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Speaker 1: I have to say the biggest pathbroke because we've seen

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Speaker 1: over the past few weeks, didn't come from the world

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Speaker 1: attack at all. They came from the world of retail.

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Speaker 1: I keep going back to that meeting several mondays ago

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Speaker 1: in Washington, d c. Between the biggest retail is in

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Speaker 1: this country and the President of the United States, which

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Speaker 1: many people believe led to the truth we saw over

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Speaker 1: the weekend.

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Speaker 2: And the threat of empty shelves heading into the back

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Speaker 2: to the school season. And we just heard from Gene

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Speaker 2: Soroca that still is a question mark is companies try

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Speaker 2: to figure out the new landscape that they're trying to order.

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Speaker 2: In the fact that Walmart's CFO is saying that price

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Speaker 2: hikes from tariffs may start this month, This coming out

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Speaker 2: in news reports right now gives you a sense of

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Speaker 2: the pressures that are going to be building at a

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Speaker 2: time or even though tariff rates have come down from

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Speaker 2: some of the worst case scenarios, they still are materially

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Speaker 2: higher than where they were at the start.

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Speaker 3: Of the year.

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Speaker 1: That's a warning from Walmart this morning. Here's a view

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Speaker 1: on Wall Street. Jim Zeltzer, the president of Apollo Global Management,

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Speaker 1: weighing in on the administration's trade regime. The last time

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Speaker 1: he joined us, saying this globalization is not going to

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Speaker 1: be like we have seen it in the past. It

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Speaker 1: is a new global world order and places safe for them.

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Speaker 1: Next thirty minutes, Jim's ounce joins us this morning, Jim.

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Speaker 3: Good morning, Good morning.

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Speaker 1: It's a phrase you used last time around that's stuck

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Speaker 1: with both of us. We've been repeating it over the

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Speaker 1: last several weeks. Macro paralysis. Can you adjust that term?

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Speaker 3: Now?

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Speaker 1: What phrase would you use to describe this moment?

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Speaker 4: First of all, it was good to be here. I

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Speaker 4: think I would frame it right now, is a macro

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Speaker 4: political pivot the administration clearly, I agree. I think that

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Speaker 4: Monday meeting with the retail executives was a I don't

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Speaker 4: want to call it watershed, but it was a critical

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Speaker 4: moment for the administration to hear about the challenges on

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Speaker 4: the ground of their plan. And the administration certainly is

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Speaker 4: not admitted they made a mistake, but they've clearly pivoted.

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Speaker 4: And that's not a surprise. And it's not a surprise

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Speaker 4: that they're out going around the globe right now trying

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Speaker 4: to and successfully inking a lot of deals. A lot

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Speaker 4: of MOUs that are non binding, but certainly it's great

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Speaker 4: headlines and it's hundreds of billion, if not trillions. But

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Speaker 4: so that's where I think, and I think the big

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Speaker 4: question now is I'll pull back in the COVID library.

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Speaker 3: There's a big gap.

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Speaker 4: Between confidence sentiment and the results and confidence and sentiment

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Speaker 4: is still pretty negative or concerned, but the results have

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Speaker 4: been pretty strong, and so there's a very if you

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Speaker 4: think about you know, we're all, you know, history of

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Speaker 4: the past, and we see signs of what we've seen

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Speaker 4: in the past, and pattern recognition if you will, and

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Speaker 4: you know, if you input all the things that you

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Speaker 4: see right now, you would have been saying recession went

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Speaker 4: from thirty percent to seventy eighty percent. Now it's probably

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Speaker 4: below fifty percent.

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Speaker 3: But the three.

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Speaker 4: Questions are does the consumer do corporates and countries are

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Speaker 4: they going to be on the V shape recovery, the

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Speaker 4: U shape recovery or the L shape recovery.

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Speaker 3: Our view at A.

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Speaker 4: Paula is right now that the consumer is still pretty strong,

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Speaker 4: a bit of a V shape recovery. Corporate's a bit

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Speaker 4: of a U shape recovery because a lot of CAPEX

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Speaker 4: and I've been traveling around quite a bit, and I

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Speaker 4: think the global response is a bit more like the

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Speaker 4: l and what you pointed out earlier, what Amory did

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Speaker 4: with Tim Cook. I am not surprised. None of us

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Speaker 4: should be surprised that this administration is going to put

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Speaker 4: their arm around all these tech titans and other leaders

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Speaker 4: and saying come to America.

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Speaker 3: China was not the plan.

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Speaker 4: We didn't love the idea of going India, come back

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Speaker 4: to the US. This is going to be a theme

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Speaker 4: that they're going to keep hitting hitting.

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Speaker 2: Is there enough of a framework that you're gleaning from

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Speaker 2: this administration that's solid to bring deal making back. We've

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Speaker 2: seen on the margins some deals being made, some IPOs,

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Speaker 2: there are just a few. Is this the beginning?

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Speaker 4: Well, I think let's separate the headlines from activity. It's

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Speaker 4: been an incredibly active time for folks that have involved

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Speaker 4: in the markets. You know, we at Apollo, we opened

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Speaker 4: up the IPO market. We brought out Aspen, one of

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Speaker 4: our reinsurers for an IPO. We did a multi billion

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Speaker 4: dollar deal for a lot of America igt every We

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Speaker 4: announced a big merger between New Home and a Land

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Speaker 4: and Sea.

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Speaker 3: So there's been a lot.

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Speaker 4: Of transactions since April second. I know the headlines may

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Speaker 4: show contrary, but there's been a tremendous amount of financing

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Speaker 4: and I think it shows the depth and breadth of

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Speaker 4: the markets right now because of private capital in the

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Speaker 4: equity and the credit world.

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Speaker 3: So this idea that.

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Speaker 4: The markets shut down, that's actually what happened two decades ago.

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Speaker 4: Two decades ago, the high yield market would go into

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Speaker 4: periods six, eight, ten weeks where there would be no

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Speaker 4: issuance based on the flows from retail the old AMG number.

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Speaker 4: So this economy, this capital markets is very robust, obviously

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Speaker 4: of a lot of volatility. One of the benchmarks in

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Speaker 4: our market would be HyG, the high Yield Index. The

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Speaker 4: listed HyG ETF that went from basically seventy nine to

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Speaker 4: eighty down to seventy three, seventy four back to seventy

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Speaker 4: nine is in a round trip. But there's been a

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Speaker 4: tremendous amount of activity underneath the headlines.

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Speaker 2: How much do you think this is because people see

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Speaker 2: the environment as being brighter than some may worry, And

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Speaker 2: how much do you see this as just simply pent

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Speaker 2: up demand that's been backed up for a long time.

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Speaker 2: There is this sort of cyclical move toward industrialization, and

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Speaker 2: you have that kind of fundraising that is kind of

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Speaker 2: independent of any economic cycle.

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Speaker 4: I think the bigger long term trends of massive, massive

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Speaker 4: cappex the year or two of cappex.

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Speaker 3: Global industrial renaissance.

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Speaker 4: The demographics every asset class is higher today as we

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Speaker 4: sit here this morning than it was on Liberation Day,

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Speaker 4: except for treasuries, which have ten years basically thirty basis

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Speaker 4: points higher and the thirty year about forty basis points higher,

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Speaker 4: about five, fifteen and six percent, respectively. That's telling you

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Speaker 4: that folks think that the economic backdrop is not going

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Speaker 4: to be a recession. It's going to be slow to

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Speaker 4: moderate growth. And that's what you're seeing right now in

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Speaker 4: the market. So that's what we're seeing from our companies.

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Speaker 4: We're seeing a lot of concern, a lot of handeringing

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Speaker 4: about big strategic M and A transactions. I don't think

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Speaker 4: you're going to see a massive equity calendar except for

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Speaker 4: a few large deals here and there. But the reality

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Speaker 4: is companies need to operate, finance, and grow, and they're

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Speaker 4: positioning themselves for an environment that the administration's putting forth.

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Speaker 1: This is what companies need let's spend some time talking

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Speaker 1: about what investors need. Never mind the rebound. What did

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Speaker 1: you learn from the drawdown public versus private?

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Speaker 4: Well, what you saw is that I come up here

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Speaker 4: a lot and talk about market structure, and what you're

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Speaker 4: finding right now is that longer dated capital is us

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Speaker 4: and many of our peers have long dated insurance assets.

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Speaker 4: Those were the folks that were the most active during

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Speaker 4: the marketplace, and they were a bit of the buffer

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Speaker 4: if you would. You know, we put about twenty seven

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Speaker 4: billion to work in the IG market from April second

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Speaker 4: to last week. That's on a growth basis about net

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Speaker 4: about seventeen eighteen billion. I think in the past that

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Speaker 4: participant was not in the market as much, and the

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Speaker 4: buffer from the Wall Street bank trading desk taking that balance.

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Speaker 4: I think that we collectively as an industry helped out

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Speaker 4: so that you didn't see as much polatiley. There's a

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Speaker 4: lot of there's a lot of cash on the sidelines.

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Speaker 4: There's a tremendous amount and again as you see what's

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Speaker 4: going on right now around the globe with you know,

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Speaker 4: the pension assets, DC assets, other assets, really trying to

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Speaker 4: get long duration, long duration assets against their liabilities. It's

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Speaker 4: really really critical. I mean, the one big overhang it's

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Speaker 4: still in the market is what's going on the treasury market.

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Speaker 4: You know, certainly if you pivot right now to what's

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Speaker 4: going on with the budget issues in DC, it doesn't

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Speaker 4: look like they have a clear path to a deal

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Speaker 4: that would be really de leveraging to the US over time.

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Speaker 4: Now Bessen is saying a lot of great things, but

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Speaker 4: treasury rates are higher, and you know, as we've as

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Speaker 4: we've been saying, the one real leftail risk for this

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Speaker 4: administration is the Liz Trust moment. Is that still out there.

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Speaker 4: It's not a zero, it's not a big number, but

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Speaker 4: it's a left tail risk for this administration.

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Speaker 1: Can we ask you what you think that looks like?

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Speaker 1: What does a List trust moment look like? In the

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Speaker 1: treasury market?

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Speaker 4: You know, it's the deepest, most liquid, broadest market in

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Speaker 4: the world's and I don't really participate day to day,

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Speaker 4: so I'm not it really is.

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Speaker 3: It's a confidence.

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Speaker 4: Issue, and it's when that stream of confidence goes from

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Speaker 4: not being substantial to being a little bit more material.

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Speaker 4: And I don't know what that number is, but certainly

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Speaker 4: it's got to be in the back of the head

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Speaker 4: of the administration, and again the prior administration did not

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Speaker 4: really extend duration in their liability. So there's I think,

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Speaker 4: I don't know if it's seven or nine trillion of

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Speaker 4: refinancing over the next twenty four months. It's a big number.

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Speaker 4: But these rates are real. Rates are real in terms

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Speaker 4: of where they are right now, So you are finding

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Speaker 4: buyers of that paper, but it is a challenge.

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Speaker 2: In the backdrop, there is this belief that private credit

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Speaker 2: markets offer this ballast, the sort of haven from some

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Speaker 2: of the volatility that we're seeing in public markets and

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Speaker 2: in particular from the treasury market. At the same time,

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Speaker 2: how can you say that private debt in particular is

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Speaker 2: really immune to the fluctuations and the sucking sound of

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Speaker 2: capital into the treasury market given all of that issuings.

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Speaker 4: Well, I'd say two things, and this is a longer

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Speaker 4: conversation that I do want to get into. The real

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Speaker 4: rates are higher, and if you can in private credit,

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Speaker 4: private credit, you know, high single digits, low double digits

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Speaker 4: on a compounding basis, it's a tremendous asset class over

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Speaker 4: a decade or two. I really want to spend some

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Speaker 4: time with you both this morning talking about these comments

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Speaker 4: about private credit being a bubble, you know, that's just

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Speaker 4: a mistake in comment and when you really break it down,

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Speaker 4: as I said before, private credit in the traditional manner,

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Speaker 4: the narrow manner is the higher market, the leverage loan market,

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Speaker 4: and now the emerging direct lending market. When people talk

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Speaker 4: about a credit bubble, it's just not the case. What

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Speaker 4: they are talking about is there could be a credit cycle.

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Speaker 3: That's normal. We haven't had one in a long time.

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Speaker 4: But that credit cycle will impact debt and leverage balance sheets,

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Speaker 4: high yield leverage loans, and direct lending. It'll also affect

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Speaker 4: private equity. It'll affect equity multiples. But it's not a

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Speaker 4: bubble per se. It's a good old recession and a

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Speaker 4: credit cycle. We're going to have one of those. It

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Speaker 4: may be pushed out again a year or two, but

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Speaker 4: let's not go out there. I think folks that are

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Speaker 4: not in private credit or private capital say, oh, it's

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Speaker 4: a bubble because they're not involved. But the reality is

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Speaker 4: there's lots of opportunities. There's a massive amount of opportunities.

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Speaker 4: We were very active last month. Boeming decided to spin

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Speaker 4: off its aircraft one of its businesses. We worked in

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Speaker 4: conjunction with City on it multi billion dollar deal, a

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Speaker 4: tremendous asset heated auction. There's opportunities for real companies, but

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Speaker 4: there will be a credit cycle still.

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Speaker 1: With a Jim's outse of Apollo Global Management, Jim, we

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Speaker 1: talked about the prospect of a credit cycle. How can

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Speaker 1: we have a credit cycle when we're running deficits this

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Speaker 1: ladge in Washington.

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Speaker 4: Well, I mean, as I said before, we've been waiting

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Speaker 4: for those who have been professionals in this sector for

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Speaker 4: decades would have expected a few things right now, and

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Speaker 4: I've talked about pattern recognition. I was here several years

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Speaker 4: ago talking about the rate hike and how that would

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Speaker 4: create a tighter a period of tighter financial conditions, and

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Speaker 4: many of us that were expecting as serious credits cycle,

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Speaker 4: you know, predicted something that didn't occur because of the

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Speaker 4: macro backdrop. You know certainly right now is we have

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Speaker 4: a higher rate environment, which means a bit of economic

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Speaker 4: strength in.

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Speaker 3: The overall economy.

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Speaker 4: There always are a number of companies that just have

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Speaker 4: too much leverage and are not going to grow out

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Speaker 4: of their balance sheets, and you're going to see that.

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Speaker 4: Last year, the last couple of years, you had actually

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Speaker 4: fairly high numbers of restructurings and non investment great credit.

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Speaker 4: It just didn't overwhelm the headlines because the overall returns

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Speaker 4: and the strength of the equity market. But I do

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Speaker 4: think there are you know, I said before, here's there's

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Speaker 4: a when you look at back in the last four

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Speaker 4: or five years in private credit direct lending, a lot

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Speaker 4: of the largest sector of financing was technology and enterprise software.

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Speaker 4: And I do think that there's a possibility with what's

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Speaker 4: going on with AI that many of these companies could

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Speaker 4: really have massive impact on their operating business. The renewal

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Speaker 4: rates there are seven or eighty ninety ninety five percent

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Speaker 4: could plummet dramatically, and I could see a variety of

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Speaker 4: challenges in the enterprise software tech space that have been

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Speaker 4: a big, big area of private credit. And I think

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Speaker 4: there will be those who are not involved will say, Aha,

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Speaker 4: there was a problem, it's a hoax.

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Speaker 3: That's not the case.

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Speaker 4: It was just bad companies overlevered that didn't grow out

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Speaker 4: of their balance sheet, and that happens every day in

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Speaker 4: the equity market in other markets. But you know, again,

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Speaker 4: as much as we are a player in the insurance

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Speaker 4: balance sheets on sale yield. We also do play in

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Speaker 4: that risk your end, and I don't see a massive

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Speaker 4: credit cycle happening in twenty five. Certainly we've taken care

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Speaker 4: of a lot of the refinancing risks. That refinancing cliff

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Speaker 4: that was pretty large in twenty six and twenty seven.

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Speaker 3: It's been pushed out, but.

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Speaker 4: We're not seeing although the risk premiums have raised have

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Speaker 4: been raised. And I will tell you there's a very

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Speaker 4: large US based retailer based here in New York that

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Speaker 4: has undergone a transformational merger. They had a private credit

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Speaker 4: solution in front of them, which we were quite involved with.

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Speaker 4: They decided to go to the public markets and issue

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Speaker 4: a public bond in this safe public markets, and that

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Speaker 4: bond today within six months is trading below fifty. So again,

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Speaker 4: I think there's a lot of noise about risk and

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Speaker 4: reward and various asset classes, but that's our view of

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Speaker 4: private credit.

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Speaker 2: Just quickly, how much could hire long term US yields

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Speaker 2: spur that credit cycle.

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Speaker 5: I won't call it a bubble, because we could talk

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Speaker 5: about what a bubble is or what we could see

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Speaker 5: with some sort of just negative price action, But do

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Speaker 5: you see that as being a catalyst.

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Speaker 4: Well, I think that the overall listen were having higher

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Speaker 4: real rates are good for long term investors to a

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Speaker 4: certain degree. They're good for a certain degree until we

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Speaker 4: lose confidence in the actual underlying market. Again, the US

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Speaker 4: treasure market deepest, most liquid in the world. Rates of

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Speaker 4: four and a half and five percent with real rates

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Speaker 4: right now pretty strong on a relative basis over the

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Speaker 4: last twenty five years, but I'm not seeing that in

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Speaker 4: the current zip code.

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Speaker 1: Just to wrap it up, biggest opportunity right now for

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Speaker 1: you in the team, what do you think it is?

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Speaker 3: Well, I think it's a few places.

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Speaker 4: I do think the volatility that has taken most people

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Speaker 4: on the sidelines and a bit of a paralysis just

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Speaker 4: operating day in and day out on the business that

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Speaker 4: we do. Right now, we have eight hundred and fifty

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Speaker 4: billion the capital doing a lot of refinancing with PE

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Speaker 4: firms as well, two thousand PE situations where they've owned

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Speaker 4: companies more than five years. A lot of refinancing there.

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Speaker 4: This is the global industrial renaissance is alive and well

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Speaker 4: in the US. With the delay in deploying the Chips Act,

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Speaker 4: a lot of financing on shore of chip manufacturing and

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Speaker 4: other assets. I've been traveling around the globe quite a bit.

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Speaker 4: You know, Japan is still quite interesting from a insurance perspective,

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Speaker 4: from a global wealth perspective, and a Pe perspective. And

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Speaker 4: we cannot forget about Europe. I mean Europe really is

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Speaker 4: what's going on there. It's a once in a generation.

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Speaker 4: I do believe that there's a variety. When you look

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Speaker 4: at a thirty trillion economy in the US twenty four

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Speaker 4: trillion in Europe, there's a massive amount of financing to occur.

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Speaker 1: You've been traveling too much. It's going to have you back.

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Speaker 3: Good to be back.

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Speaker 1: Welcome back to New York. Jym's outer of Apollo Global Management, Jim,

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Speaker 1: Thank you, sir,