1 00:00:02,520 --> 00:00:07,000 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:07,800 --> 00:00:10,200 Speaker 2: Jim's out to the Apollo Global Management president, saying the 3 00:00:10,200 --> 00:00:13,000 Speaker 2: firm maintains one of the leanest software positions in the 4 00:00:13,039 --> 00:00:15,239 Speaker 2: sector and pleased to say that. Jim joins us now 5 00:00:15,280 --> 00:00:16,560 Speaker 2: for more. Jim, good morning, Good to see you. 6 00:00:16,840 --> 00:00:18,880 Speaker 3: Good morning, John. I was good to see you and Lisa. 7 00:00:19,120 --> 00:00:20,800 Speaker 2: What do you think we're going to cover this morning? 8 00:00:20,960 --> 00:00:24,240 Speaker 3: Probably software, right, I think you probably might ask that question. 9 00:00:24,280 --> 00:00:26,440 Speaker 2: I suspect want to pick up on this quote from 10 00:00:26,480 --> 00:00:29,200 Speaker 2: Mark Rowan, your colleague, good friend. In our PE business, 11 00:00:29,240 --> 00:00:32,400 Speaker 2: our software exposure runs to zero in our theme balance sheet. 12 00:00:32,440 --> 00:00:35,479 Speaker 2: Our software exposure runs close to the zero than to 13 00:00:35,560 --> 00:00:37,800 Speaker 2: one that was on the call again the last week. 14 00:00:37,840 --> 00:00:42,120 Speaker 2: Can you frame for us your deployment into software versus 15 00:00:42,159 --> 00:00:45,120 Speaker 2: maybe your competitors and why you weren't as big as 16 00:00:45,159 --> 00:00:47,000 Speaker 2: aggressive as others have been. 17 00:00:47,840 --> 00:00:50,800 Speaker 3: Well, I think the answer is you need to take 18 00:00:50,800 --> 00:00:53,520 Speaker 3: a step back in the whole evolution of the role 19 00:00:53,600 --> 00:00:56,600 Speaker 3: of private credit. And as we've talked about on the 20 00:00:56,640 --> 00:01:00,960 Speaker 3: show before, the non investment grade Porsche, which is really 21 00:01:01,000 --> 00:01:06,200 Speaker 3: the area where PE sponsors look for financing. That's the 22 00:01:06,319 --> 00:01:10,920 Speaker 3: area where software, software tech, healthcare tech is around forty 23 00:01:10,959 --> 00:01:15,760 Speaker 3: percent of the marketplace, and we just used as a 24 00:01:16,080 --> 00:01:19,039 Speaker 3: principal investor in that area. We had a view that 25 00:01:19,120 --> 00:01:23,360 Speaker 3: there was a greater degree of potential disruption over time 26 00:01:24,040 --> 00:01:27,399 Speaker 3: in those business models, and a far greater focus for 27 00:01:27,520 --> 00:01:30,640 Speaker 3: us is on the investment grade side portion of the 28 00:01:30,680 --> 00:01:33,640 Speaker 3: of the private credit world. So you know, I've been 29 00:01:33,680 --> 00:01:35,959 Speaker 3: in the business for forty one years the S and 30 00:01:36,040 --> 00:01:38,760 Speaker 3: P five hundred. Since I got in the business in 31 00:01:38,800 --> 00:01:41,960 Speaker 3: nine eighty five, three hundred and seventy three companies have 32 00:01:42,080 --> 00:01:45,360 Speaker 3: moved out of the S and P because of disruption 33 00:01:45,520 --> 00:01:48,720 Speaker 3: and mergers and acquisitions, and I think every decade there's 34 00:01:48,840 --> 00:01:51,960 Speaker 3: more evolution out of the S and P five hundred. 35 00:01:52,000 --> 00:01:54,440 Speaker 3: So I just think that we took it. Wasn't that 36 00:01:54,480 --> 00:01:57,080 Speaker 3: we were smarter. It's just that when you have a 37 00:01:57,160 --> 00:02:00,800 Speaker 3: discipline approach on value, when you have a suppline approach 38 00:02:00,800 --> 00:02:03,360 Speaker 3: on how you want to underwrite. There's a tremendous amount 39 00:02:03,360 --> 00:02:06,480 Speaker 3: of wonderful companies out there, But when we think about 40 00:02:06,560 --> 00:02:09,400 Speaker 3: equity at the bottom of a levered balance sheet or 41 00:02:09,440 --> 00:02:12,680 Speaker 3: a levered capital structure, there's just risks that we thought 42 00:02:12,720 --> 00:02:15,119 Speaker 3: were not proven for our style of investing. 43 00:02:15,240 --> 00:02:17,560 Speaker 2: Management teams will often say they don't follow the stock 44 00:02:17,639 --> 00:02:19,840 Speaker 2: that closely, but your stock has got caught up in 45 00:02:19,880 --> 00:02:22,520 Speaker 2: the sell off, and I'm wondering what your interpretation of 46 00:02:22,560 --> 00:02:24,880 Speaker 2: that actually is, why you think that's happening, and what 47 00:02:24,919 --> 00:02:27,480 Speaker 2: investors are telling you about how your name trade at 48 00:02:27,480 --> 00:02:28,760 Speaker 2: the moment in public markets. 49 00:02:29,440 --> 00:02:32,280 Speaker 3: You know, I think is the evolution of the markets 50 00:02:32,320 --> 00:02:35,600 Speaker 3: and the role of private credit has really continued to 51 00:02:35,639 --> 00:02:38,680 Speaker 3: evolve and play a major role in the financing markets 52 00:02:38,680 --> 00:02:42,079 Speaker 3: the last three to five years. In particular, we've been 53 00:02:42,120 --> 00:02:46,320 Speaker 3: a massive beneficiary of that. We've brought our retirement services 54 00:02:46,400 --> 00:02:49,760 Speaker 3: lower cost capital to being a solution provider. We've had 55 00:02:49,840 --> 00:02:52,880 Speaker 3: tremendous growth in our company and every part of our 56 00:02:52,880 --> 00:02:55,160 Speaker 3: company the last four or five years. And I think 57 00:02:55,200 --> 00:02:58,920 Speaker 3: that there's a The great thing about capitalism is if 58 00:02:58,960 --> 00:03:03,799 Speaker 3: there's concerns, market reacts really really quickly. Price activity, price action. 59 00:03:03,919 --> 00:03:06,960 Speaker 3: The equity market is instantaneous, as we've seen the last 60 00:03:07,360 --> 00:03:10,640 Speaker 3: couple of months. And I think that there are some 61 00:03:10,760 --> 00:03:15,720 Speaker 3: great companies in our sector that have a been victims 62 00:03:15,760 --> 00:03:19,800 Speaker 3: of let's move on and let's pair down positions in 63 00:03:19,840 --> 00:03:23,920 Speaker 3: periods of uncertainty. So there's nothing fundamentally that investors have 64 00:03:23,960 --> 00:03:26,880 Speaker 3: told us that there's concern about our company or sectors, 65 00:03:27,240 --> 00:03:30,080 Speaker 3: but there are certainly concerns about the growth of private 66 00:03:30,120 --> 00:03:33,560 Speaker 3: credit and aggregate and we've been pretty consistent for our 67 00:03:33,680 --> 00:03:37,600 Speaker 3: stock long long term. To create the value that we 68 00:03:37,640 --> 00:03:39,760 Speaker 3: believe it will, we're going to need to go through 69 00:03:39,800 --> 00:03:42,280 Speaker 3: a credit cycle, and at some point in time it's 70 00:03:42,320 --> 00:03:44,800 Speaker 3: been if you really go back, it's really been seven 71 00:03:44,880 --> 00:03:48,000 Speaker 3: h nine since there's been a deep credit cycle. We're 72 00:03:48,040 --> 00:03:51,320 Speaker 3: supremely confident of our ability to navigate that credit cycle 73 00:03:51,480 --> 00:03:55,520 Speaker 3: very very well, especially with the predominance of our ig exposure. 74 00:03:56,040 --> 00:03:58,520 Speaker 3: And when we do that, I think that the marketplace 75 00:03:58,560 --> 00:04:02,120 Speaker 3: will see the great benefit of our franchise. But I'll 76 00:04:02,160 --> 00:04:04,800 Speaker 3: also add I'll just pivot form second. You know, prior 77 00:04:04,840 --> 00:04:07,240 Speaker 3: to earnings, we just got back from Japan. We took 78 00:04:07,240 --> 00:04:10,240 Speaker 3: two hundred partners over to Japan for better part of 79 00:04:10,240 --> 00:04:12,920 Speaker 3: a week. We do it every two years, and when 80 00:04:12,920 --> 00:04:14,800 Speaker 3: you think about the things that we're involved with with 81 00:04:14,960 --> 00:04:20,200 Speaker 3: retirement solutions, helping investment grade companies evolve global growth of 82 00:04:20,240 --> 00:04:23,880 Speaker 3: economies that are in transition periods, Japan was an amazing 83 00:04:23,920 --> 00:04:26,479 Speaker 3: place for us to get that strategy. So a lot 84 00:04:26,520 --> 00:04:28,440 Speaker 3: of answers there, but it's a very exciting time for 85 00:04:28,480 --> 00:04:28,960 Speaker 3: our business. 86 00:04:29,080 --> 00:04:31,039 Speaker 1: I heard that there are certain actors who are bad 87 00:04:31,040 --> 00:04:32,640 Speaker 1: actors in the space. They're dragging you down. 88 00:04:32,680 --> 00:04:33,400 Speaker 3: That's kind of what I heard. 89 00:04:33,440 --> 00:04:35,159 Speaker 1: I mean, is that correct? I mean, is that sort 90 00:04:35,200 --> 00:04:37,640 Speaker 1: of how you see this scenario given the fact that 91 00:04:37,720 --> 00:04:39,039 Speaker 1: there will be a credit cycle and some of them 92 00:04:39,040 --> 00:04:39,960 Speaker 1: are going to get washed out. 93 00:04:41,000 --> 00:04:43,880 Speaker 3: I think what a cycle does is a cycle always 94 00:04:43,920 --> 00:04:48,040 Speaker 3: allows for dispersion of returns. And again I think that 95 00:04:48,160 --> 00:04:50,719 Speaker 3: there's a handful of us that are public. We all 96 00:04:50,720 --> 00:04:54,679 Speaker 3: have very different strategies. We've all really leaned into either 97 00:04:55,120 --> 00:04:58,679 Speaker 3: real estate, we've really leaned into credit, We've leaned into 98 00:04:58,760 --> 00:05:01,960 Speaker 3: Asian equity, whatever it may. Our business is a bit 99 00:05:01,960 --> 00:05:05,440 Speaker 3: different because of the athene angle and the aspects of 100 00:05:05,480 --> 00:05:08,680 Speaker 3: our retirement services platform and the fact that we act 101 00:05:08,680 --> 00:05:11,640 Speaker 3: as a principle. So there's a variety of different strategies 102 00:05:11,640 --> 00:05:15,359 Speaker 3: out there. We're convinced that ours over time, with the 103 00:05:15,480 --> 00:05:20,919 Speaker 3: changing winds of finance, where the demands from technology, energy transition, 104 00:05:21,120 --> 00:05:24,080 Speaker 3: that our model will be a wonderful model in that 105 00:05:24,600 --> 00:05:28,320 Speaker 3: and others who have invested in areas what which might 106 00:05:28,360 --> 00:05:30,400 Speaker 3: have been interesting at a point in time with the 107 00:05:30,400 --> 00:05:33,240 Speaker 3: information you had at that time. You know, we'll see 108 00:05:33,240 --> 00:05:36,000 Speaker 3: how those do. But again I'm not close enough to 109 00:05:36,640 --> 00:05:40,400 Speaker 3: other software portfolios to see the robust nature, but certainly 110 00:05:40,760 --> 00:05:44,800 Speaker 3: they're going to go through a period of economic disruption. 111 00:05:45,360 --> 00:05:48,960 Speaker 3: And again all the guests on your show talk about 112 00:05:49,360 --> 00:05:53,160 Speaker 3: AI with regard to data and chips and energy. There's 113 00:05:53,200 --> 00:05:55,720 Speaker 3: a second and third and fourth derivative this will come 114 00:05:55,720 --> 00:05:57,960 Speaker 3: out of the next three to five years about the 115 00:05:58,080 --> 00:06:01,760 Speaker 3: real return on invested capital, what it does for employment, 116 00:06:01,760 --> 00:06:04,400 Speaker 3: what it does for white collar jobs, what it does 117 00:06:04,440 --> 00:06:06,279 Speaker 3: for a lot of areas. And I think it plays 118 00:06:06,279 --> 00:06:08,279 Speaker 3: into another big theme which we've talked about in the 119 00:06:08,279 --> 00:06:11,440 Speaker 3: show is that the last fifteen eighteen years it's been 120 00:06:11,960 --> 00:06:16,040 Speaker 3: monetary policy. Monetary monetary policy. It's all about monetary policy 121 00:06:16,320 --> 00:06:18,479 Speaker 3: because a lot of government officials in the world have 122 00:06:18,560 --> 00:06:21,600 Speaker 3: taken a step back and let the monetary authorities take 123 00:06:21,640 --> 00:06:24,520 Speaker 3: the lead. The reality is this is a time for 124 00:06:24,600 --> 00:06:27,200 Speaker 3: a lot of fiscal activity to be really dealt with. 125 00:06:27,440 --> 00:06:30,000 Speaker 3: You talked about the UK with taxes and minimum wages. 126 00:06:30,320 --> 00:06:33,599 Speaker 3: This is the time. Monetary policy can only do so much. 127 00:06:33,960 --> 00:06:37,400 Speaker 3: You need to have good fiscal policy, really be thoughtful 128 00:06:37,440 --> 00:06:41,760 Speaker 3: about long term retirement solutions long term budget issues, and 129 00:06:41,800 --> 00:06:44,040 Speaker 3: that can't be led by the monetary authorities. 130 00:06:44,200 --> 00:06:45,719 Speaker 1: Jim, there's a lot to unpack there. 131 00:06:45,800 --> 00:06:46,560 Speaker 3: I am curious. 132 00:06:46,640 --> 00:06:48,839 Speaker 1: Twenty twenty four, you were talking about the golden era 133 00:06:48,920 --> 00:06:51,320 Speaker 1: for private credit and for credit in general. I wonder 134 00:06:51,400 --> 00:06:54,239 Speaker 1: if there's been a shift, given some of the difference 135 00:06:54,360 --> 00:06:57,359 Speaker 1: in fiscal spending and the shift away from monetary policy, 136 00:06:57,560 --> 00:07:00,440 Speaker 1: where that era is over and now it's shifting things 137 00:07:00,640 --> 00:07:04,560 Speaker 1: like insurance is shifting to infrastructure, and frankly, it's harder 138 00:07:04,560 --> 00:07:06,720 Speaker 1: to raise money for private credit. There aren't as many 139 00:07:06,720 --> 00:07:09,120 Speaker 1: opportunities right now because we might be heading into a 140 00:07:09,160 --> 00:07:12,200 Speaker 1: credit cycle and it seems like the opportunities are elsewhere. 141 00:07:12,880 --> 00:07:16,440 Speaker 3: Yeah, I take a much longer view of the role 142 00:07:16,480 --> 00:07:19,880 Speaker 3: of credit, and I think, you know, if you take 143 00:07:19,880 --> 00:07:22,880 Speaker 3: a step back as usual, look at BAG earnings in 144 00:07:22,920 --> 00:07:27,040 Speaker 3: the first quarter. They were very, very strong. The evolution 145 00:07:27,080 --> 00:07:29,320 Speaker 3: of finance in the US, it's no surprise that the 146 00:07:29,360 --> 00:07:32,440 Speaker 3: economic engine of the US has been leading the world. 147 00:07:32,520 --> 00:07:35,080 Speaker 3: I think the evolution of the capital markets and the 148 00:07:35,160 --> 00:07:38,640 Speaker 3: role of private credits had a big impact on that. 149 00:07:39,120 --> 00:07:43,560 Speaker 3: And again I sort of turned my lens to the 150 00:07:43,600 --> 00:07:47,600 Speaker 3: broader investment grade portion, which we've been as active on 151 00:07:47,640 --> 00:07:51,000 Speaker 3: the issuance and the partner activities of our business and 152 00:07:51,040 --> 00:07:54,320 Speaker 3: we've been in years. The non investment grade, the sponsor 153 00:07:54,400 --> 00:07:57,720 Speaker 3: led business is going to go through some degree of turbulence. 154 00:07:58,000 --> 00:08:01,640 Speaker 3: There's lots of questions about the private equity asset class 155 00:08:01,640 --> 00:08:05,160 Speaker 3: and the monetization cycle in the IPO cycle, But don't 156 00:08:05,160 --> 00:08:09,680 Speaker 3: be confused the demands of capital by many of these companies. 157 00:08:09,720 --> 00:08:12,360 Speaker 3: What are some of the mag seven, not Apple, but 158 00:08:12,440 --> 00:08:15,880 Speaker 3: the other ones and many other companies. The demands on 159 00:08:16,560 --> 00:08:19,440 Speaker 3: credit and the demands for capital to build out the 160 00:08:19,520 --> 00:08:21,880 Speaker 3: vision of what they want to do is voracious. Look 161 00:08:21,920 --> 00:08:24,000 Speaker 3: what's happened the last couple of weeks in the IG 162 00:08:24,200 --> 00:08:27,640 Speaker 3: market with a couple of large issuers, whether it's you know, 163 00:08:27,720 --> 00:08:32,280 Speaker 3: Alphabet and others, you know, there's a veracious demand for capital. 164 00:08:32,280 --> 00:08:34,600 Speaker 3: And I think many investors around the globe are saying, 165 00:08:35,080 --> 00:08:38,000 Speaker 3: I actually have allocated quite a bit of corporate credit. 166 00:08:38,480 --> 00:08:41,760 Speaker 3: How do I allocate to asset based finance? How do 167 00:08:41,840 --> 00:08:45,960 Speaker 3: I allocate to other IG strategies? When IG indexes are 168 00:08:46,120 --> 00:08:49,160 Speaker 3: virtually at all time highs and I'm looking to make 169 00:08:49,240 --> 00:08:51,640 Speaker 3: not four hundred over, but I'm looking to make one 170 00:08:51,760 --> 00:08:55,000 Speaker 3: fifty two hundred over with the treasury in the low fours. 171 00:08:55,200 --> 00:08:57,280 Speaker 3: There's voracious demand for that around the globe. 172 00:08:57,400 --> 00:09:01,120 Speaker 2: I've heard you use this phrase the pebbles versus the bone. Yeah, 173 00:09:01,160 --> 00:09:03,160 Speaker 2: could you just communicate that to our audience what you 174 00:09:03,240 --> 00:09:05,719 Speaker 2: mean by the pamples versus the boulders and what we're 175 00:09:05,760 --> 00:09:07,840 Speaker 2: being distracted by right now? What we should focus on? 176 00:09:07,960 --> 00:09:11,160 Speaker 3: Well, I think you know in our case, we are 177 00:09:11,800 --> 00:09:14,679 Speaker 3: a company that when we announce start running last week, 178 00:09:14,679 --> 00:09:17,240 Speaker 3: we were a nine hundred and thirty billion plus our 179 00:09:17,240 --> 00:09:20,640 Speaker 3: minus and assets. We've grown tremendously over the twenty years 180 00:09:20,679 --> 00:09:23,240 Speaker 3: that I've been there, and for us to really have 181 00:09:23,320 --> 00:09:26,680 Speaker 3: an impact on our enterprise, we need to focus on 182 00:09:26,960 --> 00:09:30,520 Speaker 3: large river opportunities. And when I think about the amount 183 00:09:30,640 --> 00:09:34,040 Speaker 3: of software in the non investment great world, it's a 184 00:09:34,080 --> 00:09:37,199 Speaker 3: plus or minus three four hundred billion dollar opportunity set. 185 00:09:37,440 --> 00:09:39,800 Speaker 3: There will be some winners and losers there. We're not 186 00:09:39,840 --> 00:09:42,120 Speaker 3: spending a tremendous amount of time thinking about the winners 187 00:09:42,200 --> 00:09:44,800 Speaker 3: or losers there. I'm thinking about how do I become 188 00:09:44,840 --> 00:09:49,760 Speaker 3: a retirement solutions provider in Australia and Japan. Those are boulders. 189 00:09:50,040 --> 00:09:53,880 Speaker 3: The software. It's a good conversation. Will we be talking 190 00:09:53,920 --> 00:09:57,280 Speaker 3: about enterprise software and the impact on defaults in twelve 191 00:09:57,320 --> 00:10:00,200 Speaker 3: to eighteen months. I think there will be some conversation, 192 00:10:00,600 --> 00:10:02,640 Speaker 3: but I don't think it will be the central conversation 193 00:10:02,800 --> 00:10:03,320 Speaker 3: on this show. 194 00:10:03,440 --> 00:10:06,600 Speaker 2: Jim just back from Tokyo. Of course, these numbs are big. 195 00:10:06,840 --> 00:10:09,120 Speaker 2: Do you still think we sit here and we underestimate 196 00:10:09,559 --> 00:10:12,040 Speaker 2: the amount of capital investment that will be deployed into 197 00:10:12,040 --> 00:10:13,360 Speaker 2: this country over the next year. 198 00:10:14,320 --> 00:10:17,360 Speaker 3: I do. I think the administration went out and they 199 00:10:17,400 --> 00:10:21,559 Speaker 3: structure from our understanding, six of these agreements, A three 200 00:10:21,640 --> 00:10:24,560 Speaker 3: in Asia, PAC three in the Middle East. This is 201 00:10:24,600 --> 00:10:27,959 Speaker 3: the first to actually get announced. And when I've been 202 00:10:27,960 --> 00:10:31,000 Speaker 3: here before and we've talked, you know, the center of 203 00:10:31,040 --> 00:10:34,199 Speaker 3: the fairway in the US economy and the global economy 204 00:10:34,240 --> 00:10:36,760 Speaker 3: is quite strong. Right now. You have an administration that 205 00:10:36,880 --> 00:10:39,600 Speaker 3: is very pro business and very much into trade agreements 206 00:10:39,600 --> 00:10:42,400 Speaker 3: and bringing FDI into the US. You've got a major 207 00:10:42,520 --> 00:10:46,320 Speaker 3: m and a boom, You've got a major CAPEX boom. 208 00:10:46,520 --> 00:10:49,240 Speaker 3: You know, certainly the center of the fairmily is pretty strong. 209 00:10:49,559 --> 00:10:51,640 Speaker 3: So I do think you're going to see more of these. 210 00:10:51,760 --> 00:10:54,920 Speaker 3: I do think the worry is on the in the rough. 211 00:10:54,960 --> 00:10:57,600 Speaker 3: If you would so as I've spoken about in terms 212 00:10:57,760 --> 00:11:00,240 Speaker 3: of not only the concerns inflation feels like it's a 213 00:11:00,240 --> 00:11:03,840 Speaker 3: bit matted down. Geopolitics is a bit matted down right now. 214 00:11:04,200 --> 00:11:06,520 Speaker 3: I think the worry that we see is a bit 215 00:11:06,559 --> 00:11:10,000 Speaker 3: of consumer sentiment. Some of the consumer sentiment numbers are very, 216 00:11:10,120 --> 00:11:14,800 Speaker 3: very challenging. They're not in the data yet. We'll keep 217 00:11:14,840 --> 00:11:18,240 Speaker 3: an eye on how those progress. But certainly this administration 218 00:11:18,400 --> 00:11:22,000 Speaker 3: is doing a strong job by this agreement, plus the 219 00:11:22,040 --> 00:11:23,480 Speaker 3: four or five that are behind. 220 00:11:23,160 --> 00:11:27,000 Speaker 2: It, the investments helping GDP, is it helping Jobstriss. 221 00:11:27,480 --> 00:11:29,320 Speaker 3: I think that's a big open question right now. And 222 00:11:29,360 --> 00:11:33,520 Speaker 3: I think that when we have these conversations about the 223 00:11:33,559 --> 00:11:38,160 Speaker 3: impact of AI in terms of chips and capex and 224 00:11:38,440 --> 00:11:42,240 Speaker 3: energy and power, I think we're talking you know, we've talked. 225 00:11:42,440 --> 00:11:45,079 Speaker 3: Torson's talked a lot about this concept of a K economy, 226 00:11:45,480 --> 00:11:46,880 Speaker 3: and I think you're going to have more and more 227 00:11:46,880 --> 00:11:49,520 Speaker 3: companies fit into that. The top of the K is 228 00:11:49,600 --> 00:11:53,240 Speaker 3: companies that are winners, are that are having access to capital, 229 00:11:53,280 --> 00:11:55,800 Speaker 3: that are getting data, that are getting energy and power 230 00:11:56,040 --> 00:11:58,319 Speaker 3: to be able to really benefit. And the bottom of 231 00:11:58,360 --> 00:12:00,480 Speaker 3: the K is companies that are really under a tremendous 232 00:12:00,520 --> 00:12:02,960 Speaker 3: amount of margin pressure. And I don't think if you 233 00:12:03,000 --> 00:12:05,880 Speaker 3: ask me, well, what's not in the marketplace long term, 234 00:12:06,200 --> 00:12:09,000 Speaker 3: I don't think the second and third derivative of the 235 00:12:09,200 --> 00:12:13,600 Speaker 3: long term impact of productivity and actual employment and then 236 00:12:13,720 --> 00:12:17,280 Speaker 3: consumer spending. I don't think that's really in the marketplace. 237 00:12:17,320 --> 00:12:20,199 Speaker 3: And I suspect if I was to get invited back 238 00:12:20,280 --> 00:12:23,959 Speaker 3: later this year to have that conversation about the emergence 239 00:12:24,000 --> 00:12:27,160 Speaker 3: of the K economy K companies and what's the second 240 00:12:27,160 --> 00:12:31,040 Speaker 3: and third derivative to consumer confidence, consumer spending, and the 241 00:12:31,120 --> 00:12:32,400 Speaker 3: overall economic growth. 242 00:12:32,559 --> 00:12:34,720 Speaker 1: Jim, you know you have an open invitation anytime you 243 00:12:34,760 --> 00:12:36,560 Speaker 1: want to come. You can be here, and you will 244 00:12:36,559 --> 00:12:38,920 Speaker 1: be here. I just want to build on this idea 245 00:12:38,960 --> 00:12:41,679 Speaker 1: because there's a fierce debate right now about whether AI 246 00:12:41,920 --> 00:12:45,400 Speaker 1: really will disrupt corporate America, whether it really will eradicate 247 00:12:45,440 --> 00:12:47,800 Speaker 1: the need for a lot of white collar workers. What 248 00:12:47,880 --> 00:12:50,880 Speaker 1: are you seeing in portfolio companies, What are you hearing 249 00:12:50,960 --> 00:12:54,120 Speaker 1: from some of your colleagues in the industry about how 250 00:12:54,200 --> 00:12:57,760 Speaker 1: much people are restraining from hiring, people are potentially ratcheting 251 00:12:57,840 --> 00:13:00,560 Speaker 1: back they're hiring plans going forward as a result of 252 00:13:00,600 --> 00:13:02,000 Speaker 1: some of these technological shifts. 253 00:13:02,679 --> 00:13:06,000 Speaker 3: I think there's the immediate euphoria when one goes home 254 00:13:06,040 --> 00:13:08,880 Speaker 3: and tries out these applications and figures out what it 255 00:13:08,920 --> 00:13:11,280 Speaker 3: can do. They come in and say, you know, why 256 00:13:11,320 --> 00:13:13,360 Speaker 3: are we doing X? Y? Are we doing Y? But 257 00:13:13,600 --> 00:13:18,920 Speaker 3: I don't think you've seen broad, broad based evolutionary strategy 258 00:13:18,960 --> 00:13:22,480 Speaker 3: and hiring across our portfolio companies. There's certainly a degree 259 00:13:22,480 --> 00:13:26,600 Speaker 3: of discipline that's being brought to the forefront, but I 260 00:13:26,640 --> 00:13:30,040 Speaker 3: don't think there's a massive strategic change at this point 261 00:13:30,040 --> 00:13:32,160 Speaker 3: that I've seen. I still think it's quite a bit early. 262 00:13:32,840 --> 00:13:36,520 Speaker 3: I think people are trying to anticipate productivity gains and 263 00:13:36,559 --> 00:13:39,080 Speaker 3: what makes sense in terms of our business model. But 264 00:13:39,400 --> 00:13:43,880 Speaker 3: I've not seen wholesale approach changes of hiring in the 265 00:13:43,920 --> 00:13:47,640 Speaker 3: companies that we've overseen today. Now there's obviously exceptions to that. 266 00:13:47,760 --> 00:13:50,920 Speaker 3: There's some on the on areas that are much more 267 00:13:50,960 --> 00:13:55,080 Speaker 3: impacted that will take a greater degree of change, but 268 00:13:55,320 --> 00:13:57,560 Speaker 3: I think that's a story that will continue to evolve. 269 00:13:57,640 --> 00:13:59,679 Speaker 2: The highering issue is a massive problem potentially for the 270 00:13:59,679 --> 00:14:01,920 Speaker 2: policy estions. How they respond to that think is really 271 00:14:01,960 --> 00:14:04,800 Speaker 2: difficult to price. It's so far out there. It's just 272 00:14:04,880 --> 00:14:07,959 Speaker 2: not on the market's radar right now, we're asking the question, 273 00:14:08,480 --> 00:14:10,080 Speaker 2: but I don't know if the President can get through 274 00:14:10,160 --> 00:14:12,720 Speaker 2: the idea of saying capping interest rates on credit cards 275 00:14:12,800 --> 00:14:14,839 Speaker 2: is a risk. Can they get it through Congress. I've 276 00:14:14,840 --> 00:14:16,640 Speaker 2: got no idea who's going to be in the White 277 00:14:16,640 --> 00:14:18,320 Speaker 2: House two years from now. What kind of policies are 278 00:14:18,320 --> 00:14:20,560 Speaker 2: they being elected on. I don't know, but that's a 279 00:14:20,680 --> 00:14:22,840 Speaker 2: risk and it's something we're going to have to confront 280 00:14:22,840 --> 00:14:23,560 Speaker 2: in the years to come. 281 00:14:23,680 --> 00:14:26,000 Speaker 1: And right now it seems like there's a constraint where 282 00:14:26,040 --> 00:14:28,320 Speaker 1: Washington doesn't want to fall behind China, so they don't 283 00:14:28,320 --> 00:14:30,880 Speaker 1: want to regulate a lot of the technology. And when 284 00:14:30,880 --> 00:14:32,600 Speaker 1: you get a response, it's going to be when they're 285 00:14:32,600 --> 00:14:35,480 Speaker 1: people angry, not necessarily trying to be proactive and try 286 00:14:35,480 --> 00:14:38,520 Speaker 1: to do training programs and incentivize companies to hire people 287 00:14:38,800 --> 00:14:41,240 Speaker 1: to potentially train in positions that will be relevant. 288 00:14:41,360 --> 00:14:43,600 Speaker 2: Gim thirty seconds, got enough time for a final word? 289 00:14:43,720 --> 00:14:45,920 Speaker 3: You know this? I think this last conversation is when 290 00:14:46,120 --> 00:14:48,640 Speaker 3: we're going to be continuing to have I think this 291 00:14:48,800 --> 00:14:52,000 Speaker 3: big the market the last ten to fifteen years monetary 292 00:14:52,120 --> 00:14:55,400 Speaker 3: liquidity driven, and this is a much broader evolution of 293 00:14:55,440 --> 00:15:00,040 Speaker 3: a capital allocation, long term retirement and fiscal challenges. I 294 00:15:00,040 --> 00:15:02,840 Speaker 3: think that's the conversation that I suspect it may not 295 00:15:02,920 --> 00:15:06,120 Speaker 3: be day to day with driving individual stock performance, but 296 00:15:06,200 --> 00:15:08,920 Speaker 3: I think it will drive economic performance over a cycle, 297 00:15:08,920 --> 00:15:11,880 Speaker 3: and I know that's where we have positioned. I talk 298 00:15:11,920 --> 00:15:15,320 Speaker 3: about the boulders. The boulders are still big retirement problems 299 00:15:15,320 --> 00:15:16,080 Speaker 3: around the globe.