1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,720 --> 00:00:10,080 Speaker 2: We begin this now we're stock centering lower as investors 3 00:00:10,080 --> 00:00:12,920 Speaker 2: wear slew of new risks, So Poloit Global Management President 4 00:00:13,039 --> 00:00:16,360 Speaker 2: Jim seunt right in the following twenty six US outlook 5 00:00:16,400 --> 00:00:19,680 Speaker 2: is consistent with a snakflation re environment, and we expect 6 00:00:19,720 --> 00:00:21,680 Speaker 2: interest rates to be higher for longer. 7 00:00:21,880 --> 00:00:23,520 Speaker 1: Jim joins us now for more. Jim, Good morning, he 8 00:00:23,560 --> 00:00:24,200 Speaker 1: Come morning, John. 9 00:00:24,239 --> 00:00:24,919 Speaker 3: How are you happy? I? 10 00:00:25,079 --> 00:00:26,000 Speaker 1: Well, it's good to see you. 11 00:00:26,040 --> 00:00:27,400 Speaker 2: I want to pick up on this headline from our 12 00:00:27,400 --> 00:00:29,920 Speaker 2: friends over at the Ft in the last month, Apollo's 13 00:00:29,920 --> 00:00:32,080 Speaker 2: cutting risk and stop piling cash. 14 00:00:32,600 --> 00:00:34,000 Speaker 1: Is that true? What are you guys up to? 15 00:00:34,520 --> 00:00:34,800 Speaker 3: Well? 16 00:00:35,200 --> 00:00:37,320 Speaker 4: I would say that we've always been known as a 17 00:00:37,360 --> 00:00:40,400 Speaker 4: discipline investor. We talk about purchase price matters, we talk 18 00:00:40,400 --> 00:00:44,320 Speaker 4: about alignment with our investors, and I think that what 19 00:00:44,479 --> 00:00:48,600 Speaker 4: that statement is is really about the gauntlet for approving investments. 20 00:00:48,600 --> 00:00:51,200 Speaker 4: That Apollo has gotten higher and higher over the last 21 00:00:51,280 --> 00:00:54,520 Speaker 4: year or so as we see an environment that down 22 00:00:54,560 --> 00:00:57,120 Speaker 4: the fairway. I'll use a golf analogy. Down the fairway. 23 00:00:57,120 --> 00:00:59,480 Speaker 4: You've got a lot of great things going on. You 24 00:00:59,520 --> 00:01:03,360 Speaker 4: knows of capex cycle, good economic growth, consumer and solid 25 00:01:03,400 --> 00:01:07,440 Speaker 4: shape you know, a variety of great attributes that being 26 00:01:07,560 --> 00:01:12,640 Speaker 4: said the rough where there's lots of challenges between geopolitics, 27 00:01:12,720 --> 00:01:16,240 Speaker 4: between the concern about inflation, between the concern about the 28 00:01:16,319 --> 00:01:17,039 Speaker 4: return of. 29 00:01:17,080 --> 00:01:18,600 Speaker 3: Invested capital and AI. 30 00:01:19,280 --> 00:01:23,800 Speaker 4: There's a variety of left hail items that have certainly 31 00:01:23,880 --> 00:01:27,959 Speaker 4: grown in stature. You know, as I listened to some 32 00:01:28,040 --> 00:01:30,880 Speaker 4: of the macro commentary here, I think there's a great 33 00:01:30,880 --> 00:01:34,640 Speaker 4: deal of humility about the macro view of how the predictions. 34 00:01:35,040 --> 00:01:36,920 Speaker 4: As I meant, I've said here many times. We sat 35 00:01:36,920 --> 00:01:41,640 Speaker 4: here after SVB, we all thought massive capitals slowed down 36 00:01:41,680 --> 00:01:46,039 Speaker 4: and spending and credit crisis, the US economy really was 37 00:01:46,240 --> 00:01:49,480 Speaker 4: massively resilient. You guys talked earlier about what's going on 38 00:01:49,600 --> 00:01:52,360 Speaker 4: with the deficit. I think it's a little bit it's 39 00:01:52,400 --> 00:01:55,120 Speaker 4: the economy stupid, the US economy. People just don't want 40 00:01:55,160 --> 00:01:58,560 Speaker 4: to shorten the great momentum of what's going on. And 41 00:01:58,720 --> 00:02:03,640 Speaker 4: we have an ADMINITISEDT it's very politically savvy about populist topics. 42 00:02:03,720 --> 00:02:04,960 Speaker 3: He's been very responsive. 43 00:02:05,320 --> 00:02:07,440 Speaker 4: But again I this back to us, back to the 44 00:02:07,520 --> 00:02:09,480 Speaker 4: question you had, we're putting money to work. 45 00:02:09,560 --> 00:02:10,679 Speaker 3: This week was a busy week. 46 00:02:10,720 --> 00:02:15,440 Speaker 4: We announced six billion of deals of transactions all great companies. 47 00:02:15,840 --> 00:02:18,560 Speaker 4: Again we're leaning into larger companies that are part of 48 00:02:18,639 --> 00:02:22,760 Speaker 4: the global industrial renaissance. One with bet brad Jacobs, a 49 00:02:22,840 --> 00:02:25,639 Speaker 4: forty thirty five year winner in the building product space. 50 00:02:26,600 --> 00:02:30,519 Speaker 4: The second one with Russell Investments really simplifying their capital structure. 51 00:02:30,919 --> 00:02:33,600 Speaker 4: And then the last transaction was very interesting. Actually it 52 00:02:33,720 --> 00:02:37,200 Speaker 4: was for valor Xai. It was really a sale lease 53 00:02:37,320 --> 00:02:43,160 Speaker 4: back on a massive amount five billion of Nvidia chips. 54 00:02:43,240 --> 00:02:47,160 Speaker 4: So all three really interesting transactions, but really well structured 55 00:02:47,560 --> 00:02:50,080 Speaker 4: downside risk and I think that's our view right now. 56 00:02:50,120 --> 00:02:53,040 Speaker 4: We want to be investing capital, but you've got to 57 00:02:53,120 --> 00:02:55,920 Speaker 4: acknowledge you can wake up on a Saturday morning and 58 00:02:55,960 --> 00:03:00,320 Speaker 4: see us with activities around the globe that really answer 59 00:03:00,360 --> 00:03:02,720 Speaker 4: is the tail risk of geopolitics. 60 00:03:03,200 --> 00:03:04,120 Speaker 3: You can get a. 61 00:03:04,040 --> 00:03:06,880 Speaker 4: Stroke of the pen announcement yesterday with regard to housing, 62 00:03:07,320 --> 00:03:09,200 Speaker 4: and so I think you have to be very very 63 00:03:09,240 --> 00:03:12,320 Speaker 4: careful about how you invest long term at scale. 64 00:03:12,560 --> 00:03:14,960 Speaker 2: To extend the analogy, though to your point, the fairway 65 00:03:15,240 --> 00:03:17,760 Speaker 2: is getting narrower, the rough is getting deeper. 66 00:03:17,840 --> 00:03:18,639 Speaker 1: In the last few years. 67 00:03:18,680 --> 00:03:20,760 Speaker 2: It has not been that way allocates risk and you'll perform, 68 00:03:20,760 --> 00:03:21,519 Speaker 2: you'll do well world. 69 00:03:21,560 --> 00:03:22,720 Speaker 1: There's like a tougher environment. 70 00:03:22,800 --> 00:03:25,000 Speaker 4: The analogy for golf for those who play a lot 71 00:03:25,040 --> 00:03:27,680 Speaker 4: of golf is worth the US Open. US Open is 72 00:03:27,680 --> 00:03:31,639 Speaker 4: known for tight fairways and really punitive rough and if 73 00:03:31,639 --> 00:03:33,520 Speaker 4: you cape in the fairway, you're going to be a 74 00:03:33,560 --> 00:03:36,400 Speaker 4: great victor and you're going to have great success. I 75 00:03:36,440 --> 00:03:39,040 Speaker 4: think there's going to be as last year will remind 76 00:03:39,120 --> 00:03:41,520 Speaker 4: us you can have some bumps in the road during 77 00:03:41,520 --> 00:03:44,640 Speaker 4: the course of the year. That definitely changed the trajectory 78 00:03:44,640 --> 00:03:48,800 Speaker 4: on liquidity, on momentum, on risk appetite. But I think 79 00:03:48,800 --> 00:03:52,560 Speaker 4: the long term trend is quite positive. But I do 80 00:03:52,600 --> 00:03:54,480 Speaker 4: think you have to be very measured about how you 81 00:03:54,560 --> 00:03:55,720 Speaker 4: execute your business model. 82 00:03:55,960 --> 00:03:59,000 Speaker 5: So if that's the US Cup, do you go to 83 00:03:59,240 --> 00:04:03,800 Speaker 5: the Rider Cup? No, I mean the idea, do you 84 00:04:03,960 --> 00:04:07,480 Speaker 5: stand your I google that. Evidently I bombed on it. 85 00:04:07,520 --> 00:04:09,920 Speaker 5: I think curious if you go overseas, you know, because 86 00:04:09,960 --> 00:04:11,480 Speaker 5: to differs fy away from the United States. 87 00:04:11,520 --> 00:04:13,800 Speaker 4: Well, we've been we've been I would say two account 88 00:04:13,800 --> 00:04:15,800 Speaker 4: that we've been very vocal and I've been vocaling this 89 00:04:15,960 --> 00:04:18,760 Speaker 4: on this program about Europe. You know, we we when 90 00:04:18,800 --> 00:04:23,599 Speaker 4: you look at the needs of governments around the globe, 91 00:04:24,000 --> 00:04:26,840 Speaker 4: especially in Europe, in Germany, in particular, and some more 92 00:04:26,920 --> 00:04:31,320 Speaker 4: so in the UK. The governments does demand for capital 93 00:04:31,800 --> 00:04:35,000 Speaker 4: far aways their ability to participate, and so we want 94 00:04:35,040 --> 00:04:36,840 Speaker 4: to be part of that renaissance and that part of 95 00:04:36,880 --> 00:04:40,880 Speaker 4: the globe in places like Japan and Australia, we want 96 00:04:40,880 --> 00:04:43,920 Speaker 4: to be part of the retirement solutions and some of 97 00:04:43,960 --> 00:04:48,080 Speaker 4: the global industrial renaissance with a changing banking system. You know, 98 00:04:48,160 --> 00:04:54,560 Speaker 4: we're not a broadly speaking, a developing an emerging markets investor. 99 00:04:54,720 --> 00:04:56,800 Speaker 4: So while we have a view on what's going on 100 00:04:57,200 --> 00:05:01,640 Speaker 4: in Latin America today, that's an negligible part of our capital. 101 00:05:01,720 --> 00:05:04,200 Speaker 3: That's just not what we do. We're really a G 102 00:05:04,480 --> 00:05:07,000 Speaker 3: seven and larger economy investor. 103 00:05:07,200 --> 00:05:09,280 Speaker 5: So you were talking about how you're getting more conservative. 104 00:05:10,160 --> 00:05:13,240 Speaker 5: Corporations and governments are attacking the market at a record pace. 105 00:05:13,480 --> 00:05:16,479 Speaker 5: So far this year, about two hundred and sixty billion 106 00:05:16,480 --> 00:05:19,160 Speaker 5: dollars of bond issuance from governments and corporations around the 107 00:05:19,200 --> 00:05:21,880 Speaker 5: world have been issued, the fastest pace ever. Is this 108 00:05:22,080 --> 00:05:25,000 Speaker 5: because there is a lot of optimism out there or 109 00:05:25,120 --> 00:05:27,640 Speaker 5: is this because they see a small window that could 110 00:05:27,720 --> 00:05:28,800 Speaker 5: close and they want to get in. 111 00:05:29,279 --> 00:05:30,720 Speaker 4: I don't think it's a small wh When you look 112 00:05:30,760 --> 00:05:32,400 Speaker 4: at the numbers that have been put out by the 113 00:05:32,520 --> 00:05:36,360 Speaker 4: large financial institutions, the big banks about net issuance in 114 00:05:36,480 --> 00:05:40,040 Speaker 4: the IG market, it's north of like it's anywhere from 115 00:05:40,080 --> 00:05:43,400 Speaker 4: eight hundred billion to a trillion two net issuance, which 116 00:05:43,480 --> 00:05:45,320 Speaker 4: is one of the largest numbers in the last ten 117 00:05:45,400 --> 00:05:48,000 Speaker 4: to fifteen years. Same can be said in the high 118 00:05:48,080 --> 00:05:51,280 Speaker 4: yield and the leverage loan market, the net issuance is 119 00:05:51,320 --> 00:05:54,360 Speaker 4: going to be quite high. So with real rates and 120 00:05:54,440 --> 00:05:58,200 Speaker 4: real yields fairly high in a historic basis, with a 121 00:05:58,360 --> 00:06:02,520 Speaker 4: variety of pensioners and investors around the globe looking for 122 00:06:02,680 --> 00:06:06,320 Speaker 4: long duration yield, it's a pretty powerful mix of supply 123 00:06:06,440 --> 00:06:10,839 Speaker 4: and demand in terms of taking that overhang, if you will. 124 00:06:11,160 --> 00:06:13,720 Speaker 4: I think one of the big questions is does the 125 00:06:13,960 --> 00:06:18,720 Speaker 4: equity new issue IPO calendar actually come to fruition. And 126 00:06:18,800 --> 00:06:21,240 Speaker 4: the second thing that people aren't talking about is where 127 00:06:21,320 --> 00:06:25,560 Speaker 4: oil is right now. It's very deflationary. If it were 128 00:06:25,600 --> 00:06:28,440 Speaker 4: to stay at these levels or even go lower again, 129 00:06:28,480 --> 00:06:30,480 Speaker 4: we're talking about all the things that can go wrong. 130 00:06:31,200 --> 00:06:33,120 Speaker 4: I'm a credit guy, you know, bonds don't go to 131 00:06:33,160 --> 00:06:37,000 Speaker 4: two hundred, they go to zero. I'm cautious by definition, 132 00:06:37,680 --> 00:06:41,320 Speaker 4: but you know, in oil at these levels on WTI 133 00:06:41,480 --> 00:06:45,680 Speaker 4: at fifty six fifty seven, that's very deflationary and very 134 00:06:45,800 --> 00:06:48,800 Speaker 4: positive for economic growth. So you know, again, I think 135 00:06:48,880 --> 00:06:51,880 Speaker 4: that there's a variety of balancing acts here going on. 136 00:06:52,160 --> 00:06:55,360 Speaker 4: But you know, to John's first question, I would say 137 00:06:55,400 --> 00:06:59,160 Speaker 4: that we think that there's a variety of issues that 138 00:06:59,279 --> 00:07:01,039 Speaker 4: one needs a deal with, But at the same time, 139 00:07:01,360 --> 00:07:04,000 Speaker 4: you want to be putting money to work in large scale. Now, 140 00:07:04,360 --> 00:07:06,640 Speaker 4: if you look at the traditional high yield market, the 141 00:07:06,720 --> 00:07:10,440 Speaker 4: triple CLBO buyout, that activity is just not happening in 142 00:07:10,520 --> 00:07:14,760 Speaker 4: scale anymore. It's being funded in private credit, which I'm 143 00:07:14,800 --> 00:07:16,800 Speaker 4: sure we'll talk about because of our big white paper 144 00:07:16,880 --> 00:07:19,400 Speaker 4: in December. But at the end of the day, it's 145 00:07:19,480 --> 00:07:22,920 Speaker 4: really about credit and the ability for this IPO calendar 146 00:07:23,000 --> 00:07:24,000 Speaker 4: to comefort to fruition. 147 00:07:24,080 --> 00:07:24,560 Speaker 1: On some of this gym. 148 00:07:24,600 --> 00:07:26,480 Speaker 2: Because I can tell you sort of openly and honestly 149 00:07:26,520 --> 00:07:28,120 Speaker 2: what I've struggled with. I don't know what to look 150 00:07:28,160 --> 00:07:30,880 Speaker 2: at anymore. Payrolls has been a bit of a head fake. 151 00:07:30,960 --> 00:07:33,240 Speaker 2: In the last twelve months, we've seen a real deceleration 152 00:07:33,280 --> 00:07:35,000 Speaker 2: in payrolls growth, but it's not been relevant to the 153 00:07:35,040 --> 00:07:37,640 Speaker 2: performance of risk ansets more broadly, something that even the 154 00:07:37,640 --> 00:07:39,480 Speaker 2: team have talked about for a number of years now. 155 00:07:39,840 --> 00:07:42,440 Speaker 2: When we saw interest rates go to four pushing five percent, 156 00:07:43,000 --> 00:07:44,440 Speaker 2: Lisa and I were talking about this for the best 157 00:07:44,480 --> 00:07:46,360 Speaker 2: part of twelve months. How on earth is this economy 158 00:07:46,440 --> 00:07:48,480 Speaker 2: going to deal with four to five percent interest rates? 159 00:07:48,520 --> 00:07:51,400 Speaker 2: And we dealt with that just about Okay, what should 160 00:07:51,440 --> 00:07:51,960 Speaker 2: we be focused? 161 00:07:52,480 --> 00:07:56,200 Speaker 4: I think, I think to answer that question, it's really 162 00:07:56,360 --> 00:08:00,480 Speaker 4: we talk about the changing backdrop of market structure. The 163 00:08:00,640 --> 00:08:04,920 Speaker 4: reality is in the US today, it's been an extended 164 00:08:04,960 --> 00:08:08,960 Speaker 4: credit cycle. It's harder to have a real economic recession 165 00:08:09,480 --> 00:08:13,080 Speaker 4: because of the diversity of funding across the board. We 166 00:08:13,240 --> 00:08:16,040 Speaker 4: have the healthiest banks in the globe. We have a 167 00:08:16,080 --> 00:08:20,480 Speaker 4: securitization market that's alive and well in record size of issuance, 168 00:08:20,800 --> 00:08:23,480 Speaker 4: that disperses a lot of risk around the economy in 169 00:08:23,600 --> 00:08:26,720 Speaker 4: terms of balance sheets. You have a consumer in pretty 170 00:08:26,720 --> 00:08:29,120 Speaker 4: good shape. You have a housing market where forty percent 171 00:08:29,200 --> 00:08:32,240 Speaker 4: of folks don't have a mortgage. I'm not saying we're 172 00:08:32,280 --> 00:08:34,000 Speaker 4: not going to have an economic cycle. We will have 173 00:08:34,040 --> 00:08:37,280 Speaker 4: an economic cycle. We will have a credit cycle. But 174 00:08:37,520 --> 00:08:41,080 Speaker 4: if the post SVB environment is any lesson to us 175 00:08:41,120 --> 00:08:44,959 Speaker 4: all because of the advances and the evolution of the 176 00:08:45,120 --> 00:08:48,719 Speaker 4: US economy since the GFC. It's a lot harder to 177 00:08:48,880 --> 00:08:51,880 Speaker 4: push over this machine than it had been in the past. 178 00:08:52,360 --> 00:08:55,599 Speaker 4: The transmission mechanism of the FED that used to be 179 00:08:55,800 --> 00:08:59,040 Speaker 4: instantaneous is not what it used to be. We saw 180 00:08:59,080 --> 00:09:00,719 Speaker 4: it in the last two years with housing in the 181 00:09:00,840 --> 00:09:03,959 Speaker 4: US because of the thirty year mortgage concept, or the 182 00:09:04,040 --> 00:09:07,560 Speaker 4: lack of a mortgage versus countries like the UK, where 183 00:09:07,640 --> 00:09:09,760 Speaker 4: most folks are on a five or seven year floating 184 00:09:09,840 --> 00:09:12,920 Speaker 4: rate mortgage that has an immediate impact on the breaks 185 00:09:12,960 --> 00:09:14,360 Speaker 4: of the consumer and the economy. 186 00:09:14,840 --> 00:09:16,160 Speaker 3: Not the case in the US. 187 00:09:16,800 --> 00:09:21,600 Speaker 4: So the strength, the breadth of market structure, how companies finance, 188 00:09:21,960 --> 00:09:25,240 Speaker 4: the role of banking, the ability for FED, the FED 189 00:09:25,320 --> 00:09:29,040 Speaker 4: to actually have that transmission mechanism of raising race and 190 00:09:29,120 --> 00:09:30,280 Speaker 4: slung the economy down. 191 00:09:30,679 --> 00:09:32,520 Speaker 3: It's not what it used to be. It's not your 192 00:09:32,600 --> 00:09:33,880 Speaker 3: father's economy. 193 00:09:33,800 --> 00:09:40,240 Speaker 1: Jim, You're going to stick with us. So here's the license. 194 00:09:40,240 --> 00:09:42,720 Speaker 2: This morning, President's Trump taking a swife a big business, 195 00:09:42,760 --> 00:09:45,439 Speaker 2: announcing his plan to ban wall straight from by single 196 00:09:45,520 --> 00:09:49,000 Speaker 2: family homes. The White House looking to address housing affordability 197 00:09:49,200 --> 00:09:51,680 Speaker 2: ahead of the midterms. Blimberg Jonathan Samurray joins US Now 198 00:09:51,720 --> 00:09:54,040 Speaker 2: for more, Jonathan, the president's own words, I will announce 199 00:09:54,040 --> 00:09:57,320 Speaker 2: some of the most aggressive housing reform plans in American history. 200 00:09:57,600 --> 00:09:59,880 Speaker 6: What can we expect, Well, we saw this announced for 201 00:09:59,880 --> 00:10:04,080 Speaker 6: you yesterday that he's looking to ban big institutional investors 202 00:10:04,160 --> 00:10:06,560 Speaker 6: from buying new homes, the ideas to try to drive 203 00:10:06,640 --> 00:10:10,360 Speaker 6: the price down. There. The big challenge there is will 204 00:10:10,400 --> 00:10:13,000 Speaker 6: that stand up legally? Will he need approval from Congress? 205 00:10:13,480 --> 00:10:15,319 Speaker 6: And how much housing do they really own? If you 206 00:10:15,400 --> 00:10:18,480 Speaker 6: look at the overall market, it's a relatively small amount 207 00:10:18,520 --> 00:10:21,280 Speaker 6: that's owned by these big institutional investors. 208 00:10:21,559 --> 00:10:23,920 Speaker 2: Jonathan, with the lightest down in Washington, Jonathan, thank you. 209 00:10:24,160 --> 00:10:25,960 Speaker 2: What just around of tell youple Apollo is Jim's now 210 00:10:26,040 --> 00:10:28,640 Speaker 2: to Apollo, not black style, And that's an important distinction. 211 00:10:28,800 --> 00:10:30,280 Speaker 1: Jim, You're not big in this space. 212 00:10:31,120 --> 00:10:33,200 Speaker 3: No, as a matter of course we are. 213 00:10:33,640 --> 00:10:35,120 Speaker 1: What historically has that been the case? 214 00:10:35,720 --> 00:10:38,599 Speaker 4: You know, it's something that was not It was not 215 00:10:38,800 --> 00:10:41,520 Speaker 4: down the center of how we thought about investing our capital. 216 00:10:41,880 --> 00:10:44,439 Speaker 4: As I reminded you all from many times, for us, 217 00:10:45,000 --> 00:10:46,960 Speaker 4: most of our capital, half of our capital, is our 218 00:10:47,000 --> 00:10:49,760 Speaker 4: own balance sheet, and we wanted to focus more of 219 00:10:49,840 --> 00:10:53,200 Speaker 4: our activity on the big choke points of housing. Housing 220 00:10:53,320 --> 00:10:56,680 Speaker 4: is a massive issue. We saw in New York City 221 00:10:56,720 --> 00:10:59,679 Speaker 4: with our election, affordability around the country. There's a lot 222 00:10:59,679 --> 00:11:03,839 Speaker 4: of demographic reasons why, and we've just chosen to be 223 00:11:04,040 --> 00:11:06,280 Speaker 4: much more on the choke points. 224 00:11:05,960 --> 00:11:06,880 Speaker 3: Of the strategic growth. 225 00:11:06,920 --> 00:11:11,440 Speaker 4: How do we actually help create more property for home 226 00:11:11,600 --> 00:11:14,520 Speaker 4: builders and developers, How do we really create the choke 227 00:11:14,559 --> 00:11:16,920 Speaker 4: points of building products and things like that. But we've 228 00:11:16,960 --> 00:11:20,119 Speaker 4: just not pursued this for a variety of strategic activities. 229 00:11:20,480 --> 00:11:22,360 Speaker 4: But I think what's going on right now is the 230 00:11:22,480 --> 00:11:26,800 Speaker 4: President is saying a symbolic north star laying out, but 231 00:11:26,960 --> 00:11:29,920 Speaker 4: they're also going to work on a variety of massive 232 00:11:30,040 --> 00:11:33,920 Speaker 4: strategic initiatives that will allow the social good to be 233 00:11:34,000 --> 00:11:36,000 Speaker 4: dealing with this problem because it's not only in the US, 234 00:11:36,080 --> 00:11:37,439 Speaker 4: but it's in the UK, it's in a variety of 235 00:11:37,480 --> 00:11:40,000 Speaker 4: other countries. We don't have the zoning issues that the 236 00:11:40,160 --> 00:11:44,920 Speaker 4: UK has, but certainly in terms of affordability and starter homes, 237 00:11:45,520 --> 00:11:51,000 Speaker 4: and whether it's initiatives to allow for subsidized mortgages or 238 00:11:51,360 --> 00:11:56,240 Speaker 4: quicker building, of standardization or a relaxation of the zoning rules. 239 00:11:56,280 --> 00:11:57,560 Speaker 4: I mean, these are all activities, but. 240 00:11:58,040 --> 00:12:00,199 Speaker 3: We're not in the core franchise of this so it 241 00:12:00,240 --> 00:12:01,520 Speaker 3: has no impact on our franchise. 242 00:12:01,600 --> 00:12:03,679 Speaker 1: You're not directly exposed. But do you think this idea 243 00:12:03,679 --> 00:12:06,960 Speaker 1: of banning large institutional investors from buying up single family 244 00:12:07,040 --> 00:12:08,720 Speaker 1: homes is the right policy approach? 245 00:12:09,440 --> 00:12:12,280 Speaker 4: You know, we have an administration that's chosen to do 246 00:12:12,360 --> 00:12:15,520 Speaker 4: a variety of things, whether it's taking equity in large 247 00:12:15,679 --> 00:12:20,920 Speaker 4: technological companies. I think there's better ways to actually solve 248 00:12:20,960 --> 00:12:26,240 Speaker 4: these strategic issues. They have identified challenges that are affecting many, 249 00:12:26,320 --> 00:12:29,160 Speaker 4: many Americans in many companies. But at the same time, 250 00:12:29,240 --> 00:12:33,640 Speaker 4: I think there's broader policy strategies that can help out 251 00:12:33,720 --> 00:12:35,800 Speaker 4: to solve those problems. And I would say for us, 252 00:12:36,240 --> 00:12:38,280 Speaker 4: you know, you don't get to the size that we've 253 00:12:38,400 --> 00:12:43,240 Speaker 4: gotten without participating, whether it's retirement, the industrial renaissance, or 254 00:12:43,320 --> 00:12:46,319 Speaker 4: other big initiatives that help society out. So we want 255 00:12:46,360 --> 00:12:48,880 Speaker 4: to be on the strategic helping side rather than the 256 00:12:49,000 --> 00:12:50,480 Speaker 4: debate about policy. 257 00:12:50,760 --> 00:12:52,520 Speaker 5: What is strategic helping? I mean we saw this with 258 00:12:52,640 --> 00:12:55,120 Speaker 5: JP Morgan's recent fund. They're wanted to actually know our fund, 259 00:12:55,360 --> 00:12:56,200 Speaker 5: where are you expanding? 260 00:12:56,440 --> 00:12:59,360 Speaker 4: You know, kudos to JP Morgan and Jamie for doing that. 261 00:12:59,679 --> 00:13:03,079 Speaker 4: It's it's really consistent with you know, pro US policy 262 00:13:03,360 --> 00:13:06,439 Speaker 4: We're in dialogues with them and many many others on 263 00:13:06,600 --> 00:13:11,200 Speaker 4: a variety of funding the choke points in the defense initiatives. 264 00:13:11,480 --> 00:13:13,839 Speaker 4: We're doing a variety of things in the housing in 265 00:13:14,000 --> 00:13:17,640 Speaker 4: terms of land banking for builders and otherwise. All the 266 00:13:17,679 --> 00:13:20,400 Speaker 4: things we've been doing in technology, getting chip building back 267 00:13:20,480 --> 00:13:22,880 Speaker 4: in the US. Those are all the things that we 268 00:13:22,960 --> 00:13:26,280 Speaker 4: think are good for us long term. Whether you're on 269 00:13:26,440 --> 00:13:28,680 Speaker 4: either side of the political party agenda, can. 270 00:13:28,600 --> 00:13:30,480 Speaker 2: You frame capital needs for us in a private space 271 00:13:30,520 --> 00:13:32,079 Speaker 2: at the moment, I'm going to reduce it down to 272 00:13:32,160 --> 00:13:32,680 Speaker 2: one company. 273 00:13:32,840 --> 00:13:33,000 Speaker 3: Yeah. 274 00:13:33,000 --> 00:13:34,480 Speaker 2: It feels like a lot of this year is centered 275 00:13:34,480 --> 00:13:36,760 Speaker 2: around open AI, the capital needs and whether they be 276 00:13:36,800 --> 00:13:38,440 Speaker 2: met or not, and that's going to set the tone 277 00:13:38,480 --> 00:13:41,120 Speaker 2: for risk appetite for the year ahead. How small is 278 00:13:41,200 --> 00:13:42,520 Speaker 2: that compared to the bigger pool? 279 00:13:43,400 --> 00:13:47,600 Speaker 4: You know, when you look at the number I used 280 00:13:47,640 --> 00:13:50,440 Speaker 4: earlier was the next five to six years. It's been 281 00:13:50,520 --> 00:13:54,760 Speaker 4: bantered around that the hyper scalers and aggregator are going 282 00:13:54,840 --> 00:13:58,199 Speaker 4: to need five to seven trillion. You know, when you 283 00:13:58,320 --> 00:14:00,839 Speaker 4: think about how that's going to be filled, about a 284 00:14:00,920 --> 00:14:03,760 Speaker 4: third of it will be filled from their free cash flow, 285 00:14:03,960 --> 00:14:08,839 Speaker 4: not open AI, but the other six the high yield market, 286 00:14:09,120 --> 00:14:13,280 Speaker 4: the investment grade market, the structured finance and ABS market. 287 00:14:13,720 --> 00:14:16,280 Speaker 4: They will all fill that when you identify the gaps. 288 00:14:16,679 --> 00:14:19,600 Speaker 4: It's another trillion of the five to seven trillion, about 289 00:14:19,600 --> 00:14:21,800 Speaker 4: a trillion trillion five has not been identified. 290 00:14:22,520 --> 00:14:24,400 Speaker 3: You know that seems like it's a huge number. 291 00:14:24,760 --> 00:14:27,680 Speaker 4: As I was mentioning to you earlier, US economy thirty 292 00:14:27,760 --> 00:14:31,040 Speaker 4: thirty trillion plus economy Global economy almost one hundred and 293 00:14:31,040 --> 00:14:34,400 Speaker 4: twenty five trillion, So it's a big number. It's definitely 294 00:14:34,480 --> 00:14:37,040 Speaker 4: going to strain and have an impact on the ig 295 00:14:37,240 --> 00:14:41,920 Speaker 4: issuance markets where these companies were negligible participants. Now they're 296 00:14:41,920 --> 00:14:44,560 Speaker 4: going to be ten to fifteen percent participants. But I 297 00:14:44,600 --> 00:14:46,840 Speaker 4: think I think that's a when you say to me, 298 00:14:46,920 --> 00:14:48,680 Speaker 4: what are the questions that I would love to know 299 00:14:48,880 --> 00:14:52,000 Speaker 4: for year end twenty six or twenty seven. I love 300 00:14:52,080 --> 00:14:53,600 Speaker 4: to know where oil is, I love to know where 301 00:14:53,640 --> 00:14:55,800 Speaker 4: ten year bonds are, and I'd love to know what 302 00:14:55,920 --> 00:15:00,920 Speaker 4: the return on this capex of broad broad AI data 303 00:15:01,000 --> 00:15:03,560 Speaker 4: centers is. And if you knew those, those would be 304 00:15:03,640 --> 00:15:06,720 Speaker 4: great demarcations of success. But I do think there's a 305 00:15:06,760 --> 00:15:09,640 Speaker 4: big question about the return on invested capital on some 306 00:15:09,680 --> 00:15:10,240 Speaker 4: of these companies. 307 00:15:10,280 --> 00:15:12,800 Speaker 5: There's a bigger question about return on invested capital for 308 00:15:13,160 --> 00:15:15,800 Speaker 5: the biggest in the private debt and private equity space, 309 00:15:15,920 --> 00:15:18,640 Speaker 5: because some of these deals are really large and increasingly 310 00:15:18,800 --> 00:15:21,280 Speaker 5: they are the market, and there have been questions about 311 00:15:21,320 --> 00:15:24,680 Speaker 5: how do you outperform when you are the market? How 312 00:15:24,760 --> 00:15:29,440 Speaker 5: much you seeing actual performance? Actual returns inherently go lower 313 00:15:29,840 --> 00:15:31,840 Speaker 5: as you try to be safer and as you do 314 00:15:32,080 --> 00:15:33,440 Speaker 5: invest in such big size. 315 00:15:34,040 --> 00:15:38,520 Speaker 4: You know, the transaction we did for Bailor and Xai, 316 00:15:39,280 --> 00:15:43,680 Speaker 4: double digit amortizing transaction with the value of the chips 317 00:15:43,720 --> 00:15:45,080 Speaker 4: being zero in five years. 318 00:15:45,160 --> 00:15:48,240 Speaker 3: That's good risk return for us. You know. 319 00:15:48,360 --> 00:15:50,960 Speaker 4: Again, I think that open Ai is a unique company 320 00:15:51,480 --> 00:15:54,240 Speaker 4: visa vis some of the others because of the strong 321 00:15:54,400 --> 00:15:58,480 Speaker 4: cash flow and balance sheet those companies have inherently versus 322 00:15:58,560 --> 00:16:01,760 Speaker 4: the growth initiatives of opening. But you know, certainly it's 323 00:16:01,800 --> 00:16:03,720 Speaker 4: going to be a very large question, and I think 324 00:16:03,800 --> 00:16:06,600 Speaker 4: that around the globe, more and more investors, because of 325 00:16:06,640 --> 00:16:10,400 Speaker 4: the pension challenges, they're looking for a long duration yield 326 00:16:10,920 --> 00:16:12,880 Speaker 4: that's a bit different than we've had historically in the 327 00:16:12,960 --> 00:16:16,400 Speaker 4: last ten or fifteen years. So I think there is 328 00:16:16,520 --> 00:16:21,120 Speaker 4: plenty of demand to be a scale solution provider. I 329 00:16:21,240 --> 00:16:23,800 Speaker 4: think the other big question will be how many of 330 00:16:23,800 --> 00:16:27,000 Speaker 4: these companies actually are able to hit the equity market 331 00:16:27,320 --> 00:16:30,360 Speaker 4: and what will the equity calendar really absorb over the course. 332 00:16:30,200 --> 00:16:30,800 Speaker 3: Of the next year. 333 00:16:31,000 --> 00:16:33,000 Speaker 2: Do you think that's think private story is coming to 334 00:16:33,080 --> 00:16:35,360 Speaker 2: a close. These companies have got to go public, you know. 335 00:16:35,720 --> 00:16:40,920 Speaker 4: I do think that with the VC and private equity overhang, 336 00:16:41,000 --> 00:16:44,680 Speaker 4: and there's a greater demand for liquidity from a variety 337 00:16:44,680 --> 00:16:48,280 Speaker 4: of investors, whether it's endowments or foundations that are knocking. 338 00:16:48,080 --> 00:16:48,640 Speaker 3: At that door. 339 00:16:48,800 --> 00:16:51,240 Speaker 4: So I think there's no doubt there's an ability to 340 00:16:51,360 --> 00:16:57,359 Speaker 4: stay private a lot longer. But depending on your constituents, employees, 341 00:16:57,640 --> 00:17:00,600 Speaker 4: and others who might need liquidity, that a challenge you're 342 00:17:00,600 --> 00:17:00,840 Speaker 4: going to. 343 00:17:00,840 --> 00:17:01,880 Speaker 3: Have to confront. 344 00:17:02,120 --> 00:17:03,880 Speaker 1: Jim, it's going to see you always good to be here.