WEBVTT - Apollo Global Management President Jim Zelter Talks Asset Management 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.720 --> 0:00:10.080 We begin this now we're stock centering lower as investors 0:00:10.080 --> 0:00:12.920 wear slew of new risks, So Poloit Global Management President 0:00:13.039 --> 0:00:16.360 Jim seunt right in the following twenty six US outlook 0:00:16.400 --> 0:00:19.680 is consistent with a snakflation re environment, and we expect 0:00:19.720 --> 0:00:21.680 interest rates to be higher for longer. 0:00:21.880 --> 0:00:23.520 Jim joins us now for more. Jim, Good morning, he 0:00:23.560 --> 0:00:24.200 Come morning, John. 0:00:24.239 --> 0:00:24.919 How are you happy? I? 0:00:25.079 --> 0:00:26.000 Well, it's good to see you. 0:00:26.040 --> 0:00:27.400 I want to pick up on this headline from our 0:00:27.400 --> 0:00:29.920 friends over at the Ft in the last month, Apollo's 0:00:29.920 --> 0:00:32.080 cutting risk and stop piling cash. 0:00:32.600 --> 0:00:34.000 Is that true? What are you guys up to? 0:00:34.520 --> 0:00:34.800 Well? 0:00:35.200 --> 0:00:37.320 I would say that we've always been known as a 0:00:37.360 --> 0:00:40.400 discipline investor. We talk about purchase price matters, we talk 0:00:40.400 --> 0:00:44.320 about alignment with our investors, and I think that what 0:00:44.479 --> 0:00:48.600 that statement is is really about the gauntlet for approving investments. 0:00:48.600 --> 0:00:51.200 That Apollo has gotten higher and higher over the last 0:00:51.280 --> 0:00:54.520 year or so as we see an environment that down 0:00:54.560 --> 0:00:57.120 the fairway. I'll use a golf analogy. Down the fairway. 0:00:57.120 --> 0:00:59.480 You've got a lot of great things going on. You 0:00:59.520 --> 0:01:03.360 knows of capex cycle, good economic growth, consumer and solid 0:01:03.400 --> 0:01:07.440 shape you know, a variety of great attributes that being 0:01:07.560 --> 0:01:12.640 said the rough where there's lots of challenges between geopolitics, 0:01:12.720 --> 0:01:16.240 between the concern about inflation, between the concern about the 0:01:16.319 --> 0:01:17.039 return of. 0:01:17.080 --> 0:01:18.600 Invested capital and AI. 0:01:19.280 --> 0:01:23.800 There's a variety of left hail items that have certainly 0:01:23.880 --> 0:01:27.959 grown in stature. You know, as I listened to some 0:01:28.040 --> 0:01:30.880 of the macro commentary here, I think there's a great 0:01:30.880 --> 0:01:34.640 deal of humility about the macro view of how the predictions. 0:01:35.040 --> 0:01:36.920 As I meant, I've said here many times. We sat 0:01:36.920 --> 0:01:41.640 here after SVB, we all thought massive capitals slowed down 0:01:41.680 --> 0:01:46.039 and spending and credit crisis, the US economy really was 0:01:46.240 --> 0:01:49.480 massively resilient. You guys talked earlier about what's going on 0:01:49.600 --> 0:01:52.360 with the deficit. I think it's a little bit it's 0:01:52.400 --> 0:01:55.120 the economy stupid, the US economy. People just don't want 0:01:55.160 --> 0:01:58.560 to shorten the great momentum of what's going on. And 0:01:58.720 --> 0:02:03.640 we have an ADMINITISEDT it's very politically savvy about populist topics. 0:02:03.720 --> 0:02:04.960 He's been very responsive. 0:02:05.320 --> 0:02:07.440 But again I this back to us, back to the 0:02:07.520 --> 0:02:09.480 question you had, we're putting money to work. 0:02:09.560 --> 0:02:10.679 This week was a busy week. 0:02:10.720 --> 0:02:15.440 We announced six billion of deals of transactions all great companies. 0:02:15.840 --> 0:02:18.560 Again we're leaning into larger companies that are part of 0:02:18.639 --> 0:02:22.760 the global industrial renaissance. One with bet brad Jacobs, a 0:02:22.840 --> 0:02:25.639 forty thirty five year winner in the building product space. 0:02:26.600 --> 0:02:30.519 The second one with Russell Investments really simplifying their capital structure. 0:02:30.919 --> 0:02:33.600 And then the last transaction was very interesting. Actually it 0:02:33.720 --> 0:02:37.200 was for valor Xai. It was really a sale lease 0:02:37.320 --> 0:02:43.160 back on a massive amount five billion of Nvidia chips. 0:02:43.240 --> 0:02:47.160 So all three really interesting transactions, but really well structured 0:02:47.560 --> 0:02:50.080 downside risk and I think that's our view right now. 0:02:50.120 --> 0:02:53.040 We want to be investing capital, but you've got to 0:02:53.120 --> 0:02:55.920 acknowledge you can wake up on a Saturday morning and 0:02:55.960 --> 0:03:00.320 see us with activities around the globe that really answer 0:03:00.360 --> 0:03:02.720 is the tail risk of geopolitics. 0:03:03.200 --> 0:03:04.120 You can get a. 0:03:04.040 --> 0:03:06.880 Stroke of the pen announcement yesterday with regard to housing, 0:03:07.320 --> 0:03:09.200 and so I think you have to be very very 0:03:09.240 --> 0:03:12.320 careful about how you invest long term at scale. 0:03:12.560 --> 0:03:14.960 To extend the analogy, though to your point, the fairway 0:03:15.240 --> 0:03:17.760 is getting narrower, the rough is getting deeper. 0:03:17.840 --> 0:03:18.639 In the last few years. 0:03:18.680 --> 0:03:20.760 It has not been that way allocates risk and you'll perform, 0:03:20.760 --> 0:03:21.519 you'll do well world. 0:03:21.560 --> 0:03:22.720 There's like a tougher environment. 0:03:22.800 --> 0:03:25.000 The analogy for golf for those who play a lot 0:03:25.040 --> 0:03:27.680 of golf is worth the US Open. US Open is 0:03:27.680 --> 0:03:31.639 known for tight fairways and really punitive rough and if 0:03:31.639 --> 0:03:33.520 you cape in the fairway, you're going to be a 0:03:33.560 --> 0:03:36.400 great victor and you're going to have great success. I 0:03:36.440 --> 0:03:39.040 think there's going to be as last year will remind 0:03:39.120 --> 0:03:41.520 us you can have some bumps in the road during 0:03:41.520 --> 0:03:44.640 the course of the year. That definitely changed the trajectory 0:03:44.640 --> 0:03:48.800 on liquidity, on momentum, on risk appetite. But I think 0:03:48.800 --> 0:03:52.560 the long term trend is quite positive. But I do 0:03:52.600 --> 0:03:54.480 think you have to be very measured about how you 0:03:54.560 --> 0:03:55.720 execute your business model. 0:03:55.960 --> 0:03:59.000 So if that's the US Cup, do you go to 0:03:59.240 --> 0:04:03.800 the Rider Cup? No, I mean the idea, do you 0:04:03.960 --> 0:04:07.480 stand your I google that. Evidently I bombed on it. 0:04:07.520 --> 0:04:09.920 I think curious if you go overseas, you know, because 0:04:09.960 --> 0:04:11.480 to differs fy away from the United States. 0:04:11.520 --> 0:04:13.800 Well, we've been we've been I would say two account 0:04:13.800 --> 0:04:15.800 that we've been very vocal and I've been vocaling this 0:04:15.960 --> 0:04:18.760 on this program about Europe. You know, we we when 0:04:18.800 --> 0:04:23.599 you look at the needs of governments around the globe, 0:04:24.000 --> 0:04:26.840 especially in Europe, in Germany, in particular, and some more 0:04:26.920 --> 0:04:31.320 so in the UK. The governments does demand for capital 0:04:31.800 --> 0:04:35.000 far aways their ability to participate, and so we want 0:04:35.040 --> 0:04:36.840 to be part of that renaissance and that part of 0:04:36.880 --> 0:04:40.880 the globe in places like Japan and Australia, we want 0:04:40.880 --> 0:04:43.920 to be part of the retirement solutions and some of 0:04:43.960 --> 0:04:48.080 the global industrial renaissance with a changing banking system. You know, 0:04:48.160 --> 0:04:54.560 we're not a broadly speaking, a developing an emerging markets investor. 0:04:54.720 --> 0:04:56.800 So while we have a view on what's going on 0:04:57.200 --> 0:05:01.640 in Latin America today, that's an negligible part of our capital. 0:05:01.720 --> 0:05:04.200 That's just not what we do. We're really a G 0:05:04.480 --> 0:05:07.000 seven and larger economy investor. 0:05:07.200 --> 0:05:09.280 So you were talking about how you're getting more conservative. 0:05:10.160 --> 0:05:13.240 Corporations and governments are attacking the market at a record pace. 0:05:13.480 --> 0:05:16.479 So far this year, about two hundred and sixty billion 0:05:16.480 --> 0:05:19.160 dollars of bond issuance from governments and corporations around the 0:05:19.200 --> 0:05:21.880 world have been issued, the fastest pace ever. Is this 0:05:22.080 --> 0:05:25.000 because there is a lot of optimism out there or 0:05:25.120 --> 0:05:27.640 is this because they see a small window that could 0:05:27.720 --> 0:05:28.800 close and they want to get in. 0:05:29.279 --> 0:05:30.720 I don't think it's a small wh When you look 0:05:30.760 --> 0:05:32.400 at the numbers that have been put out by the 0:05:32.520 --> 0:05:36.360 large financial institutions, the big banks about net issuance in 0:05:36.480 --> 0:05:40.040 the IG market, it's north of like it's anywhere from 0:05:40.080 --> 0:05:43.400 eight hundred billion to a trillion two net issuance, which 0:05:43.480 --> 0:05:45.320 is one of the largest numbers in the last ten 0:05:45.400 --> 0:05:48.000 to fifteen years. Same can be said in the high 0:05:48.080 --> 0:05:51.280 yield and the leverage loan market, the net issuance is 0:05:51.320 --> 0:05:54.360 going to be quite high. So with real rates and 0:05:54.440 --> 0:05:58.200 real yields fairly high in a historic basis, with a 0:05:58.360 --> 0:06:02.520 variety of pensioners and investors around the globe looking for 0:06:02.680 --> 0:06:06.320 long duration yield, it's a pretty powerful mix of supply 0:06:06.440 --> 0:06:10.839 and demand in terms of taking that overhang, if you will. 0:06:11.160 --> 0:06:13.720 I think one of the big questions is does the 0:06:13.960 --> 0:06:18.720 equity new issue IPO calendar actually come to fruition. And 0:06:18.800 --> 0:06:21.240 the second thing that people aren't talking about is where 0:06:21.320 --> 0:06:25.560 oil is right now. It's very deflationary. If it were 0:06:25.600 --> 0:06:28.440 to stay at these levels or even go lower again, 0:06:28.480 --> 0:06:30.480 we're talking about all the things that can go wrong. 0:06:31.200 --> 0:06:33.120 I'm a credit guy, you know, bonds don't go to 0:06:33.160 --> 0:06:37.000 two hundred, they go to zero. I'm cautious by definition, 0:06:37.680 --> 0:06:41.320 but you know, in oil at these levels on WTI 0:06:41.480 --> 0:06:45.680 at fifty six fifty seven, that's very deflationary and very 0:06:45.800 --> 0:06:48.800 positive for economic growth. So you know, again, I think 0:06:48.880 --> 0:06:51.880 that there's a variety of balancing acts here going on. 0:06:52.160 --> 0:06:55.360 But you know, to John's first question, I would say 0:06:55.400 --> 0:06:59.160 that we think that there's a variety of issues that 0:06:59.279 --> 0:07:01.039 one needs a deal with, But at the same time, 0:07:01.360 --> 0:07:04.000 you want to be putting money to work in large scale. Now, 0:07:04.360 --> 0:07:06.640 if you look at the traditional high yield market, the 0:07:06.720 --> 0:07:10.440 triple CLBO buyout, that activity is just not happening in 0:07:10.520 --> 0:07:14.760 scale anymore. It's being funded in private credit, which I'm 0:07:14.800 --> 0:07:16.800 sure we'll talk about because of our big white paper 0:07:16.880 --> 0:07:19.400 in December. But at the end of the day, it's 0:07:19.480 --> 0:07:22.920 really about credit and the ability for this IPO calendar 0:07:23.000 --> 0:07:24.000 to comefort to fruition. 0:07:24.080 --> 0:07:24.560 On some of this gym. 0:07:24.600 --> 0:07:26.480 Because I can tell you sort of openly and honestly 0:07:26.520 --> 0:07:28.120 what I've struggled with. I don't know what to look 0:07:28.160 --> 0:07:30.880 at anymore. Payrolls has been a bit of a head fake. 0:07:30.960 --> 0:07:33.240 In the last twelve months, we've seen a real deceleration 0:07:33.280 --> 0:07:35.000 in payrolls growth, but it's not been relevant to the 0:07:35.040 --> 0:07:37.640 performance of risk ansets more broadly, something that even the 0:07:37.640 --> 0:07:39.480 team have talked about for a number of years now. 0:07:39.840 --> 0:07:42.440 When we saw interest rates go to four pushing five percent, 0:07:43.000 --> 0:07:44.440 Lisa and I were talking about this for the best 0:07:44.480 --> 0:07:46.360 part of twelve months. How on earth is this economy 0:07:46.440 --> 0:07:48.480 going to deal with four to five percent interest rates? 0:07:48.520 --> 0:07:51.400 And we dealt with that just about Okay, what should 0:07:51.440 --> 0:07:51.960 we be focused? 0:07:52.480 --> 0:07:56.200 I think, I think to answer that question, it's really 0:07:56.360 --> 0:08:00.480 we talk about the changing backdrop of market structure. The 0:08:00.640 --> 0:08:04.920 reality is in the US today, it's been an extended 0:08:04.960 --> 0:08:08.960 credit cycle. It's harder to have a real economic recession 0:08:09.480 --> 0:08:13.080 because of the diversity of funding across the board. We 0:08:13.240 --> 0:08:16.040 have the healthiest banks in the globe. We have a 0:08:16.080 --> 0:08:20.480 securitization market that's alive and well in record size of issuance, 0:08:20.800 --> 0:08:23.480 that disperses a lot of risk around the economy in 0:08:23.600 --> 0:08:26.720 terms of balance sheets. You have a consumer in pretty 0:08:26.720 --> 0:08:29.120 good shape. You have a housing market where forty percent 0:08:29.200 --> 0:08:32.240 of folks don't have a mortgage. I'm not saying we're 0:08:32.280 --> 0:08:34.000 not going to have an economic cycle. We will have 0:08:34.040 --> 0:08:37.280 an economic cycle. We will have a credit cycle. But 0:08:37.520 --> 0:08:41.080 if the post SVB environment is any lesson to us 0:08:41.120 --> 0:08:44.959 all because of the advances and the evolution of the 0:08:45.120 --> 0:08:48.719 US economy since the GFC. It's a lot harder to 0:08:48.880 --> 0:08:51.880 push over this machine than it had been in the past. 0:08:52.360 --> 0:08:55.599 The transmission mechanism of the FED that used to be 0:08:55.800 --> 0:08:59.040 instantaneous is not what it used to be. We saw 0:08:59.080 --> 0:09:00.719 it in the last two years with housing in the 0:09:00.840 --> 0:09:03.959 US because of the thirty year mortgage concept, or the 0:09:04.040 --> 0:09:07.560 lack of a mortgage versus countries like the UK, where 0:09:07.640 --> 0:09:09.760 most folks are on a five or seven year floating 0:09:09.840 --> 0:09:12.920 rate mortgage that has an immediate impact on the breaks 0:09:12.960 --> 0:09:14.360 of the consumer and the economy. 0:09:14.840 --> 0:09:16.160 Not the case in the US. 0:09:16.800 --> 0:09:21.600 So the strength, the breadth of market structure, how companies finance, 0:09:21.960 --> 0:09:25.240 the role of banking, the ability for FED, the FED 0:09:25.320 --> 0:09:29.040 to actually have that transmission mechanism of raising race and 0:09:29.120 --> 0:09:30.280 slung the economy down. 0:09:30.679 --> 0:09:32.520 It's not what it used to be. It's not your 0:09:32.600 --> 0:09:33.880 father's economy. 0:09:33.800 --> 0:09:40.240 Jim, You're going to stick with us. So here's the license. 0:09:40.240 --> 0:09:42.720 This morning, President's Trump taking a swife a big business, 0:09:42.760 --> 0:09:45.439 announcing his plan to ban wall straight from by single 0:09:45.520 --> 0:09:49.000 family homes. The White House looking to address housing affordability 0:09:49.200 --> 0:09:51.680 ahead of the midterms. Blimberg Jonathan Samurray joins US Now 0:09:51.720 --> 0:09:54.040 for more, Jonathan, the president's own words, I will announce 0:09:54.040 --> 0:09:57.320 some of the most aggressive housing reform plans in American history. 0:09:57.600 --> 0:09:59.880 What can we expect, Well, we saw this announced for 0:09:59.880 --> 0:10:04.080 you yesterday that he's looking to ban big institutional investors 0:10:04.160 --> 0:10:06.560 from buying new homes, the ideas to try to drive 0:10:06.640 --> 0:10:10.360 the price down. There. The big challenge there is will 0:10:10.400 --> 0:10:13.000 that stand up legally? Will he need approval from Congress? 0:10:13.480 --> 0:10:15.319 And how much housing do they really own? If you 0:10:15.400 --> 0:10:18.480 look at the overall market, it's a relatively small amount 0:10:18.520 --> 0:10:21.280 that's owned by these big institutional investors. 0:10:21.559 --> 0:10:23.920 Jonathan, with the lightest down in Washington, Jonathan, thank you. 0:10:24.160 --> 0:10:25.960 What just around of tell youple Apollo is Jim's now 0:10:26.040 --> 0:10:28.640 to Apollo, not black style, And that's an important distinction. 0:10:28.800 --> 0:10:30.280 Jim, You're not big in this space. 0:10:31.120 --> 0:10:33.200 No, as a matter of course we are. 0:10:33.640 --> 0:10:35.120 What historically has that been the case? 0:10:35.720 --> 0:10:38.599 You know, it's something that was not It was not 0:10:38.800 --> 0:10:41.520 down the center of how we thought about investing our capital. 0:10:41.880 --> 0:10:44.439 As I reminded you all from many times, for us, 0:10:45.000 --> 0:10:46.960 most of our capital, half of our capital, is our 0:10:47.000 --> 0:10:49.760 own balance sheet, and we wanted to focus more of 0:10:49.840 --> 0:10:53.200 our activity on the big choke points of housing. Housing 0:10:53.320 --> 0:10:56.680 is a massive issue. We saw in New York City 0:10:56.720 --> 0:10:59.679 with our election, affordability around the country. There's a lot 0:10:59.679 --> 0:11:03.839 of demographic reasons why, and we've just chosen to be 0:11:04.040 --> 0:11:06.280 much more on the choke points. 0:11:05.960 --> 0:11:06.880 Of the strategic growth. 0:11:06.920 --> 0:11:11.440 How do we actually help create more property for home 0:11:11.600 --> 0:11:14.520 builders and developers, How do we really create the choke 0:11:14.559 --> 0:11:16.920 points of building products and things like that. But we've 0:11:16.960 --> 0:11:20.119 just not pursued this for a variety of strategic activities. 0:11:20.480 --> 0:11:22.360 But I think what's going on right now is the 0:11:22.480 --> 0:11:26.800 President is saying a symbolic north star laying out, but 0:11:26.960 --> 0:11:29.920 they're also going to work on a variety of massive 0:11:30.040 --> 0:11:33.920 strategic initiatives that will allow the social good to be 0:11:34.000 --> 0:11:36.000 dealing with this problem because it's not only in the US, 0:11:36.080 --> 0:11:37.439 but it's in the UK, it's in a variety of 0:11:37.480 --> 0:11:40.000 other countries. We don't have the zoning issues that the 0:11:40.160 --> 0:11:44.920 UK has, but certainly in terms of affordability and starter homes, 0:11:45.520 --> 0:11:51.000 and whether it's initiatives to allow for subsidized mortgages or 0:11:51.360 --> 0:11:56.240 quicker building, of standardization or a relaxation of the zoning rules. 0:11:56.280 --> 0:11:57.560 I mean, these are all activities, but. 0:11:58.040 --> 0:12:00.199 We're not in the core franchise of this so it 0:12:00.240 --> 0:12:01.520 has no impact on our franchise. 0:12:01.600 --> 0:12:03.679 You're not directly exposed. But do you think this idea 0:12:03.679 --> 0:12:06.960 of banning large institutional investors from buying up single family 0:12:07.040 --> 0:12:08.720 homes is the right policy approach? 0:12:09.440 --> 0:12:12.280 You know, we have an administration that's chosen to do 0:12:12.360 --> 0:12:15.520 a variety of things, whether it's taking equity in large 0:12:15.679 --> 0:12:20.920 technological companies. I think there's better ways to actually solve 0:12:20.960 --> 0:12:26.240 these strategic issues. They have identified challenges that are affecting many, 0:12:26.320 --> 0:12:29.160 many Americans in many companies. But at the same time, 0:12:29.240 --> 0:12:33.640 I think there's broader policy strategies that can help out 0:12:33.720 --> 0:12:35.800 to solve those problems. And I would say for us, 0:12:36.240 --> 0:12:38.280 you know, you don't get to the size that we've 0:12:38.400 --> 0:12:43.240 gotten without participating, whether it's retirement, the industrial renaissance, or 0:12:43.320 --> 0:12:46.319 other big initiatives that help society out. So we want 0:12:46.360 --> 0:12:48.880 to be on the strategic helping side rather than the 0:12:49.000 --> 0:12:50.480 debate about policy. 0:12:50.760 --> 0:12:52.520 What is strategic helping? I mean we saw this with 0:12:52.640 --> 0:12:55.120 JP Morgan's recent fund. They're wanted to actually know our fund, 0:12:55.360 --> 0:12:56.200 where are you expanding? 0:12:56.440 --> 0:12:59.360 You know, kudos to JP Morgan and Jamie for doing that. 0:12:59.679 --> 0:13:03.079 It's it's really consistent with you know, pro US policy 0:13:03.360 --> 0:13:06.439 We're in dialogues with them and many many others on 0:13:06.600 --> 0:13:11.200 a variety of funding the choke points in the defense initiatives. 0:13:11.480 --> 0:13:13.839 We're doing a variety of things in the housing in 0:13:14.000 --> 0:13:17.640 terms of land banking for builders and otherwise. All the 0:13:17.679 --> 0:13:20.400 things we've been doing in technology, getting chip building back 0:13:20.480 --> 0:13:22.880 in the US. Those are all the things that we 0:13:22.960 --> 0:13:26.280 think are good for us long term. Whether you're on 0:13:26.440 --> 0:13:28.680 either side of the political party agenda, can. 0:13:28.600 --> 0:13:30.480 You frame capital needs for us in a private space 0:13:30.520 --> 0:13:32.079 at the moment, I'm going to reduce it down to 0:13:32.160 --> 0:13:32.680 one company. 0:13:32.840 --> 0:13:33.000 Yeah. 0:13:33.000 --> 0:13:34.480 It feels like a lot of this year is centered 0:13:34.480 --> 0:13:36.760 around open AI, the capital needs and whether they be 0:13:36.800 --> 0:13:38.440 met or not, and that's going to set the tone 0:13:38.480 --> 0:13:41.120 for risk appetite for the year ahead. How small is 0:13:41.200 --> 0:13:42.520 that compared to the bigger pool? 0:13:43.400 --> 0:13:47.600 You know, when you look at the number I used 0:13:47.640 --> 0:13:50.440 earlier was the next five to six years. It's been 0:13:50.520 --> 0:13:54.760 bantered around that the hyper scalers and aggregator are going 0:13:54.840 --> 0:13:58.199 to need five to seven trillion. You know, when you 0:13:58.320 --> 0:14:00.839 think about how that's going to be filled, about a 0:14:00.920 --> 0:14:03.760 third of it will be filled from their free cash flow, 0:14:03.960 --> 0:14:08.839 not open AI, but the other six the high yield market, 0:14:09.120 --> 0:14:13.280 the investment grade market, the structured finance and ABS market. 0:14:13.720 --> 0:14:16.280 They will all fill that when you identify the gaps. 0:14:16.679 --> 0:14:19.600 It's another trillion of the five to seven trillion, about 0:14:19.600 --> 0:14:21.800 a trillion trillion five has not been identified. 0:14:22.520 --> 0:14:24.400 You know that seems like it's a huge number. 0:14:24.760 --> 0:14:27.680 As I was mentioning to you earlier, US economy thirty 0:14:27.760 --> 0:14:31.040 thirty trillion plus economy Global economy almost one hundred and 0:14:31.040 --> 0:14:34.400 twenty five trillion, So it's a big number. It's definitely 0:14:34.480 --> 0:14:37.040 going to strain and have an impact on the ig 0:14:37.240 --> 0:14:41.920 issuance markets where these companies were negligible participants. Now they're 0:14:41.920 --> 0:14:44.560 going to be ten to fifteen percent participants. But I 0:14:44.600 --> 0:14:46.840 think I think that's a when you say to me, 0:14:46.920 --> 0:14:48.680 what are the questions that I would love to know 0:14:48.880 --> 0:14:52.000 for year end twenty six or twenty seven. I love 0:14:52.080 --> 0:14:53.600 to know where oil is, I love to know where 0:14:53.640 --> 0:14:55.800 ten year bonds are, and I'd love to know what 0:14:55.920 --> 0:15:00.920 the return on this capex of broad broad AI data 0:15:01.000 --> 0:15:03.560 centers is. And if you knew those, those would be 0:15:03.640 --> 0:15:06.720 great demarcations of success. But I do think there's a 0:15:06.760 --> 0:15:09.640 big question about the return on invested capital on some 0:15:09.680 --> 0:15:10.240 of these companies. 0:15:10.280 --> 0:15:12.800 There's a bigger question about return on invested capital for 0:15:13.160 --> 0:15:15.800 the biggest in the private debt and private equity space, 0:15:15.920 --> 0:15:18.640 because some of these deals are really large and increasingly 0:15:18.800 --> 0:15:21.280 they are the market, and there have been questions about 0:15:21.320 --> 0:15:24.680 how do you outperform when you are the market? How 0:15:24.760 --> 0:15:29.440 much you seeing actual performance? Actual returns inherently go lower 0:15:29.840 --> 0:15:31.840 as you try to be safer and as you do 0:15:32.080 --> 0:15:33.440 invest in such big size. 0:15:34.040 --> 0:15:38.520 You know, the transaction we did for Bailor and Xai, 0:15:39.280 --> 0:15:43.680 double digit amortizing transaction with the value of the chips 0:15:43.720 --> 0:15:45.080 being zero in five years. 0:15:45.160 --> 0:15:48.240 That's good risk return for us. You know. 0:15:48.360 --> 0:15:50.960 Again, I think that open Ai is a unique company 0:15:51.480 --> 0:15:54.240 visa vis some of the others because of the strong 0:15:54.400 --> 0:15:58.480 cash flow and balance sheet those companies have inherently versus 0:15:58.560 --> 0:16:01.760 the growth initiatives of opening. But you know, certainly it's 0:16:01.800 --> 0:16:03.720 going to be a very large question, and I think 0:16:03.800 --> 0:16:06.600 that around the globe, more and more investors, because of 0:16:06.640 --> 0:16:10.400 the pension challenges, they're looking for a long duration yield 0:16:10.920 --> 0:16:12.880 that's a bit different than we've had historically in the 0:16:12.960 --> 0:16:16.400 last ten or fifteen years. So I think there is 0:16:16.520 --> 0:16:21.120 plenty of demand to be a scale solution provider. I 0:16:21.240 --> 0:16:23.800 think the other big question will be how many of 0:16:23.800 --> 0:16:27.000 these companies actually are able to hit the equity market 0:16:27.320 --> 0:16:30.360 and what will the equity calendar really absorb over the course. 0:16:30.200 --> 0:16:30.800 Of the next year. 0:16:31.000 --> 0:16:33.000 Do you think that's think private story is coming to 0:16:33.080 --> 0:16:35.360 a close. These companies have got to go public, you know. 0:16:35.720 --> 0:16:40.920 I do think that with the VC and private equity overhang, 0:16:41.000 --> 0:16:44.680 and there's a greater demand for liquidity from a variety 0:16:44.680 --> 0:16:48.280 of investors, whether it's endowments or foundations that are knocking. 0:16:48.080 --> 0:16:48.640 At that door. 0:16:48.800 --> 0:16:51.240 So I think there's no doubt there's an ability to 0:16:51.360 --> 0:16:57.359 stay private a lot longer. But depending on your constituents, employees, 0:16:57.640 --> 0:17:00.600 and others who might need liquidity, that a challenge you're 0:17:00.600 --> 0:17:00.840 going to. 0:17:00.840 --> 0:17:01.880 Have to confront. 0:17:02.120 --> 0:17:03.880 Jim, it's going to see you always good to be here.