WEBVTT - Day One, Part Two at the Milken Global Conference 0:00:01.360 --> 0:00:05.720 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. 0:00:19.440 --> 0:00:22.119 I'm Carol Master at the Lookin Institute Global Conference in 0:00:22.160 --> 0:00:24.600 Beverly Hills, and we do have an all star lineup 0:00:24.640 --> 0:00:26.600 this hour, and our next guest has a front row 0:00:26.640 --> 0:00:29.360 seat on today's financial markets and so much more. Jim 0:00:29.400 --> 0:00:31.560 Crowley is CEO of B and Y Mellon Pershing, and 0:00:31.600 --> 0:00:33.520 he joins me here on site. 0:00:33.560 --> 0:00:35.559 How are you well, It's great to see you. 0:00:35.640 --> 0:00:38.559 It's great to see you having me well, thank you 0:00:38.600 --> 0:00:40.239 for being here. I feel like you guys see so 0:00:40.320 --> 0:00:42.440 much the environment. How does it feel right now? 0:00:43.000 --> 0:00:47.240 I would say cautiously optimistic. Obviously there's quite a bit 0:00:47.240 --> 0:00:49.960 of news going on, particularly today. 0:00:50.920 --> 0:00:53.400 What did you make of the banking news because it 0:00:53.440 --> 0:00:56.120 does feel like things come down and then we still 0:00:56.160 --> 0:00:56.800 got to deal with some SI. 0:00:57.200 --> 0:01:00.760 I think the news today was really important for the marketplace. 0:01:00.880 --> 0:01:04.920 I think it was, as most people have said, stabilizing, 0:01:05.840 --> 0:01:10.400 and what investors don't like is uncertainty. Markets don't like uncertainty. 0:01:10.520 --> 0:01:14.080 So the story today with JP, I think really was 0:01:14.120 --> 0:01:17.080 stabilizing for the marketplace, and I think that's what you know, 0:01:17.080 --> 0:01:18.480 we're sort of seeing in the market today. 0:01:18.480 --> 0:01:20.280 So it does feel like it's like put that behind. 0:01:20.440 --> 0:01:23.000 Do you think that's it, though, Jim or it's hard. 0:01:22.800 --> 0:01:26.480 To say, well, hard to say, right, of course, whenever 0:01:26.520 --> 0:01:29.119 you sort of think that it's it, there's always another 0:01:29.120 --> 0:01:32.120 shoot a drop. So I think that I think it's 0:01:32.200 --> 0:01:37.240 wise of us all to take a breath, be grateful 0:01:37.240 --> 0:01:40.280 for the stabilization that we have today and stay tuned. 0:01:40.360 --> 0:01:44.920 I think that, you know, whether it's interest rates or 0:01:45.160 --> 0:01:48.880 commercial real estate or whatever, the next thing might be right, 0:01:49.960 --> 0:01:52.440 there could be another surprise, but I think that we 0:01:52.480 --> 0:01:54.360 should just all stay well prepared. 0:01:54.640 --> 0:01:56.920 You know, it's interesting because I did a panel this 0:01:57.000 --> 0:02:00.680 morning about commercial real estate, and yeah, there's a concerns, 0:02:00.760 --> 0:02:03.360 whether it's the middle market or you know, they're going 0:02:03.440 --> 0:02:05.880 to be some more problems. But I didn't feel like 0:02:06.000 --> 0:02:09.240 it was Okay, this is going to be, you know, 0:02:09.400 --> 0:02:13.560 a gigantic shoot a drop. Again, I am curious, do 0:02:13.600 --> 0:02:16.079 you feel like it's too early to really figure out 0:02:16.120 --> 0:02:19.800 what will be the longer term repercussions of exchange in 0:02:20.480 --> 0:02:22.800 rates and the impact of it. 0:02:23.080 --> 0:02:25.880 Well, I'm a bit of a Jeremy Seguel kind of guy. 0:02:25.960 --> 0:02:30.320 Right stocks for the long ride, and if we stay calm, 0:02:30.400 --> 0:02:33.480 stay invested, it usually works out. Well, We've seen it 0:02:33.520 --> 0:02:37.000 over and over history does repeat itself that if we 0:02:37.120 --> 0:02:39.760 just stay invested in, stay calm, will be Okay. 0:02:40.200 --> 0:02:42.760 What are you hearing from your investment community? 0:02:43.560 --> 0:02:49.720 Oh, great question. So clients, clients really interested in how 0:02:49.720 --> 0:02:53.160 they can scale their businesses, how they can grow their businesses, 0:02:54.040 --> 0:02:56.840 how we can help them simplify what is a really 0:02:56.880 --> 0:02:58.359 complex operating environment. 0:02:58.760 --> 0:03:01.840 So so kind of business as usual moving ahead are No. 0:03:03.040 --> 0:03:06.600 I'd say it is be a you from most of 0:03:06.639 --> 0:03:10.880 our clients. But I think that there's more focus, more 0:03:11.120 --> 0:03:15.200 intentionally on growth than there ever has been in the past. 0:03:15.240 --> 0:03:18.840 And we're seeing it every week where there's another transaction 0:03:19.080 --> 0:03:22.720 that is announced where people are either doing a transaction 0:03:22.960 --> 0:03:27.880 just to acquire more scale, to acquire geography, to acquire talent, 0:03:28.200 --> 0:03:31.040 to acquire a technology, right something. 0:03:32.040 --> 0:03:34.320 It's a positive, it's a positive thing. 0:03:34.600 --> 0:03:37.920 More and more investment seems to be coming into the marketplace, 0:03:37.960 --> 0:03:41.080 particularly the wealth marketplace, and so we see it as 0:03:41.080 --> 0:03:45.200 a very positive thing. We're very bullish on the wealth marketplace. 0:03:45.240 --> 0:03:48.119 And in fact, you know you've were at Insight last 0:03:48.200 --> 0:03:50.720 year when we did the big sort of announcement with 0:03:50.840 --> 0:03:55.640 Pershing X and launching this new advisory technology platform, and 0:03:55.960 --> 0:03:58.480 hopefully we'll see you there again wanting to be there 0:03:58.480 --> 0:04:00.320 in a few weeks and you're going to hear more 0:04:00.360 --> 0:04:01.440 about what we're doing there. 0:04:01.520 --> 0:04:03.080 Well, what's the impact of all of that? 0:04:04.800 --> 0:04:07.440 It is It gets back to what I said just 0:04:07.480 --> 0:04:10.440 a moment ago, is how can we help our clients 0:04:10.960 --> 0:04:14.520 maneuver through this very challenging environment so they can scale 0:04:14.520 --> 0:04:18.960 and grow their business. So if it's technology as an example, 0:04:19.839 --> 0:04:22.880 for an advisor to put together all the different pieces 0:04:22.880 --> 0:04:25.120 of technology that they need to run their business and 0:04:25.120 --> 0:04:27.480 put it all together and have the data move across 0:04:27.520 --> 0:04:31.480 those different technology pieces without being stuck in the sort 0:04:31.520 --> 0:04:36.640 of swivel chair environment, that's something that a business like 0:04:36.680 --> 0:04:39.400 being on maleimpursion. With the scale and the investments that 0:04:39.440 --> 0:04:41.480 we're making, we can solve for I. 0:04:41.480 --> 0:04:45.640 Am curious how AI artificial intelligence has started to creep 0:04:45.640 --> 0:04:50.800 into your world and the advisors that work with you guys, 0:04:50.880 --> 0:04:54.680 because it's it's certainly everywhere I feel like in our 0:04:54.720 --> 0:04:55.320 world right. 0:04:55.160 --> 0:04:56.839 Now, Yeah, certainly to be determined. 0:04:56.960 --> 0:04:57.120 Right. 0:04:58.720 --> 0:05:02.600 We work in an environment that is very, very highly regulated, 0:05:03.480 --> 0:05:05.800 and so I think that there's going to be a good, 0:05:05.839 --> 0:05:10.120 healthy skepticism about AI, but clearly it will play a 0:05:10.160 --> 0:05:14.719 part in you seem cautious, of course, Okay, I'm cautious 0:05:14.760 --> 0:05:17.599 about it, but certainly I'm optimistic. At the same time, 0:05:17.720 --> 0:05:21.000 I think that there will be application for AI in 0:05:21.040 --> 0:05:24.200 our business to help, you know, teams be more effective, 0:05:24.320 --> 0:05:28.840 to help investors become more knowledgeable about the business. And 0:05:28.880 --> 0:05:30.599 so I just think it's going to be the proper 0:05:30.640 --> 0:05:33.799 application of AI that will have to sort of sort 0:05:33.839 --> 0:05:36.960 that all out in the months and years ahead. 0:05:37.080 --> 0:05:39.039 Well, I do wonder too, And you talk about, you know, 0:05:39.080 --> 0:05:41.039 certainly the wealth management side of the business, but I 0:05:41.080 --> 0:05:43.599 do wonder, you know, coming off the pandemic, and we 0:05:43.680 --> 0:05:48.599 talk about a lot those that are financially underserved, and 0:05:48.640 --> 0:05:51.240 I do wonder how like technology or AI continues to 0:05:51.320 --> 0:05:52.360 kind of help in that area. 0:05:52.600 --> 0:05:57.000 Yeah. I almost fall back though, Carol too, that this 0:05:57.040 --> 0:05:59.840 is a relationship business, and people's money is very very 0:06:00.080 --> 0:06:02.760 or even still even still, and it doesn't matter if 0:06:02.800 --> 0:06:05.000 you have five thousand dollars that you're saving for your 0:06:05.000 --> 0:06:08.440 retirement and you're just out of school or you're trying 0:06:08.480 --> 0:06:12.440 to save for a retirement. It doesn't matter what end 0:06:12.480 --> 0:06:15.960 of the spectrum that you're on. I think that whether 0:06:16.040 --> 0:06:19.400 it's AI or technology, it will take you so far 0:06:19.480 --> 0:06:23.960 in the process. But there's a point in time when 0:06:23.960 --> 0:06:26.760 you really do need the human interaction to really understand 0:06:27.120 --> 0:06:30.160 what the investors are thinking and how best to. 0:06:30.120 --> 0:06:32.000 Achieve their goal that hasn't gone away. 0:06:31.880 --> 0:06:32.560 Hasn't gone away. 0:06:32.600 --> 0:06:33.840 And you hear that from your advisors. 0:06:33.880 --> 0:06:35.960 Hear it all the time, Yeah, hear it all the time. 0:06:37.520 --> 0:06:39.960 So when it comes to you know where the growth 0:06:40.040 --> 0:06:43.400 opportunities you talk about, you know, technology and helping your 0:06:44.240 --> 0:06:47.599 certainly those who are you're working with your clients that 0:06:47.640 --> 0:06:50.839 they're looking for growth. What else do you look at 0:06:50.960 --> 0:06:53.600 that you think, I don't know, six months from now, 0:06:53.640 --> 0:06:56.520 twelve months from now, will be something that continues to 0:06:56.520 --> 0:06:58.760 be a big part of your world that you look 0:06:58.800 --> 0:07:04.480 to grow into. Well, I guess I'm thinking, like you know, evolution, disruption, innovation. 0:07:04.920 --> 0:07:09.320 Yeah, so I already mentioned pershing X right, A bit 0:07:09.480 --> 0:07:13.200 innovative on the technology side. I would also say and 0:07:13.280 --> 0:07:15.120 This is going to sound like I'm speaking at both 0:07:15.160 --> 0:07:16.880 sides of my mouth here, because I love. 0:07:16.800 --> 0:07:18.679 When you say technology and yet people are important. 0:07:18.840 --> 0:07:22.520 Yes, that's exactly where I'm headed. I still think that 0:07:22.600 --> 0:07:29.840 there's still great opportunities for digital interfaces with investors, and 0:07:29.880 --> 0:07:33.160 maybe it's advisor assisted, but we're seeing a lot of 0:07:33.240 --> 0:07:38.000 activity with many of the fintech wealth tech companies who 0:07:38.080 --> 0:07:40.960 still want to be disruptive and still believe that there's 0:07:41.000 --> 0:07:43.000 a market to be served and there is a market 0:07:43.000 --> 0:07:47.040 to be served by technology and the advice that these 0:07:47.680 --> 0:07:51.960 organizations can provide. As an example, we just did an 0:07:52.880 --> 0:07:55.840 establish a relationship with a firm called art of Financial, 0:07:55.880 --> 0:08:00.880 which is a family office wealth tech organization and it's 0:08:00.920 --> 0:08:03.680 a bunch of ex Googlers who came out of the 0:08:03.720 --> 0:08:07.760 marketplace engineers who really put together what they believe is 0:08:07.760 --> 0:08:14.160 a very very credible, valuable offer to family offices and 0:08:14.280 --> 0:08:18.800 so very different than the marketplace that we would traditionally 0:08:18.840 --> 0:08:23.760 think of. Right that would be attracted to a technology. 0:08:23.200 --> 0:08:25.240 Platform, but it's another way of getting into it, right. 0:08:25.200 --> 0:08:26.520 It's another way getting into it. 0:08:26.520 --> 0:08:27.760 It's fascinating, it's. 0:08:27.640 --> 0:08:31.600 A very fascinating. So that that's one area that we're 0:08:31.640 --> 0:08:33.040 really excited about going forward. 0:08:33.840 --> 0:08:35.800 I am curious to the last year. It's so funny, 0:08:35.880 --> 0:08:38.160 like I always feel like there's a catchphrase or something. 0:08:38.240 --> 0:08:39.719 You know, a year ago, we might have talked a 0:08:39.760 --> 0:08:40.480 lot about crypto. 0:08:40.960 --> 0:08:42.200 Yeah, this year. 0:08:42.080 --> 0:08:43.200 We're talking a lot about AI. 0:08:43.600 --> 0:08:43.920 Yeah. 0:08:45.040 --> 0:08:47.559 You know you said about your clients, you know, or 0:08:47.600 --> 0:08:49.960 the folks that you're working with, you know, a lot 0:08:50.000 --> 0:08:52.160 of it's how to grow their business. Is there anything 0:08:52.160 --> 0:08:55.160 else that kind of comes up that they're like, these 0:08:55.200 --> 0:08:58.360 are things we're hearing from investors that we want to 0:08:58.360 --> 0:08:59.480 make sure that we're involved in. 0:08:59.559 --> 0:09:01.720 Well, I think that there are different asset classes that 0:09:01.800 --> 0:09:03.000 people are interested in. 0:09:03.400 --> 0:09:03.439 It. 0:09:03.679 --> 0:09:07.120 I I'm always blown away by the private market here. 0:09:06.760 --> 0:09:10.560 Exactly all the time, exactly wherever's going. So whether it's 0:09:10.600 --> 0:09:17.080 the private markets or digital assets and the digitization of 0:09:17.160 --> 0:09:21.240 those assets still still different than crypto. 0:09:22.040 --> 0:09:24.640 But that's something that if you're sort of looking out 0:09:24.679 --> 0:09:26.680 on the horizon, I think has got a lot of 0:09:27.160 --> 0:09:29.360 room to run and something that we being one all 0:09:29.400 --> 0:09:33.240 are very interested in supporting the marketplace, and you know, 0:09:33.280 --> 0:09:35.880 as the world's largest Cristodian, we're going to need to 0:09:35.920 --> 0:09:36.600 sort of play in the. 0:09:36.520 --> 0:09:39.120 Space in terms of the mood here. What are you 0:09:39.160 --> 0:09:41.760 hearing some of the conversations that you're having with folks. 0:09:41.840 --> 0:09:47.480 I've been meeting with clients all morning, very positive. As 0:09:47.559 --> 0:09:49.800 you and I were talking before I came on, great buzz, 0:09:49.920 --> 0:09:56.880 great energy here, excitement for the marketplace, and you know, 0:09:56.960 --> 0:09:59.160 I think, right, you know, the future is pretty bright 0:09:59.200 --> 0:09:59.480 for us. 0:09:59.520 --> 0:10:01.320 It's kind of funny in a week where you know, 0:10:02.040 --> 0:10:03.640 it's just been an interesting you know, you've got a 0:10:03.679 --> 0:10:06.680 FED meeting, how much of that comes up in terms 0:10:06.720 --> 0:10:09.000 of the concerns. You know that raids are going to 0:10:09.040 --> 0:10:10.880 still go higher, They're going to stay higher for longer. 0:10:10.960 --> 0:10:13.760 Yeah, So this is the way that we think about it. 0:10:14.880 --> 0:10:17.679 We've been in business for two hundred and thirty nine years, 0:10:18.120 --> 0:10:18.640 through all. 0:10:18.520 --> 0:10:21.160 Cycles, right, We've seen a lot of cycles. 0:10:21.200 --> 0:10:23.000 We've seen a lot of cycles. I've seen a lot 0:10:23.000 --> 0:10:28.520 of cycles, and so I think what the mood is 0:10:28.559 --> 0:10:32.080 going to be is, as I said earlier, if we 0:10:32.120 --> 0:10:34.680 can just sort of see through all of this, rates 0:10:34.679 --> 0:10:35.960 are going to be higher for longer. 0:10:36.160 --> 0:10:37.880 Yeah, But it's manageable. 0:10:38.000 --> 0:10:41.000 It's manageable, and if people just take the long view, 0:10:41.200 --> 0:10:41.920 they'll be Okay. 0:10:43.000 --> 0:10:44.360 I'm going to leave it on that note, because I 0:10:44.400 --> 0:10:48.080 really think, you know, what it's been somewhat comforting is 0:10:48.200 --> 0:10:50.880 to hear people because of the headlines. Can be a 0:10:50.880 --> 0:10:53.600 little bit nerve racking, but it does feel like kind 0:10:53.600 --> 0:10:57.080 of steady and kind of maintaining the course at this point. 0:10:57.240 --> 0:11:01.280 Yeah. So disruption well obviously bring opportunity for some and 0:11:01.360 --> 0:11:05.920 we've saw today, But if we stay calm and we 0:11:06.200 --> 0:11:07.520 looked at the longer term, I think. 0:11:07.400 --> 0:11:10.040 Would be great. No chat, g ept stuff happening. 0:11:12.040 --> 0:11:13.559 No no chat gee. 0:11:14.720 --> 0:11:16.839 I'm going to leave it there, looking forward to Pershing Inside. 0:11:16.880 --> 0:11:18.840 It's always fun. I have to say. I always feel 0:11:18.840 --> 0:11:20.559 like I get so much out of talking to individual 0:11:20.720 --> 0:11:23.640 financial advisors in terms of what they're doing, what's top 0:11:23.679 --> 0:11:26.480 of mine, And sometimes we get so caught up in 0:11:26.600 --> 0:11:29.360 the big headlines, but they are It's about investors trying 0:11:29.360 --> 0:11:31.800 to figure out how to retire, how to pay for things. 0:11:32.000 --> 0:11:35.520 It's really down to earth type of advice. So I'm 0:11:35.559 --> 0:11:36.199 looking forward to it. 0:11:36.600 --> 0:11:37.960 Well, look forward to having you. 0:11:38.080 --> 0:11:39.880 Jim. Thank you so much. Jim Crowley, CEO of B 0:11:39.920 --> 0:11:41.520 and Y Melon, Pershing, thank you so much. 0:11:42.640 --> 0:11:46.200 You're listening to the Bloomberg Business Week podcast. Catch us 0:11:46.240 --> 0:11:49.600 Live Weekday afternoons from three to six Eastern Listen on 0:11:49.640 --> 0:11:53.679 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, 0:11:53.960 --> 0:11:57.480 or watch us live on YouTube Highlight for us right now. 0:11:57.520 --> 0:11:59.559 Some are well known to the Bloomberg audience. We're talking 0:11:59.559 --> 0:12:04.040 about David President, CEO of the Massive Global Asset Manager PGM. 0:12:04.120 --> 0:12:07.240 They've got one point two trillion of assets under management. 0:12:07.240 --> 0:12:09.079 One hundred and sixty two of the largest three hundred 0:12:09.080 --> 0:12:12.680 global pens and funds are clients. You see a lot. 0:12:12.920 --> 0:12:14.760 Hello, we do kind of is so nice to be 0:12:14.840 --> 0:12:16.160 with you. Thank you for having me, David. 0:12:16.160 --> 0:12:18.360 It's nice to have you here. So when you talk 0:12:18.400 --> 0:12:22.079 with your clients, you hear their concerns. What is top 0:12:22.120 --> 0:12:22.640 of mind for that? 0:12:23.280 --> 0:12:26.280 I would say that, you know, although the media likes 0:12:26.320 --> 0:12:28.120 to cover are we going to have a recession of 0:12:28.160 --> 0:12:32.400 soft landing or hard landing? In general, our institutional clients 0:12:32.440 --> 0:12:34.960 believe that the market is pretty good at pricing in 0:12:35.000 --> 0:12:38.000 those risks, and as more information comes, the kind of 0:12:38.000 --> 0:12:41.400 giant avacus will actually reprice the markets a bit. What 0:12:41.480 --> 0:12:43.920 they worry about is the things that the market doesn't 0:12:43.960 --> 0:12:48.199 price very well, and those are things which have lower probability. 0:12:48.480 --> 0:12:52.240 But if they happen, actually are quite damaging, and they 0:12:52.280 --> 0:12:55.200 also in general are things where kind of you know, 0:12:55.200 --> 0:12:58.040 the market relies on the rational man school of thought 0:12:58.080 --> 0:13:00.000 that people will at the end of the day be reasonable. 0:13:00.600 --> 0:13:03.679 But what it happen And the two biggest ones that 0:13:03.720 --> 0:13:06.920 our clients are worried about right now is one, what 0:13:07.040 --> 0:13:11.160 will happen if Putin increasingly feels like he's backed into 0:13:11.160 --> 0:13:13.840 a corner? And what if he does decide that he 0:13:13.960 --> 0:13:17.080 is really going to escalate things? And are we going 0:13:17.160 --> 0:13:19.000 to have the backing in that case of a lot 0:13:19.000 --> 0:13:23.120 of the non aligned countries who have been waffling more 0:13:23.160 --> 0:13:25.200 recently on a lot of these topics. 0:13:25.040 --> 0:13:27.240 That's that's one to put that out there, but anyway, 0:13:27.280 --> 0:13:27.600 go ahead. 0:13:27.840 --> 0:13:31.040 And the second one comes more from our delightful hometown 0:13:31.040 --> 0:13:34.000 of Washington, d C. Where the market at the moment 0:13:34.120 --> 0:13:37.000 would say, you know, any rational person will assume that 0:13:37.040 --> 0:13:39.280 these nice people will actually reach an agreement on this, 0:13:39.320 --> 0:13:42.320 and it may take till eleven fifty nine, right before 0:13:42.360 --> 0:13:45.160 the deadline, but ultimately they'll come to another group. And 0:13:45.240 --> 0:13:46.760 that is in fact what's happened. 0:13:46.520 --> 0:13:47.240 In the past. 0:13:47.679 --> 0:13:50.280 But what if that doesn't happen? What if the political 0:13:50.320 --> 0:13:55.079 calculations now in Washington have changed, and don't we need 0:13:55.120 --> 0:13:57.720 to be thinking about what is the implication of that, 0:13:57.880 --> 0:14:01.760 what's the volatility that will lead in that on behalf 0:14:01.800 --> 0:14:03.600 of our clients. And so I would say those are 0:14:03.640 --> 0:14:07.480 the kinds of kind of scenario based work that we're 0:14:07.520 --> 0:14:12.880 doing with clients, almost beyond the classic market cycles which 0:14:13.080 --> 0:14:14.760 the market prices in pretty well. 0:14:14.880 --> 0:14:17.720 So David, take us there factor those in. Let's start 0:14:17.720 --> 0:14:21.080 with who factor that in? What would be the implications 0:14:21.120 --> 0:14:23.640 potentially for global financial markets? 0:14:24.040 --> 0:14:25.920 Well, I think that you have to start with the 0:14:26.080 --> 0:14:29.360 obvious things there, which is that you know, we'd have 0:14:29.520 --> 0:14:33.440 energy prices that would probably really begin to rise up. 0:14:34.600 --> 0:14:38.720 You know, you would absolutely have a much bigger shift 0:14:38.720 --> 0:14:42.400 than we've had now on you know, who is actually 0:14:42.440 --> 0:14:46.800 going to align with NATO and who won't. So you know, 0:14:47.000 --> 0:14:49.480 for the most part, NATO has been I think, done 0:14:49.480 --> 0:14:51.720 a good job of staying very aligned. But they haven't 0:14:51.760 --> 0:14:54.280 brought in a lot of the global South. They haven't 0:14:54.280 --> 0:14:56.840 parted along India. There's a whole variety of people that 0:14:57.200 --> 0:14:59.800 you know, China has played this very you know, clever 0:15:00.080 --> 0:15:03.520 in some ways, and you know, to what extent if 0:15:03.560 --> 0:15:06.960 putin really escalates, things will that no longer become acceptable, 0:15:07.240 --> 0:15:09.960 and we will actually have more of a bipolar world 0:15:10.040 --> 0:15:12.640 than we do today, and that would fragment trade, it 0:15:12.640 --> 0:15:16.000 would fragment technology. So all of those implications are the 0:15:16.120 --> 0:15:18.080 kinds of things that we're beginning to kind of game 0:15:18.120 --> 0:15:19.400 theory our way through today. 0:15:19.560 --> 0:15:22.040 Interesting, So go all right, So game theory is through 0:15:22.840 --> 0:15:26.680 the debt in the worst case scenario. 0:15:26.840 --> 0:15:29.920 So that's particularly fascinating one because as long as the 0:15:30.080 --> 0:15:34.200 as the market basically thinks that the politicians will solve this, 0:15:34.320 --> 0:15:37.240 the politicians don't actually have any real incentive to solve it, 0:15:37.280 --> 0:15:39.960 so there's no pressure on that. The only way pressure 0:15:40.000 --> 0:15:42.880 begins to build on them is to the extent that 0:15:42.920 --> 0:15:45.160 we start to see some volatility and we start to 0:15:45.200 --> 0:15:48.760 see the market saying, wow, now maybe this doesn't get solved. 0:15:49.440 --> 0:15:51.800 And so I do think you will see and you 0:15:51.840 --> 0:15:57.720 saw Yellen's comments today about a June you know, kind. 0:15:57.560 --> 0:15:59.240 Of getting out of cash. 0:15:59.360 --> 0:16:02.280 So we are going to see in May the beginnings 0:16:02.320 --> 0:16:04.680 of that discussion involved. So let you'll see it covered 0:16:04.720 --> 0:16:07.760 a lot more fundamentally, and you're going to have to 0:16:07.800 --> 0:16:10.240 see some of the game theory elements of well if 0:16:10.520 --> 0:16:13.960 we don't reach an agreement, what are the range of 0:16:14.040 --> 0:16:16.520 things that the government will have to start scaling back 0:16:16.560 --> 0:16:18.360 line and what will their priorities. 0:16:17.880 --> 0:16:20.640 In orders be. So, if you're doing game or game 0:16:20.640 --> 0:16:24.000 theory right now, when do you know just to pull 0:16:24.040 --> 0:16:26.640 the trigger and putting those theories into. 0:16:27.000 --> 0:16:29.200 You don't And I think that's one of the really 0:16:29.480 --> 0:16:31.920 you start to do it now, Well, you don't know 0:16:31.960 --> 0:16:33.720 which of them is going to happen, which is why 0:16:33.800 --> 0:16:36.720 you need to build in some real flexibility into your 0:16:36.760 --> 0:16:40.160 strategies and in and into and into your portfolios, because 0:16:40.160 --> 0:16:42.920 I don't think anybody here can predict how this is 0:16:42.920 --> 0:16:43.480 going to come out. 0:16:44.320 --> 0:16:47.000 I didn't really hear you talk about the FED. So 0:16:47.080 --> 0:16:49.960 where how does that factor in or do you feel 0:16:49.960 --> 0:16:51.840 like that's all factored into the markets already? 0:16:52.320 --> 0:16:56.240 Well, our internal view is that the market is not 0:16:56.360 --> 0:17:00.440 pricing the Fed incorrectly. Our view is that marks are 0:17:00.480 --> 0:17:04.639 too optimistic at the moment that the US economy is 0:17:04.760 --> 0:17:08.520 stronger than the markets realize. That's going to cause the 0:17:08.560 --> 0:17:12.680 FED to need to keep rates higher for longer than 0:17:12.680 --> 0:17:15.639 the markets realized. I mean, remember the markets think, you know, 0:17:15.640 --> 0:17:18.720 we're going to have actually carey thoughts this year. You 0:17:18.800 --> 0:17:22.560 think that's quite unlinkely. So our view would be that 0:17:22.960 --> 0:17:25.879 markets are too optimistic for that. But as I said before, 0:17:25.920 --> 0:17:28.399 those are things that the market will read price as 0:17:28.440 --> 0:17:31.359 it gets better and more information, as opposed to some 0:17:31.400 --> 0:17:33.920 of these other risks which actually the market really struggles 0:17:34.200 --> 0:17:35.239 with pricing well at all. 0:17:35.400 --> 0:17:37.359 David, you've seen a lot of market cycles. I'm not 0:17:37.400 --> 0:17:40.560 aging you. You've just seen I've seen a lot of 0:17:40.560 --> 0:17:43.199 market cycles too, But I do wonder, you know, the 0:17:43.280 --> 0:17:46.400 last year, who would have predicted, right, the war in Ukraine, 0:17:46.640 --> 0:17:49.560 the crypto collapse, what we're you know, bank runs? Who 0:17:49.600 --> 0:17:51.840 would have thunk? If you will? And you just laid 0:17:51.840 --> 0:17:55.760 out two significant things that could certainly change things dramatically. 0:17:56.800 --> 0:17:59.760 Is there something I don't know? You know, it does 0:17:59.840 --> 0:18:04.840 make you're doing game theory, but it's challenging for investors. 0:18:05.119 --> 0:18:08.280 So how do they protect themselves or what do you Yeah. 0:18:08.119 --> 0:18:11.600 No, it's very challenging and obviously the great protection in 0:18:11.680 --> 0:18:12.600 a world where. 0:18:13.000 --> 0:18:14.800 We where do you find that protection? When we even 0:18:14.800 --> 0:18:16.160 started to question treasuries? 0:18:16.640 --> 0:18:19.800 So the place that you find it is in diversification. 0:18:20.680 --> 0:18:24.920 And so you know, we've really been great believers that 0:18:25.320 --> 0:18:28.520 the most diversified institutional portfolios are the ones that are 0:18:28.600 --> 0:18:32.600 best positioned for resiliency in these kinds of things. So's diverse. 0:18:32.880 --> 0:18:34.040 What does diversification mean? 0:18:34.280 --> 0:18:38.120 So, if you went back twenty five years, most institutional 0:18:38.119 --> 0:18:42.120 investors would be in public stocks and bonds, and then 0:18:42.119 --> 0:18:45.400 along came this rather strange thing called private equity, which 0:18:45.840 --> 0:18:47.680 people were a little worried about in the beginning, and 0:18:47.720 --> 0:18:50.960 then ultimately sort of became an asset class. And now 0:18:51.080 --> 0:18:55.280 we're actually seeing private alternatives more broadly really coming into 0:18:55.280 --> 0:18:58.600 their own. So private alternatives, which are in addition to 0:18:58.600 --> 0:19:01.639 private equity but includes the state and private credit, I 0:19:01.640 --> 0:19:06.280 think importantly have been for US and for many others, 0:19:06.680 --> 0:19:09.080 you know, really our fastest growing businesses. So we manage 0:19:09.119 --> 0:19:13.520 about three hundred billion in private alternatives. And our view 0:19:13.600 --> 0:19:18.240 is as the banking system continues to be very capital constrained, 0:19:18.240 --> 0:19:20.240 and I think they're going to get some new regulations 0:19:20.280 --> 0:19:22.680 on top of what they've already got that's even going 0:19:22.720 --> 0:19:26.400 to constrain their credit to supply more. That is going 0:19:26.440 --> 0:19:28.600 to mean more and more companies are going to look 0:19:28.680 --> 0:19:32.040 to non bank lenders such as US to meet their needs. 0:19:32.080 --> 0:19:34.200 And so that is going to be a business which 0:19:34.240 --> 0:19:38.680 will also help diversify institutional portfolios away from the treasury 0:19:38.680 --> 0:19:41.000 problems and other things that we started our conversational. 0:19:41.119 --> 0:19:45.240 Well, it's interesting, you know, in terms of your institutional 0:19:45.480 --> 0:19:47.760 and global pension funds that you guys are that are 0:19:47.800 --> 0:19:51.400 investing with you, what kind of managing are you having 0:19:51.400 --> 0:19:54.399 to do of performance or not because you're not feeling 0:19:54.440 --> 0:19:58.639 any kind of performance hits in this environment by firms 0:19:58.640 --> 0:20:02.280 you mean defaults or not even defaults, but just expectations 0:20:02.280 --> 0:20:03.320 in terms of returns. 0:20:04.359 --> 0:20:08.000 So return expectations you know, I would say for private 0:20:08.000 --> 0:20:11.439 equity have come down a little bit. Yeah, in private 0:20:11.480 --> 0:20:14.439 credit actually because much of that, particularly direct lending, is 0:20:14.520 --> 0:20:17.800 floating rate, the returns are actually going up and have 0:20:17.880 --> 0:20:20.320 been actually quite robust, and I think that's one of 0:20:20.359 --> 0:20:23.520 the reasons that many institutional investors have been looking to 0:20:23.560 --> 0:20:27.040 add that to their portfolio because that's actually returning better 0:20:27.119 --> 0:20:30.760 than it did and they're in some ways using that 0:20:31.200 --> 0:20:33.720