Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: John Rodgers, Founder, chairman and co chief executive officer of
Speaker 2: Aerial Investments, joining us here at Bloomberg Investor.
Speaker 3: Thank you so much.
Speaker 2: We've got a lot going on.
Speaker 3: We appreciate your patience.
Speaker 2: I want to go back to something. How are you,
Speaker 2: first of all.
Speaker 3: Doing okay dealing with all this potility craziness? Well? Is
Speaker 3: it crazy? John?
Speaker 2: I love talking to folks like you. You guys have
Speaker 2: been investing for a long time. You've seen a lot
Speaker 2: of market cycles like there are you know, how do
Speaker 2: you kind of factor in this one and the stuff
Speaker 2: that feels like every morning we can wake up and
Speaker 2: there can either be something out of Washington that really
Speaker 2: impacts the trade, and then there are days it doesn't.
Speaker 3: So how do you.
Speaker 2: Kind of work all that into strategy?
Speaker 1: Well, I think of the forty three years noise if
Speaker 1: you will, Yeah, I mean the forty three is of aeril.
Speaker 1: We've had lots of ups and downs in nineteen eighty
Speaker 1: seven crash of course, wait and nine financial crisis, but
Speaker 1: this is the first time we're seemed like there where
Speaker 1: sort of we're making this crisis happen, you know, making
Speaker 1: a conscious decision to make policy decisions, whether it's the
Speaker 1: tariffs or now whether it's the war, and that's causing
Speaker 1: all this drama and all this angst, and that's something
Speaker 1: that's unusual and different for us.
Speaker 2: How do you trade that?
Speaker 3: Well, I think, on.
Speaker 1: The one hand, you trade it is that we know
Speaker 1: that President Trump cares about the markets. He sees that
Speaker 1: as a scorecard. So the one positive thing you can
Speaker 1: pluck out is that eventually he figures out a way
Speaker 1: to adjust to get things back to a calm state eventually.
Speaker 1: But you just hope he doesn't go too far, you know,
Speaker 1: one more time, and stretch and do something that really
Speaker 1: he can't pull it back.
Speaker 4: You know, I'm curious about your view on this that
Speaker 4: as it does not relate to markets. It sounded like
Speaker 4: you were saying that we've entered a new paradigm, at
Speaker 4: least with the decisions that this administration is making. I'm
Speaker 4: wondering how you're looking at that. We understand that what
Speaker 4: the President wants to achieve with tariffs, I would not
Speaker 4: say I understand what he wants to achieve Right now
Speaker 4: with Iran, we're still waiting to hear exactly what the
Speaker 4: US wants to achieve there. But how do you view this,
Speaker 4: not necessarily with regard to markets.
Speaker 3: Well, what I worry about is that.
Speaker 1: I ran to something that's extraordinarily painful for America or
Speaker 1: another part of the world, as they fight back and
Speaker 1: feel like they have to defend their honor, buildies do
Speaker 1: something that will be we'll all have a hard hard.
Speaker 3: Time living with over the long run.
Speaker 1: So we all saw what happened when the World Trade
Speaker 1: Center collapsed, and all the trauma and drama and extraordinary
Speaker 1: heartbreak from that situation, and you just hope that nothing
Speaker 1: like that happens again ever in the United States or
Speaker 1: in our friendly countries.
Speaker 2: Got to say, I went right there after this happened,
Speaker 2: and that's what I thought about retaliation. Any of us
Speaker 2: who were here in New York during nine to eleven
Speaker 2: remember it like it was yesterday, and it does make
Speaker 2: me a little scared. And I'm not an alarmist, but
Speaker 2: it did make me think, Okay, what's the retaliation of
Speaker 2: all of this. We're going to set that aside.
Speaker 4: I can we can shift back to markets, Carol, we
Speaker 4: can shift back to market.
Speaker 2: I want to go back to something you said actually
Speaker 2: in January and I was doing some read in on this,
Speaker 2: and you said the US will likely slide into a
Speaker 2: small recession at the end of the year. Stock market
Speaker 2: will drop as average income consumers struggle with high living costs.
Speaker 2: And this was I think at the Executive's Club of
Speaker 2: Chicago's annual Outlook event, and you talked about the down
Speaker 2: maybe declining fifteen to twenty percent this year. But it
Speaker 2: and it also got into this dichotomy which I think
Speaker 2: really increasingly. I know it bothers US wealthy consumers doing okay,
Speaker 2: so many other consumers are not. So talk to me
Speaker 2: about that. Do you still feel this way about maybe
Speaker 2: we see some kind of small recession.
Speaker 1: I still do. I've never seen anything quite like it.
Speaker 1: I know a lot of people have been talking about this,
Speaker 1: but we're You're right when people are still going and
Speaker 1: spending money on cruise ships or going to Las Vegas
Speaker 1: for experiences, doing things that are really the wealthy people
Speaker 1: can do, right, But the average American is really really struggling.
Speaker 1: You know, I go to mcdonald'sretty much every day, and
Speaker 1: you know, you see how much it costs to you know,
Speaker 1: buy your drink and your French frise and what happens,
Speaker 1: and you realize that ordinary Americans are having a hard
Speaker 1: time covering the cost of just day to day life
Speaker 1: in America. And I think that's a real challenge for
Speaker 1: our economy, a real challenge for certain industries.
Speaker 4: It's the so called K shaped economy. Is something that
Speaker 4: we talk about a lot, and we think about a lot.
Speaker 4: Are there policy proposals or are their policies that the
Speaker 4: US government could enact that would make the gap between
Speaker 4: the very wealthy and the poor, or that would bring
Speaker 4: back the middle class? I think is something that we
Speaker 4: talk about a lot too. Is it something that you
Speaker 4: think the free market can solve? How do we get
Speaker 4: out of this?
Speaker 1: I think the free market will will solve it. You know,
Speaker 1: we America always goes to extremes and things ultimately get
Speaker 1: back to back to normal. Warren Buffett says, you know,
Speaker 1: our capuist democracy is the best system ever invented, and
Speaker 1: so we'll ultimately put the right pace people in place.
Speaker 1: Governmental shift and change and people will be able to
Speaker 1: get to a place that I think will bring back
Speaker 1: a better life for folks from Middle America. And I
Speaker 1: think that's really really important. I think keeping interest rates reasonable,
Speaker 1: keeping inflation low is really really important creating the other
Speaker 1: tax policies that are fair and equitable. So I think
Speaker 1: we'll get there. It takes a while, but we'll be
Speaker 1: on our way back. And I think we're in that
Speaker 1: process now.
Speaker 3: So you're optimistic.
Speaker 1: I'm optimistic that we will create the wealth gap in
Speaker 1: our country will start to diminish over time.
Speaker 2: So when I look at I'm going to talk a
Speaker 2: little bit about the investment environment. We saw broadening out
Speaker 2: certainly in terms of where investors were placing some bets here.
Speaker 2: Where do you see some mispricing within the market where
Speaker 2: you think that that presents some opportunities for investors.
Speaker 1: I think right now the financial services companies are what
Speaker 1: I think have gotten may be extremely cheap. They've gotten,
Speaker 1: you know, very very worrisome about what's happening with private credit,
Speaker 1: as we all know what you guys are reporting on
Speaker 1: and talking about all the time. But I think it's
Speaker 1: over done. I saw David rubens Sein speak last week.
Speaker 1: He was interviewed by our chairman, Charlie Barbrinskoy. You know,
Speaker 1: in his optimism around about Carlisle, I thought was striking,
Speaker 1: and I think they've gotten sort of a hit with
Speaker 1: what's happened in private credit everywhere.
Speaker 3: Even though they have a small.
Speaker 1: Exposure to private credit, there's also been this huge concern
Speaker 1: around private equity that people won't come back, that you know,
Speaker 1: it's gonna be and harder to raise funds. I think
Speaker 1: its interest rates get lower. Companies that have the kind
Speaker 1: of brand that Carlisle has will be able to do
Speaker 1: extremely extremely well. And then secondarily, a company like Lizard,
Speaker 1: you know, one of the world's best investment banking firms.
Speaker 1: Peter Orzag has done a great job and getting that
Speaker 1: company on track. It's moving in the right direction and
Speaker 1: being one of the best investment bankers. They're going to
Speaker 1: benefit from all the deals they're going to happen in
Speaker 1: this deregulated environment. It's a really a great opportunity for
Speaker 1: companies to buy, merge, do things that are right for shareholders.
Speaker 2: It's really kind of refreshing. I haven't heard you say AI.
Speaker 2: Where does that fit in?
Speaker 3: Is that it's not a value playing right.
Speaker 2: Where how does that factor in?
Speaker 3: Like?
Speaker 2: Because I do think the AI trade has evolved over
Speaker 2: the last two three years in terms of where investors
Speaker 2: want to place their bets and now we're talking a
Speaker 2: lot more about inference and agentic AI and kind of
Speaker 2: where that's going. But I think we still don't know
Speaker 2: a lot.
Speaker 1: We still don't and we're working really really hard on it.
Speaker 1: At Ariel. We're using some of the top academic minds
Speaker 1: at the University of Chicago to help guide us as
Speaker 1: we think through which industries will be the most disrupted,
Speaker 1: which ones will not be disrupted, and where the maybe
Speaker 1: the fear is overdone. So like for us, one of
Speaker 1: our favorite stocks is Jones Lange Lassalle JLLL. You know,
Speaker 1: real estate broker, which is still an important business. It's
Speaker 1: a complicated business. If you're a CEO trying to move
Speaker 1: hundreds of people from one office power to another, one
Speaker 1: campus to another, you need a great broker who can
Speaker 1: help you see and have the insights that are there.
Speaker 1: So I think AI helps to make them more efficient
Speaker 1: and more effective. AI is not going to replace that
Speaker 1: real estate broker the way some people are afraid of.
Speaker 4: So much of the concentration literally and when it comes
Speaker 4: to coverage of the market has been makea caap tech
Speaker 4: names and I'm wondering if it's possible in your view,
Speaker 4: I think I know what you're gonna say, but if
Speaker 4: it's possible in your view to outperform make a cap
Speaker 4: tech or the S and P five hundred by excluding
Speaker 4: those from a portfolio, by finding those value names.
Speaker 1: Well, I think so as we. You know, I've been
Speaker 1: very public. I think the large cap growth stocks have
Speaker 1: gotten way, way, way too expensive. Everyone's fallen in love
Speaker 1: with that trade for quite a long time. But I've
Speaker 1: seen this happen time and time again in my forty
Speaker 1: three years in Ariel, but also saw it throughout history.
Speaker 1: You know, the nifty fifties, you know during the seventy
Speaker 1: the nifty fifty stocks, you saw it during what.
Speaker 3: Happened in the Go go twenties.
Speaker 1: People just fall in love with the sector and think
Speaker 1: it's just going to go up and up forever. And
Speaker 1: the small stocks neglected, they get misunderstood, they're not as
Speaker 1: well followed, and so opportunities it gets created because everyone's
Speaker 1: falling in love with this hot, shiny, shiny.
Speaker 3: Dollar out there, and you think that's happening right now,
Speaker 3: I really really do. Up until most recently.
Speaker 1: I mean, I've seen now that the Palanteers of the
Speaker 1: world and others have finally started to have some of
Speaker 1: their come up, and it reminds me of what happened
Speaker 1: during the turn of the century when the Internet bubble
Speaker 1: finally burst. So you start to see some signs that
Speaker 1: the world is coming back to rationality and people are
Speaker 1: realizing some opportunities in their smaller names.
Speaker 2: When it comes to the investment environment, are you anticipating
Speaker 2: that investors need to be thinking about it's going to
Speaker 2: be a higher rate environment going forward, and so you've
Speaker 2: got to think about that and what it means in
Speaker 2: terms of evaluations.
Speaker 1: Well, I think I'm more optimistic about rates. I think
Speaker 1: they they they'll go lower, they they go lower, I
Speaker 1: really do. I think that the new FED chairman is
Speaker 1: clearly someone who's going to want to make the president happy.
Speaker 1: He's going to do everything he can to ben the
Speaker 1: will of the federal reserved.
Speaker 2: Doesn't that make you nervous though, if it's not fundamentally.
Speaker 1: Based long term, it makes me nervous, Okay, But I
Speaker 1: do think of the short to intermediate term. If it
Speaker 1: keep rates lower, it's always good. Low rates are always
Speaker 1: positive for the markets, And of course there's some some
Speaker 1: things will come back to haunt us because of it. Yeah,
Speaker 1: but I think that's more longer term and the short term.
Speaker 1: I think this will be something that will be a
Speaker 1: help the market's day where it needs to be and
Speaker 1: be sort of a tailwind for the markets.
Speaker 2: It doesn't sound like when we you know, one of
Speaker 2: the narratives it felt like we were coming into was
Speaker 2: I mean, think about Biden before President Biden, before President
Speaker 2: Trump won the election, like the US was the best
Speaker 2: place to invest. When President Trump came in a year ago, again,
Speaker 2: like the US market was the place to invest, and
Speaker 2: then we were just thinking about the US being uninvestable
Speaker 2: like that became a narrative, and.
Speaker 4: To a certain extent, even though the US markets did
Speaker 4: well last year, there was a lot of underperformance compared
Speaker 4: to global markets for twenty twenty five.
Speaker 2: Is that is that something you think a lot about,
Speaker 2: or that we are seeing investors start to diversify away
Speaker 2: from the US market or that's impossible because of how
Speaker 2: deep and how liquid the US market is.
Speaker 1: I think it's really really hard to divers file away
Speaker 1: from the US markets in any meaningful way. We still
Speaker 1: have the deepest economic system, the most successful economic system,
Speaker 1: the best universities in the world. You know, we're the
Speaker 1: United States of America and even though there's been all
Speaker 1: this drama and trauma right now, Yeah, ultimately people want
Speaker 1: to come back to the country where you can count
Speaker 1: on our currency, you can count on our democracy and
Speaker 1: the regulatory environment that we have, and just all the
Speaker 1: great success we've had Wall Street to Silicon Valley.
Speaker 3: I think that America is the best. So this is
Speaker 3: just a blip, I think.
Speaker 2: So it's just it's because it's interesting. I think we
Speaker 2: try to figure out the lasting impact of the last
Speaker 2: year or so. Well.
Speaker 4: One thing that we're trying to figure out is the
Speaker 4: impact that integration or a lack thereof, we'll have on
Speaker 4: the economy.
Speaker 2: Here.
Speaker 4: If we think about in recent years Americans not having
Speaker 4: enough babies, and one of the ways that has been
Speaker 4: supplemented and we've been able to avoid turning into a
Speaker 4: Japan for example, is because we have had people come
Speaker 4: to the United States and increase economic activity that.
Speaker 3: We wouldn't have had had we not had that.
Speaker 4: And I'm wondering how we have to adjust our expectations
Speaker 4: for a world that is increasingly I was gonna say isolationists,
Speaker 4: but we're not necessarily saying that right now, but one
Speaker 4: that looks inward toward itself more than looking outwards.
Speaker 2: And you only have thirty seconds.
Speaker 3: I'm sorry, that was that was my bag.
Speaker 1: Well, I just think in this business, the ability to
Speaker 1: see the future is the most important thing, and so
Speaker 1: if you look out two to three or four years,
Speaker 1: we will be past this crisis, this isolationism, the challenges
Speaker 1: that we face. One way or another, you're going to
Speaker 1: have a new president, you're going to have a new government,
Speaker 1: and I think America will still be in a strong,
Speaker 1: strong place.
Speaker 2: I kind of love this, John, Thank you so much,
Speaker 2: really appreciate it. John Rogers of course founder, chairman and
Speaker 2: Cosey you have aerial investments