker 1: Right now, we're talking also about the potential consequences additional
Speaker 1: consequences for Russia. A number of European nations have called
Speaker 1: for a full embargo of oil from Russia. What would
Speaker 1: that do to member states in terms of economics? Uh? Well, Indeed,
Speaker 1: since the beginning of Russia's aggression, EU has implemented already
Speaker 1: five rounds of sanctions against Russia, and now we're discussing
Speaker 1: possible next sanctions, which among others include a possibility of
Speaker 1: some kind of oil embargo in one form or another.
Speaker 1: We held done this assessment of what implications it's going
Speaker 1: to help for the European economy if there is a
Speaker 1: sudden cutting off of Russia's hydrocarbons, not only oil, but
Speaker 1: also gas, and as a conclusion is that not without problems,
Speaker 1: European Union can cope with this scenario. Well, as regards oils,
Speaker 1: there is a global oil market, so there is a
Speaker 1: possibility to find another suppliers. As regards gas, we are
Speaker 1: now working very intensively to diversify guards supplies, including from allergy,
Speaker 1: including from the United States, but also to accelerate the
Speaker 1: green transition rolling out of renewable energy, so basically working
Speaker 1: at full speed to reduce a dependency on Russian hydrocarbons.
Speaker 1: And well, these you talked about potential oil embargo in
Speaker 1: one form or another. There have been some questions about
Speaker 1: how severe these embargoes could actually be given the reluctance
Speaker 1: by Germany, namely to really go forward with this because
Speaker 1: of their dependence on Russia, yes, for gas, but also
Speaker 1: for oil. How quickly could something be implemented and how
Speaker 1: strict could this embargo be? Well, in terms of speed,
Speaker 1: we are actually ready to move up very fast, as
Speaker 1: as regards that take Nicol work. So it's mainly the
Speaker 1: question of reaching political agreement because sanctions are agreed in
Speaker 1: the EU at the principle of unanimity of all member states,
Speaker 1: so all twenty seven member states need to agree. That's
Speaker 1: why those political consultations are now ongoing very intensively. But
Speaker 1: technically we are ready to move very fast. As our
Speaker 1: first sanctions packages had shown, we are ready to put
Speaker 1: them placed in a one or two days. So cut
Speaker 1: to the chase, Mr Dombraska's with your twenty four seven
Speaker 1: work and the work of everyone in Europe. Are you
Speaker 1: essentially waiting for the outcome of the French election? Are
Speaker 1: people like you essentially and hold until Monday? Well, uh,
Speaker 1: it must be said, absolutely not. And as you noted before,
Speaker 1: France has actually voiced its support for oil embargo, so
Speaker 1: it's not something which is holding us back, and that
Speaker 1: was not something which was holding us back for example,
Speaker 1: to presenting the fifth sanctions package. Also in this very
Speaker 1: same pre election context, it must be said that there
Speaker 1: is quite a degree of determination and unity in the
Speaker 1: EU to stop Russia's aggression, to put pressure on Russia
Speaker 1: through sanctions, through other means, and to provide a maximum
Speaker 1: possible support for Ukraine. Varius, do you get the impression
Speaker 1: that the Europeans have finally learned a lesson of dealing
Speaker 1: with Russia, given what happened at the end of the
Speaker 1: first decade of this millennium, warning one Georgia, another one
Speaker 1: in Crimea, and yet the Germans it was just businesses usual,
Speaker 1: business as usual with the German government. Have we finally
Speaker 1: learned that lesson? Well, clearly, I think there is now
Speaker 1: quite a broad acknowledgment that there were mistakes made also
Speaker 1: not reacting in a firm and determined way against Russia,
Speaker 1: aggression against Georgia, annexation of Crimea and other events. So
Speaker 1: from that point point of view, one can say, yes,
Speaker 1: this lesson is finally learned. And actually, as you knows
Speaker 1: that Central East and European countries had been ringing alarm
Speaker 1: bells already for many years, so finally it's hurt and
Speaker 1: there is a firm, undetermined action, and it's important that
Speaker 1: fast stays. Of course, that we stay consistent and make
Speaker 1: sure that this war is really stop and Russia's aggression fails.
Speaker 1: Commissioner even a good friend to this program every years,
Speaker 1: Thank you very much for him with us again this morning,
Speaker 1: Farriston Brodsky, the European Commission. Come on, Claudia, you're killing
Speaker 1: me out of the University of Michigan Inflation combine with
Speaker 1: Matt Superior, Claudia Ship, Claudia Shapiro, Claudius sum joins us
Speaker 1: this morning with Jane Institute. Claudia, I want to cut
Speaker 1: to the chase you are legit pro out of the
Speaker 1: Michigan Combine and the effect of inflation across the different
Speaker 1: death styles of America, Mary Daily and others. They can
Speaker 1: look from sixty feet the working class, the middle class,
Speaker 1: the subclass, the rich, all those partitions, how are they
Speaker 1: affected by this historic inflation? Right? Well, you're absolutely correct.
Speaker 1: Inflation does not affect us all in the same way.
Speaker 1: I mean, frankly, just the thin inflation prices are not
Speaker 1: this big blob of an aggregate number. It's everybody like
Speaker 1: what we put in our shopping basket. It differs right
Speaker 1: in a lot of ways, and what you have to
Speaker 1: pay for it. Say, there's people who working class, even
Speaker 1: up into the middle class, they spend a lot more
Speaker 1: on necessities, on gas, on food right now. I mean
Speaker 1: for a while, housing that have been just not affordable.
Speaker 1: And they're the they're the things we talk about that
Speaker 1: are the prices are rising and and rich people they're
Speaker 1: they're doing okay, Like I'm not worried about them. But
Speaker 1: inflation is complicated because it has you know, it can
Speaker 1: benefit people that have a lot of credit card debt.
Speaker 1: Ain't so good for bond holders, right, So, like there's
Speaker 1: a lot going on, but the big thing is high prices,
Speaker 1: high inflation. They're disruptive, like they make life challenging. And
Speaker 1: this is important. Come on, Michigan has owns a high
Speaker 1: ground on this. You studied there. Allan Meltzer's rolling over
Speaker 1: in his grave at Carnegie Mellon because Allen Meltzer wants
Speaker 1: to go aggregate. Mary Daily is going aggregate. Chairman Powell's
Speaker 1: going aggregate. Can we beat seven percent inflation going aggregate?
Speaker 1: Or do we need a FED that actually has to
Speaker 1: understand the death style and impact. So I firmly believe
Speaker 1: in the FED on this one. Like, if anybody knows
Speaker 1: how to get this under control, it's j Powell and
Speaker 1: his team. Now, I will say, what is very disconcerting,
Speaker 1: and you talked about the war in Ukraine just earlier
Speaker 1: in the show. Food gas prices are totally out of
Speaker 1: control of the FED, right those they don't they would
Speaker 1: have to cut demand in a way that would be
Speaker 1: absolutely frightening, to get people not to drive to work
Speaker 1: as much and bring gas down, or you know, tighten
Speaker 1: the belt and not feed the kids as much. So
Speaker 1: that but there's a lot they can do on all
Speaker 1: the rest of the stuff we buy, right So there
Speaker 1: and and they're making progress. The last Consumer Price Index
Speaker 1: report month over month was kind of encouraging. Okay, a
Speaker 1: long way to go. But but but Claudia, let's say,
Speaker 1: I mean the idea here is that perhaps you don't
Speaker 1: believe that the FED has to go quite as quickly
Speaker 1: as some of the more aggressive hawks out there. I
Speaker 1: do wonder, though, how much you have to reassess when
Speaker 1: you do see things like housing prices continue to climb,
Speaker 1: our housing starts continuing to climb beyond expectations despite the
Speaker 1: tightening that we're seeing in content in financial conditions right. Well,
Speaker 1: to be clear, I mean I my baseline is fifty
Speaker 1: base this points in May and June. Right, I think
Speaker 1: it's pretty clear they're signaling two moves, not just one.
Speaker 1: I think that's appropriate. The housing mortgage rates, I mean
Speaker 1: they have gone up the februaries basis point mortgage rates
Speaker 1: are up two percentage points, right, it is clear that
Speaker 1: there is some of this. I'm gonna buy now before
Speaker 1: prices go even higher. So I think it's going to
Speaker 1: take a little while for us to see the cooling.
Speaker 1: And but like j Powe cannot print houses, right, Like,
Speaker 1: we have a big problem, and we have had a
Speaker 1: big problem for decades of affordable housing and underbuild. So
Speaker 1: maybe this is a wake up call, like build the houses, Claudia.
Speaker 1: What do you think would be a restrictive policy rate?
Speaker 1: I so I wouldn't the FED, and I don't think
Speaker 1: they'll do this if they really um start running out
Speaker 1: of the gate. I know Jim Bullard was putting out
Speaker 1: a hypothetical, but I think like to seventy five basis
Speaker 1: point moves would over do it. I mean, particular, we're
Speaker 1: going to keep getting saved by the June meeting a
Speaker 1: lot more information about the economy. I mean it is
Speaker 1: if they go too hard and the world serves us up,
Speaker 1: you know, a particular set of conditions. But we could
Speaker 1: have an undershoot next year. I mean I think that'd
Speaker 1: be okay. But I mean you don't, like, you can't
Speaker 1: overdo it. You gotta see the data, you know, adjust
Speaker 1: to the data. It's absolutely clear they need to go harder, um,
Speaker 1: but not too much. Like that's that's a big cold.
Speaker 1: That is, if they went too hard, we can have
Speaker 1: an undershoot of their inflation target next year. What would
Speaker 1: too hard to be to get inflation back below two? Recession?
Speaker 1: I mean they need recession? You think would achieve that?
Speaker 1: I mean the reason ask that is because some people
Speaker 1: think that you could actually get a contraction and growth. Well,
Speaker 1: prices are still anovcting above Yeah, good luck with that. Um,
Speaker 1: I mean anything can happen at this point. You know,
Speaker 1: nuclear winter is inflationary right like, so I'm not things
Speaker 1: could be bad, but right now and we lose sight
Speaker 1: of this, we have an economy that is back on track.
Speaker 1: We are on trend for inflation adjusted consumers spending inflation
Speaker 1: adjusted business investment. We never got that after the Great Recession,
Speaker 1: the labor market jobs there there, so inflation, Claude, we're
Speaker 1: running out of time in the clock here. Pharall's got
Speaker 1: to close out the hour. But we're among friends here.
Speaker 1: What's Larry Summers get wrong on this? I mean you
Speaker 1: just basically said the stag inflation hypothesis is nuts. What's
Speaker 1: he get wrong? Well? I think I haven't heard Larry
Speaker 1: talk about COVID for a very long time. I don't
Speaker 1: think there's a serious discussion about the Ukraine. I don't
Speaker 1: know how you miss that, you know whatever. It's useful
Speaker 1: to have somebody going around saying the world is you know,
Speaker 1: stag inflation, inflation, recession. You know it's worth talking about.
Speaker 1: But his story just does not stand up. It's not
Speaker 1: the nineteen seventies Thursday Morning wrestling. I can I can
Speaker 1: see a panel development here. Some you think we get
Speaker 1: the former Trustury secretary on alongside, we can get Simon
Speaker 1: Summers on stage of Davos n step back to you
Speaker 1: can let them do their think and not get involved
Speaker 1: for about six hour's calldy some that of the Jain
Speaker 1: Family Institute done joins US. Now, so down, let's start
Speaker 1: with the broader picture. We were trying to work out
Speaker 1: whether we had a Netflix problem or a market problem.
Speaker 1: Which one is it. I think it's a Netflix problem,
Speaker 1: and I think you have a Facebook problem as well.
Speaker 1: I think we you see more and more it's a
Speaker 1: bifurcated tech teape and I think the work from home
Speaker 1: beneficiaries are going to continue to trade off. I think
Speaker 1: that's catch a falling knife. But what we see, but Tessa,
Speaker 1: we'll see what Apple next week, Microsoft, cyber Semmys, that's
Speaker 1: gonna lead tech hire. I just view it as a
Speaker 1: have and I have not, and Netflix is clearly I
Speaker 1: have not. It's not a market problem, it's companies for
Speaker 1: if I believe it's a strong techer earnings next month.
Speaker 1: You mentioned Facebook that was down yesterday by seven point
Speaker 1: eight percent. That was brutal. You mentioned Apple as well,
Speaker 1: So let's talk about the relationship between say Apple and
Speaker 1: a tesla. Right now, it's China down. I think the
Speaker 1: China story is so important. Namura overnight cut GDP for
Speaker 1: China this year, their forecast to a three handle down.
Speaker 1: How important to the issues in Shanghai? And do you
Speaker 1: think they get them worked out well. I mean that
Speaker 1: was the key from last night because for tests. So
Speaker 1: that's the hearts and lungs of the bull story. In
Speaker 1: terms of Gigga Shanghai, you know obviously the three weeks shutdown,
Speaker 1: but must talk about I mean it's ramping quickly coming
Speaker 1: out of the gate, you know now that it's reopening.
Speaker 1: I think that's gonna be similar what we see with
Speaker 1: Apple next week. And I think the street they're viewing
Speaker 1: this is sort of a contained issue. Of course, you
Speaker 1: can still have zero COVID issues in China, but overall
Speaker 1: supply chain I think slightly improving. And that's actually gonna
Speaker 1: be something that the were of Mapple next week, which
Speaker 1: is I think, you know the boost for Group Retina Dan,
Speaker 1: how confident are you that they can compete well against
Speaker 1: the new upstart electric carmaker Ford. Look, I think fundamentally,
Speaker 1: you know, when you look what's happened right now in
Speaker 1: the e V landscape, it's Howso's world and everyone else's
Speaker 1: paying rent. And I think what you're seeing here is
Speaker 1: they're further flexing their muscles to a manufacturing perspective, and
Speaker 1: even despite Category five hurricane headwinds in China. I mean
Speaker 1: those numbers last night, that's a billion dollar beat, and
Speaker 1: I think it just shows the raising for you. You
Speaker 1: talk about raising prices, they're raising prices and demands increasing.
Speaker 1: It just showed that's an important dynamic right now, demand
Speaker 1: out strip and supply aby about Then, how do you
Speaker 1: determine what a reopening story is and what's fundamental at
Speaker 1: a time when so many people went into cars, bought cars,
Speaker 1: bought new ones because gas prices were climbing, or because
Speaker 1: they didn't want to take public transportation, or they weren't
Speaker 1: traveling on airplanes internationally, how much is that also a
Speaker 1: reopening story versus some kind of set killer shift. Yeah,
Speaker 1: it's a great We take basically what we believe it
Speaker 1: was like a pull forward dynamic, and we saw that
Speaker 1: with obviously some tech names, even like a Microsoft. And
Speaker 1: then what's the sustainable demand trend? And what we're actually
Speaker 1: seeing is the sustainable demand trend for names like tass
Speaker 1: On EVS and I think in tach in terms of
Speaker 1: the cloud, digital transmission a quarter of fourth Industrial Revolution,
Speaker 1: it's unpowered to anything we've seen the last twenty two years. Damn,
Speaker 1: Netflix ran into some competition, whether it's puny paramount ors,
Speaker 1: others that are more sustainable, any number of ev articles,
Speaker 1: and I'm gonna go to Mazda here and their idea
Speaker 1: of sustainable zoom zoom. Everybody wants to compete with Tesla.
Speaker 1: Are you telling me they're going to maintain revenue integrity
Speaker 1: given all that competition, I think it's gonna be a
Speaker 1: rising tie. Is gonna lift a lot of boots, not
Speaker 1: just a zero some game that they're gonna sustain their
Speaker 1: unit dynamics. I think it's gonna Apple five because I
Speaker 1: think we're gonna tempercent automotive that the e v s
Speaker 1: and they're gonna have a bigger and bigger piece of that.
Speaker 1: And the difference just when you compare to Hastings and
Speaker 1: Netflix Hubris, the continue to raipe prices, others all eventually
Speaker 1: kind of caught up, and the difference of testsa from
Speaker 1: the battery technology and continuing to build out factors. That's
Speaker 1: the difference between someone like a Musk and the Hastings
Speaker 1: seeing far ast to the trees. They're one step ahead.
Speaker 1: That's why we saw last night's numbers and I wanted
Speaker 1: no one on the cool Laska at switch up. Look,
Speaker 1: I think right now that was one where you know,
Speaker 1: no one wanted to spoil the party, you know, in
Speaker 1: terms of obviously a test of focused earnings. Obviously on Twitter,
Speaker 1: it's the cleer elephant in the room, you know, the
Speaker 1: collateralized stock in terms of what he's alteringly gonna need
Speaker 1: to do with the musk with Tessa as well as SpaceX.
Speaker 1: But I do believe there will be other times to
Speaker 1: ask that, because there's soap proper just starting in terms
Speaker 1: going to and sometimes spoil the party. You know, that's
Speaker 1: just how these things work, done of wet push. Then
Speaker 1: I screwed to catch up. So Jonathan Gray, thank you
Speaker 1: for joining us here. I want to start here with
Speaker 1: you on that real estate business, because no business did
Speaker 1: better for you than opportunistic and core plus real estate.
Speaker 1: And so when you're looking at this market, this soaring
Speaker 1: real estate pricing market, how long does that dynamic last
Speaker 1: for socitionale? It's great to be here. I think in
Speaker 1: real estate it is a bit of a tale of
Speaker 1: two cities. Um A number of areas of real estate
Speaker 1: actually are still facing big pressure. If you think about
Speaker 1: older office buildings and cities, if you think about regional
Speaker 1: malls where the fundamentals are challenged, where rising rates will
Speaker 1: put pressure on these assets, it's not as good a story.
Speaker 1: We fortunately have some good neighborhoods to deploy capital and
Speaker 1: real estate. We've really focused on global logistics, which has
Speaker 1: been by far our biggest theme. Rental housing, life science,
Speaker 1: office buildings increasingly making a bed on a recovery in
Speaker 1: hotels and in those areas where you have shorter duration leases,
Speaker 1: strong demand um income can continue to grow to offset
Speaker 1: these inflationary pressures. So there are headwinds from rising rates,
Speaker 1: but owning hard assets in the right sectors in this
Speaker 1: kind of environment can be a good thing. John, you're
Speaker 1: being a little meek in terms of how much exactly
Speaker 1: you've invested in the last year in housing thirteen billion dollars.
Speaker 1: Two days ago, you announced in all cash for campus
Speaker 1: housing six billion dollars. Last year for single family rental
Speaker 1: that was seven thousand houses at the time, and this
Speaker 1: year another six billion dollars on an apartment community business.
Speaker 1: So if anyone knows what's happening in a tight housing market,
Speaker 1: it's you. How big of a problem are these rising
Speaker 1: prices for the American HomeBuyer? So the challenge on housing
Speaker 1: has been many years in the making. If you step
Speaker 1: back and look at the supply picture, we have been
Speaker 1: building housing at half the rate we did prior to
Speaker 1: the financial crisis as a percentage of population. So for
Speaker 1: a decade we've built up probably a five million home shortage,
Speaker 1: and that imbalance, particularly after all the stimulus that came
Speaker 1: out from COVID. People's focus on where they live, has
Speaker 1: led to this sharp increase in pricing, and so I
Speaker 1: think that's going to take a while to work through.
Speaker 1: Mortgage rates going up, it's gonna make it harder, costs
Speaker 1: going up for builders, who is gonna make it harder?
Speaker 1: And it's really about new supply coming online. We think
Speaker 1: capital moving into the space helps, you know, encourage new building,
Speaker 1: which is really fundamental Hair. But you're right at some
Speaker 1: point there are some limitations in terms of how much
Speaker 1: folks can charge for a new home or rental prices
Speaker 1: because of earnings. But the long term picture for housing
Speaker 1: in America from a value standpoint is pretty good because
Speaker 1: of this long term shortfall that's built up, John, I
Speaker 1: want to shift gears a little bit here because a
Speaker 1: lot of the troubles we saw that we heard from
Speaker 1: the biggest banks, the idea of deal slowing down, We're
Speaker 1: not seeing it right away in your performance. In fact,
Speaker 1: you're part of one of the largest, the largest deal
Speaker 1: announced and talked about this year for Atlantea. So what
Speaker 1: does this mean about your propensity to deploy capital and
Speaker 1: how big can you see yourself going when it turns
Speaker 1: when it comes to buying assets, where are you looking
Speaker 1: for opportunities? So I would say it really speaks to
Speaker 1: the breath of our platform, and we did announce uh
Speaker 1: this year four large chan in actions that share some characteristics,
Speaker 1: but they speak to our global reach. We committed to
Speaker 1: buy the largest casino company in Australia, the biggest last
Speaker 1: mile logistics business in Europe, um also in Europe, you
Speaker 1: mentioned the large transportation infrastructure company, and then the student
Speaker 1: housing deal that we've talked about as well. These are
Speaker 1: all big businesses, they're not all One of them involved
Speaker 1: our private equity business. A couple of them involved our
Speaker 1: real estate business, also our infrastructure business. And we do
Speaker 1: this globally and that allows us to deploy capital. We also,
Speaker 1: because of the scale of our funds, can do things
Speaker 1: that are bigger and where we have high conviction, we
Speaker 1: lean in and in these areas. These are hard assets,
Speaker 1: they've got good underlying fundamentals, not as much exposure to
Speaker 1: input costs, and as a result, we feel good about
Speaker 1: investing in these areas. So I think one of the
Speaker 1: things for individual investors to think about is in a
Speaker 1: volatile market like as you know, do I want to
Speaker 1: sit on the sidelines and just hold cash with inflation?
Speaker 1: I think that's actually risky. So owning hard assets and
Speaker 1: things you have high conviction and makes sense. And what
Speaker 1: you're seeing is an expression of that high conviction. John,
Speaker 1: there's assets you're willing to buy, but then there are
Speaker 1: deals you may pass up on. The Financial Times reported
Speaker 1: this week that Blackstone is probably gonna pass when it
Speaker 1: comes to Elon Musk in the bid to buy Twitter.
Speaker 1: What does this mean in terms of what opportunities you
Speaker 1: might pass up on, whether it's in private equity or
Speaker 1: in direct lending. Well, we don't really comment on individual deals,
Speaker 1: but you know, every transaction we look at the merits
Speaker 1: of a potential transaction based on the risk return for
Speaker 1: our investors, and that's been our story for a long
Speaker 1: time as investors. You know, it's it's like a batter
Speaker 1: sitting there in the batter's box. You don't swing at
Speaker 1: every pitch. There are things that make sense and you
Speaker 1: look at through the lens of what are the risks
Speaker 1: out there? What is the environment look like today? Of course,
Speaker 1: the inflationary prism, the rising rate prism very important as
Speaker 1: you deploy capital, But I wouldn't look into any individual
Speaker 1: transaction is assigned to what we're doing. So before I
Speaker 1: let you go here, i'd love for you to comment
Speaker 1: on the geop political tensions. I know you don't have
Speaker 1: any investments in Russia, but you have worked very closely
Speaker 1: with China over the years, and there's a lot of
Speaker 1: questions both about the slowdown you're seeing there in terms
Speaker 1: of growth and the relationship between China and Russia. What
Speaker 1: does this mean for you in the way you're thinking
Speaker 1: about investing in China. Well, in China, I would start
Speaker 1: by saying, this is the second largest economy in the world. Um,
Speaker 1: we subscribe to what the Commerce Secretary said, which is
Speaker 1: engagement through business helps mitigate tensions. UM. That being said,
Speaker 1: you've got to be mindful that there are tensions today
Speaker 1: on both sides and be selective and where you deploy
Speaker 1: capital in China. We primarily have invested in the domestic economy,
Speaker 1: mostly in real estate, mostly in logistics, which has been
Speaker 1: our big sector around the globe, and we've been pleased
Speaker 1: with that. But they are facing headwinds near term. You
Speaker 1: have to acknowledge what's happening in COVID, what's happening in
Speaker 1: their housing market, their capital markets. All of that means
Speaker 1: it's a more difficult environment. But long term, I think
Speaker 1: China will grow quite a bit. John, thank you so
Speaker 1: much for your time. We're looking forward to catching up
Speaker 1: with you again soon. That's Jonathan Great, President and CEO
Speaker 1: of Black Zone, very close to becoming a one trillion
Speaker 1: dollar asset manager. This is the Bloomberg Surveillance Podcast. Thanks
Speaker 1: for listening. Join us live weekdays from seven to ten
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