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Speaker 2: Alex feel here alongside Paul sw We need this a
Speaker 2: Bloomberg Intelligence Radio. We are broadcasting to live from a
Speaker 2: Bloomberg Invest twenty twenty five conference in downtown Manhattan. A
Speaker 2: lot of the action, though, is still in the economic data,
Speaker 2: in particular ADP. We also got ism services and also
Speaker 2: what's going to happen with trade policy. Earlier today, US
Speaker 2: Commerce Secretary Howard Lutnick spoke with Bloomberg, saying maybe a
Speaker 2: potential a potential shift in TEARFF policy.
Speaker 3: The President is listening uh to the offers from Mexico
Speaker 3: and Canada. He's thinking about trying to do something in
Speaker 3: the middle. He's thinking about it. We're talking about it.
Speaker 3: We're going to what I leave here, I'm going to
Speaker 3: go to talk about it with him, and I think
Speaker 3: early this afternoon or this afternoon, we expect to make
Speaker 3: an announcement. And my thinking is it's going to be
Speaker 3: somewhere in.
Speaker 4: The middle, all right. That was Howard Ludnik.
Speaker 2: We also are hearing from Peter Navarro on CNN talking
Speaker 2: about trade as well, saying Trump is right, there's going
Speaker 2: to be some kind of tear uf disturbance, and all
Speaker 2: of this just means a little bit more uncertainty within
Speaker 2: the market. Michael mcckeb Bloomberg Economic and Policy correspondent joins us. Now, Mike,
Speaker 2: is that uncertainty showing up in some.
Speaker 5: Of the data not yet?
Speaker 6: Interestingly enough, we've had divergent data today. The ADP report
Speaker 6: comes in a little light in terms of private sector jobs,
Speaker 6: and the composition of jobs is a little strange in
Speaker 6: that report. But the ISM services PMI comes in much
Speaker 6: better than anticipated, and new orders were up, which is
Speaker 6: the converse of what we saw in the ISM manufacturing number.
Speaker 6: So a little reassurance for the markets, which sort of
Speaker 6: have been bouncing around today, but in general have taken
Speaker 6: a little encouragement from the idea that perhaps the economy
Speaker 6: is not falling off a cliff.
Speaker 7: Hey, Mike, I see the ISM services prices paid came
Speaker 7: in higher than expected and higher than the last period.
Speaker 7: Does that suggest maybe some inflation seeping in to the
Speaker 7: economy there.
Speaker 6: Well, maybe more inflation still in the economy as opposed
Speaker 6: to seeping in now.
Speaker 8: It's a little hard to separate out because we don't know.
Speaker 6: This is a sentiment survey, and we don't know how
Speaker 6: much that sentiment might have been influenced by all the
Speaker 6: tariff talk. But tariffs generally don't hit services in the
Speaker 6: same way they hit goods, and so this may be
Speaker 6: just more reflection of the cost of raw materials, maybe
Speaker 6: commodities that are out there now. We don't know, but
Speaker 6: we have seen the ism services prices paid index up
Speaker 6: for four months in a row, so it does seem
Speaker 6: that we still have some inflation out there.
Speaker 8: The Fen's going to have to address.
Speaker 4: Yes, yes, inflation address.
Speaker 2: And that brings us to your news making interview yesterday
Speaker 2: of a New York Fed President John Williams talking about
Speaker 2: how to address the inflationary impact from tariffs.
Speaker 4: Can walk us through some of the highlights.
Speaker 2: Here, because that was definitely one of the standouts yesterday
Speaker 2: at Boom.
Speaker 4: We're going to best.
Speaker 6: The Fed's been waiting for quite some time to have
Speaker 6: any kind of comment on what Trump's policies would be
Speaker 6: because he didn't know what they were. But now that
Speaker 6: we know, he's got these twenty five percent tariffs on
Speaker 6: maybe some carve outs coming this afternoon and more coming.
Speaker 6: As Secretary Lutnik emphasized over and over again this morning,
Speaker 6: the FED feels a little more unconstrained. John Williams talking
Speaker 6: about the fact that tariffs are inflationary. Now they don't
Speaker 6: know how inflationary because they don't know how many tariffs
Speaker 6: are going to end up being imposed, at what level
Speaker 6: and over what period of time. But he did suggest
Speaker 6: that that's reason for caution and that the Fed basically
Speaker 6: needs to stay on hold for right now.
Speaker 7: We're going to get some labor data MIC over the
Speaker 7: next couple of days, with initial jobles claims tomorrow and
Speaker 7: then nonfarm payrolls on Friday. Still too early to see
Speaker 7: any effects of dose impacting the numbers.
Speaker 6: Well, we might actually get some numbers this week because
Speaker 6: the federal government employees have their own category within jobless claims.
Speaker 8: It's funded separately, and so.
Speaker 6: It's two weeks delayed in terms of its release and
Speaker 6: should suggest that we are now at least getting some
Speaker 6: jobless claims from federal workers who've been laid off, so
Speaker 6: we would anticipate that. I wouldn't anticipate much of anything
Speaker 6: showing up in the payrolls report on Friday, because that
Speaker 6: encompasses the pay period that includes the twelfth of the month,
Speaker 6: And it really was Valentine's Day, February fourteenth when the
Speaker 6: layoffs really started. If you remember the late night time
Speaker 6: from Elon Musk to so many federal.
Speaker 2: Workers, Mike, before we let you go, my favorite question,
Speaker 2: as most of you know, he always gets to send
Speaker 2: me charts in the afternoon, like the one nerdy thing
Speaker 2: that Mike's paying attention to. What's that one nerdy thing
Speaker 2: you're going to be paying attention to.
Speaker 6: Well, I'm looking at the ADP numbers, and it's unusual
Speaker 6: that we see service industry jobs much lower than the
Speaker 6: goods producing jobs. In this case, it's the goods producing.
Speaker 6: That's very odd because we've been talking about how manufacturing
Speaker 6: is suffering, and yet they had a big increase in
Speaker 6: jobs during the month according to ADP, of eighteen thousand jobs,
Speaker 6: and construction was up.
Speaker 8: By twenty six thousand.
Speaker 6: But what have we been hearing for weeks now about
Speaker 6: how bad the weather was and how do you have
Speaker 6: a lot of construction going on when the weather is
Speaker 6: that bad, so some unusual numbers. Also, of educational health
Speaker 6: services is usually the biggest job creator, and ADP found
Speaker 6: a twenty eight thousand job loss there. So I'm not
Speaker 6: sure about the makeup of the ADP numbers, but we'll
Speaker 6: get a better clue on Friday.
Speaker 4: All right, My thanks a lot, really appreciate it.
Speaker 2: Michael mcke Boomberg Economic and Policy Corresponding, joining us now.
Speaker 4: Looking for his nerde chart later on as well.
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Speaker 7: Joining us now at the conference on site is Katie Fogerty,
Speaker 7: chief financial officer of Shakeshack. Katie, thanks so much for
Speaker 7: joining us here. Love to get a sense everybody's talking
Speaker 7: about Harris and what it might do to economic growth,
Speaker 7: what it might do to the consumer. Who is the
Speaker 7: consumer shake check and what is that consumer telling you
Speaker 7: these days?
Speaker 9: Great? So you know who we think of as our consumer?
Speaker 9: We have you know, went out there and we have
Speaker 9: this amazing real estate strategy, real estates strategy, and what
Speaker 9: we've done is we've put these great community gathering places
Speaker 9: in a lot of these you know, great communities, and
Speaker 9: where we have attracted is just really kind of more
Speaker 9: of a I would say, you know, a more a
Speaker 9: middle income to higher income guests, and we've seen that
Speaker 9: guest be able to weather a lot more of the
Speaker 9: economic headwinds than other, you know, than the low income
Speaker 9: consumer has been facing. And you know, what we continue
Speaker 9: to see is by leaning into our strength, which is
Speaker 9: delivering a fine casual experience. So we think about kind
Speaker 9: of bringing all those great guts of fine dining, elevated food,
Speaker 9: premium ingredients, doing the things that you know, other you know,
Speaker 9: fast casual and QSR just are not willing to do.
Speaker 9: Putting that an amazing hospital or hospitable environment and getting
Speaker 9: great guest service. That together has been a winning formula
Speaker 9: to help us outpunch what has been you know, some
Speaker 9: consumer headwinds that has been facing the industry.
Speaker 4: And we are going to continue to lean into that.
Speaker 9: It's it's helping us to different and kind of pull
Speaker 9: apart from the pack, and it's it's been our strength.
Speaker 4: Where are our samples? I know, I mean what is
Speaker 4: this about?
Speaker 2: Uh, you know, who doesn't want to burger at ten
Speaker 2: am on a Wednesday so close to open?
Speaker 7: So so who.
Speaker 2: Are your competitors then? So if you're a middle and
Speaker 2: high end consumer, who would.
Speaker 9: You say as a competitor, Yeah, I mean we sell burgers, shakes, fries,
Speaker 9: I think the best chicken sandwich out there in the business.
Speaker 9: We view our competitors as being, you know, anybody who
Speaker 9: you know you might consider having lunch at or dinner at.
Speaker 9: So that is a pretty wide array and it also
Speaker 9: can be you know, food at home. I mean that
Speaker 9: can also be in you know, in an area where
Speaker 9: you would have some share of stomach. So, you know,
Speaker 9: for the vast amount of you know, of our restaurants
Speaker 9: out there, we are competing with a lot of people.
Speaker 9: Now we are differentiated and we are kind of in
Speaker 9: that category of one in the fine casual sector. But
Speaker 9: at the same time we know that, you know, people
Speaker 9: have lots of different options where they can go out
Speaker 9: to eat.
Speaker 7: Okay, there's concern out there about inflation. If inflation were
Speaker 7: to come into your business, where would you see it
Speaker 7: and how do you plan for that?
Speaker 9: So we actually have been navigating through inflationary pressures for
Speaker 9: a number of years here and doing so quite successfully.
Speaker 9: I'll say, you know, we've had wage inflationary pressures in COVID.
Speaker 4: It was actually very hard to get.
Speaker 9: Restaurant talent in our restaurants to staff and to deliver
Speaker 9: our food. It was not a desirable job at the time,
Speaker 9: and we had we raised wages and had a very
Speaker 9: competitive and compelling opportunity for our team members. We also
Speaker 9: introduced tips as a way to compensate our team members
Speaker 9: as well and give them added benefit. And then last
Speaker 9: year with you know, with California Fast Food Wage Act,
Speaker 9: you know, we paced through that as well. We've also
Speaker 9: had on the food side, you know, inflationary pressures that
Speaker 9: have been we've been navigating for a number of years
Speaker 9: as well. But through all of this through leaning in
Speaker 9: on our strength, which is you know, again delivering that
Speaker 9: elevated you know experience to guests, giving them that you know,
Speaker 9: twenty five dollars you know, black truffle Burger that we
Speaker 9: were actually selling for ten dollars and giving them that
Speaker 9: great value. On that side, we've been able to both
Speaker 9: grow sales and grow margins at a faster pace. Just
Speaker 9: even last year, we expanded our margins in the fourth
Speaker 9: quarter by three hundred basis points.
Speaker 2: So I've never had Shakeshack but it looks I know,
Speaker 2: I know, but it looks like I may be able
Speaker 2: to now in Delta.
Speaker 9: Yeah.
Speaker 2: So, and this really also goes to your expansion plans.
Speaker 2: Delta is going to offer Shakeshack Burgers on additional domestic
Speaker 2: roots this year, and that could expand international flights next year.
Speaker 4: Talk about these expansion kind of plans.
Speaker 9: Yeah, I mean, if you look at Delta at its
Speaker 9: core and what this does, you know, this is an
Speaker 9: opportunity where we're able to surprise and delight our guests,
Speaker 9: give them that thing that they weren't really expecting. You know,
Speaker 9: you have your expectation for what airline food is like,
Speaker 9: and you know this this opportunity to get a Shakeshack
Speaker 9: burger and our great we have a special brownie that
Speaker 9: we've made for Delta as well.
Speaker 4: Through this program.
Speaker 9: People are just absolutely elated at the opportunity to have
Speaker 9: that on their flights, and so much so that it's
Speaker 9: exceeded our internal expectations.
Speaker 4: We're rolling it out to more airports.
Speaker 9: You're going to be able to get it, you know,
Speaker 9: New York, Atlanta, a number of airports, and that will
Speaker 9: just you know, probably continue to grow. And you know,
Speaker 9: if you look at that opportunity, and I can make
Speaker 9: so many different parallels to how we've gone into an
Speaker 9: area where the consumer had a certain expectation and we
Speaker 9: just really raised the bar on it and out punched
Speaker 9: above our weight and transformed what people were expecting from
Speaker 9: you know, it's airline food, if it's roadside food, and
Speaker 9: across the board.
Speaker 7: Katie, in terms of growth, how many locations do you
Speaker 7: have today and what's your outlook for the next year
Speaker 7: or two.
Speaker 9: Yeah, we have, you know, across both our company operated
Speaker 9: and our licensed business. We're you know, about five hundred
Speaker 9: and fifty five hundred and seventy locations, but we are
Speaker 9: growing very fast. We're going to add another forty five
Speaker 9: domestic company operator shacks this year, and we're going to
Speaker 9: open about thirty five to forty licensed shacks as well.
Speaker 9: Those licensed shacks are ones that we operate, that our
Speaker 9: partners operate. We have locations in the US, but most
Speaker 9: of that is kind of outside of the US and Asia,
Speaker 9: and and we have UK, the Middle East, Mexico and
Speaker 9: most recently we opened up in Canada.
Speaker 4: Well, great stuff. We really appreciate it. We know you
Speaker 4: got to run, Katie.
Speaker 2: Thank you very much, next time, snaxt Katie Muggerty, Chief
Speaker 2: financial officer at shake Shack.
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Speaker 7: Alex Steel, Paul Swiney live here in our Bloomberg invest
Speaker 7: conference at Brookfield Place in Lower Manhattan. Lots of great
Speaker 7: guests we're just grabbing. As soon as they get off
Speaker 7: the stage, we grab and put them in the hot seat.
Speaker 7: One of them is Chris Heisie, chief investment officer at
Speaker 7: Bank of America Private Bank, and I love that branding
Speaker 7: right there. Somebody thought of that, got you paid that
Speaker 7: for that? Chris, talk to us about the market here.
Speaker 7: There's a lot of cross winds coming in aside from
Speaker 7: some of the economic data like we received today, aside
Speaker 7: from some of the corporate earnings that we have to
Speaker 7: deal with. A lot of cross winds coming out of Washington,
Speaker 7: d C. How do you guys at the portfolio level
Speaker 7: deal with.
Speaker 10: That novel statement here I'm about to say, which is,
Speaker 10: you know, market hates uncertainty. We've seen it. There's a
Speaker 10: lot of uncertainty. It's across the board. It's geopolitical risk,
Speaker 10: it's policy in general. It's now starting to seep into
Speaker 10: the level of growth. You saw a little bit of
Speaker 10: soft patch data. We believe it's a little exaggerated, frankly,
Speaker 10: because a lot of it was weather induced. I know
Speaker 10: it sounds like an excuse, but it's particularly true in
Speaker 10: the Northeast. But when you're putting all this together, one
Speaker 10: thing that hasn't changed is the fact that corporate earnings
Speaker 10: are still going to be very attractive and above average. Frankly,
Speaker 10: you could see double digits. Some of Wall Street has
Speaker 10: been bringing them down, but that's pretty natural.
Speaker 11: So overall, we're.
Speaker 10: In a volatility pothole which is forcing some repricing, and
Speaker 10: that's very healthy. And it's easy for me to say
Speaker 10: because it's only a five percent pullback and it could
Speaker 10: get to a ten percent correction, but that would be
Speaker 10: a buying opportunity in our opinion.
Speaker 2: So the narrative of maybe you want to be putting
Speaker 2: money into areas that will be stimulative Europe, for example,
Speaker 2: Germany most likely, China versus US.
Speaker 11: Hold for you, it does. It does.
Speaker 10: It's at the top of our watch list for one
Speaker 10: very important reason. They are now serious about a level
Speaker 10: of stimulus.
Speaker 11: It wasn't the case.
Speaker 7: Before both of them.
Speaker 4: You can make the argument right both, Yeah.
Speaker 11: That's right.
Speaker 10: And when the US was providing the fiscal stimulus, you
Speaker 10: saw what happened. Now, granted it created a deficit for sure,
Speaker 10: but now you're starting to see easing financial conditions across Europe.
Speaker 10: At the same time, you're seeing this willingness now to
Speaker 10: add fiscal spend.
Speaker 11: To get the growth. So it's a little bit of
Speaker 11: a normalization.
Speaker 10: I want to get two over enthusiastic about non dollar assets,
Speaker 10: but certainly it's the.
Speaker 11: Top of the watch list to upgrade.
Speaker 7: Just breaking across the Bloomberg terminal right now, red headline
Speaker 7: Canada won't end tariffs unless all US tariffs lifted. That
Speaker 7: is according to an official. So again the news keeps
Speaker 7: flowing here. So as we think about the US equity markets,
Speaker 7: one of the risks that gets called out quite frequently
Speaker 7: Chris is just this concentration risk. It's just too over
Speaker 7: concentrated some of these big cap names. As you talk
Speaker 7: to your portfolio managers, how did they deal with that?
Speaker 10: Most portfolio managers cannot own up to the level of
Speaker 10: what the index is in any one name. So when
Speaker 10: people say portfolio managers are underperforming or active managers are underperformed, well,
Speaker 10: they can't participate at the level that the index can't.
Speaker 10: Now we're now switching into a marketplace that's rotating rebalancing.
Speaker 10: I'd like to use the word rebalancing because the rotation
Speaker 10: would make you think that it's going to happen with with.
Speaker 11: A snap of a chalk line. It's from here to there.
Speaker 2: It actually applies that you'd be like selling tech and
Speaker 2: buying Europe.
Speaker 4: It's the one for one exactly.
Speaker 10: And I think it's just really portfolio construction. To your
Speaker 10: point about what do you do with it? I think
Speaker 10: you have to look for three things that have been
Speaker 10: driving markets and it's now switching to other parts. It's
Speaker 10: earnings momentum, price momentum, and news momentum.
Speaker 11: Those three things hit together. Where are they hitting?
Speaker 10: Some defensives and frankly, some cyclicals and away from the
Speaker 10: big leaders.
Speaker 11: I wouldn't be short the big leaders.
Speaker 2: Though, so it's not short the big leaders. How do
Speaker 2: you protect yourself from all the noise?
Speaker 10: Very hard to do. You have to take emotion out.
Speaker 10: You have to be disciplined. How do you be disciplined?
Speaker 10: You have to have a process, you have to have
Speaker 10: cash ready to reinvest and stick to your goals. I
Speaker 10: know that sounds very simple and elementary, but it's the
Speaker 10: only way to create a framework that takes the emotion out. Granted,
Speaker 10: we just wrote a report recently. It talks about focus
Speaker 10: on the trend lines, not the headlines.
Speaker 11: Hard to do so to a.
Speaker 10: Certain degree, trust your instincts about your goals and objectives
Speaker 10: and be diversified. And it just doesn't always mean sixty forty.
Speaker 10: It's whatever that appropriate mix is for you.
Speaker 7: What are we doing in the fixed income world here?
Speaker 7: Yield's coming down?
Speaker 10: Actually, yeah, for a few people that have been around
Speaker 10: the block a little bit, we're back to the nineteen
Speaker 10: nineties again, and you're talking about four to five percent yields,
Speaker 10: which are attractive for savers and fixed income investors. So
Speaker 10: there's a reason why fixed income is called fixed income
Speaker 10: and that's how we should think about it versus the
Speaker 10: total return that occurred for better part of three decades.
Speaker 10: So we're looking across the curve. We're right on duration
Speaker 10: right now. We think at some point up to five
Speaker 10: percent of the ten year yield, it's important to.
Speaker 11: Extend duration a little bit.
Speaker 10: A lot of people don't like to do that because
Speaker 10: they're getting four percent at the short end. That's fine
Speaker 10: at the end of the day. I would say in
Speaker 10: terms of segments within fixed income, real quickly, we want
Speaker 10: to be neutral across the board. There's not a unit
Speaker 10: of risk out there that's going to give you extra
Speaker 10: return that is more attractive than any of the space.
Speaker 2: What about corporate credit, for example, because we finally to
Speaker 2: see a little bit of a widening in the investment
Speaker 2: grade market.
Speaker 10: In addition to international equities being at the top of
Speaker 10: the watch list, it's also corporate credit. They're at spreads now,
Speaker 10: they're a little bit more attractive both high yield and
Speaker 10: investment grade, and I would consider.
Speaker 11: That an upgrade potential.
Speaker 7: So one of the topics we hear a lot about
Speaker 7: at this conference and a lot of conferences over the
Speaker 7: last couple of years is alternative investments, not just private credit,
Speaker 7: I mean private equity and hedge funds, but also private credit.
Speaker 7: How do you and your private clients at Bava Meryl,
Speaker 7: how do you guys think about that?
Speaker 10: Well, we think of it as an alternative piece of
Speaker 10: credit right and at the same time, right now where
Speaker 10: it is in the cycle, stay high quality. Don't reach
Speaker 10: for the lower quality end of private credit right now.
Speaker 10: Even though you're going to get a little bit of
Speaker 10: pickup in yield, you can do that in the normal
Speaker 10: high yield market.
Speaker 11: We don't see any big default cycle coming.
Speaker 10: We're kind of through the hornet's nest of that recycle
Speaker 10: of going from zero percent inturates restraights sharply up to
Speaker 10: five percent. So we look at private credit as an
Speaker 10: alternative source of credit as a part of a build
Speaker 10: out of a portfolio on the private side.
Speaker 2: Okay, So if we were looking at the sixty forty
Speaker 2: or like, just don't think of it like that is it?
Speaker 2: What percent is equity is what is fixed income? And
Speaker 2: in fixed income what would be your traditional stuff versus
Speaker 2: a private credit.
Speaker 10: So you start with the role it's going to play
Speaker 10: if you're looking for it to be in a yield
Speaker 10: or a yield enhancing strategy for you that comes from
Speaker 10: fixed income. If you're going to pick up a little
Speaker 10: bit of the equity, which some parts of private credit
Speaker 10: can do, then it's a little bit of a combination
Speaker 10: of both. We don't have any one particular allocation to
Speaker 10: private credit. It kind of depends on the individual. But
Speaker 10: at the end of the day, I think you're going
Speaker 10: to consistently see this. It's gone from an assa class
Speaker 10: so basically had nothing in it to two trillion. Ultimately,
Speaker 10: they're probably increasing that over the course of the next
Speaker 10: decade for sure, so we're going to constantly be adding
Speaker 10: to it.
Speaker 7: We talked a little bit about Europe earlier. There's actually
Speaker 7: been some pretty good performance out of Europe in this
Speaker 7: first quarter visa VI the US, and that has not
Speaker 7: been the case for a long time. Does that change
Speaker 7: your allocation? I mean, do you risk kind of chasing
Speaker 7: this performance?
Speaker 10: The US reached seventy percent of the world market cap extraordinary.
Speaker 10: I remember in the nineteen nineties it barely broke the
Speaker 10: fifty two percent level and everybody got excited. Now you're
Speaker 10: talking seventy percent, and it makes sense for everything that's
Speaker 10: going on in the last, you know, twenty plus years.
Speaker 11: We think it's a little excessive.
Speaker 10: We don't believe that America dominance from an equity market standpoint,
Speaker 10: is over, but we think people should reassess their allocation
Speaker 10: overseas and not overseas investing. Typically the window opens and
Speaker 10: it closes, and usually it closes because they can't compete
Speaker 10: on growth, they can't compete on yields, and ultimately the
Speaker 10: dollar doesn't stay weak, it ultimately strengthens again.
Speaker 11: You're starting to see winds of change there.
Speaker 10: So this is a great time to reassess and put
Speaker 10: that at the top of your watchlift for potential upgrade.
Speaker 2: And I'm assuming you're talking about the fiscal break kind
Speaker 2: of coming off the boil in Germany, so like this
Speaker 2: time it maybe actually is different.
Speaker 10: It seems it seems like that, And there's a lot
Speaker 10: of investors who think the international markets didn't participate in
Speaker 10: that narrow leadership.
Speaker 11: They did.
Speaker 10: A lot of the companies that lead the market even
Speaker 10: now in this year, particularly in Europe, thin get most
Speaker 10: of their revenues outside of Europe. They're just happened to
Speaker 10: be domiciled there. But you're going to pick up value
Speaker 10: and it doesn't mean you go from growth to value.
Speaker 11: You have a broad mix of both.
Speaker 7: How am I back here in the US valuation? What's
Speaker 7: the valuation call? Here? Earnings have been good, but are
Speaker 7: they good enough?
Speaker 10: This is where it gets interesting, right The whole second
Speaker 10: derivative argument is slowing down and the first mover when
Speaker 10: the second derivative is going up higher velocity, get higher
Speaker 10: earnings growth.
Speaker 11: You start early, you benefit from that.
Speaker 10: Now you start to see a little cresting of that
Speaker 10: second derivative. You're slowing down, but earning's growth should still
Speaker 10: be okay. A Our view is pretty simple valuation. If
Speaker 10: billions of investors feel comfortable paying twenty times forward earnings.
Speaker 11: Who are we to argue with that? Until something changes?
Speaker 11: What's that something?
Speaker 10: We have to see earnings growth fade and ultimately go
Speaker 10: down to almost zero three to two percent keeping with inflatial,
Speaker 10: We don't see that, So we are comfortable with valuation
Speaker 10: right now. We understand it's at premium. But our last
Speaker 10: point on this is pretty simple. If the leaders have
Speaker 10: been and the leaders of tomorrow are going to consistently
Speaker 10: be asset light, they have high cash rich, they have
Speaker 10: good balance sheets, they have low fixed labor. Why shouldn't
Speaker 10: they have premium valuations? And that's how we see the
Speaker 10: market moving in the next ten years. It's going to
Speaker 10: become increasingly asset light, which keeps valuations a little higher
Speaker 10: than what we've come to know in the last thirty
Speaker 10: forty years.
Speaker 2: Before we let you go, thoughts and comments on a
Speaker 2: potential recession in the US, what are you guys modeling
Speaker 2: right now?
Speaker 11: Very low level.
Speaker 10: Obviously, if tariffs stay and they stick, and they're across
Speaker 10: the board and ultimately becomes a tax on growth, we
Speaker 10: would have to reset.
Speaker 4: And stay in stick means like forever tariffs.
Speaker 10: Forever tariffs at least, or if they just stay and
Speaker 10: stick through the year and into next year, it could harm.
Speaker 11: Growth pretty aggressively. So we'll be watching that closely.
Speaker 10: But we have a very low probability on any recession
Speaker 10: risk in the in the foreseeable future.
Speaker 7: Villanova basketball tough loss at Georgetown last night, eighteen and
Speaker 7: thirteen on the year. What's going on down Philly?
Speaker 10: I don't even want to talk about last night's Let's
Speaker 10: talk about humble and hungry, which is who we are.
Speaker 11: And we're going to move on and we're going to
Speaker 11: do really well.
Speaker 7: Are they having a hard time adjusting to the nil
Speaker 7: and every trans for a portfolio kind of thing.
Speaker 10: Everybody is Yeah, it's a whole new state out there.
Speaker 10: But at the end of the day, it is what
Speaker 10: it is. We like friendly competition. We're going to look
Speaker 10: forward to the Big East. It's gonna be very very
Speaker 10: fun and Big East is back.
Speaker 7: Big East is backward. Bettina's back. See smug in a
Speaker 7: little bit. Did Villanova people. They're very passionate about their who.
Speaker 4: Hey, man, I support sports, so I support you supporting sports.
Speaker 7: My father was all set to go to Villanova and
Speaker 7: then the Japanese bomb Pearl Harbor change in plans for
Speaker 7: him and like a lot of people, so soft spot
Speaker 7: in the heart for you. Ye, fair enough, fair enough,
Speaker 7: Chris Heisei, thanks so much for joining us. Chris Hesei,
Speaker 7: Chief Investment Officer, Bank of America Private Bank, and Merril
Speaker 7: here at our Bloomberg inst conference. A lot of smart
Speaker 7: people running around here.
Speaker 4: Yeah, it's really great.
Speaker 2: Actually, I mean all these people that you see through
Speaker 2: the screens and now they're real and you're talking and
Speaker 2: you get lots of time to chat.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 2: Alex Steel alongside Pops we Need. This is Bloomberg Intelligence Radio.
Speaker 2: We are broadcasting to live from Bloomberg invest conference in
Speaker 2: downtown at Manhattan. We talked to all the top names
Speaker 2: in business, really asset managers, private credit, private equity, even
Speaker 2: pension funds. And for that we are joined now by Yupkim,
Speaker 2: a chief investment officer at Texas Municipal Retirement System managing
Speaker 2: forty plus billion dollars in pension fund today. Do a
Speaker 2: long history in funds, right, you previously ran private equity
Speaker 2: over at CalPERS. You also were senior portfolio manager at
Speaker 2: the Alaska Permanent Fund Corporation, so you've been through this
Speaker 2: for a long time. What is the best allocation that
Speaker 2: you can think of right now in this very strange,
Speaker 2: difficult environment.
Speaker 12: Yeah, it's you know, I think on a very holistic basis,
Speaker 12: we are long term investors, and so our long term
Speaker 12: strategy remains unchanged. You know, it's really predicated upon three
Speaker 12: pillars number one, attract higher and retain the best talent possible,
Speaker 12: and also attract and partner with the world class investment
Speaker 12: managers around the globe. Secondly, it's really about taking a
Speaker 12: low cost, public markets benchmark aligned approach to investing.
Speaker 13: I do think we all recognize.
Speaker 12: Going forward there are more alph opportunities and beta might
Speaker 12: be you know, there might some headwinds to to beta
Speaker 12: going forward. So I do think increasing the share of
Speaker 12: active management and public markets will be a critical a
Speaker 12: critical approach. And lastly, really endeavoring to generate a lot
Speaker 12: of the upperformance going forward in private markets will be
Speaker 12: absolutely critical. And you know, and so I do think
Speaker 12: kind of with the you know, with the confluence of
Speaker 12: a lot of market volatility, it's it's easy to be
Speaker 12: swayed left and right. But I do think kind of
Speaker 12: sticking to your core long term strategy is you know,
Speaker 12: very important in this environment.
Speaker 7: How does an asset allocation work for you guys down
Speaker 7: in Austin stocks, bonds, alternatives, Let's you hold it with
Speaker 7: alternatives playing.
Speaker 12: Absolutely Look, I think when you think about alternatives, the
Speaker 12: delta between a media and manager and a top five
Speaker 12: percentile manager in alternatives and privates can be upwards of
Speaker 12: fifteen hundred to eighteen hundred basis points. That equivalent number
Speaker 12: in public markets is two hundred fifty to three hundred
Speaker 12: basis points. And so you are really compensated for good
Speaker 12: manager selection but also a good deal selection. And so
Speaker 12: I do think there's still you know, when you think
Speaker 12: about the next ten years, there's a lot of equity
Speaker 12: value creation that will occur in the private markets, and
Speaker 12: so it really you know, kind of provides that long
Speaker 12: term you know, kind of alp engine to the overall portfolio.
Speaker 2: I mean, so surprise that you did private equity in
Speaker 2: your last job, and then now we're taking over at
Speaker 2: the Texas Pension fund. Correct, How how well funded are
Speaker 2: pensions right now?
Speaker 12: Yes, and so pension funds are definitely better funded kind
Speaker 12: of really on the backs of two incredible years in
Speaker 12: you know, the equity public markets. And and I do
Speaker 12: think public pensions typically have higher allocations to public equities,
Speaker 12: since that's that's certainly helped. At Texas, we're you know,
Speaker 12: above ninety percent funded and so and just given that
Speaker 12: we serve cities that are growing, you know, you know,
Speaker 12: our net cash out flow for the past two years
Speaker 12: has been less than a percent, and so that really
Speaker 12: empowers us to harvest, you know, the ilquided premium of
Speaker 12: our private market book, but also really helps us risk
Speaker 12: manage on the liquidity side.
Speaker 7: How do you feel about just the opportunities today? Where
Speaker 7: do you guys see the best opportunities?
Speaker 13: Sure?
Speaker 12: Sure, you know, like I think, maybe three things I'll
Speaker 12: share there is, you know, number one, the core building
Speaker 12: blocks on why people were excited about this US exceptionalism.
Speaker 12: The core building blocks have not changed. Right when I
Speaker 12: talk to my peers in Asia and Europe and the
Speaker 12: Middle East, the US continues to be the top destination,
Speaker 12: you know, for their investment capital. You have the top
Speaker 12: academic institutions in the United States, presumably with the greatest founders,
Speaker 12: the most tenured management teams.
Speaker 13: You have access to cheap energy.
Speaker 12: You have really a risk taking culture that's celebrated that's
Speaker 12: really not found in many parts of the world. And
Speaker 12: so I do think when we think, the question we
Speaker 12: ask is not how do we performs in twenty twenty five,
Speaker 12: but how do we generate outperforms in the next decade.
Speaker 12: And we do view the US to continue to take
Speaker 12: an asymantic share of that equity, you know, value creation
Speaker 12: in our total portfolio.
Speaker 2: How do you deal with liquidity when it comes to
Speaker 2: different parts of the market. Being in the public market,
Speaker 2: obviously it is easier, but then the more you go
Speaker 2: to alternatives as harder it as.
Speaker 12: A get Yeah, absolutely, liquidity is absolutely critical. I do think,
Speaker 12: you know, as I shared before, given that our net
Speaker 12: cash off flow annually is less than a percent, we're
Speaker 12: very well covered by our public equities book and our
Speaker 12: public credit book to meet those annual you know, liability streams.
Speaker 12: The situation you really want to avoid is having to
Speaker 12: sell your private market assets at a grave discount right
Speaker 12: to satisfy that that liability stream. And so we feel
Speaker 12: very very fortunate, you know, from a liquidity standpoint.
Speaker 7: Texans would say that they are unique. Their Texans first,
Speaker 7: really strong strong belief in that not often comes into
Speaker 7: the investment themes as well, kind of leading the way
Speaker 7: with maybe an alternative view of ESG investing several years ago,
Speaker 7: allocating towards energy versus people who don't have heat towards energy.
Speaker 7: How does that impact running the state pension fund? Yeah?
Speaker 12: Look, I think I think Austin is a wonderful place
Speaker 12: to be an allocator. Right, there are a number of
Speaker 12: very large LPs you know, in town, and all the
Speaker 12: CIOs we convene together and you know, we share share,
Speaker 12: you know, kind of our views of the world, and
Speaker 12: so I think that's that's super helpful, you know, Like
Speaker 12: I think thematically, we're really excited about you know, five
Speaker 12: big mega trends, right. Number one obviously around you know,
Speaker 12: digital transformation. So we're talking about just industry transforming AI applications,
Speaker 12: vertical software, cybersecurity, and data centers.
Speaker 13: In healthcare innovation, we're really focused on.
Speaker 12: Next generation pre clinical biotech platforms and also just opportunities
Speaker 12: across the biotech and pharma value chain. On industrial resilience,
Speaker 12: really around robotics AI, and also aerospace and defense. And
Speaker 12: then kind of the last two areas, it's really around energy,
Speaker 12: monetization and financial empowerment, so opportunities in fintech and also
Speaker 12: asset light insurance, brokerage and so look, I do think
Speaker 12: the next fifteen years will look very different from the
Speaker 12: last fifteen and so really digging deep on these mega
Speaker 12: trends and understanding how the world is moving, how these
Speaker 12: industries are transforming, will be critical to long term OWT performance.
Speaker 2: Here's an entirely unfair question you have to answer now
Speaker 2: in thirty seconds. Okay, do you think the US should
Speaker 2: have a sovereign well fund?
Speaker 13: I do think that.
Speaker 12: I do think we have the best investment talent in
Speaker 12: the world residing here in the United States. I do think,
Speaker 12: you know, a lot of our federal sources of capital
Speaker 12: has not been compounding at endowment or pension like returns,
Speaker 12: and so I think there is great opportunity to bring
Speaker 12: the best of America's investment management and apply it to
Speaker 12: you know, different forms of federal funds.
Speaker 7: Great stuff. I really appreciate it. They're getting some thoughts
Speaker 7: on these markets. Yep Kim, Chief Investment Officer, Texas Municipal
Speaker 7: Retirement System based in Austin, Texas.
Speaker 1: Credit you're listening to the Bloomberg Intelligence Podcast. Catch us
Speaker 1: live weekdays at ten am Eastern on Applecarclay, and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube Alex.
Speaker 2: You here alongside Paul Sweeney the Bloomberg invest Conference twenty
Speaker 2: twenty five downtown in Lower Manhattan.
Speaker 4: Now, obviously, when you.
Speaker 2: Get together wealth managers private equity bankers, private credit guys.
Speaker 2: They're all talking about alternative assets, but what have you
Speaker 2: already been in that space for decades?
Speaker 4: What do you do there?
Speaker 2: While joining us now is a Pernima PII. She's governing
Speaker 2: partner and portfolio manager for public credit at HPS Investment Partners,
Speaker 2: which was founded back in twenty to two thousand and
Speaker 2: seven to focus on credit and guess what longer dated,
Speaker 2: less liquid investment opportunities, which it feels like that's the world.
Speaker 4: That everyone is chasing right now.
Speaker 2: You guys ended twenty twenty four with one hundred and
Speaker 2: forty nine billion dollars in assets under management.
Speaker 4: Where are your biggest opportunities?
Speaker 14: Yeah, So when we started the business, the regulatory environment
Speaker 14: changed pretty quickly thereafter, and it really gave us the
Speaker 14: opportunity to get involved in the private credit business. And
Speaker 14: at the time, private credit was more levered companies in
Speaker 14: the high market or a substitute for broadly syndicated loans.
Speaker 2: Like I can't get funding for my regular banks, I
Speaker 2: got to go to.
Speaker 4: You and pay up.
Speaker 14: And there were moments of dislocation in the marketplace, and
Speaker 14: so the banks might not have been there at that
Speaker 14: moment in time regulatory environment changed and that opened up
Speaker 14: the sort of I would say, that opened up the
Speaker 14: marketplace for people to be an alternative provider of capital
Speaker 14: to companies that needed at different moments in time. And
Speaker 14: so what we used to be, you know, oh, was
Speaker 14: when the capital markets were shifting. It actually transitioned a lot.
Speaker 14: Like our business for example, we invest not just in
Speaker 14: sponsor deals. We invest in we provide capital to owners
Speaker 14: as well on a regular base. So over time the
Speaker 14: market's evolved a lot. I would say, the market is
Speaker 14: really bifurcated. There's a whole host of folks in private credit.
Speaker 14: You say to yourself, there's been a ton of funds
Speaker 14: that have been raised. We tend to traffic in I
Speaker 14: would say, Number one, bigger businesses. Number Two, we tend
Speaker 14: to we tend to provide larger sources of capital. Three,
Speaker 14: we have flexible capital in terms of the top and bottom
Speaker 14: of the structure, so we do we are able to
Speaker 14: sort of think about where our solution might make sense
Speaker 14: for a company. So that competitive landscape I think is
Speaker 14: a little bit smaller in terms of the folks that
Speaker 14: are trafficking there. The other thing I would say is
Speaker 14: private credits expanding dramatically now because you're seeing it with
Speaker 14: I think Joe Bay was just speaking, you know, private
Speaker 14: ig that's a whole other sector that there's a whole
Speaker 14: need of financing for all these mega trends that are
Speaker 14: happening in the US. So that could be infrastructure, that
Speaker 14: can be AI, that can be energy transition and that,
Speaker 14: and that opportunity set is sort of ripe for folks
Speaker 14: like ourselves and others to take advantage of.
Speaker 7: What's a typical deal size for you guys? And how
Speaker 7: has that changed over the year.
Speaker 14: Well, it's changed a lot because the market's changed a lot.
Speaker 14: So several years ago you did not have a lot
Speaker 14: of private credit tranches that were you know, call it
Speaker 14: much greater than three hundred.
Speaker 5: Million dollars of size.
Speaker 14: There are many now, I'll give you an example in
Speaker 14: the marketplace today. There are three deals I can think
Speaker 14: of that are refinancing in the broadly syndicated loan private credit.
Speaker 14: One of them is a four to five billion dollar
Speaker 14: deal size.
Speaker 5: That's one trunch.
Speaker 14: Another is, you know, three billion on the first lane,
Speaker 14: nine hundred million second lane. That's a trunch, And another's
Speaker 14: two and a half billion so like now you're starting
Speaker 14: to see billion dollar deals. Wow, you don't have tons
Speaker 14: of people that can traffic in two and a half
Speaker 14: billion dollar deal sizes there, But there's guys out there
Speaker 14: that can. You know, we think there's five or six
Speaker 14: people who do that on a regular basis every single day.
Speaker 5: But that's a smaller, smaller pool of competition.
Speaker 2: I think, are you seeing the distress market grow pick up?
Speaker 2: Is that the catastrophe we all thought it was going
Speaker 2: to be five years ago or no?
Speaker 14: I mean I would say, no, Oh, I don't think there.
Speaker 14: I mean this was like the default cycle that never was.
Speaker 14: So it was a variant on the distress cycle, which
Speaker 14: is that you guys have talked about this, I'm sure,
Speaker 14: but all the liability management stuff and sort of structured
Speaker 14: transactions to kick the can a little bit and figure
Speaker 14: out if you had time, especially in the in the
Speaker 14: world of rising interest rates where balance sheets got stressed.
Speaker 14: But we haven't really seen a distress cycle. And in fact,
Speaker 14: if you talk to my partners who run our private
Speaker 14: credit business, they would say they were surprised by how
Speaker 14: well a lot of companies did over this period of time.
Speaker 7: I started my career at the Chasement, Heaton Bank, and
Speaker 7: the Leverage Lending Group lending five six times that the EBITTA.
Speaker 7: We took a big fee up front, We syndicate, syndicated
Speaker 7: all the risk off our balance sheet. It was a
Speaker 7: great business. I would never allow you to come in
Speaker 7: and take one of my clients. What are the banks
Speaker 7: doing here? Why are they letting this business go to
Speaker 7: people like you and others?
Speaker 5: Wow?
Speaker 14: So so one is that there's a regulatory environment shift right,
Speaker 14: that changed a lot from when you started and frankly
Speaker 14: when I started, and all that kind of stuff.
Speaker 5: So that's number one.
Speaker 14: Number two, there's different reasons companies go to private credit lenders,
Speaker 14: right because banks, by and large, I think, just take
Speaker 14: the body syndicated loan market, right, That bodily syndicated loan
Speaker 14: market is sixty plus percent colos.
Speaker 5: Colo is like a box. There's a box.
Speaker 14: You want a reading, you want a certain amount of leverage,
Speaker 14: you need a certain amount of diversity. It's great business,
Speaker 14: by the way, but the things that are straight down
Speaker 14: the fairway nicely fit into a colo.
Speaker 5: So all of a sudden, if your reading's.
Speaker 14: Constrained and maybe something's the minus, that market may or
Speaker 14: may not be available to at a given moment in time.
Speaker 14: So why do people go why do issuers go to
Speaker 14: private credit folks? Well, they'll go because maybe they need
Speaker 14: flexibility in picking for a period of time.
Speaker 5: Okay, that could be one.
Speaker 14: Maybe it's because the americket feels pretty saturated in particular industries.
Speaker 5: That could be two.
Speaker 14: Maybe it's because people need a delay draw facility because
Speaker 14: businesses aren't static and they grow over time, and you
Speaker 14: want to have that funding sort of lined up and
Speaker 14: ready to roll if it's a roll up or something
Speaker 14: like that, or you have a capback plan or something
Speaker 14: like that. So that could be the third reason. And
Speaker 14: then four, I think that you know, what we've seen,
Speaker 14: certainly in some of our buckets of capital is that
Speaker 14: as businesses grow, sometimes they'd like to have one or
Speaker 14: two relationship providers.
Speaker 7: Interesting, it's great business.
Speaker 4: What what do you not want to touch right now
Speaker 4: at the tem football.
Speaker 5: Well, I think you mean, I'm sure you've heard this
Speaker 5: from everybody.
Speaker 14: You know, we don't know what's going on with tariffs,
Speaker 14: and tariffs have both short term implications and longer term applicatdications.
Speaker 5: The longer term implications.
Speaker 14: Are trickier to underwrite because trade wars are very difficult
Speaker 14: to underwrite, and that can really that coupled with the
Speaker 14: other sort of things as part of the puzzle.
Speaker 5: Immigration, slower growth.
Speaker 14: Et cetera, affect a whole, but will affect everyone's portfolio.
Speaker 14: Everybody's portfolio, every company. Shorter term. Maybe there's a band
Speaker 14: you can underwrite on tariffs. So there's sort of the obvious,
Speaker 14: which are you know, industrial manufacturing, retail or certain things
Speaker 14: in the consumer space which get trickier to trickier to underwrite.
Speaker 7: But just real quickly, thirty seconds. Your market is open,
Speaker 7: today's miss. There's three deals in the market.
Speaker 14: The broadly syndicated liquid loan market is open. Yes, you know,
Speaker 14: there's been one hundred and sixty billion dollars of COLO
Speaker 14: growth demand and the markets in twenty twenty one, the
Speaker 14: lever lone market has changed by fifty billion.
Speaker 5: There's a lot of people who want paper.
Speaker 2: Yep, there you go, all right, Really great to get
Speaker 2: your perspective up from Prairie joining us from HPS Investment Partners.
Speaker 4: Also Feller in Northwestern grad and now you're going up
Speaker 4: on me. They are good to know, they are good Western.
Speaker 4: It was really cold.
Speaker 7: It was very cool, Chicago.
Speaker 4: Yeah, but you know it's because you're not like you don't.
Speaker 2: Have big towers, because you're kind of allot to win.
Speaker 7: All you have got that win.
Speaker 4: Yes, and it's cold.
Speaker 7: Yeah, I went to Virginia in North Carolina.
Speaker 4: I'm not so many layers. All right, I thank very much.
Speaker 2: We really appreciate it's great to talk to you.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your or watch us live on YouTube.
Speaker 7: Let's get to our next guest, Stephen Meyer, New York
Speaker 7: City Retirement Systems Asset Management CIO and he's deputy controller
Speaker 7: for the city. Steve, thanks so much for joining us here.
Speaker 7: Now you just jumped off a panel. We appreciate it.
Speaker 7: How are you guys navigating the last six, seven, eight
Speaker 7: weeks with all the cross current of news coming out.
Speaker 7: How does that impact the way you manage your pension?
Speaker 15: Well, it's certainly been interesting, and we try to do
Speaker 15: those adhere to a long term strategic plan. So a
Speaker 15: lot for us, a lot of this is noise in
Speaker 15: terms of what's going on in the change of policy
Speaker 15: in Washington. So we're really trying to stick to our
Speaker 15: north star, which is our strategic ass allocation. Again, we
Speaker 15: have multi generational liabilities that we're trying to satisfy. So again,
Speaker 15: a long term investment horizon and a long term discipline. Now,
Speaker 15: having said that, our trustees and our beneficiaries and our
Speaker 15: participants do call. We have the privilege of servicing eight
Speaker 15: hundred thousand public workers here in the City of New
Speaker 15: York their concerns. So we need to stay on top
Speaker 15: of it in terms of increasing the information flow of
Speaker 15: how our assets are diversified and they continue to perform
Speaker 15: as expected.
Speaker 2: So how are they like forty sixty or sixty forty
Speaker 2: maybe a thing of the past. There's different mix in there,
Speaker 2: especially when it comes to alternative assets.
Speaker 4: What's the best mix.
Speaker 15: We're about thirty five percent and alternative assets at this point.
Speaker 15: That's a lot, yeah, yeah, yeah, And that includes private equity, infrastructure,
Speaker 15: private credit, some small exposure to hedge funds in real estate.
Speaker 15: Of this other sixty five percent were about almost forty
Speaker 15: percent of that is in equity, dominated by US equity,
Speaker 15: about eighty five percent US large cap in particular, and
Speaker 15: then an allocation to develop market xually US and emerging market.
Speaker 15: So we're balanced. We're balanced from a private perspective, we're
Speaker 15: balanced from a public perspective, and again I think that's
Speaker 15: going to benefit us over time.
Speaker 7: With the increase in volatility, have you changed your views
Speaker 7: on the economy out of the US economy or global
Speaker 7: economy given some of these trade tensions that are coming
Speaker 7: into the marketplace.
Speaker 15: Well, we're concerned about inflation, and we do think we
Speaker 15: have some natural hedges against inflation and our portfolio in
Speaker 15: terms of a real asset allocation, real estate, infrastructure. I
Speaker 15: think our public equities will actually perform well over time
Speaker 15: in a higher inflationary environment. So we're not necessarily overly concerned.
Speaker 15: We did expect to see some uplift in inflation expectations
Speaker 15: given concerns about the imposition of tariffs, the mass deportations
Speaker 15: that were talked about anyway in terms of potentially impact
Speaker 15: in the price of labor.
Speaker 7: So again, haven't really changed.
Speaker 15: What we're doing or how we're doing it, but we're
Speaker 15: certainly mindful and we continue to monitor the situations.
Speaker 2: We do have a headline carousing right now the US
Speaker 2: is now weighing a one month delay of Canada and
Speaker 2: Mexico tariffs on autos, so looking for those exemptions, those
Speaker 2: little carve outs. But potentially we could hear more about
Speaker 2: that from the White House later on this afternoon. Before
Speaker 2: we let you go, you mentioned thirty five percent in alternatives.
Speaker 4: Seems like a lot. Is there a liquidity issue there?
Speaker 15: Not really compared to some of our peers, And I know,
Speaker 15: you know other institutional investors were just under three hundred
Speaker 15: billion dollars in assets, So I understand that there are
Speaker 15: other managers out there that have forty forty five fifty
Speaker 15: percent allocation to alternatives. We have ample liquidity through the
Speaker 15: sixty five percent in public markets. Again, we're disciplined in
Speaker 15: terms of putting them work money to work over time,
Speaker 15: we're benefiting from vintage your diversification. We've actually been putting
Speaker 15: more money to work in private assets over the last
Speaker 15: two years with a change of our strategic as allocation,
Speaker 15: which has been beneficial as others have pulled away from
Speaker 15: the markets. We've been actually putting money to work, getting
Speaker 15: better economics, better access to the top manager's co investment
Speaker 15: as well to average down the fees and expense.
Speaker 7: All right, Steve, thank you so much for joining us.
Speaker 7: Really appreciate you. Stee my New York City Retirement System
Speaker 7: Asset Management CIO and Deputy Comptroller for the great City
Speaker 7: of New York that does it for us here at
Speaker 7: Umberg Invest twenty twenty five here at the Convene Conference
Speaker 7: Center down here in the world financial centers. In a
Speaker 7: great couple of days, some great guests.
Speaker 4: Yeah, amazing guests, yep.
Speaker 2: And it's great to get all different perspectives, right, Like
Speaker 2: that's how you make a market at the end of
Speaker 2: the day.
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