WEBVTT - Powell Leans Into Hawkish Message 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business. Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.960 --> 0:00:23.119 Let's get into it because we did hear from Jays Powell, 0:00:23.200 --> 0:00:25.880 and we've got a great twosome to talk about it. 0:00:26.160 --> 0:00:30.160 Bloomberg News International Economics and Policy correspondent and deadhead Michael McKee. 0:00:30.200 --> 0:00:31.640 He's got his ticket. 0:00:31.320 --> 0:00:32.200 On his phone. 0:00:32.320 --> 0:00:34.239 I saw him walk in. He's here. 0:00:34.520 --> 0:00:37.839 I walked in listening to last year's concert. 0:00:38.400 --> 0:00:39.680 Oh did you realize you reading? 0:00:39.800 --> 0:00:42.080 Yeah? The opening song? Do you remember that? 0:00:42.640 --> 0:00:45.519 I heard? I heard I didn't go to last year's concert. 0:00:46.000 --> 0:00:48.080 It was a mistake, and I heard it was amazing. 0:00:48.159 --> 0:00:51.120 What was the quest? The opening song was playing in 0:00:51.159 --> 0:00:51.520 the band. 0:00:53.560 --> 0:00:57.320 I just hope there's no welcoming in the rain tonight 0:00:57.440 --> 0:00:57.960 or tomorrow. 0:00:58.120 --> 0:00:59.640 Okay, tomorrow is the problem. 0:00:59.760 --> 0:01:02.240 Yeah, all right, guys, let's focus focus kids. 0:01:02.440 --> 0:01:05.119 All right, Let's get Bloomberg News Economics editor Molly Smith. 0:01:05.160 --> 0:01:07.560 She's also here in our Bloomberg Interactive Broker studio. 0:01:07.680 --> 0:01:08.800 So Mike, let's start with you. 0:01:09.600 --> 0:01:12.080 I did take a kind of peek into TV and 0:01:12.360 --> 0:01:14.400 we basically got the same thing from JP. 0:01:15.240 --> 0:01:16.360 Yeah. 0:01:16.400 --> 0:01:20.559 Well, his opening statement was exactly the same, almost word 0:01:20.600 --> 0:01:23.039 for word. They just moved a few paragraphs around, but 0:01:23.040 --> 0:01:24.959 they didn't change any of the language to keep it 0:01:25.000 --> 0:01:27.680 as we got from his opening statement last Wednesday. So 0:01:29.040 --> 0:01:30.640 I think he walked in there going I'm not going 0:01:30.720 --> 0:01:34.440 to make news, and he generally succeeded, other than perhaps 0:01:34.720 --> 0:01:37.520 on the Grateful Dead or Dead in Company. 0:01:37.160 --> 0:01:38.759 But that was pretty funny. 0:01:38.760 --> 0:01:41.120 But he did he did. Uh yeah, you know. 0:01:41.160 --> 0:01:42.560 I talked to some people at the FED who were 0:01:42.600 --> 0:01:46.400 very disappointed that I and Steve Leisman from CNBC, the 0:01:46.440 --> 0:01:49.400 two big dead heads of the FED Press Corps, did 0:01:49.400 --> 0:01:51.040 not ask him at the press conference. 0:01:51.120 --> 0:01:54.040 I can't believe you guys didn't either. Leasman plays in 0:01:54.120 --> 0:01:56.480 like a dead cover band. 0:01:55.320 --> 0:01:58.640 Yes, and for me to do it or why. 0:01:58.560 --> 0:02:01.640 It just didn't seem like the the right atmosphere at 0:02:01.640 --> 0:02:02.960 the time when I got called on. 0:02:03.160 --> 0:02:05.880 I mean, Matt and I had worked on questions. 0:02:06.000 --> 0:02:10.000 That would I know, what would incorporate the lyrics, but 0:02:10.160 --> 0:02:11.320 we didn't get a chance. 0:02:11.560 --> 0:02:12.880 But you got to kind of know the room and 0:02:12.919 --> 0:02:14.480 if he's not in the mood for it, right, like 0:02:14.520 --> 0:02:15.640 you just kind of pass on it. 0:02:17.040 --> 0:02:18.840 Okay, So nothing new, Molly, come on in on this. 0:02:18.880 --> 0:02:20.600 Are you a deadhead? Have you ever been to a 0:02:20.600 --> 0:02:21.200 dead concert? 0:02:21.240 --> 0:02:25.359 I have not, and we can remedy that we would. 0:02:25.800 --> 0:02:29.679 Yeah, tonight, I'll hear my schedule. 0:02:31.080 --> 0:02:33.080 I'm gonna tell you it would be quite an experience 0:02:33.320 --> 0:02:35.399 knowing who's going. Okay, So what did you take away 0:02:35.400 --> 0:02:36.080 from j Powell? 0:02:36.400 --> 0:02:39.600 Yeah, pretty boring today, honestly, which I think is Yeah, 0:02:39.639 --> 0:02:42.519 to Mike's point, mission accomplished on that. He really did 0:02:42.600 --> 0:02:46.160 get grilled a lot on both sides about the Fed's 0:02:46.200 --> 0:02:48.720 response to the banking failures in March, and I was 0:02:48.800 --> 0:02:51.960 kind of surprised, thinking, you know, we just had last 0:02:51.960 --> 0:02:55.320 week's FED meeting and that was like a couple you know, 0:02:55.400 --> 0:02:57.720 the big surprise sing like there are another two rate 0:02:57.800 --> 0:03:00.200 hikes possibly to come this year and that should be 0:03:00.680 --> 0:03:03.639 top of mind for most lawmakers, and that inflation is still, 0:03:04.000 --> 0:03:06.959 you know, pretty rampant and affecting their constituents pretty seriously 0:03:07.040 --> 0:03:07.400 right now. 0:03:07.440 --> 0:03:09.760 But they really just went hard on the banking stuff. 0:03:09.800 --> 0:03:12.720 And I think Jay generally give us a whole lot 0:03:12.760 --> 0:03:15.720 to work with on that would often defer to a 0:03:15.840 --> 0:03:18.680 Vice Chair of Supervision, Michael Barr, who prepared a report 0:03:18.840 --> 0:03:22.080 and the aftermath of SPVs collapse and also deflected some 0:03:22.120 --> 0:03:25.280 other questions to the FDIC, which has handled some of 0:03:25.280 --> 0:03:26.600 these banks that have since failed. 0:03:26.919 --> 0:03:30.000 The bank failures actually was pointed out to me in 0:03:30.040 --> 0:03:33.080 a note today by Veronique de Rugid. You know, she's 0:03:33.120 --> 0:03:37.480 an economist at Mercadis, and you know from her perspective 0:03:37.560 --> 0:03:40.200 the fact that the FED isn't and again this is 0:03:40.200 --> 0:03:42.800 from her perspective, the fact that the FED hasn't been 0:03:42.840 --> 0:03:47.960 straight with the American people about this. The condition of 0:03:48.000 --> 0:03:50.400 the US banking system is part of the reason that 0:03:50.400 --> 0:03:51.920 they don't have credibility with the market. 0:03:51.920 --> 0:03:53.240 How has he not been straight with them? 0:03:53.280 --> 0:03:56.520 Because they say the banking system in this country is 0:03:56.640 --> 0:03:59.600 sound and resilient, and she points out that there are 0:03:59.640 --> 0:04:04.920 some examples that clearly show it's not sound and resilient. 0:04:05.000 --> 0:04:07.400 Yeah, but those are to be fair, would you say 0:04:07.400 --> 0:04:09.080 those are more the exception than the rule? 0:04:09.760 --> 0:04:12.440 Well, you asking me, or Vernique, because. 0:04:12.320 --> 0:04:13.880 Asking you you're an intelligent guimet. 0:04:14.800 --> 0:04:16.680 Yeah, of course, because we've only seen a couple of 0:04:16.680 --> 0:04:19.640 bank failures and they are what six thousand banks in America. 0:04:20.000 --> 0:04:22.520 Yeah, No, there's no systemic risk really from any of them. 0:04:22.560 --> 0:04:23.279 It doesn't seem. 0:04:23.520 --> 0:04:24.240 Yeah, as J. 0:04:24.360 --> 0:04:27.400 Powell pointed out, there's some bad bank managers out there. 0:04:27.640 --> 0:04:28.039 Yeah, you know. 0:04:28.120 --> 0:04:31.520 He kept saying like, yeah, like overwhelmingly banks have handled 0:04:31.600 --> 0:04:34.080 interest rate risk well that there are a few of 0:04:34.120 --> 0:04:34.720 them that did not. 0:04:35.000 --> 0:04:37.480 But what I'm trying to get at is why does 0:04:37.680 --> 0:04:41.360 the FED have such little credibility. We had guests on 0:04:42.040 --> 0:04:45.159 the cheap economists from the biggest banks on surveillance last week, 0:04:45.480 --> 0:04:48.000 one after the other said they don't believe the Fed's 0:04:48.040 --> 0:04:50.880 going to continue to raise rates. They think it's over history. 0:04:51.040 --> 0:04:54.400 I mean, that's just learned behavior. The FED has always 0:04:54.440 --> 0:04:57.680 stepped in when markets get bad. And you have a 0:04:57.680 --> 0:05:01.760 whole generation of traders who grew up with no idea 0:05:01.839 --> 0:05:04.479 of what it's like to have the FED on the sideline. 0:05:04.640 --> 0:05:06.559 And you talk to the people in the old bond 0:05:06.640 --> 0:05:09.880 vigilante days who were many years before Carol and I, 0:05:11.120 --> 0:05:17.600 and they they knew. But the modern day folks, I mean, 0:05:17.640 --> 0:05:20.360 the Fed's been in the markets for twenty. 0:05:20.120 --> 0:05:22.520 Years now, but like you look at the warp function, 0:05:22.640 --> 0:05:26.080 I mean, traders are still betting on a cut this year. 0:05:27.600 --> 0:05:30.919 To listeners, right, warp is the world function on the 0:05:30.920 --> 0:05:33.240 Bloomberg terminal that shows. 0:05:34.520 --> 0:05:37.560 Expects, and they're not betting on a cut anymore this year. 0:05:37.600 --> 0:05:39.560 As a matter of fact, they still have rates. 0:05:40.920 --> 0:05:41.920 Not in December. 0:05:42.200 --> 0:05:44.279 Nope, nope, not in December. 0:05:44.600 --> 0:05:47.039 Most of those are fully priced out. 0:05:47.640 --> 0:05:49.080 Here's here's the confusion. 0:05:49.160 --> 0:05:51.320 And this is a I run under this a lot 0:05:51.560 --> 0:05:54.560 because people don't understand how WARP works. 0:05:55.760 --> 0:05:58.640 Yeah, because I agree with Carrol, look at me, like 0:05:58.680 --> 0:05:59.400 there's gonna be one. 0:05:59.760 --> 0:06:05.760 Carrol applied rate. It goes up to a high in 0:06:05.960 --> 0:06:09.960 November of five point three to two percent hike together, 0:06:10.000 --> 0:06:12.360 and then it gets and then it gets cut down 0:06:12.440 --> 0:06:15.800 back to where we are now. So in essence, it's 0:06:15.839 --> 0:06:18.680 not cutting rates from where we are now. And it 0:06:18.760 --> 0:06:20.760 presumes that you get up there also. 0:06:21.040 --> 0:06:22.680 I get I get you, Carol. 0:06:24.400 --> 0:06:27.760 I know, all right, get this boy out of here. 0:06:28.600 --> 0:06:31.720 You're out of here. Not Matt, Mike, Okay. 0:06:31.720 --> 0:06:33.920 But the point is, and Remy made the point too 0:06:33.960 --> 0:06:36.640 in our simulcast, that markets look at where yields have 0:06:36.720 --> 0:06:40.480 kind of eased from the movement up higher earlier. So 0:06:40.520 --> 0:06:43.520 it does feel like within the trade investors see something 0:06:43.560 --> 0:06:44.720 different versus what the FEDS. 0:06:44.880 --> 0:06:47.560 Well, the interesting thing is, and I've asked a lot. 0:06:47.400 --> 0:06:50.920 Of used to like you, Mike, I'm just gonna put 0:06:50.920 --> 0:06:51.360 it out there. 0:06:51.960 --> 0:06:54.640 Always loved juice, sweetie. 0:06:54.839 --> 0:06:57.400 I've asked a lot of strategists about this, and basically 0:06:57.440 --> 0:07:01.480 what you have is the general belief among strategists at 0:07:01.520 --> 0:07:03.800 all the major banks and everywhere else is that the 0:07:03.800 --> 0:07:06.720 FED is not going to cut rates. They're basing their 0:07:07.800 --> 0:07:10.200 buying strategy in the markets on the idea the FED 0:07:10.240 --> 0:07:13.240 is not going to cut rates. But if inflation comes 0:07:13.240 --> 0:07:15.760 down fast, either because the FED does a super job 0:07:16.000 --> 0:07:19.520 or because we have a recession, then the FED would 0:07:19.560 --> 0:07:23.240 be cutting rates. And that is a possibility. So you 0:07:23.320 --> 0:07:26.880 put some money in options on that possibility. You take 0:07:26.920 --> 0:07:33.440 out an option on a FED rate cut in December. Yeah, 0:07:33.480 --> 0:07:35.440 I mean, Ira Jersey's really good on this. If you 0:07:35.520 --> 0:07:37.600 if you have him on, he's really good at how 0:07:37.760 --> 0:07:39.080 this is not really real? 0:07:39.720 --> 0:07:42.640 Also, a man's blane warped me. 0:07:45.800 --> 0:07:49.040 I can't, I can't, can I so respect Mike? 0:07:49.080 --> 0:07:49.360 Can you know? 0:07:49.360 --> 0:07:49.840 I would have the. 0:07:49.880 --> 0:07:52.800 Money, by the way, and said, what the FED is 0:07:52.840 --> 0:07:55.680 doing right now is essentially passive tightening. That's the phrase 0:07:55.720 --> 0:07:58.400 he used, right, So I to your point. Right, if 0:07:58.440 --> 0:08:00.880 inflation comes down and they don't that they just leave 0:08:00.880 --> 0:08:03.520 them where they are. That's passive tightening. And I wonder 0:08:03.560 --> 0:08:06.520 if some members of the Fed things that think that's 0:08:06.560 --> 0:08:07.920 what they should be doing right now. 0:08:08.080 --> 0:08:11.200 Well, Jay did today then again say that not only 0:08:11.320 --> 0:08:13.440 is this not a skip, which he said last week, 0:08:13.480 --> 0:08:15.200 but then today he said it's not a pause. So 0:08:15.240 --> 0:08:18.200 I don't really know what what the terminology is. But 0:08:18.280 --> 0:08:21.120 either way, they did not hike rates last week, and 0:08:21.360 --> 0:08:23.000 the idea right now is we're going to see all 0:08:23.000 --> 0:08:25.640 the data, how it comes in and make our next 0:08:25.680 --> 0:08:27.560 move based off of that. So yeah, I like that 0:08:27.680 --> 0:08:30.480 passively tightening phrase as well, and that does seem to 0:08:30.520 --> 0:08:32.319 be what they have been communicating to us. 0:08:32.360 --> 0:08:34.839 Do you feel like Jape Halmke has been pretty clear. 0:08:34.960 --> 0:08:37.760 I mean, I feel like they're data dependent. I believe that. 0:08:38.040 --> 0:08:40.640 Yeah, I mean they've they've been clear to a point. 0:08:40.760 --> 0:08:44.080 I mean, they're no longer trying to give straight guidance 0:08:44.160 --> 0:08:46.160 We're going to do X on such and such a date. 0:08:46.840 --> 0:08:49.840 They don't want the markets to price and cuts, so 0:08:49.880 --> 0:08:52.640 they put in the high dot plot and they talk 0:08:52.679 --> 0:08:54.959 about the fact that we're going to raise rates more. 0:08:55.000 --> 0:08:56.760 But they're not putting a date on it. They're not 0:08:57.360 --> 0:08:58.480 putting conditions on it. 0:08:59.600 --> 0:09:02.360 What they need to see, anything's possible, which is a 0:09:02.480 --> 0:09:06.040 very unusual condition for people on Wall Street, let alone. 0:09:06.200 --> 0:09:08.679 You know, whatever age they are, however long they've been around. 0:09:08.800 --> 0:09:09.920 Might he just get this right? 0:09:10.760 --> 0:09:12.839 Oh sure, there's a chance they can get it right. 0:09:12.880 --> 0:09:16.160 And everybody will be gobsmacked by that and say that's 0:09:16.240 --> 0:09:18.520 never happened before, which is why they don't think they'll 0:09:18.679 --> 0:09:20.720 accomplish it, because it's never happened before. 0:09:21.520 --> 0:09:24.480 Someday they'll write books about nineteen ninety four. They sort 0:09:24.480 --> 0:09:27.600 of did, but they have that was the only other 0:09:27.640 --> 0:09:30.880 soft land. Well, yeah, they didn't have a big inflation. 0:09:30.920 --> 0:09:32.640 They were trying to get out in front of inflation, 0:09:32.760 --> 0:09:34.959 and they did and they raise rates and they destroyed 0:09:34.960 --> 0:09:37.240 the bond market, but they did not destroy the economy. 0:09:37.240 --> 0:09:38.880 So passive tightening is that what we're calling it? 0:09:39.200 --> 0:09:42.680 What was it? That's what Raphael Bostic said, tightening, passive tightening. 0:09:42.840 --> 0:09:45.360 I mean they don't actually raise rates, but the real 0:09:45.440 --> 0:09:47.920 rate goes higher as inflation comes down. 0:09:48.320 --> 0:09:51.000 And Jay also did say today too, he doesn't really 0:09:51.040 --> 0:09:53.440 know where the terminal rate is going to be like 0:09:53.559 --> 0:09:57.880 what that rate is that accomplishes getting maximum employment plus 0:09:57.920 --> 0:10:00.640 price stability? So who the heck? I we could have 0:10:00.679 --> 0:10:02.679 two more hikes, we could have two cuts, we could 0:10:02.720 --> 0:10:03.240 have nothing. 0:10:03.480 --> 0:10:05.480 So by the way, we should have more hikes from 0:10:05.480 --> 0:10:09.360 the BOE and the ECB because their rates will still 0:10:09.440 --> 0:10:10.120 well on to watch. 0:10:10.240 --> 0:10:13.520 That's tune in tomorrow as our friends at the Bank 0:10:13.559 --> 0:10:15.000 of England have their media. 0:10:15.120 --> 0:10:16.640 They are having a tough fight there when it comes 0:10:16.679 --> 0:10:18.400 to inflation. All right, love you both. 0:10:18.440 --> 0:10:21.720 Michael McKey, international economics and Policy correspondent at Bloomberg News. 0:10:21.720 --> 0:10:24.480 Off to a dead concert. Molly Smith, Economics editor at 0:10:24.480 --> 0:10:26.640 Bloomberg News. Not off to a dead concert, that is. 0:10:26.559 --> 0:10:27.600 Too This is Bloomberg. 0:10:28.320 --> 0:10:31.920 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:31.920 --> 0:10:35.280 live weekday afternoons from three to six Eastern Listen on 0:10:35.360 --> 0:10:39.360 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, 0:10:39.679 --> 0:10:56.280 or watch us live on YouTube right now. 0:10:56.280 --> 0:10:57.520 It's not too right. 0:10:58.160 --> 0:10:59.719 What are incredible musicians? 0:11:00.080 --> 0:11:02.640 But do you love the Daryl Hall with Daryl I 0:11:02.640 --> 0:11:03.760 mean with the long hair. 0:11:03.880 --> 0:11:05.120 Yeah, yeah, me too for sure. 0:11:05.160 --> 0:11:05.960 But then he got a cut. 0:11:06.040 --> 0:11:07.880 It was a little bit of a mullet. I like that. 0:11:08.200 --> 0:11:10.840 Yeah I can. Yeah, I don't like mullets. All right. 0:11:10.920 --> 0:11:13.240 So, Matt, we talked yesterday about a story that concerns 0:11:14.320 --> 0:11:17.160 have been highlighted when it comes to the private credit world, 0:11:17.640 --> 0:11:19.040 pressures of higher interest. 0:11:18.840 --> 0:11:21.880 Rates, what it means for those borers floating rates. As 0:11:21.920 --> 0:11:23.360 you said, Oh my gosh. 0:11:23.480 --> 0:11:25.480 Safe to say that you and I are both pretty 0:11:25.480 --> 0:11:28.199 well obsessed with private credit and I am. 0:11:27.960 --> 0:11:29.760 I am anywhere where I feel like I don't have 0:11:29.800 --> 0:11:31.920 a total handle on it, and everybody's. 0:11:31.520 --> 0:11:33.280 Like, don't worry, it's going to be okay. 0:11:34.080 --> 0:11:37.360 So let's get into the private world, which includes of 0:11:37.360 --> 0:11:39.960 course private equity with us. As Kate Ambrose, CEO of 0:11:40.000 --> 0:11:44.199 the Global Private Capital Association, it's a nonprofit, nonprofit, independent 0:11:44.240 --> 0:11:48.319 membership organization representing private capital investors who manage some two 0:11:48.400 --> 0:11:51.559 trillion in assets globally. We're talking about a KKR, We're 0:11:51.559 --> 0:11:54.640 talking about Bill and Melinda Gates Cousters, we're talking about 0:11:54.679 --> 0:11:57.959 the former Silicon Valley Bank, academic institutions, and more so 0:11:58.520 --> 0:12:00.560 looking forward to our conversation and she's here in our 0:12:00.559 --> 0:12:01.320 Bloomberg interaction. 0:12:01.559 --> 0:12:04.560 Is this essentially a lobbying group or when I see 0:12:04.679 --> 0:12:07.920 nonprofit together with private equity, like alarm bells go off? 0:12:07.920 --> 0:12:09.839 Why does private equity need a nonprofit? 0:12:10.000 --> 0:12:10.160 Right? 0:12:10.400 --> 0:12:13.600 Love that question, love it. We are a very unique organization. 0:12:14.160 --> 0:12:17.720 The organization was founded as the Emerging Markets Private Equity 0:12:17.760 --> 0:12:20.720 Association by the IFC of the World Bank over twenty 0:12:20.800 --> 0:12:21.240 years ago. 0:12:21.360 --> 0:12:21.880 Oh my god. 0:12:21.920 --> 0:12:25.920 It was founded by the first LPs in funds in 0:12:26.240 --> 0:12:30.120 emerging markets and grew to some prominence at the period 0:12:30.120 --> 0:12:32.760 of time that there was this idea that emerging markets 0:12:32.800 --> 0:12:34.920 was going to be an asset class in and of itself, 0:12:34.960 --> 0:12:39.240 that was going to be faster demograph younger demographics, faster growth, 0:12:39.240 --> 0:12:42.200 that would be a rising time that would lift all boats, 0:12:42.280 --> 0:12:45.920 and grew to some significant size. I joined in twenty 0:12:46.000 --> 0:12:49.960 nineteen as CEO and really to reposition the organization for 0:12:50.000 --> 0:12:52.760 the future, to reflect what's going on in the world today. 0:12:53.040 --> 0:12:56.280 The terminology emerging markets is forty years out of date. 0:12:56.720 --> 0:12:58.880 You know, it's forty years old. It's just completely outdated. 0:12:58.960 --> 0:13:02.319 China's the world's second lard economy, so many of the opportunities 0:13:02.320 --> 0:13:04.520 is so much capital flows from these places in the world. 0:13:04.559 --> 0:13:07.480 So we are now the Global Private Capital Association. The 0:13:07.559 --> 0:13:11.120 regions that we cover our Asia, Latin America, Africa, Central 0:13:11.160 --> 0:13:13.400 and Eastern Europe, and the Middle East. But our board 0:13:13.480 --> 0:13:16.000 includes for example Bill Ford of General Atlantic, one of 0:13:16.000 --> 0:13:18.480 the world's largest private equity firms as you mentioned KKR. 0:13:18.559 --> 0:13:22.240 Others are members. We have for example Tamasek, the Singapore 0:13:22.360 --> 0:13:24.520 sovereign from their chief Investment. 0:13:24.200 --> 0:13:28.439 Office are fascinating. So essentially it was the organization was 0:13:28.480 --> 0:13:31.800 started to kind of shepherd growth through private equity in 0:13:31.920 --> 0:13:33.640 these markets exactly. 0:13:33.880 --> 0:13:36.679 And the reposition so nonprofit, is that wrong? 0:13:36.800 --> 0:13:40.040 We are So we are the same structure as a 0:13:40.120 --> 0:13:43.160 national Venture capital Association in the US or a private 0:13:43.160 --> 0:13:46.040 equity council, which indeeder lobby groups. The beauty, and this 0:13:46.120 --> 0:13:48.480 is why we use the word independent, is that because 0:13:48.520 --> 0:13:51.000 we cover all of these markets, we're not there to 0:13:51.040 --> 0:13:55.840 lobby on behalf of lower tax rates for or preferential 0:13:56.000 --> 0:13:59.560 regulatory treatment for our members. We're really there to evangelize 0:13:59.559 --> 0:14:02.640 capital and educate on the opportunities across global markets. And 0:14:02.640 --> 0:14:04.520 the last thing I'll say is we are not a 0:14:04.760 --> 0:14:08.000 US lobby group. We are truly a global organization. Again, 0:14:08.040 --> 0:14:11.760 our board includes the leading fund managers from India, Africa, 0:14:11.880 --> 0:14:13.640 Latin America, both global firms. 0:14:13.480 --> 0:14:15.320 And local So where's your funding come from? 0:14:15.920 --> 0:14:20.360 Membership dues? So over three hundred member firms pay dues 0:14:20.400 --> 0:14:23.080 to be members of the organization. We have a very 0:14:23.160 --> 0:14:25.600 dynamic research platform. I can throw some data off the 0:14:25.600 --> 0:14:27.720 top of my head in terms of fundraising and trends 0:14:27.760 --> 0:14:28.680 and as I private exit. 0:14:28.680 --> 0:14:31.520 But so, but what I'm getting is that the World 0:14:31.600 --> 0:14:35.120 Bank said we need to shepherd growth through this mechanism 0:14:35.200 --> 0:14:37.160 private equity, and a good way to do that just 0:14:37.160 --> 0:14:39.800 put together an organization to support it. I guess what. 0:14:39.960 --> 0:14:43.840 So the IFC is the International Finance Corporation and they 0:14:43.960 --> 0:14:47.680 were limited partners in funds, so they actually put money 0:14:47.680 --> 0:14:48.280 into funds. 0:14:48.360 --> 0:14:48.680 See. 0:14:48.800 --> 0:14:52.720 And there's a whole universe of development finance institutions, including 0:14:52.760 --> 0:14:56.480 the US DFC, which is what the US uses to 0:14:56.760 --> 0:14:59.760 compete with China. Frankly around the world putting money into funds. 0:15:00.440 --> 0:15:03.400 It really it's more commercial than sort of what we're describing. 0:15:03.440 --> 0:15:05.040 But we are a nonprofit organization. 0:15:05.080 --> 0:15:10.480 YESDFC, the Development Finance Corporation. Okay, so if you had 0:15:10.520 --> 0:15:13.480 to say your top priority in your organization, number one, 0:15:13.680 --> 0:15:14.040 just one? 0:15:14.080 --> 0:15:14.560 What is it? 0:15:15.080 --> 0:15:15.320 Wow? 0:15:15.400 --> 0:15:16.040 That's tough. 0:15:17.160 --> 0:15:20.280 There's kind of twins, so I may cheat. One is 0:15:20.320 --> 0:15:24.160 to just re educate the world on the opportunities and 0:15:24.200 --> 0:15:27.680 the realities and the risks of investing in these markets. 0:15:28.480 --> 0:15:31.720 And the second would be to influence capital towards greater 0:15:32.400 --> 0:15:37.280 long term, inclusive growth and environmental private capital, yes, crivate capital. 0:15:37.360 --> 0:15:39.760 I am obsessed, Matt, We're both obsessed. 0:15:40.120 --> 0:15:42.040 And I feel like I keep saying this last couple 0:15:42.040 --> 0:15:43.960 of times I've been at Milka and we've done broadcasts. 0:15:44.360 --> 0:15:46.360 Doesn't seem like anybody cares about the public markets. It's 0:15:46.360 --> 0:15:48.760 all about the private markets, private credit, private. 0:15:48.480 --> 0:15:52.000 Equall those people you're hanging around the wrong people public 0:15:52.160 --> 0:15:53.440 But well, yes. 0:15:53.320 --> 0:15:57.360 Yes, but there's also right but so but I mean, 0:15:58.080 --> 0:16:02.040 tell us about from your perspective, because I think there's 0:16:02.040 --> 0:16:05.520 some nervousness in terms of the private capital world, especially 0:16:05.560 --> 0:16:07.240 as we see rates going out that you know, there 0:16:07.240 --> 0:16:09.840 doesn't feel like there's as much transparency and that that 0:16:09.840 --> 0:16:13.240 could be problematic interesting transancy. 0:16:13.360 --> 0:16:17.920 But well, okay, great, I mean absolutely, the scale of 0:16:18.000 --> 0:16:21.200 capital is remarkable, and this is sort of private capital, 0:16:21.240 --> 0:16:24.600 private capital exactly. For example, last year alone one point 0:16:24.640 --> 0:16:26.840 three trillion, you know, it's one point two one point 0:16:26.840 --> 0:16:30.600 three but critically, that's just what's raised by fund managers. 0:16:30.760 --> 0:16:33.440 You've got to throw in there all the Canadian pension plans. 0:16:33.440 --> 0:16:35.480 By the way, CPP is also on our board of 0:16:35.480 --> 0:16:39.160 directors as his future fund from Australia. It's trillions and 0:16:39.280 --> 0:16:43.120 trillions of dollars of liquidity. It's just so that the 0:16:43.200 --> 0:16:44.920 scale of money that is availa. You've got all the 0:16:45.000 --> 0:16:47.200 Chinese billionaires, you've got family offices. 0:16:47.600 --> 0:16:50.200 You know, there's so much everybody wants in right now. 0:16:50.240 --> 0:16:52.920 Because the thing is, there's also so much talk of 0:16:52.960 --> 0:16:57.480 the opportunity in private credit. It's become uh, kind of 0:16:57.520 --> 0:17:02.320 the darling of investors really from retail up now. 0:17:02.400 --> 0:17:05.960 Right Well, I was speaking across all private private capital 0:17:06.000 --> 0:17:10.320 strategies in private equity, venture capital, infrastructure, real assets. So 0:17:10.359 --> 0:17:11.160 there's a lot in there. 0:17:11.240 --> 0:17:12.440 What's really hot right now. 0:17:13.040 --> 0:17:16.280 So the two Well, you're mentioning private credit, which absolutely 0:17:16.280 --> 0:17:17.760 is a huge driver. So if I had to say 0:17:17.760 --> 0:17:20.560 a strategy that's going really quickly, I'd say private credit. 0:17:20.600 --> 0:17:25.720 And there was fourteen billion dollars in private credit fundraising 0:17:25.800 --> 0:17:29.080 last year. KKR had a big Asia private credit fund, 0:17:29.119 --> 0:17:32.080 Apollo had a big private credit fund, big manager in 0:17:32.080 --> 0:17:35.520 India's raising one point six billion for their private credit 0:17:35.600 --> 0:17:38.640 fund just focused on India. Then the other I would 0:17:38.680 --> 0:17:42.160 highlight two other big drivers particularly in our markets, climate 0:17:42.280 --> 0:17:46.240 and everything anything sustainability focused, huge driver. 0:17:46.119 --> 0:17:48.800 Seriously absolutely different from the ESG. 0:17:49.600 --> 0:17:52.720 Absolutely absolutely huge driver. And I would make this critical 0:17:52.720 --> 0:17:57.480 distinction ESG. It's kind of like the working with terminology 0:17:57.520 --> 0:17:59.800 like emerging markets. It can mean anything, right, what is he? 0:18:00.320 --> 0:18:02.879 What is impact? I mean, the definitions. 0:18:02.200 --> 0:18:04.280 Really are there. There's a lot of resulais. 0:18:08.200 --> 0:18:13.600 Particularly it's funny when you say, you know transparency. I 0:18:13.640 --> 0:18:16.960 believe that there's actually a greater opportunity for transparency and 0:18:17.040 --> 0:18:21.080 private capital strategies because you can see what's in portfolios. 0:18:21.119 --> 0:18:24.119 You can see you can look at the portfolio company. 0:18:23.800 --> 0:18:25.800 Level, not every portfolio. 0:18:26.000 --> 0:18:27.679 Well, in the I guess I would say in the 0:18:27.720 --> 0:18:30.560 markets that we represent going in. 0:18:30.480 --> 0:18:33.520 But if you're a pension fund, you can look at it, right, Yeah, 0:18:33.560 --> 0:18:34.080 I mean. 0:18:35.640 --> 0:18:35.840 Good. 0:18:36.280 --> 0:18:39.640 So I'm speaking specifically to the markets that we're in, 0:18:40.000 --> 0:18:43.720 and in the markets that we're in, you know governance, 0:18:43.880 --> 0:18:48.240 governance and transparency and you know going in and cleaning 0:18:48.320 --> 0:18:51.000 up that type of stuff from the outset, and there's 0:18:51.040 --> 0:18:53.120 so much leverage. So I don't know, when you're thinking 0:18:53.160 --> 0:18:55.720 from a risk perspective, you're thinking about the amount of 0:18:55.800 --> 0:18:56.919 leverage that's been put on. 0:18:57.280 --> 0:18:59.920 If KKR Apollo has a fun I don't necessarily know 0:19:00.160 --> 0:19:01.000