WEBVTT - Bloomberg Surveillance TV: August 24th, 2026 0:00:00.040 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordernt join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.840 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.200 Terminal and the Bloomberg Business app. We begin this hour 0:00:37.400 --> 0:00:39.800 with stock sliding his investors brace of FED check Kevin 0:00:39.840 --> 0:00:43.000 Walsh's speech on Friday, and wilsh the chief investment officer 0:00:43.000 --> 0:00:46.440 of Guggenheim Partner's Investment Management, writing the Jackson Hole meeting 0:00:46.800 --> 0:00:50.159 is an opportunity to clarify the strategy to address inflation. 0:00:50.560 --> 0:00:53.040 The Hawks have grown louder, but inflation progress should be 0:00:53.120 --> 0:00:55.840 enough to avoid hikes this fall. And joins us now 0:00:55.880 --> 0:00:57.320 for more and good morning, good to see. 0:00:57.120 --> 0:00:58.720 You, Good morning, glad to hear we. 0:00:58.680 --> 0:01:01.800 Get into this as you know I am. We're anticipating 0:01:01.880 --> 0:01:04.480 us getting into the issues around Mark Waltters and his 0:01:04.560 --> 0:01:07.640 affiliation to Gugenheim. More broadly, I'm going to go through 0:01:07.640 --> 0:01:10.200 the details as we understand them. As I understand them, 0:01:10.640 --> 0:01:13.960 whether these loans from insurers were directed to other parts 0:01:13.959 --> 0:01:17.200 of his empire without being properly disclosed and labeled as 0:01:17.360 --> 0:01:20.160 affiliated transaction. That seems to be the epicenter of the 0:01:20.200 --> 0:01:23.520 investigations right now. I'm sure clients are very interested in 0:01:23.680 --> 0:01:26.560 way you stand and what it means for Gugenheim Asset Management. 0:01:26.760 --> 0:01:30.080 Where does Gugenheim Masset Management sit in all of that. 0:01:30.880 --> 0:01:33.360 Well, let me see if I can create some clarity 0:01:33.440 --> 0:01:37.160 around this. In particular, what is not the focus of 0:01:37.200 --> 0:01:42.360 any inquiry is to our investment management process, our people, 0:01:43.000 --> 0:01:46.840 our performance and returns, or our trade allocations, which has 0:01:46.959 --> 0:01:50.640 historically been an area that the SEC would open an 0:01:50.680 --> 0:01:53.880 inquiry into an investment management firm. That is not the 0:01:53.960 --> 0:01:56.559 case here. We are working day in and day out 0:01:56.840 --> 0:02:01.880 for our investors with the same integrity and fiduciary responsibility 0:02:01.880 --> 0:02:04.640 that we have always engaged in at the firm and 0:02:04.680 --> 0:02:07.320 will continue to do so. In particular, at this time 0:02:07.400 --> 0:02:12.519 with markets being so uncertain, we do have an inquiry 0:02:12.639 --> 0:02:16.480 into a business accounting issue in one of our subsidiaries, 0:02:16.919 --> 0:02:21.359 and we've been very open with regulators and very cooperative 0:02:21.880 --> 0:02:25.040 in their investigation and we will continue to do. 0:02:25.040 --> 0:02:28.800 So, and that, as I said, is a business issue. 0:02:28.800 --> 0:02:32.000 We've engaged with our auditors and we feel that the 0:02:32.840 --> 0:02:38.079 accounting treatment was appropriate. With regard to TWG and its 0:02:38.080 --> 0:02:42.080 insurance entities, that is a fully separate matter. And of 0:02:42.120 --> 0:02:45.800 course they are dealing with their regulators and have also 0:02:45.960 --> 0:02:49.919 very cooperative and as I understand it, have entered into 0:02:50.000 --> 0:02:55.000 a remediation agreement or a protocol and that has been. 0:02:55.120 --> 0:02:56.520 As I said, very cooperative. 0:02:57.240 --> 0:02:59.799 At this point in time, I think investors need to 0:02:59.800 --> 0:03:04.839 be assured that we again are working very much diligently 0:03:05.000 --> 0:03:07.960 day in and day out. Again because these markets are 0:03:08.000 --> 0:03:09.320 so uncertain. 0:03:09.360 --> 0:03:12.480 How cooperacific client spent out of the past few weeks. 0:03:12.240 --> 0:03:15.880 Very supportive and once it's very clear to them exactly 0:03:15.919 --> 0:03:17.240 what is happening and. 0:03:18.560 --> 0:03:19.959 We are able to explain. 0:03:20.680 --> 0:03:23.920 Then as a result, we have been able to assure 0:03:23.960 --> 0:03:27.840 them and I think again assuage their concerns. 0:03:28.560 --> 0:03:31.600 Do you think that the climate has adjusted such You 0:03:31.680 --> 0:03:34.040 keeps saying that markets are incredibly complicated, and they are, 0:03:34.080 --> 0:03:36.960 and we're talking about for example, and Nvidia and some 0:03:37.000 --> 0:03:39.520 of the accounting mechanisms that have been going on with 0:03:39.560 --> 0:03:42.240 respect to where they book profits versus the hyper scalers 0:03:42.240 --> 0:03:45.920 as they spend. Do you think that rumors spread faster 0:03:46.280 --> 0:03:48.720 right now because people feel like there's so much money 0:03:48.760 --> 0:03:52.320 being spent. It's such a difficult, fraught time with so 0:03:52.400 --> 0:03:55.040 much money going to private sectors with less transparency. 0:03:55.480 --> 0:03:58.880 Well, look, this is the world within which we are operating. 0:04:00.120 --> 0:04:04.200 The markets are highly fragmented and stratified. So at this 0:04:04.320 --> 0:04:08.600 point in time, what we're seeing is we're seeing the 0:04:08.640 --> 0:04:12.160 intra sensitive parts of the economy are maybe a bit 0:04:12.160 --> 0:04:14.920 more wobbly. We're going to talk about rates that's obviously 0:04:14.960 --> 0:04:19.520 having an impact. We're talking about private markets have grown 0:04:19.920 --> 0:04:23.800 significantly over the last number of years, and with BDCs 0:04:23.839 --> 0:04:28.000 and some of these other transactions, particularly concerns over software, 0:04:28.160 --> 0:04:31.440 we're starting to see a lot of investor nervousness. And 0:04:31.480 --> 0:04:33.240 by the way, we're coming up into that time of 0:04:33.279 --> 0:04:36.800 the year September and October, which historically is a market 0:04:37.000 --> 0:04:41.320 volatility period of time, and as a result, investors are 0:04:41.360 --> 0:04:44.159 more nervous than probably they would otherwise be. 0:04:44.360 --> 0:04:46.400 We were just talking with Earl Davis who said he's 0:04:46.400 --> 0:04:49.120 going to the back of the theater near the exit door, 0:04:49.440 --> 0:04:51.840 talking about how he is looking for ten year treasure 0:04:51.920 --> 0:04:53.760 yells to go between five and five and a quarter 0:04:53.760 --> 0:04:56.679 percent and thirty year treasuries to go to six percent, 0:04:56.680 --> 0:04:57.760 but so wouldn't buy them. 0:04:58.279 --> 0:04:59.680 Do you see things the same way? 0:05:00.320 --> 0:05:03.000 I think that's a very provocative statement. What I would 0:05:03.080 --> 0:05:05.359 say is is that here we are in a trading 0:05:05.440 --> 0:05:07.840 range on the tenure, and at the low end we've 0:05:07.839 --> 0:05:10.360 been down into the high threes. At the high end 0:05:10.360 --> 0:05:14.160 we're four seventy four, seventy five, and at for seventy five, 0:05:14.320 --> 0:05:17.560 that's pretty much the high end of our range. If 0:05:17.600 --> 0:05:21.680 we see five percent on treasuries on the tenure, I 0:05:21.720 --> 0:05:24.920 would tell you that is a buying opportunity. I think 0:05:24.960 --> 0:05:28.039 the markets aren't able, particularly the equity markets aren't really 0:05:28.040 --> 0:05:30.839 able to function as well beyond that, and I do 0:05:30.960 --> 0:05:35.600 believe that titans financial conditions. The thirty year, however, historically 0:05:35.680 --> 0:05:40.880 has traded much more on inflation concerns. I don't see 0:05:40.960 --> 0:05:44.040 us going to six percent on the thirty year, and 0:05:44.160 --> 0:05:46.520 if it does, I would take the opposite view, and 0:05:46.560 --> 0:05:49.000 I'd back up the truck and I buy a lot 0:05:49.080 --> 0:05:51.839 of six percent thirty year treasuries. 0:05:52.440 --> 0:05:54.280 I think that at this. 0:05:54.279 --> 0:05:57.960 Point in time, what we're also seeing I said stratification earlier, 0:05:58.080 --> 0:06:01.440 we're seeing that also in the pull up. Another factor 0:06:01.480 --> 0:06:04.800 that's happening, and that is the sheer amount of debt 0:06:04.839 --> 0:06:08.840 that's being issued, not just at the treasury level from 0:06:08.839 --> 0:06:13.839 fiscal spending, but also because of data centers and AI trade. 0:06:14.200 --> 0:06:15.160 The AI trade. 0:06:14.920 --> 0:06:17.360 That's happening at this point in time, and as a result, 0:06:17.480 --> 0:06:21.479 we're seeing this very significant amount of need for capital 0:06:21.960 --> 0:06:24.159 and they want to issue in the long end, which 0:06:24.200 --> 0:06:25.240 is pulling rates up. 0:06:25.800 --> 0:06:28.080 Do you want to invest in that debt long duration, 0:06:28.839 --> 0:06:32.160 hyperscaler debt or do you see that as potentially more 0:06:32.200 --> 0:06:35.119 toxic than US government debt should things turn south. 0:06:35.600 --> 0:06:38.240 I think there are other parts of the infrastructure trade 0:06:38.240 --> 0:06:41.240 that make a lot more sense, power build out and 0:06:41.320 --> 0:06:45.760 other kinds of long term real asset investing. My concern 0:06:45.839 --> 0:06:48.479 about the data center build out and the cost of 0:06:48.520 --> 0:06:50.640 that is the obsolescence risk in. 0:06:50.600 --> 0:06:51.400 The long term. 0:06:51.600 --> 0:06:57.320 Now, I am selectively an investor in shorter duration offerings, 0:06:57.520 --> 0:06:57.960 but we have. 0:06:57.960 --> 0:07:00.039 To be thoughtful because the AI. 0:07:00.440 --> 0:07:02.640 Offerings that are coming out in the capital market are 0:07:02.680 --> 0:07:05.600 not in just one place. They are in unsecured investment 0:07:05.640 --> 0:07:10.480 grade credit, they're in structured credit, they're infrastructure, So you 0:07:10.520 --> 0:07:12.480 have to be really thoughtful to make sure that you're 0:07:12.520 --> 0:07:16.800 getting the right amount of diversification. There's trillions of dollars 0:07:16.920 --> 0:07:19.480 of capex in this space that is happening over the 0:07:19.560 --> 0:07:21.800 next several years, and as a result, there's going to 0:07:21.840 --> 0:07:25.040 be continued need for capital, and I think being thoughtful 0:07:25.080 --> 0:07:28.880 and layering in is probably a better way to be 0:07:29.200 --> 0:07:31.160 investing in this space going forward. 0:07:31.280 --> 0:07:33.800 And so much of that is investment grade right to debt. 0:07:34.400 --> 0:07:37.040 Ol Davis Abimo Lisa was talking about the six percent 0:07:37.080 --> 0:07:39.240 cod The otherness is an interesting take he had. He 0:07:39.280 --> 0:07:41.400 was de risking on the credit side, but drop in 0:07:41.400 --> 0:07:44.400 all the high yield exposure and then refilling at the 0:07:44.400 --> 0:07:47.360 front end of IG. What do you think the risk 0:07:47.480 --> 0:07:49.520 is in credit right now? Because we've had a series 0:07:49.520 --> 0:07:51.280 of conversations that have raised the question as to whether 0:07:51.320 --> 0:07:54.000 actually it might be sitting in investment grade and not 0:07:54.040 --> 0:07:56.520 in high yield. With regards to this story, well, in. 0:07:56.520 --> 0:07:58.880 The high yield market has actually shrunk over the last 0:07:58.960 --> 0:08:01.560 number of years anyway, and has actually moved up in 0:08:01.560 --> 0:08:02.320 credit quality. 0:08:03.080 --> 0:08:04.080 It is a very. 0:08:03.840 --> 0:08:06.880 Different market than it was, say, ten years ago, even 0:08:07.640 --> 0:08:11.920 with regard to the high level of capital issuance and 0:08:11.960 --> 0:08:14.520 debt issuance that's happening, particularly in the long end on 0:08:14.600 --> 0:08:17.320 investment grade to fund this AI build out. And by 0:08:17.320 --> 0:08:20.280 the way, I'm very positive on the AI technology in 0:08:20.280 --> 0:08:23.600 the long run, but I am concerned in the nearer 0:08:23.800 --> 0:08:27.040 term with regard to the risk that's happening, and simply 0:08:27.080 --> 0:08:30.880 again that stratification that's happening because there's so much issuance 0:08:30.880 --> 0:08:37.959 there that is demanding a higher level of coupon and 0:08:38.200 --> 0:08:40.560 for me to get invested, it has to be paying 0:08:40.880 --> 0:08:43.760 a lot more, and that makes sense to me as 0:08:43.760 --> 0:08:44.320 an investor. 0:08:44.440 --> 0:08:46.880 The risk is elevated and there. 0:08:46.800 --> 0:08:50.840 Is concern, and of course we've become much more aware 0:08:50.920 --> 0:08:54.320 of the fact that these issuers are three free cash 0:08:54.360 --> 0:08:56.720 flow negative at this point in time, and I think 0:08:56.840 --> 0:08:59.959 that's something to be concerned about. Whenever you see has 0:09:00.000 --> 0:09:03.480 historically a huge amount of debt issuance, whether it's whether 0:09:03.559 --> 0:09:06.440 it's the fiber optic cable build out of the late 0:09:06.480 --> 0:09:10.240 nineteen nineties or the financial crisis, you know, the lead 0:09:10.240 --> 0:09:12.920 into the financial crisis where there's so much debt came out, 0:09:13.080 --> 0:09:15.360 and any time you see that, you have to sort 0:09:15.400 --> 0:09:17.720 of say to yourself, I think we need to be 0:09:17.840 --> 0:09:21.560 thoughtful with regard to this concentration of risk and to 0:09:21.600 --> 0:09:26.319 be aware that it could have repercussions to the credit market. 0:09:26.400 --> 0:09:27.760 Did you think this s fed? These the times of 0:09:27.800 --> 0:09:28.720 financial conditions. 0:09:29.679 --> 0:09:33.760 I think the FED has done something with the beginning 0:09:33.840 --> 0:09:36.600 part of the year in that they increase their balance 0:09:36.600 --> 0:09:40.800 sheet in the ample reserves regime to by the tune 0:09:40.840 --> 0:09:43.760 of about three hundred billion dollars in the first six 0:09:43.800 --> 0:09:47.640 months of the year. Those purchases have now stopped, and 0:09:47.880 --> 0:09:49.679 I think that it's confusing. 0:09:49.200 --> 0:09:49.880 To the market. 0:09:50.640 --> 0:09:53.520 This is one of the elements that I think Chair 0:09:53.600 --> 0:09:55.560 Warsh is going to be spending time on. He's already 0:09:55.559 --> 0:09:58.760 mentioned it is the evaluation of how does the balance 0:09:58.800 --> 0:10:01.559 sheet act as a tool. And I think that's a 0:10:01.679 --> 0:10:04.800 very important initiative for the FED to take up. And 0:10:05.080 --> 0:10:07.600 I would say that by increasing the balance sheet by 0:10:07.640 --> 0:10:10.280 three hundred billion dollars, that's the equivalent of about a 0:10:10.440 --> 0:10:12.880 quarter basis point. It's going to be a quarter percent 0:10:13.440 --> 0:10:17.760 rate cut. And so they've been actually somewhat stimulative. Along 0:10:17.800 --> 0:10:22.480 with the one big beautiful build attacks benefits, fiscal spending, 0:10:22.840 --> 0:10:26.880 I mean it's and tariff refunds. This has been a 0:10:27.040 --> 0:10:31.400 very heavily stimulative first half of the year relatively speaking, 0:10:31.760 --> 0:10:34.360 that I think actually slows down and may even come 0:10:34.400 --> 0:10:36.960 to a stop here in the second half. And so 0:10:37.040 --> 0:10:39.600 I think that investors need to be aware the financial 0:10:39.600 --> 0:10:43.000 conditions are probably going to naturally tighten. And to Kevin 0:10:43.040 --> 0:10:46.319 Worrish's perspective, I think the market is going to. 0:10:46.280 --> 0:10:48.880 Do some of the Fed's job for them, unless Besson 0:10:48.960 --> 0:10:52.079 has other ideas. And I appreciate it. And wilsh your Gegenheim, 0:10:52.200 --> 0:10:56.080 thanks for dropping by, stay with us. Mult Bloomberg surveillance 0:10:56.120 --> 0:11:07.960 coming up. After this, trade talks between the US and 0:11:08.000 --> 0:11:11.920 Canada officially breaking down, Canada firing back against state fifty 0:11:11.920 --> 0:11:15.520 percent tariffs with a twenty billion dollar council Levy sources, 0:11:15.520 --> 0:11:18.760 talagates Herupelomberg, the Prime Minister. Mount County's government, sees little 0:11:18.800 --> 0:11:22.440 chance of negotiations resuming before the midterm elections. To build 0:11:22.480 --> 0:11:24.920 on this, Bran Gardner of Statehood, let's talk about why 0:11:24.920 --> 0:11:27.520 we're doing this. Why is the US going after Canada 0:11:27.640 --> 0:11:30.000 to the extent it is going after Canada. 0:11:32.000 --> 0:11:34.679 I think it goes to the fact that. 0:11:34.520 --> 0:11:38.480 In my view, the president sees economics and trade is 0:11:38.520 --> 0:11:42.920 a zero sum game. I think that's the simplest, most 0:11:42.960 --> 0:11:48.079 accurate explanation for this. So if the US, if Canada loses, 0:11:48.200 --> 0:11:50.800 the United States wins, I don't think he believes in 0:11:50.840 --> 0:11:53.360 it as much of a win win scenario. That has 0:11:53.480 --> 0:11:57.600 underpinned US trade policy, global trade policy for the last 0:11:57.600 --> 0:11:58.640 forty plus years. 0:11:58.720 --> 0:12:00.520 So I think that is the explanation. 0:12:00.679 --> 0:12:03.200 Roan, we still have USMCA. When you see numbers like 0:12:03.280 --> 0:12:06.480 fifty percent on some goods, how much have tried tod 0:12:06.480 --> 0:12:08.920 we actually talking about how much foes under the USMCI 0:12:09.360 --> 0:12:13.640 and how much foes under this spap Right now. 0:12:12.440 --> 0:12:15.160 This is a I mean, this is still a fairly 0:12:15.240 --> 0:12:19.920 low percentage of overall trade with Canada, so we can't 0:12:20.559 --> 0:12:25.080 blow it out of proportion. But the tone, the way 0:12:25.080 --> 0:12:30.160 the negotiations collapsed, the way that USMCA has been evolving, 0:12:30.800 --> 0:12:33.839 it does call into question on what changes are coming 0:12:33.840 --> 0:12:37.360 for us MCA, What is the long term implications for 0:12:37.520 --> 0:12:40.280 North America trade. I mean, it's kind of amazing that 0:12:40.320 --> 0:12:44.000 we're sitting here. You know, going into the Trump administration, 0:12:44.040 --> 0:12:46.880 you would have thought that US Canada relations would be 0:12:46.920 --> 0:12:50.040 in a better place than US Mexico relations, and they're 0:12:50.080 --> 0:12:52.480 exactly the opposite. I think we're in a better place 0:12:52.520 --> 0:12:55.760 with Mexico and more likely to get longer term agreements 0:12:55.800 --> 0:12:57.480 with Mexico than we are with Canada. 0:12:58.120 --> 0:13:00.719 It's pretty remarkable ran there was a that going into 0:13:00.760 --> 0:13:04.400 the midterm election cycle there would be some relief from tariffs, 0:13:04.480 --> 0:13:06.760 or at least the threat of them, to reduce the 0:13:06.800 --> 0:13:10.520 cost of living. Do you think that that playbook is gone? 0:13:11.000 --> 0:13:13.760 No, I mean I think they're still there, Lisa. 0:13:14.000 --> 0:13:20.240 I mean the cut in tariffs on beef imports recently. 0:13:20.840 --> 0:13:26.080 I think that that underscores the worries of the administration, 0:13:26.880 --> 0:13:32.640 their perceived vulnerability on affordability going into the midterms. Look, 0:13:32.679 --> 0:13:35.400 when when you go into any kind of negotiations like this, 0:13:37.040 --> 0:13:38.960 various parties can overplay their hand. 0:13:39.000 --> 0:13:40.600 And I'm not going to point fingers. 0:13:40.640 --> 0:13:42.880 Maybe it was the Canadians who thought, because of what 0:13:42.920 --> 0:13:46.640 you just said, Maybe they thought going into the midterms 0:13:46.640 --> 0:13:49.400 that they had a stronger hand to play and that 0:13:49.440 --> 0:13:53.000 they could get a better deal, and taking a page 0:13:53.040 --> 0:13:54.120 out of the Trump playbook. 0:13:54.200 --> 0:13:55.920 Maybe it's, you know, the art of the deal. 0:13:56.280 --> 0:13:59.440 Maybe once in a while, you just walk away from 0:13:59.480 --> 0:14:03.319 a deal from negotiations and force the other side to 0:14:03.360 --> 0:14:04.280 reconsider and. 0:14:04.200 --> 0:14:05.600 Come back with a better deal. 0:14:05.679 --> 0:14:09.080 Maybe that's maybe they're playing a longer game for this. 0:14:09.200 --> 0:14:13.280 But to your initial question, Lisa, No, I think the 0:14:13.280 --> 0:14:16.199 administration is still very concerned to on affordability and that's 0:14:16.240 --> 0:14:18.240 why they're lowering tariffs and other products. 0:14:18.280 --> 0:14:20.160 The reason why I ask is because there was this 0:14:20.200 --> 0:14:24.320 reported meeting between House Democratic Leader Hakim Jeffreys and Jared 0:14:24.360 --> 0:14:28.720 Kushner in the past couple of days talking potentially, we're 0:14:28.720 --> 0:14:31.480 not sure, but reportedly talking about how to work more 0:14:31.480 --> 0:14:34.960 closely together. If the Democrats win the House, this would 0:14:34.960 --> 0:14:37.040 be the person who would have to work most closely 0:14:37.080 --> 0:14:39.560 with the administration. Do you think that that is a 0:14:39.600 --> 0:14:43.200 significant tell that this administration is preparing for a divided 0:14:43.240 --> 0:14:46.720 House and gridlock for the second half of President Trump's 0:14:46.720 --> 0:14:47.440 second term. 0:14:48.280 --> 0:14:52.840 Yes, and I think they understand reality book that they're 0:14:52.840 --> 0:14:55.080 going to pull out all the stops to either keep 0:14:55.080 --> 0:14:57.280 the numbers low or defy history. 0:14:57.520 --> 0:15:00.400 But they know what history is, which is that the 0:15:00.440 --> 0:15:01.240 party out of power. 0:15:01.280 --> 0:15:04.440 The Democrats are likely to pick up seats in the midterms, 0:15:04.480 --> 0:15:07.640 and since they only need three the bar is pretty low, 0:15:07.840 --> 0:15:11.360 and so I think it's just facing reality as it 0:15:11.440 --> 0:15:15.840 is doing the correct outreach. Jeffries himself is going to 0:15:15.840 --> 0:15:18.400 be in a very difficult spot, so maybe there because 0:15:18.440 --> 0:15:21.880 he's going to have a fractured conference with some new 0:15:21.920 --> 0:15:24.520 DSA members, some more mainstream members who. 0:15:24.360 --> 0:15:29.360 Are opposed or in conflict with the left wing of 0:15:29.360 --> 0:15:30.320 the Democratic Party. 0:15:30.680 --> 0:15:34.040 And so I think the administration is taking the correct 0:15:34.080 --> 0:15:36.840 steps and doing some outreach. It's going to be a 0:15:36.920 --> 0:15:39.160 rocky two years, but it doesn't mean that you can't 0:15:39.200 --> 0:15:41.800 talk to the other side and see maybe are some 0:15:41.960 --> 0:15:44.720 areas of common ground, some areas where you can avoid 0:15:44.800 --> 0:15:46.120 conflict unnecessarily. 0:15:46.440 --> 0:15:48.720 Ron and Trump one, A lot of people complained about 0:15:48.720 --> 0:15:51.800 the tariffs on China then underbid, and very few, if 0:15:51.800 --> 0:15:54.360 any weccount in Trump too. A lot of people complained 0:15:54.360 --> 0:15:57.760 about the tariffs on everybody, and yet I see very 0:15:57.800 --> 0:16:01.000 few people, if any, campaign and to cut them into 0:16:01.000 --> 0:16:03.320 the mid tims, Brian, why's that no part of the conversation. 0:16:05.480 --> 0:16:08.880 Yeah, I think among the public, I don't think the 0:16:08.960 --> 0:16:14.600 terrorists are overly popular with the public, but they do 0:16:14.720 --> 0:16:19.400 resonate with key constituencies, and so there's I think politicians, 0:16:20.560 --> 0:16:24.440 members of Congress looking at this just don't see any 0:16:24.560 --> 0:16:27.960 reason to go out and advocate in Very few of 0:16:28.000 --> 0:16:31.120 them will advocate in favor of rolling them back. Maybe 0:16:31.160 --> 0:16:33.880 Ram Paul from Kentucky one of the few, but most 0:16:33.920 --> 0:16:37.960 of them. Let's go back to the beef import example, 0:16:38.440 --> 0:16:42.560 because that got a huge amount of pushback domestically from 0:16:43.560 --> 0:16:45.000 US producers. 0:16:46.480 --> 0:16:49.920 Stay with US, multiple impex. Savannah's coming up after this, 0:16:58.920 --> 0:17:02.560 Troy Kanisky future standard writing. Private markets are holding gup. 0:17:02.760 --> 0:17:07.000 AI concentration is becoming a portfolio issued. Capital is increasingly 0:17:07.000 --> 0:17:10.920 concentrated around AI across both public and private markets. Troy 0:17:11.240 --> 0:17:13.320 joined us now for more. Troy's been so long, my friend, 0:17:13.359 --> 0:17:15.640 Welcome back to the program. This is a question so 0:17:15.640 --> 0:17:18.399 many of us have asked. Are we all in the 0:17:18.440 --> 0:17:19.200 same traite? 0:17:20.600 --> 0:17:23.520 Yeah, I think the concentration has gone up substantially. I 0:17:23.520 --> 0:17:26.080 mean most of the press and most of the analysts 0:17:26.119 --> 0:17:29.080 focuses on public markets where you have more and more 0:17:29.119 --> 0:17:32.359 tech and AI concentration, which is fairly obvious. But I 0:17:32.359 --> 0:17:35.159 think what's happened this year, particularly in private markets, is 0:17:35.160 --> 0:17:38.080 more and more capital, whether it's going for go go 0:17:38.240 --> 0:17:43.000 growth or whether it's going for AI infrastructure has really 0:17:43.040 --> 0:17:46.640 increased substantially, and so when you think about the use 0:17:46.720 --> 0:17:49.119 case for alternatives, you know, one of the principal use 0:17:49.200 --> 0:17:52.000 cases for something like middle market private equity has always. 0:17:51.760 --> 0:17:53.159 Been growth at a reasonable price. 0:17:53.600 --> 0:17:57.000 But what's becoming more and more important is that diversification 0:17:57.160 --> 0:18:00.600 away from AI risk because in the event that there 0:18:00.720 --> 0:18:05.040 isn't a meaningful ar ROI C to justify the continued 0:18:05.080 --> 0:18:08.280 growth or even the sustainability of the current growth and spending, 0:18:09.320 --> 0:18:12.439 that could lead to obviously a very negative economic outcome, 0:18:12.520 --> 0:18:16.000 not to mention a tougher outcome for public and certain 0:18:16.040 --> 0:18:18.440 types of growth oriented private market exposures. 0:18:18.640 --> 0:18:21.359 Troy, what are the opportunities like elsewhere and to what 0:18:21.440 --> 0:18:23.840 extent they being crowded out by the issuance we're saying 0:18:23.880 --> 0:18:26.560 for the Treasury that we're saying from Let's just look 0:18:26.560 --> 0:18:29.000 at this morning, Self Bank planning to write six billion 0:18:29.280 --> 0:18:32.840 in Japan, about raising ten billion in Hong Kong, the 0:18:32.880 --> 0:18:36.240 AI players, the hyperscatus issuing tons and tons of debt. 0:18:36.240 --> 0:18:38.800 How much crownic gat you saying, Yeah, So. 0:18:39.280 --> 0:18:42.000 I think again, if you look at opportunities for growth 0:18:42.119 --> 0:18:45.119 away from AI, you know, we focus on in a 0:18:45.160 --> 0:18:47.560 market private equity where a lot of the exposures are 0:18:47.680 --> 0:18:50.560 what I refer to as boring is beautiful things like 0:18:51.080 --> 0:18:55.879 mobile payment applications or paving or specialty foods. You know, 0:18:55.960 --> 0:18:58.159 these are good core businesses that make up about a 0:18:58.200 --> 0:19:02.040 third of private sector GDP. However, in other areas there 0:19:02.080 --> 0:19:06.640 are other growth factors like robotic surgery or infusion care. 0:19:07.240 --> 0:19:10.320 There's a lot of growth now tied to defense. So 0:19:10.720 --> 0:19:13.880 the argument isn't that you shouldn't own AI or AI risk. 0:19:14.119 --> 0:19:17.120 It will more than likely turn out fine. However, if 0:19:17.119 --> 0:19:19.320 it doesn't turn out fine, it's good to have an 0:19:19.359 --> 0:19:22.440 exposure or portfolio that can provide you growth like returns 0:19:22.880 --> 0:19:25.359 without that singular level of concentration risk. 0:19:26.280 --> 0:19:28.200 Do you find a lot of the positions that you're 0:19:28.240 --> 0:19:31.080 looking for increasingly crowded? Because people have been talking about 0:19:31.119 --> 0:19:34.160 garb or growth at in a reasonable rate for a while, 0:19:34.200 --> 0:19:35.919 and then we say the Russell two thousand surge, I 0:19:35.960 --> 0:19:38.639 know is what you're talking about with private markets, but 0:19:38.720 --> 0:19:41.560 it is a proxy for smaller companies and the dynamism 0:19:41.600 --> 0:19:42.640 that people are foreseeing. 0:19:42.640 --> 0:19:44.040 At what point does it get too crowded? 0:19:44.080 --> 0:19:46.600 Is people just sort of chase something that can be 0:19:46.680 --> 0:19:49.800 relatively immunized from that larger potential risk. 0:19:50.680 --> 0:19:50.880 Yeah. 0:19:50.920 --> 0:19:53.919 Well, it's really interesting because to John's point, the crowding 0:19:54.240 --> 0:19:58.240 has happened more in terms of AI and a infrastructure. 0:19:58.560 --> 0:19:59.679 However, because there's. 0:19:59.560 --> 0:20:02.280 A dearth capital, the returns that you can make there 0:20:02.320 --> 0:20:06.000 are still very attractive. Now to your point question, Lisa, 0:20:06.440 --> 0:20:09.920 what's really interesting is this year we've seen, particularly in 0:20:10.000 --> 0:20:13.840 our co invest pipeline, a tremendous level of deal activity 0:20:14.320 --> 0:20:17.159 and the reason for that is pretty straightforward. You have 0:20:17.359 --> 0:20:20.399 very strong NONLAL GDP growth and many of these small 0:20:20.400 --> 0:20:24.679 and medium private enterprises need capital just to meet the 0:20:24.760 --> 0:20:28.040 demand backlog because of the demand shock we're seeing across 0:20:28.119 --> 0:20:31.920 various growth verticals including defense and again other niche areas. 0:20:32.400 --> 0:20:36.119 So that's the principal reason the pipeline is on fire, 0:20:36.240 --> 0:20:39.080 and we just haven't seen any evidence of crowding out 0:20:39.160 --> 0:20:41.239 in that niche area of the market. Now, to your 0:20:41.240 --> 0:20:44.320 point on the Russell, the Russell has been on quite 0:20:44.320 --> 0:20:47.320 a tear and as a reminder, the Russell trades more 0:20:47.320 --> 0:20:50.399 expensively on a pee basis than the NATSDAK and on 0:20:50.440 --> 0:20:53.600 an enterprise died eve Ada basis and the SMP, but 0:20:53.720 --> 0:20:56.440 typically has given you much lower revenue and earnings. 0:20:56.080 --> 0:20:58.040 Growth, So you know, rooting for the Russell. 0:20:58.480 --> 0:21:00.679 We're not saying that it's a bad place to put it, 0:21:00.800 --> 0:21:05.720 just strikes us as very expensive relative to larger indices 0:21:05.720 --> 0:21:07.600 that are out there with better growth prospects. 0:21:08.000 --> 0:21:11.920 As benchmark yields go up significantly, particularly in longer term debt, 0:21:12.000 --> 0:21:14.040 how much does that change the calculus when it comes 0:21:14.080 --> 0:21:15.840 to private debt versus private equity. 0:21:17.000 --> 0:21:19.880 Yeah, so most private debt is priced at the front 0:21:19.960 --> 0:21:21.600 end of the curve, right, So if you think of 0:21:21.680 --> 0:21:23.639 the back end of the curve, that's really an issue. 0:21:23.640 --> 0:21:23.840 More. 0:21:23.920 --> 0:21:25.720 This steepening we're seeing is more of an issue for 0:21:25.800 --> 0:21:30.240