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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: Ale Steeler alongside Paul Sweeney. This is Bloomberg in Best

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Speaker 2: twenty twenty five. We are down here at the New

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Speaker 2: York Financial District. This is where all the big names

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Speaker 2: in finance, banking, asset managers, private credit, private equity all

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Speaker 2: come together and talk about the way forward. And part

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Speaker 2: of that way forward is the policy that's going to

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Speaker 2: come out of Washington, d C and any more insight.

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Speaker 2: We'll get on that on tonight's State of the Union

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Speaker 2: with President Trump. So we want to go to DC

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Speaker 2: with Nathan Dean. He's Bloomberg Intelligence senior policy analyst. Nathan.

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Speaker 2: There's so much to unpack here, but markets are down,

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Speaker 2: trade wars on does President Trump we'll get a stock

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Speaker 2: market today?

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Speaker 3: No, I don't think so.

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Speaker 4: I mean I think President Trump this is a long

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Speaker 4: term message from the White House in terms of these tariffs.

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Speaker 4: You know, look, you know President Trump has been saying

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Speaker 4: for months the tariffs are his favorite word or maybe

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Speaker 4: his fourth favorite word, depending on when he talks about it.

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Speaker 4: But you know, and I think this was anticipated. I

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Speaker 4: mean everybody was thinking, you know, is he going to

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Speaker 4: do this? Is he not going to do this? But

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Speaker 4: tariff's were going to come. It was just a matter

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Speaker 4: of the size and the scope. Now, look, President Trump negotiates,

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Speaker 4: That's what he does. There's always going to be a negotiation.

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Speaker 4: But the response that we have seen from Ottawa and

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Speaker 4: Mexico City today suggests that those negotiations are going to

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Speaker 4: be taking place right away.

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Speaker 3: This is going to need some time to cook.

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Speaker 4: So I think what you're going to see tonight in

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Speaker 4: this joint address to Congress is you're going to see

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Speaker 4: President Trump double down on this idea of tariffs, an

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Speaker 4: idea of bringing back manufacturing jobs to the United States.

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Speaker 4: His true social posts about farmers growing stuff in the

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Speaker 4: United States to sell in the United States. That's the

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Speaker 4: message to which you're going to hear tonight. Wall Street

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Speaker 4: probably isn't going to like that, but I don't think

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Speaker 4: you're going to see any reaction from the White House

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Speaker 4: in terms of Wall Street.

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Speaker 3: A couple of weeks at the earliest.

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Speaker 5: So, Nathan, what is the feeling in a d C

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Speaker 5: amongst you know, Congress, just the system, theocracy about where

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Speaker 5: this is all going here.

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Speaker 4: Yeah, so there's gonna be a lot of uneasy, especially

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Speaker 4: amongst the Republicans in terms of these tariffs.

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Speaker 3: You know, Senator Rampaul even just tweeted two.

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Speaker 4: Hours ago that look, tariffs are going to increase prices,

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Speaker 4: and he cited automobiles that you know, auto prices are

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Speaker 4: going to go up as a result of these tariffs.

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Speaker 4: Senator Grassley from Iowa, he's gonna have any problem this

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Speaker 4: this tonight as well, because, as President Trump says in

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Speaker 4: the speech, look what I did in terms of the tariffs,

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Speaker 4: will China put retialitary tariffs on soybeans? And there's a

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Speaker 4: lot of soybeans that go to China from the United States.

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Speaker 3: So I think what's going to happen is over the

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Speaker 3: next few days. In terms of this.

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Speaker 4: Republican response is they're going to wait and wait to

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Speaker 4: see what happens.

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Speaker 3: Now.

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Speaker 4: Target is best and Best Buy have already said the

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Speaker 4: price increases are probably going to be coming in the

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Speaker 4: next few days. Is this enough to get President Trump

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Speaker 4: to change his mind.

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Speaker 3: Probably not.

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Speaker 4: But as these farmers talk to folks like Senator Grassley,

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Speaker 4: they're going to be saying, look, soybeans are down, we don't.

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Speaker 3: Have a place to sell. So if you're not going

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Speaker 3: to give us a tariff relief.

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Speaker 4: Then you have to give us subsidies via a farm

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Speaker 4: bill package. So there's a lot of unease negotiations here

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Speaker 4: to be taking place between Congress and the White House

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Speaker 4: over this tariff policy.

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Speaker 2: Which is what we heard from Justin Trudeau of Canada

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Speaker 2: saying we're going to support businesses that are going to

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Speaker 2: be hit by these tariffs when he was speaking earlier today.

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Speaker 2: So this all comes ahead of the State of the Union. Nathan,

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Speaker 2: what's going to be say the top one or two

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Speaker 2: things that you need to hear to help I don't know,

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Speaker 2: make a policy decision, have conviction on where we're headed.

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Speaker 4: Yeah, So when it comes to tariffs in particular, I'm

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Speaker 4: not exactly sure what President like, Look, we're going to

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Speaker 4: be seeing if there's any nuggets that President Trump says

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Speaker 4: in this speech that Canada and Mexico can come back with.

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Speaker 4: Now President Trump has always said this is about fentanyl.

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Speaker 4: You know, I'm not exactly sure if I believe that

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Speaker 4: the reason being is is that, you know, the Canada

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Speaker 4: and Mexico agreement from one month ago, ten thousand troops

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Speaker 4: on the border and so forth. Prime Minister Trudeau even

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Speaker 4: just said this morning that.

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Speaker 3: They've done that.

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Speaker 4: What I need to see from President Trump is this

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Speaker 4: idea of is there any way that we could scale

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Speaker 4: down the Canada and Mexico tariffs, Because if you remember

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Speaker 4: over the weekend, Howard luck Nick was saying that potentially

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Speaker 4: there's some flexibility here, and so I'm looking to see

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Speaker 4: if there's any additional statements that he says that Mexico

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Speaker 4: and Canada can do. But I also remind folks that

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Speaker 4: on April second, we have reciprocal tariffs. So if President

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Speaker 4: Trump double downs and says, look, reciprocal tariffs are coming,

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Speaker 4: I don't think you're going to see much of the

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Speaker 4: way of this trade war ending anytime soon. The other

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Speaker 4: thing that I think investors should pay attention to tonight

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Speaker 4: is this tax reform debate, because President Trump has said

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Speaker 4: certain things like, look, I don't want I want to

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Speaker 4: make these four point five trillion dollars in tax cuts permanent.

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Speaker 3: But at the same time, I don't want to touch

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Speaker 3: medicaid spending.

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Speaker 4: So I want to see direction from President Trump towards

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Speaker 4: Congress and specifically those House Republicans, to see if he's

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Speaker 4: going to put any leverage on them to support his

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Speaker 4: goals there.

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Speaker 5: So, what is the status of the tax package and

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Speaker 5: the various economic packages, because a lot of folks Nathan

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Speaker 5: and to telling me this is when the rubber's going

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Speaker 5: to hit the road in terms of Democratics responses.

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Speaker 4: Yeah, so you know, in terms of this tax passage,

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Speaker 4: where we are is the House passed their budget resolution

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Speaker 4: last week. Now, this wasn't a bill, this wasn't legislation.

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Speaker 4: This was essentially a blueprint. And so what they said

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Speaker 4: is here, go forth, and this gave instructions to eight

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Speaker 4: House committees to go forth and look for two trillion

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Speaker 4: dollars worth of tax or two trillion dollars worth of

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Speaker 4: deficit reductions to offset the four point five trillion and

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Speaker 4: the tax cuts are going to cost. Now, there's economic growth,

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Speaker 4: there's tariff money, and all of it should come approximately close.

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Speaker 4: The challenge is is that even though the House says

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Speaker 4: that they want to get something done in April, if

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Speaker 4: not May, the challenge is how are you going to

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Speaker 4: pay for this and how are you going to get

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Speaker 4: the entire caucus on CREED Because if you cut Medicaid,

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Speaker 4: you've already lost several constituencies. If you increase the deficit,

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Speaker 4: you lost others. So, you know, Speaker Johnson has this

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Speaker 4: really tricky situation of trying to get everybody on the

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Speaker 4: same page. What we're telling our clients is, look, there's

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Speaker 4: no deadline here that's going to force the House Republicans

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Speaker 4: to come up with a solution until the end of

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Speaker 4: the year, So they have all this year to figure

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Speaker 4: it out. So we don't think this is going to

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Speaker 4: happen until the fourth quarter. We do think a package

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Speaker 4: will eventually come together. We do think will you know,

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Speaker 4: extend these Trump Are tax cuts, But we don't think

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Speaker 4: it's going to change the Inflation Reduction Act all that much.

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Speaker 4: We probably don't think it's going to change medicate all

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Speaker 4: that much, you know. But again, it's hard to come

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Speaker 4: up with specifics because they have the rest of the

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Speaker 4: year to figure it out. It's just not going to

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Speaker 4: happen in the timeframe that they're currently saying it's going to.

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Speaker 2: Right and that therein lies the issue for the market.

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Speaker 2: So the stuff that's negatively impacting the markets, like tariffs,

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Speaker 2: Trump can do on his own and have an immediate effect.

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Speaker 2: But the stuff you're talking about, like tax cuts that

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Speaker 2: can have a stimulati effect on the markets can't be

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Speaker 2: just done by President Trump, has to be done by Congress.

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Speaker 2: So the longer that gap is, you have to wonder

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Speaker 2: if it's going to be harder for the markets to digest.

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Speaker 3: Yeah, absolutely so.

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Speaker 4: If you think about twenty twenty five and think about catalysts,

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Speaker 4: key things that are happening, you know, right now we're

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Speaker 4: going through the tree. The trade war is probably the

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Speaker 4: most important thing that's to the markets at this point

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Speaker 4: because look, we're seeing it in real time. You know,

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Speaker 4: we're seeing companies saying prices are going to go up.

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Speaker 4: We're seeing the peso and the Canadian dollar go down.

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Speaker 4: But then if you get longer term, we have you know,

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Speaker 4: we have a government shutdown coming up March fourteenth, very

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Speaker 4: little impact in markets. In fact, every single time this happens,

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Speaker 4: we put out notes essentially saying there's no market impact

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Speaker 4: from a government shutdown. Next after that you have the

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Speaker 4: debt ceiling. This is probably June July you know, obviously,

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Speaker 4: if you're on the fixed income side, you care very

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Speaker 4: much about the debt ceiling. We think there's an eighty

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Speaker 4: percent chance that debt ceiling is resolved with so weekend.

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Speaker 4: Don't think it a lot of headline risk. We don't

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Speaker 4: think there's really all that much to be concerned about.

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Speaker 4: But then the next one is this tax reform debate

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Speaker 4: that takes place towards the end of this year.

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Speaker 3: So this terrify argument in terms of market angst.

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Speaker 4: This is going to continue throughout the year because ultimately

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Speaker 4: it's President Trump's decision on when in this trade war ends,

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Speaker 4: and so there's a lot of uncertain certainties that are

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Speaker 4: coming out from Washington right now.

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Speaker 6: All Rightandean, thank you so much. We appreciate that.

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Speaker 5: Nathan Dean, a Bloomberg Intelligence Senior policy analyst.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Otto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 5: We're at the Bloomberg invest Conference twenty twenty five. Are

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Speaker 5: down there Lower Manhattan World Financial Center now known as

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Speaker 5: Brookfield Place. Lots of smart people at this conference giving

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Speaker 5: us the latest thoughts on what's going on in the

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Speaker 5: world of global finance, including our next guest, Robert Rubin,

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Speaker 5: senior counselor at Center View Partners send me to the

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Speaker 5: US Secretary of the Treasury and also former a senior

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Speaker 5: partner at Goldman Sachs.

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Speaker 6: Bob, thanks so much for joining us here.

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Speaker 5: There's a million topics we could go with you, but

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Speaker 5: for better or worse, Bob, I think today is going

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Speaker 5: to be known as tariff Tuesday when the tariffs hit.

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Speaker 5: Financial markets are really waking up over the last several

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Speaker 5: days and weeks about what this could mean for our

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Speaker 5: economy in terms of growth.

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Speaker 6: In terms of inflation.

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Speaker 5: How do you think about tariffs in general and maybe

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Speaker 5: how they're being used by this administration.

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Speaker 7: Yeah, I think I think terriffs are exactly what you

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Speaker 7: just said. I think they create a very serious risk

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Speaker 7: of inflation, not only because prices of imported good will

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Speaker 7: be higher, but domestic producers will be able to raise

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Speaker 7: prices because their competitive prices will be higher. But also

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Speaker 7: I think it's a substantial threat to growth because it

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Speaker 7: can adversely affect productivity since you can no longer have

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Speaker 7: access to whatever is the most efficient producer of good

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Speaker 7: and services. And as you can see from today's papers,

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Speaker 7: there's a very serious risk of retaliation, you know. More

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Speaker 7: broadly though, and that's a serious set of risks right.

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Speaker 7: More broadly, I think there's the risk of a trade war,

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Speaker 7: and trade war could be tremendously against ours. This whole

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Speaker 7: thing is against our self interest. And there's one more

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Speaker 7: aspect to it though that unfortunately has not gotten much

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Speaker 7: front focus. But should we have treaty agreements with Maganada

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Speaker 7: and Mexico. We are now violating our commitments, our treaties,

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Speaker 7: and what is that going to do to our credibility

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Speaker 7: around the world, not only expect economic issues, but geopolitical interest.

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Speaker 7: This is massively against our self interests.

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Speaker 2: At the heart of what the trub administration is trying

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Speaker 2: to do economically is pivot from fiscally funded economy to

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Speaker 2: a privately funded economy, right at the heart. No, you

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Speaker 2: don't think that's true.

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Speaker 3: I have no idea what they're trying to do.

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Speaker 2: There is an argument to be made, sure they know

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Speaker 2: what they're trying to but there's an argument to be

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Speaker 2: made that that's what they prefer, right, less fiscal stimulus

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Speaker 2: and more private investment.

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Speaker 7: And that's why Wait now, but wait a second, you

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Speaker 7: say less fiscal stimulus. Yes, assuming that they get what

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Speaker 7: they want in the reconciliation bill, that is to say,

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Speaker 7: they get these large additional tax or the continuation of

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Speaker 7: the tax cuts which would otherwise expire this year, that

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Speaker 7: will substantially increase our deficits. The projections are that, independently

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Speaker 7: of them, deficits going to continue to go up substantially,

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Speaker 7: and with them even more so. So I would say

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Speaker 7: they're on a fiscally irresponsible and I think very dangerous paths. Well,

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Speaker 7: that's a continuation of conditions have been they're making the worse.

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Speaker 5: So you mentioned the debt annual deficits. I've been on

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Speaker 5: a wall street since nineteen eighty six. That's been a

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Speaker 5: story since nineteen eighty six. It's probably well before. That

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Speaker 5: is our scenario where we really have to pay attention to.

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Speaker 7: Yeah, I think I think we're really I think we've

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Speaker 7: been at that point for quite some time. But but

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Speaker 7: but the we are about we're in new territory now.

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Speaker 7: Roughly speaking, we're at historic highs in terms of the

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Speaker 7: debt GDP ratio. The CBO projects that they're going to

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Speaker 7: go from the current hundred percent to about one hundred

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Speaker 7: and twenty percent ten years from now. But add independent

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Speaker 7: analysts by looking at increase or likely increases in defense

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Speaker 7: and interest rates, and it's costuil, et cetera. I think

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Speaker 7: one hundred and thirty to one hundred and thirty five

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Speaker 7: percent is more likely. I think it is enormously dangerous.

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Speaker 7: And the policies of this administration, at least as currently projected,

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Speaker 7: are going to make that worse.

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Speaker 2: So how do we fix it? I mean, Ray Dalio

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Speaker 2: said yesterday the debt crisis in three years could look

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Speaker 2: like a heart attack.

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Speaker 7: Yeah, I saw, I saw raise coment, So I'm not

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Speaker 7: sure exactly where he gets that from, but anyway, but

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Speaker 7: I think but I think it's sort of conception. At

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Speaker 7: least he's right with the heart attack. I'm not sure

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Speaker 7: I would use that analogy. I think Taylor and I

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Speaker 7: think is more likely than raise will raise are very

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Speaker 7: perceptive and stute observation observer.

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Speaker 3: No.

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Speaker 7: I think more likely is you'll have a higher interest rates,

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Speaker 7: You'll have a reduced business confidence, you'll have fewer resources

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Speaker 7: for public investment and national security, and that will happen

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Speaker 7: over time. The risk is that at some point it

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Speaker 7: becomes what Ragios said, which is a fiscal crisis. The

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Speaker 7: problem is to deal with this. We can cut some expenses,

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Speaker 7: but there's not that much to be cut. As a

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Speaker 7: practical matter, it is very limited. Which you predominantly need

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Speaker 7: are more revenues, and the politics of that are terrible.

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Speaker 7: This administration says the tariffs because the more revenues. Two

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Speaker 7: problems there. One is the rift will provide revenues, but

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Speaker 7: same time they're going to adversely affect growth most likely,

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Speaker 7: and if you look at models, and I have looked

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Speaker 7: at models of this, the net effect is very small

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Speaker 7: and secondly is highly adverse with respect to growth and inflation.

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Speaker 7: And as I said a moment ago, it means a

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Speaker 7: violation or that's what we're doing, a violation of treaty obligations,

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Speaker 7: which then can affect our credibility around the world, which

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Speaker 7: can affect us both that geo politically and economically.

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Speaker 5: Another pillar of this administration is immigration, getting a maybe

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Speaker 5: a stronger handle on immigration, legal and illegal, maybe even

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Speaker 5: deporting some workers back. A lot of economists will say

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Speaker 5: that's not good for the economy either. Because these folks

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Speaker 5: are working, they're paying their Social Security taxes, they're doing

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Speaker 5: jobs that Americans don't do. It's actually additive to the

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Speaker 5: economy and keeping inflation down from wage inflation.

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Speaker 6: How does that play into it?

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Speaker 8: How do you? I think you that exactly right.

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Speaker 7: If you look at the numbers over the last few

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Speaker 7: years and you look at the growth we've had, which

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Speaker 7: has been very good growth, some fair portion of that

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Speaker 7: is because of immigration and the increase in the labor force. Furthermore,

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Speaker 7: we've been having on the legal immigration side, people of

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Speaker 7: all skill levels and a lot of very very highly

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Speaker 7: skilled people have come into particular tech, but also across

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Speaker 7: our economy. The illegal immigrants are more complicated question. But

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Speaker 7: I think what you need to do is you need

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Speaker 7: to approach that not from an ideological perspective, which I

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Speaker 7: think is what's happening, but rather from an economic perspective

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Speaker 7: and decide what, from a cost benefit perspective is in

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Speaker 7: our self interest. And the answer to that is going

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Speaker 7: to be I think at least a substantial you'll increase

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Speaker 7: maybe the wrong word, but a robust policy respect legal immigration,

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Speaker 7: and then an approach to those who are illegals who

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Speaker 7: hear that it's based on the economic effects of.

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Speaker 3: What we do.

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Speaker 2: I am judging myself for asking you this question, but

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Speaker 2: I feel like I have to because this is what

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Speaker 2: people are actually talking about in terms of trun policy,

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Speaker 2: and that's the mar A Lago accord idea that potentially

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Speaker 2: you'll see, you know, a big deal among major economies

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Speaker 2: to address the exchange rate and trade imbalances. You can

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Speaker 2: have a trade war and not have a stronger dollar,

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Speaker 2: et cetera. Is anything like that something that you are

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Speaker 2: listening to talking about, like a Plaza accord a lla

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Speaker 2: decades ago.

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Speaker 7: Well, a Plasa acord wasn't. It was a very different

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Speaker 7: set of circumstances. I'm not sure what they're driving at,

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Speaker 7: but whatever it is, I don't think they're going to

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Speaker 7: get there this.

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Speaker 6: Way, you know.

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Speaker 7: Aside from which I think there's a lot of ideology

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Speaker 7: about all of this. If you have trade deficits, and

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Speaker 7: what's happening is you have an influx of capital and

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Speaker 7: then it goes into investment that actually improves growth in

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Speaker 7: the United States and is good for US. Now, if

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Speaker 7: it goes into consumption, then eventually you build up and

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Speaker 7: if course into investment, then you have additional growth and

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Speaker 7: you can pay back the debt. If it goes into consumption,

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Speaker 7: then you don't have the growth. Then you don't be

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Speaker 7: able to pay back in over time. That creates a problem.

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Speaker 7: But whatever you want to do, you do not want

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Speaker 7: to approach it through tariffs, and you don't want to

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Speaker 7: approach it through browbeating other countries or taking taking advantage

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Speaker 7: of what is a strong position of our economy.

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Speaker 6: You want.

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Speaker 7: What you want to do is just want to increase

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Speaker 7: productivity in this country and increase savings.

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Speaker 6: AI.

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Speaker 5: You told us offline that you've been really spending a

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Speaker 5: lot of time trying to get educated on AI.

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Speaker 6: What is your We've got a full minute here. What

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Speaker 6: do you think about it?

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Speaker 7: I know i'll give you my views. About a year

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Speaker 7: and a half ago I thought to myself, Hey, it

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Speaker 7: looks to me like it's going to be really important.

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Speaker 7: So about a year and a half ago I started

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Speaker 7: taking to tutorial. I go twice a week, an hour

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Speaker 7: each time, and I don't profess any expertise in it,

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Speaker 7: but I think I've become reasonably conversant with it, and

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Speaker 7: I think it's going to change life as we know

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Speaker 7: it economically, geopolitically and societally. And I think the I

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Speaker 7: don't think we're already for all of the effects it

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Speaker 7: can have.

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Speaker 2: Oh, what's an AI to tour? What do you is it?

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Speaker 2: Some guy at your desk like going.

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Speaker 6: Over to no, no, tayb what it is?

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Speaker 7: It's extremely bright guy and we do it on zoom

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Speaker 7: and he's taken me through the underpinnings.

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Speaker 3: How does it work?

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Speaker 7: And then what are the use cases?

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Speaker 8: What effects does it have?

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Speaker 7: And the more you get it, I would strongly recommend

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Speaker 7: reading a book that's been recently published by Eric Schmitt

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Speaker 7: and Eric Kissinger. And what they do is they go

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Speaker 7: they go through what AI and when it is, but

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Speaker 7: basically it goes to the ramifications the potential effects of AI.

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Speaker 7: It's really enormously worth reing. This is going to shape,

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Speaker 7: in my opinion, at least have profound effects on pretty

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Speaker 7: much everything we do over time.

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Speaker 5: Yep, that's what we're hearing from a lot of smart

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Speaker 5: people as well. Robert Ribband, thank you so much for

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Speaker 5: joining us. Really appreciate it. Robert Ribin, he's a senior

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Speaker 5: counselor Centerview partner seventieth US Secretary of Treasury and of course,

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Speaker 5: former senior partner at Goldman Sachs. We appreciate getting some

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Speaker 5: of his time talking about some of these markets.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple Coarcklay and Android

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Speaker 2: Alex youl Parls we need. This is Bloomberg Intelligence Radio.

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Speaker 2: We are broadcasting to you live from the New York

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Speaker 2: Financial District with the Bloomberg and Best Conference twenty twenty five,

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Speaker 2: bringing together financial leaders, asset managers, private wealth, private equity,

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Speaker 2: as well as banking together to talk about the main

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Speaker 2: issues of our time, and we have one of them

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Speaker 2: here right with us. Mark Mahaney is senior managing director

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Speaker 2: at Evercore ISSI. Perfect day to talk to you. Nastek

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Speaker 2: one hundred now below it's two hundred day moving average.

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Speaker 2: The pressure not abating. What is put in particular leading

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Speaker 2: the tech part of the selloff?

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Speaker 6: Maybe two things.

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Speaker 9: One is that it's a sector with that's had phenomenal

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Speaker 9: outperformance for the last two and a half years, So

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Speaker 9: in reversion to the mean trade, you revert down the

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Speaker 9: stocks that aboutperformed the most. That's true, they've had phenomenal

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Speaker 9: performance since the middle of twenty two since Interra straight

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Speaker 9: stopped spiking. And then the second thing is, you know

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Speaker 9: when the tariff issues these that's wrong. Especially the tech

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Speaker 9: leaders are dramatically global companies. Half of their revenue or

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Speaker 9: more comes from overseas. Amazon has doing a lot of

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Speaker 9: retail obviously from China, but you know through Mexico and Canada.

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Speaker 9: Anything sort of ter if issues would upend their business somewhat,

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Speaker 9: depending on how well hedged they are, just as it

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Speaker 9: would for any major retailer. So I think those two

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Speaker 9: issues coming together or what's derailling those stocks right now?

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Speaker 5: Mark, You've been covering the tech sector for a long time.

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Speaker 5: You were there at the beginning of the Internet. A

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Speaker 5: lot of people are comparing AI to the Internet in

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Speaker 5: terms of the ability to transform many aspects of life.

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Speaker 5: How do you package that AI story for your clients

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Speaker 5: these days?

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Speaker 9: I don't know if it will be that transformative, but

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Speaker 9: the amount of money that's going into them paid by companies,

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Speaker 9: put in by companies that have plenty of cash is

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Speaker 9: something of a tell. And then we've seen a lot

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Speaker 9: of examples of what I call ROAI, you know, ROI

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Speaker 9: return on investment ROAI. So you know we're staring at

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Speaker 9: it right now. Look at what's happened at Meta in

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Speaker 9: the last two and a half years, how they've turned

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Speaker 9: around their business and both and they've dramatically improved their

439
00:19:16,600 --> 00:19:19,159
Speaker 9: services for customers, that's you and me as consumers. Our

440
00:19:19,320 --> 00:19:21,720
Speaker 9: news feed has gotten to become more relevant because they've

441
00:19:21,760 --> 00:19:25,399
Speaker 9: used AI to do better targeting, better recommendations. But also

442
00:19:25,440 --> 00:19:28,520
Speaker 9: for advertisers, their return on ads ben row as has

443
00:19:28,720 --> 00:19:32,080
Speaker 9: risen because the campaigns have become better targeted, better management,

444
00:19:32,560 --> 00:19:34,920
Speaker 9: better managed. So I've seen a couple of really great

445
00:19:35,040 --> 00:19:39,119
Speaker 9: ROAI examples, and so I'm not sure it's transformative, but

446
00:19:39,240 --> 00:19:42,159
Speaker 9: it's definitely improving the performance of these companies and it

447
00:19:42,160 --> 00:19:43,760
Speaker 9: shows up in the P and L two. I think

448
00:19:43,760 --> 00:19:45,639
Speaker 9: you can also look at Google. Twenty five percent of

449
00:19:45,640 --> 00:19:48,560
Speaker 9: their code is now written by AI. Imagine the productivity

450
00:19:48,600 --> 00:19:51,280
Speaker 9: improvement associated with that. And then Amazon is talking about

451
00:19:51,280 --> 00:19:54,320
Speaker 9: twenty five percent lower cost to serve in its most

452
00:19:54,359 --> 00:19:57,159
Speaker 9: advanced distribution centers. I mean, that's why their margins are

453
00:19:57,160 --> 00:19:58,560
Speaker 9: going to continue to go up, so you're seeing it

454
00:19:58,560 --> 00:20:00,160
Speaker 9: in the P and L. So I think it it's

455
00:20:00,160 --> 00:20:02,639
Speaker 9: actually a major productivity improvement, and I think this is

456
00:20:02,680 --> 00:20:04,439
Speaker 9: going to play out for years we do.

457
00:20:04,480 --> 00:20:05,960
Speaker 2: As in breaking news for you this according to the

458
00:20:05,960 --> 00:20:08,560
Speaker 2: Wall Street Journal that Ontario is going to issue twenty

459
00:20:08,560 --> 00:20:12,199
Speaker 2: five percent export tax on electricity to the US. Canada

460
00:20:12,200 --> 00:20:13,960
Speaker 2: in particular, not only does it have oil, it has

461
00:20:14,000 --> 00:20:16,399
Speaker 2: a lot of hydropower, so they're going to be taxing

462
00:20:16,600 --> 00:20:20,800
Speaker 2: electricity to the US. Here we go. Okay, So back

463
00:20:20,800 --> 00:20:23,320
Speaker 2: to AI and the transformative part of it and how

464
00:20:23,359 --> 00:20:27,080
Speaker 2: it's going to trickle out through the economy. When do

465
00:20:27,119 --> 00:20:31,600
Speaker 2: you think we're going to really understand how inferencing is

466
00:20:31,640 --> 00:20:34,560
Speaker 2: going to impact us and companies? And like, when are

467
00:20:34,600 --> 00:20:37,760
Speaker 2: you going to get me to buy into an AI story?

468
00:20:37,960 --> 00:20:39,800
Speaker 9: Well, I tried to lay out a couple of examples

469
00:20:39,840 --> 00:20:42,880
Speaker 9: already of where these companies are deploying AI and machine learning,

470
00:20:42,920 --> 00:20:44,960
Speaker 9: and they have been for quite some time. We've just

471
00:20:45,040 --> 00:20:48,760
Speaker 9: had a step up like a hockey stick improvement you

472
00:20:48,800 --> 00:20:53,000
Speaker 9: just mentioned Canada, hockey stick inflection up in productivity gains

473
00:20:53,040 --> 00:20:55,520
Speaker 9: because with these companies. So I'm sorry, I think we're

474
00:20:55,520 --> 00:20:57,520
Speaker 9: already starting to see it, and I think we're seeing.

475
00:20:57,320 --> 00:20:59,639
Speaker 2: It in I see it. I mean maybe my news feed,

476
00:20:59,760 --> 00:21:02,520
Speaker 2: but well I pay for it.

477
00:21:03,280 --> 00:21:06,000
Speaker 9: Well, you want some really specific product examples, I got

478
00:21:06,040 --> 00:21:07,040
Speaker 9: a really fun one for you.

479
00:21:07,160 --> 00:21:08,000
Speaker 2: Okay, into it.

480
00:21:08,160 --> 00:21:10,640
Speaker 9: You want to learn languages, there's this wonderful app called

481
00:21:10,680 --> 00:21:12,920
Speaker 9: dual Lingo. You want to really learn a language, pay

482
00:21:13,000 --> 00:21:15,560
Speaker 9: up for Duelingo Max, where you can use an AI

483
00:21:15,640 --> 00:21:18,880
Speaker 9: generated bot to actually practice your French, your Spanish, your German,

484
00:21:18,920 --> 00:21:21,520
Speaker 9: your Russian, whatever we need to learn these days. Anyway,

485
00:21:22,280 --> 00:21:23,520
Speaker 9: and I think you're going to see more of these

486
00:21:23,560 --> 00:21:25,960
Speaker 9: kind of little one off examples. But you know, from

487
00:21:25,960 --> 00:21:30,720
Speaker 9: a company's perspective, anything that produces internal productivity, improves relations

488
00:21:30,720 --> 00:21:33,359
Speaker 9: with suppliers or customers, I mean all of that. I

489
00:21:33,359 --> 00:21:36,240
Speaker 9: don't think there's one. I don't think there's one AI

490
00:21:36,359 --> 00:21:38,119
Speaker 9: revenue build. But you'll see a couple of products that

491
00:21:38,119 --> 00:21:40,920
Speaker 9: wouldn't exist, and I do A lingo example is one

492
00:21:41,040 --> 00:21:43,680
Speaker 9: that wouldn't simply wouldn't exist if you didn't have AI.

493
00:21:44,119 --> 00:21:48,040
Speaker 5: How about for Google and a traditional search business, is

494
00:21:48,119 --> 00:21:50,560
Speaker 5: AI a threat to Google or not?

495
00:21:51,240 --> 00:21:54,160
Speaker 9: Google just put out a blog that said that because

496
00:21:54,240 --> 00:22:00,920
Speaker 9: of AI overviews that they're actually seeing more commercial search queries.

497
00:22:01,840 --> 00:22:02,480
Speaker 8: Really that.

498
00:22:04,119 --> 00:22:06,320
Speaker 9: Should raise all of our eyes. So and I guess

499
00:22:06,320 --> 00:22:07,920
Speaker 9: I'm not. At the end of the day, not surprise.

500
00:22:08,000 --> 00:22:11,280
Speaker 9: Google is a company that just consistently improved the product,

501
00:22:11,560 --> 00:22:14,080
Speaker 9: made the search results faster and faster and more relevant.

502
00:22:14,280 --> 00:22:16,680
Speaker 9: This just took it up a notch. And so yeah,

503
00:22:16,760 --> 00:22:19,560
Speaker 9: if they can get you the result you want more quickly,

504
00:22:20,160 --> 00:22:23,040
Speaker 9: especially if it's leading to more commercial searches, Google is

505
00:22:23,040 --> 00:22:24,720
Speaker 9: the one company in the world that knows how to

506
00:22:24,760 --> 00:22:26,080
Speaker 9: monetize commercial searches.

507
00:22:26,320 --> 00:22:29,960
Speaker 2: What do you think is the biggest misconception about AI,

508
00:22:30,200 --> 00:22:33,679
Speaker 2: Whether it's like what investors thing, what's priced into the stock,

509
00:22:33,800 --> 00:22:34,760
Speaker 2: or just conceptually.

510
00:22:36,240 --> 00:22:40,200
Speaker 9: I think the biggest mistakes misconception probably occurred about three

511
00:22:40,200 --> 00:22:42,720
Speaker 9: weeks ago when Deep Sea came out and there was

512
00:22:42,800 --> 00:22:46,480
Speaker 9: concern that this would be highly disruptive for the hyperscalers.

513
00:22:46,560 --> 00:22:49,359
Speaker 9: I actually took the exact opposite view, especially if you're

514
00:22:49,400 --> 00:22:54,679
Speaker 9: at the application layer, and because the infrastructure potentially.

515
00:22:54,359 --> 00:22:55,560
Speaker 3: Just got a lot cheaper.

516
00:22:55,840 --> 00:22:57,640
Speaker 9: So you're going to all that money that you've spent

517
00:22:57,720 --> 00:22:59,560
Speaker 9: on capex, You're going to get a better return that

518
00:22:59,600 --> 00:23:01,240
Speaker 9: money was and wasted. You're going to get a better

519
00:23:01,280 --> 00:23:03,760
Speaker 9: return than you would have had in the past. So

520
00:23:03,800 --> 00:23:07,160
Speaker 9: I think that's probably the biggest recent misconception I've seen.

521
00:23:07,800 --> 00:23:11,800
Speaker 5: For Meta It's had a great turnaround, as you talked about,

522
00:23:12,160 --> 00:23:17,160
Speaker 5: what percentage of that turnaround is simply cost cutting versus

523
00:23:17,160 --> 00:23:20,400
Speaker 5: maybe just stepping away from the metaverse discussion somewhat.

524
00:23:21,240 --> 00:23:22,359
Speaker 6: I think it's two or three things.

525
00:23:22,400 --> 00:23:25,840
Speaker 9: Stepping away from metaverse, focusing on the year of efficiency

526
00:23:26,080 --> 00:23:28,439
Speaker 9: that Zuckerberg talked about the beginning of twenty three and

527
00:23:28,480 --> 00:23:31,240
Speaker 9: now it's become the years of efficiency, and I think

528
00:23:31,280 --> 00:23:34,200
Speaker 9: this does tie back into the AI. I mean, there

529
00:23:34,280 --> 00:23:37,080
Speaker 9: has been a mind shift at Silicon Valley. It's not

530
00:23:37,200 --> 00:23:39,600
Speaker 9: growth at all costs as much more of a focus

531
00:23:39,680 --> 00:23:42,200
Speaker 9: on So there's a cultural shift I think is probably good.

532
00:23:42,359 --> 00:23:45,679
Speaker 9: These companies are going through their middle life stages, not

533
00:23:45,720 --> 00:23:48,399
Speaker 9: crisis but stages, and as they do that, they should

534
00:23:48,800 --> 00:23:51,199
Speaker 9: they should be spending much less aggressively on growth. They

535
00:23:51,240 --> 00:23:53,560
Speaker 9: should be focused more on profitability than they are. But

536
00:23:53,600 --> 00:23:57,880
Speaker 9: then the tie into AI is their developers can produce

537
00:23:58,080 --> 00:24:00,560
Speaker 9: more code with your developers, it's just not like they

538
00:24:00,560 --> 00:24:03,040
Speaker 9: need to cut people from this point on, but they

539
00:24:03,080 --> 00:24:06,760
Speaker 9: can grow. They can sustain growth with less need to

540
00:24:06,800 --> 00:24:08,439
Speaker 9: add headcount than they did in the past.

541
00:24:08,720 --> 00:24:10,719
Speaker 2: All right, Mark, such a pleasure, really really great to

542
00:24:10,720 --> 00:24:13,040
Speaker 2: see you in person. Thank you. Mark Mahoney, Senior Managing

543
00:24:13,040 --> 00:24:16,560
Speaker 2: Director over at evercore is Side.

544
00:24:17,040 --> 00:24:20,720
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

545
00:24:20,800 --> 00:24:23,880
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

546
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548
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Speaker 2: A Happy Tuesday Tough tape if you're looking at the

549
00:24:33,640 --> 00:24:36,159
Speaker 2: equity market. We're live from the Bloomberg and Best Conference

550
00:24:36,160 --> 00:24:38,359
Speaker 2: twenty twenty five. We have all the top minds and

551
00:24:38,480 --> 00:24:41,760
Speaker 2: finance talking about the pressing issues, not only how to

552
00:24:41,800 --> 00:24:44,119
Speaker 2: invest money, but the future of some of the significant

553
00:24:44,160 --> 00:24:46,439
Speaker 2: things and the transition that we're going through, like for

554
00:24:46,480 --> 00:24:50,479
Speaker 2: example AI. And here joining us on set is Ben Wren.

555
00:24:50,880 --> 00:24:53,160
Speaker 2: He's founder and CEO of Sigtech.

556
00:24:53,280 --> 00:24:53,440
Speaker 6: Now.

557
00:24:53,520 --> 00:24:56,199
Speaker 2: Sigtech is a London based fintech company spun out of

558
00:24:56,200 --> 00:24:59,600
Speaker 2: Revin Howard in twenty nineteen, and it basically tries to

559
00:24:59,800 --> 00:25:03,840
Speaker 2: help quants and users manage the capital markets. I'm not

560
00:25:03,880 --> 00:25:05,640
Speaker 2: really sure I know what that means. So luckily beIN

561
00:25:05,800 --> 00:25:07,600
Speaker 2: is here for us, all right, so give us the

562
00:25:07,960 --> 00:25:11,560
Speaker 2: quick pitch on what your company actually does, sigtug.

563
00:25:11,640 --> 00:25:16,600
Speaker 10: We build specialist agents these days to help people make

564
00:25:17,040 --> 00:25:19,840
Speaker 10: better decisions in cup to markets, but also to automate

565
00:25:20,359 --> 00:25:22,960
Speaker 10: a lot of the very high value intellectual but not

566
00:25:23,160 --> 00:25:26,879
Speaker 10: very creative workflows. You know, we can reduce a lot

567
00:25:26,920 --> 00:25:29,359
Speaker 10: of the things people do today, which a bit boring,

568
00:25:29,600 --> 00:25:32,919
Speaker 10: you know, down from many hours to thirty seconds. I

569
00:25:32,920 --> 00:25:35,520
Speaker 10: think that makes a big difference in terms of productivities.

570
00:25:35,760 --> 00:25:37,880
Speaker 5: All right, here's here's an example that I can think

571
00:25:37,920 --> 00:25:40,879
Speaker 5: of for my okay to being at the printer not

572
00:25:41,000 --> 00:25:42,959
Speaker 5: far from here, a couple of blocks from here, don

573
00:25:43,080 --> 00:25:45,560
Speaker 5: Winny at the two three o'clock in the morning going

574
00:25:45,600 --> 00:25:47,520
Speaker 5: over a bond perspectus.

575
00:25:48,320 --> 00:25:52,240
Speaker 6: That's probably something that AI can help with. So how

576
00:25:52,320 --> 00:25:54,159
Speaker 6: much our asset.

577
00:25:53,800 --> 00:25:57,320
Speaker 5: Managers, generally speaking, how much are they using tech technology

578
00:25:57,520 --> 00:25:59,119
Speaker 5: today help computerize it?

579
00:25:59,200 --> 00:26:00,560
Speaker 6: Is it help quantitative?

580
00:26:00,640 --> 00:26:00,840
Speaker 3: Is it?

581
00:26:01,400 --> 00:26:04,200
Speaker 10: I think in the last fifteen years there's a big

582
00:26:04,240 --> 00:26:08,359
Speaker 10: trend in asset management to to adopt more and more technology.

583
00:26:08,840 --> 00:26:11,000
Speaker 10: And we can see this shift in terms of, you know,

584
00:26:11,040 --> 00:26:14,920
Speaker 10: people using more data driven investment processes and people hire

585
00:26:15,000 --> 00:26:19,159
Speaker 10: data analysts and but Jenny and I Jenei in the

586
00:26:19,200 --> 00:26:21,760
Speaker 10: last few years is a big step change. It's I

587
00:26:21,800 --> 00:26:26,440
Speaker 10: would say it's it's an unprecedented, unprecedented change in in

588
00:26:27,440 --> 00:26:30,639
Speaker 10: this trend, just in terms of it's no longer incremental.

589
00:26:32,359 --> 00:26:35,280
Speaker 10: There's a before and after. And you know, when we

590
00:26:35,359 --> 00:26:39,040
Speaker 10: when we think about previous technologies, you know, we mainly

591
00:26:39,080 --> 00:26:42,639
Speaker 10: focus on what we call explicit knowledge, knowledge that we

592
00:26:42,680 --> 00:26:46,800
Speaker 10: can codify, describe, and therefore use programming language to automate.

593
00:26:47,160 --> 00:26:51,080
Speaker 10: But only until now we're able to distill and automate

594
00:26:51,720 --> 00:26:55,440
Speaker 10: so called tested knowledge, the knowledge that resides in our head,

595
00:26:55,880 --> 00:26:58,840
Speaker 10: but we can't really so easily write it down and

596
00:26:58,920 --> 00:27:02,200
Speaker 10: describe and code. But now we can actually automate those

597
00:27:02,480 --> 00:27:05,880
Speaker 10: and there are plenty of those workflows and processes, especially

598
00:27:05,880 --> 00:27:07,160
Speaker 10: in financial services.

599
00:27:07,440 --> 00:27:11,720
Speaker 2: So how would you help, like a regular quant manager,

600
00:27:13,240 --> 00:27:15,159
Speaker 2: like I go to you and I'm like, hey, I

601
00:27:15,200 --> 00:27:17,840
Speaker 2: need your product to help me get better, faster, find

602
00:27:17,880 --> 00:27:19,520
Speaker 2: better trends in the market.

603
00:27:20,359 --> 00:27:26,280
Speaker 10: Yeah, for quants, I think quants started with more number driven.

604
00:27:27,119 --> 00:27:29,359
Speaker 10: You know, trend following is if you do it like

605
00:27:29,400 --> 00:27:32,240
Speaker 10: in a very simple way, it's entirely number driven. But

606
00:27:32,400 --> 00:27:35,960
Speaker 10: these days we are moving to a world where we

607
00:27:36,080 --> 00:27:39,520
Speaker 10: have to deal with numbers and text as too modalities

608
00:27:39,560 --> 00:27:42,960
Speaker 10: at the same time, which no longer just about technical analysis,

609
00:27:43,000 --> 00:27:47,760
Speaker 10: but it's also about absorbing new information and turn you know,

610
00:27:47,880 --> 00:27:51,560
Speaker 10: non numerical information into numerical information. And that's something that

611
00:27:51,640 --> 00:27:54,600
Speaker 10: Jen and I does really well because fundamentally, if you

612
00:27:54,600 --> 00:27:57,280
Speaker 10: think about how it's trained, it has been trained on

613
00:27:57,760 --> 00:28:01,320
Speaker 10: trillions of tokens of textual days and a lot of

614
00:28:01,400 --> 00:28:05,679
Speaker 10: things we used to do either bespoke or preparatory fashion.

615
00:28:05,720 --> 00:28:08,120
Speaker 10: This day we get out of box, such as sentiment

616
00:28:08,119 --> 00:28:12,040
Speaker 10: analysis or extracting relative and information from very long pieces

617
00:28:12,040 --> 00:28:15,040
Speaker 10: of text. These sort of things actually change how qualms,

618
00:28:15,080 --> 00:28:17,679
Speaker 10: even how quants approach their daily jobs.

619
00:28:17,960 --> 00:28:22,240
Speaker 5: Are the big Wall Street firms making these investments or

620
00:28:22,280 --> 00:28:25,679
Speaker 5: is it more of the hedge fund community that is

621
00:28:25,720 --> 00:28:26,400
Speaker 5: more receptive?

622
00:28:26,680 --> 00:28:27,600
Speaker 6: Who are your customers?

623
00:28:27,600 --> 00:28:28,040
Speaker 3: Typically?

624
00:28:28,440 --> 00:28:31,440
Speaker 10: So these days we mainly focus on buyside, okay, but

625
00:28:31,520 --> 00:28:34,080
Speaker 10: we also have very big clients in terms of in

626
00:28:34,160 --> 00:28:37,040
Speaker 10: terms of like commercial banks, you know, using our technology

627
00:28:37,080 --> 00:28:42,240
Speaker 10: to completely change how they underwrite commercial loans. I think

628
00:28:42,280 --> 00:28:46,080
Speaker 10: so I wouldn't say it's a cell side or buyside

629
00:28:46,160 --> 00:28:48,720
Speaker 10: or big firm or small firm.

630
00:28:49,320 --> 00:28:50,520
Speaker 6: I don't think that's the main reason.

631
00:28:50,560 --> 00:28:53,680
Speaker 10: In terms of adoption. I would say the main reason

632
00:28:53,840 --> 00:28:58,280
Speaker 10: is is the leadership. You know, when when you approach

633
00:28:58,400 --> 00:29:01,920
Speaker 10: something so unprecedented, it takes some time to build a

634
00:29:01,960 --> 00:29:05,360
Speaker 10: consensus inside the organization about you know, what's the strategy,

635
00:29:05,400 --> 00:29:07,640
Speaker 10: what do we do? But you know that may take

636
00:29:07,680 --> 00:29:11,040
Speaker 10: two months, three months, and given how fast things change

637
00:29:11,360 --> 00:29:14,040
Speaker 10: after three months is a different world. Yeah, right, So

638
00:29:14,120 --> 00:29:16,720
Speaker 10: it really takes some kind of conviction from a visionary

639
00:29:16,840 --> 00:29:20,440
Speaker 10: leadership team to adopt this technology very confidently.

640
00:29:20,520 --> 00:29:22,480
Speaker 2: Yeah, for twenty four hours, it can be a different

641
00:29:22,560 --> 00:29:28,200
Speaker 2: investing landscape. So what's the best partnership between AI and humans?

642
00:29:28,720 --> 00:29:31,640
Speaker 2: Fifty to fifty? Is it AI seventy five percent of

643
00:29:31,680 --> 00:29:34,120
Speaker 2: the decision making process twenty five percent for human How

644
00:29:34,120 --> 00:29:34,920
Speaker 2: do you think about that?

645
00:29:35,120 --> 00:29:35,320
Speaker 8: Yeah?

646
00:29:35,800 --> 00:29:38,840
Speaker 10: I think if I think about the knowledge work we

647
00:29:38,960 --> 00:29:42,840
Speaker 10: do every day, I would describe them as most of

648
00:29:42,880 --> 00:29:48,680
Speaker 10: them may be not creative, but intellectual. Right, analyze a

649
00:29:48,760 --> 00:29:53,280
Speaker 10: lot of documents picking out the right information is intellectual,

650
00:29:53,280 --> 00:29:58,400
Speaker 10: but it's not creative. So in the future, humans should

651
00:29:58,520 --> 00:30:01,440
Speaker 10: devote almost all the time to creative stuff what makes

652
00:30:01,520 --> 00:30:06,280
Speaker 10: us different, whereas the boring intellectual stuff can be automated

653
00:30:06,280 --> 00:30:10,680
Speaker 10: by AI agents. On the other hand, we are certainly

654
00:30:10,760 --> 00:30:14,320
Speaker 10: seeing a big change in the user experience, the user

655
00:30:14,360 --> 00:30:16,920
Speaker 10: interface because you know, up to on to this point,

656
00:30:17,040 --> 00:30:20,240
Speaker 10: people approach GENI and mainly through a chetbot. You know,

657
00:30:20,320 --> 00:30:22,120
Speaker 10: there's a chat box. You're typing into it to get

658
00:30:22,160 --> 00:30:25,840
Speaker 10: some response. It's very nice and it's really started the error.

659
00:30:25,880 --> 00:30:29,000
Speaker 10: But going forward, we are looking at a user user

660
00:30:29,000 --> 00:30:33,560
Speaker 10: interface that allow human to essentially collaborate with a large

661
00:30:33,640 --> 00:30:36,880
Speaker 10: number of AI agents who specialize in different things. So

662
00:30:36,920 --> 00:30:40,200
Speaker 10: how does that user interface look like, and how does

663
00:30:40,280 --> 00:30:46,360
Speaker 10: that AI human fusion intelligence look like. It's a very

664
00:30:46,400 --> 00:30:49,960
Speaker 10: active field of research, trial and errors.

665
00:30:50,320 --> 00:30:53,840
Speaker 5: So this sounds like from what I understand of AI,

666
00:30:54,280 --> 00:30:57,760
Speaker 5: a lot of computing power requirements. Talk about the investments

667
00:30:57,800 --> 00:31:01,440
Speaker 5: that you think these financial firms need to make are

668
00:31:01,520 --> 00:31:03,959
Speaker 5: making or you know, maybe need to step up.

669
00:31:04,200 --> 00:31:07,120
Speaker 10: Yeah, in terms of intelligence, and the way I think

670
00:31:07,120 --> 00:31:10,080
Speaker 10: about it is so it's very similar to electricity. You

671
00:31:10,080 --> 00:31:12,840
Speaker 10: know that we are currently in the in the first

672
00:31:13,160 --> 00:31:16,640
Speaker 10: stage of investing in the infrastructure, right and if you're

673
00:31:16,640 --> 00:31:19,000
Speaker 10: going back in history in the last two hundred years

674
00:31:19,000 --> 00:31:21,960
Speaker 10: and then the way we started building electric electricity grid

675
00:31:22,400 --> 00:31:25,040
Speaker 10: there's one magical number which is one percent. You know,

676
00:31:25,120 --> 00:31:27,520
Speaker 10: the countries throughout the history spent about one percent of

677
00:31:27,600 --> 00:31:31,120
Speaker 10: nominal GDP on building power grid from two hundred years

678
00:31:31,120 --> 00:31:32,880
Speaker 10: ago in Britain all the way to today.

679
00:31:33,800 --> 00:31:35,000
Speaker 8: So the Big Tech this.

680
00:31:35,040 --> 00:31:38,520
Speaker 10: Year announced three hundred billion dollars of investment into Genini

681
00:31:38,920 --> 00:31:41,840
Speaker 10: data centers. That's almost exactly one percent of the US

682
00:31:41,920 --> 00:31:45,040
Speaker 10: GDP today it's about thirty trillions. So in terms of

683
00:31:45,080 --> 00:31:49,600
Speaker 10: infrastructure investment, we are there, and people are building incredibly

684
00:31:50,080 --> 00:31:56,880
Speaker 10: big mega AI clusters across the country now. But we

685
00:31:56,960 --> 00:32:00,040
Speaker 10: are shifting toward the application lay right because once you

686
00:32:00,080 --> 00:32:02,680
Speaker 10: have electricity, it's not about electricity per se, it's about

687
00:32:02,880 --> 00:32:06,680
Speaker 10: what kind of appliances you can build powered by electricity.

688
00:32:06,720 --> 00:32:09,440
Speaker 10: So we are moving into that stage too, where there

689
00:32:09,440 --> 00:32:11,560
Speaker 10: are a lot of investments both in terms of talent

690
00:32:11,640 --> 00:32:15,120
Speaker 10: and capital into building the right applications that they actually

691
00:32:15,200 --> 00:32:18,800
Speaker 10: make a big difference to the knowledge workers in term

692
00:32:18,840 --> 00:32:21,480
Speaker 10: the productivity. So we are we are starting that phase.

693
00:32:22,640 --> 00:32:25,000
Speaker 2: Last question here for US, I asked Sir Mark Mahiney too,

694
00:32:25,200 --> 00:32:28,560
Speaker 2: is what's the biggest misconsumption right now when it comes

695
00:32:28,600 --> 00:32:30,760
Speaker 2: to AI and using it.

696
00:32:33,800 --> 00:32:37,080
Speaker 10: I think the biggest conception is I think people tend

697
00:32:37,120 --> 00:32:44,360
Speaker 10: to either underappreciate its capabilities or sometimes getting over optimistic,

698
00:32:44,360 --> 00:32:46,520
Speaker 10: and it's it's quite hard to get it right.

699
00:32:47,240 --> 00:32:49,560
Speaker 2: So it's too much or too little.

700
00:32:49,640 --> 00:32:51,920
Speaker 10: So I mean, I think most people are either under

701
00:32:52,560 --> 00:32:54,040
Speaker 10: you know, under hyping it.

702
00:32:54,080 --> 00:32:54,840
Speaker 6: Or over hyping it.

703
00:32:54,840 --> 00:32:57,640
Speaker 10: It's very hard to get it right. But one thing

704
00:32:57,760 --> 00:33:01,200
Speaker 10: is very obvious to us is that the pace of

705
00:33:01,240 --> 00:33:04,600
Speaker 10: the change is unprecedented and it's getting better. Like the

706
00:33:04,640 --> 00:33:09,560
Speaker 10: Deep Seek just introduced open sourced all their efficiency engineering

707
00:33:09,600 --> 00:33:12,160
Speaker 10: tricks to the whole world and then everybody is going

708
00:33:12,200 --> 00:33:14,600
Speaker 10: to adopt it. So all of this is pushing the

709
00:33:14,840 --> 00:33:19,320
Speaker 10: efficiency frontier. So we're getting better and faster every day,

710
00:33:19,800 --> 00:33:23,200
Speaker 10: so people should be prepared for the big change.

711
00:33:23,640 --> 00:33:25,320
Speaker 2: All right, Ben, thanks a lot. We really appreciate it

712
00:33:25,360 --> 00:33:28,520
Speaker 2: being run. He's founder and CEO of sig Tech. It's

713
00:33:28,520 --> 00:33:30,800
Speaker 2: like a Goldilock thing. It's like no one actually knows.

714
00:33:30,800 --> 00:33:33,120
Speaker 2: So it's either going to change the universe or it's

715
00:33:33,120 --> 00:33:33,560
Speaker 2: going to.

716
00:33:33,640 --> 00:33:36,800
Speaker 6: Ruin it center between a billion of capex.

717
00:33:36,880 --> 00:33:39,560
Speaker 2: Yeah, that is definitely not chump change.

718
00:33:40,200 --> 00:33:43,880
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

719
00:33:43,960 --> 00:33:47,040
Speaker 1: weekdays at ten am Eastern on Apple, Corplay and Android

720
00:33:47,080 --> 00:33:50,360
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

721
00:33:50,400 --> 00:33:54,840
Speaker 1: you get your podcasts, or watch us live on YouTube.

722
00:33:54,400 --> 00:33:55,720
Speaker 6: Out Steve Paul Sweeney.

723
00:33:56,000 --> 00:33:58,040
Speaker 5: We are live here at the Bloomberg Invested twenty twenty

724
00:33:58,040 --> 00:34:01,480
Speaker 5: five conference down here at Brookville Place, formerly known as

725
00:34:02,000 --> 00:34:04,080
Speaker 5: World Financial Center. I used to hang a shingle down

726
00:34:04,080 --> 00:34:06,480
Speaker 5: here at MARYLN back in the day, so some good

727
00:34:06,520 --> 00:34:08,319
Speaker 5: memories here. I tell you, if I were to come

728
00:34:08,360 --> 00:34:11,760
Speaker 5: back on the street, Alex, again, I'm telling you, private

729
00:34:11,800 --> 00:34:13,200
Speaker 5: credit might be the place I go.

730
00:34:13,520 --> 00:34:14,080
Speaker 6: I mean I went.

731
00:34:14,200 --> 00:34:16,920
Speaker 5: I went to the Chase Manhattan Bank credit training program,

732
00:34:17,000 --> 00:34:17,880
Speaker 5: the best on the street.

733
00:34:18,360 --> 00:34:20,760
Speaker 6: I could go run circles around these guys. I should

734
00:34:20,760 --> 00:34:21,160
Speaker 6: have done that.

735
00:34:21,280 --> 00:34:25,680
Speaker 5: Mark Clipschiltz Joints is his CEO blue Al Capital, speaking

736
00:34:25,680 --> 00:34:26,839
Speaker 5: here at our conference here today.

737
00:34:26,880 --> 00:34:28,399
Speaker 6: We appreciate getting a few minutes of your time.

738
00:34:28,480 --> 00:34:31,640
Speaker 5: Mark, talk to us about blue Out how you guys

739
00:34:31,680 --> 00:34:34,719
Speaker 5: fit into the private credit business, because Alex, I are

740
00:34:34,719 --> 00:34:38,360
Speaker 5: just amazed at the funds that are flowing into that market.

741
00:34:38,560 --> 00:34:40,160
Speaker 11: Well, first I have to find out how to recruit

742
00:34:40,200 --> 00:34:42,279
Speaker 11: you to join bacause for.

743
00:34:42,239 --> 00:34:45,160
Speaker 6: The best of the best credit training.

744
00:34:47,360 --> 00:34:48,880
Speaker 11: And I also want to say it's great to be

745
00:34:48,920 --> 00:34:51,799
Speaker 11: back down here. My first apartment in New York when

746
00:34:51,840 --> 00:34:53,719
Speaker 11: I moved here in nineteen ninety one to work at

747
00:34:53,719 --> 00:34:55,840
Speaker 11: Golden Sacks, when it was an eighty five broad street

748
00:34:56,239 --> 00:34:57,120
Speaker 11: right down that.

749
00:34:57,040 --> 00:34:58,960
Speaker 5: Street, I mean too, that's where Solomon Blows put us

750
00:34:59,000 --> 00:35:00,920
Speaker 5: up back in the day, so I could say I

751
00:35:00,960 --> 00:35:02,319
Speaker 5: live down here at a water view and.

752
00:35:02,320 --> 00:35:03,040
Speaker 6: All that kind of stuff.

753
00:35:03,200 --> 00:35:06,319
Speaker 5: Lovely private credit, You guys are just part of just

754
00:35:06,360 --> 00:35:07,680
Speaker 5: an amazing asset class.

755
00:35:07,760 --> 00:35:10,239
Speaker 11: Well, we've been very fortunate to be part of an

756
00:35:10,280 --> 00:35:12,920
Speaker 11: asset class, and you know, I play our role in

757
00:35:12,960 --> 00:35:15,760
Speaker 11: helping evolve it. Look, private credit, to set the stage

758
00:35:15,840 --> 00:35:19,400
Speaker 11: right is about taking long term capital from investors, and

759
00:35:19,440 --> 00:35:21,640
Speaker 11: we've tried to broaden the range of people that have

760
00:35:21,719 --> 00:35:23,120
Speaker 11: access to it and.

761
00:35:23,040 --> 00:35:24,960
Speaker 8: To be able to provide that capital.

762
00:35:24,680 --> 00:35:28,560
Speaker 11: To corporate users to support their growth with a view

763
00:35:28,560 --> 00:35:30,279
Speaker 11: to the long term. And to be here on a

764
00:35:30,360 --> 00:35:33,239
Speaker 11: day when you know the public market is so volatile,

765
00:35:33,719 --> 00:35:36,320
Speaker 11: you know, in some ways is very much a reminder

766
00:35:36,719 --> 00:35:40,560
Speaker 11: of why private credit works for investors, but also why

767
00:35:40,560 --> 00:35:44,759
Speaker 11: it's important because look, we're doing business today. We're making

768
00:35:44,800 --> 00:35:46,920
Speaker 11: loans today, just like we were yesterday, just like we

769
00:35:46,960 --> 00:35:51,120
Speaker 11: will tomorrow. You know, screen rater screen blue, screen green

770
00:35:51,320 --> 00:35:52,440
Speaker 11: prefer green.

771
00:35:53,040 --> 00:35:55,600
Speaker 2: I should disclose that to my money manager. I do

772
00:35:55,680 --> 00:35:58,719
Speaker 2: own shares in blue out private credit. I do have

773
00:35:58,719 --> 00:36:00,000
Speaker 2: some of that feel like I need to say that

774
00:36:00,120 --> 00:36:02,439
Speaker 2: thank you, but not through me, It's through my money guy.

775
00:36:03,239 --> 00:36:06,799
Speaker 2: So help me understand the competitive landscape though, because it

776
00:36:06,800 --> 00:36:09,400
Speaker 2: feels like banks now want to get a slice of

777
00:36:09,440 --> 00:36:11,399
Speaker 2: the private credit market that they had to give up,

778
00:36:11,400 --> 00:36:14,640
Speaker 2: and now we're seeing some partnerships with private credit shops.

779
00:36:14,640 --> 00:36:15,399
Speaker 2: How do you look at it?

780
00:36:15,520 --> 00:36:18,400
Speaker 11: Yeah, the evolving landscape with the banks is pretty interesting.

781
00:36:18,480 --> 00:36:22,319
Speaker 11: Let's make a couple observations. The word like referencing the

782
00:36:22,440 --> 00:36:25,760
Speaker 11: bank market I think is worth unpacking a little bit because,

783
00:36:25,840 --> 00:36:28,719
Speaker 11: as obviously you will know, when we go back to

784
00:36:28,960 --> 00:36:31,600
Speaker 11: thirty years ago, I started in the private markets. The

785
00:36:31,680 --> 00:36:34,560
Speaker 11: alternative market wasn't called that at the time, and we

786
00:36:34,600 --> 00:36:37,720
Speaker 11: actually borrowed money from the banks when we were doing

787
00:36:37,840 --> 00:36:41,120
Speaker 11: an LBO as it was called then, literally from their

788
00:36:41,320 --> 00:36:45,000
Speaker 11: balance sheets. That over the last thirty years has been

789
00:36:45,000 --> 00:36:48,759
Speaker 11: on a long trajectory changing from being a lender to

790
00:36:48,960 --> 00:36:51,759
Speaker 11: now the banks don't lend to these companies at all.

791
00:36:51,840 --> 00:36:55,040
Speaker 11: And that's been true for a while. They intermediate, right,

792
00:36:55,080 --> 00:36:57,839
Speaker 11: they'll go in and they'll underwrite a loan and then

793
00:36:58,000 --> 00:37:00,319
Speaker 11: sell it into the market, cut it into pieces and

794
00:37:00,560 --> 00:37:04,399
Speaker 11: sell it. And so in that regard, of course, that's

795
00:37:04,400 --> 00:37:06,719
Speaker 11: an alternative way to finance a business, and we could

796
00:37:06,840 --> 00:37:08,560
Speaker 11: talk about the pluses and minuses of both.

797
00:37:08,840 --> 00:37:10,240
Speaker 8: It's great to have both markets.

798
00:37:10,280 --> 00:37:13,880
Speaker 11: You want to have a good, vibrant bank intermediated market.

799
00:37:13,920 --> 00:37:16,759
Speaker 11: But remember what the bank cares about is can I

800
00:37:16,840 --> 00:37:19,360
Speaker 11: underwrite the loan and sell it in the next sixty days.

801
00:37:19,480 --> 00:37:22,720
Speaker 11: So the red screen today is dramatic for a decision

802
00:37:22,760 --> 00:37:24,120
Speaker 11: for a bank to underwrite a loan.

803
00:37:24,880 --> 00:37:25,960
Speaker 8: On the other hand, word at the.

804
00:37:25,960 --> 00:37:28,400
Speaker 11: Exact opposite, it doesn't really matter to us what's happening

805
00:37:28,440 --> 00:37:30,799
Speaker 11: in the market today. What matters to us is do

806
00:37:30,840 --> 00:37:33,120
Speaker 11: we get paid back five, six, seven years from out.

807
00:37:33,239 --> 00:37:36,120
Speaker 11: That's our decision, that's what we're focused on. So in

808
00:37:36,160 --> 00:37:39,240
Speaker 11: that sense, we really live in kind of with different

809
00:37:39,239 --> 00:37:42,480
Speaker 11: incentives and serve a different function. However, to the good point,

810
00:37:42,840 --> 00:37:45,600
Speaker 11: the banks are saying, okay, but turns out private credit

811
00:37:45,640 --> 00:37:46,200
Speaker 11: really does work.

812
00:37:46,239 --> 00:37:46,359
Speaker 6: Right.

813
00:37:46,360 --> 00:37:48,920
Speaker 11: They spent a lot of time criticizing the market and

814
00:37:49,000 --> 00:37:52,279
Speaker 11: trying different ways to maybe scare up the boogeyman, but

815
00:37:52,480 --> 00:37:55,759
Speaker 11: now they in fact are actually launching funds to do

816
00:37:55,800 --> 00:37:59,239
Speaker 11: private credit so I'd start with, look, if can't beat them,

817
00:37:59,320 --> 00:38:02,320
Speaker 11: join them, and we that's great, We'll take the endorsement

818
00:38:02,360 --> 00:38:02,920
Speaker 11: of the market.

819
00:38:03,400 --> 00:38:05,520
Speaker 8: It's a big world credit, it's a.

820
00:38:05,600 --> 00:38:09,200
Speaker 11: Multi trillion dollar asset class, multi trillion dollar marketplace. We

821
00:38:09,360 --> 00:38:12,920
Speaker 11: need vibrant available capital and having bank.

822
00:38:12,760 --> 00:38:14,000
Speaker 8: Launch a fund, you know great.

823
00:38:14,000 --> 00:38:16,120
Speaker 11: There's a lot of funds in the world, and some

824
00:38:16,120 --> 00:38:17,959
Speaker 11: of those will be done in partnerships as you noted,

825
00:38:18,000 --> 00:38:20,919
Speaker 11: and some will just be standalone efforts, and some will

826
00:38:20,960 --> 00:38:23,720
Speaker 11: just continue to stay the course and do their traditional underwriting.

827
00:38:24,040 --> 00:38:26,600
Speaker 6: What's a typical deal for blue out these days?

828
00:38:27,000 --> 00:38:29,400
Speaker 11: So a typical deal for us. And this has been

829
00:38:29,440 --> 00:38:31,719
Speaker 11: true for us from the beginning. Obviously the attributes and

830
00:38:31,760 --> 00:38:34,560
Speaker 11: the size have changed. But over the last roughly ten

831
00:38:34,640 --> 00:38:37,120
Speaker 11: years that we've built Blue Owl, our reason to be

832
00:38:37,719 --> 00:38:39,360
Speaker 11: was to come in and say, look, we want private

833
00:38:39,400 --> 00:38:42,760
Speaker 11: credit to become the lender of first choice as opposed

834
00:38:42,800 --> 00:38:45,000
Speaker 11: to the lender of last resort, and private credit, if

835
00:38:45,040 --> 00:38:48,440
Speaker 11: you go back before that time, was really a lender

836
00:38:48,960 --> 00:38:51,280
Speaker 11: of last resort. It's where you went if you couldn't

837
00:38:51,320 --> 00:38:53,839
Speaker 11: get money from a mainstream source. As I said, I

838
00:38:53,920 --> 00:38:57,160
Speaker 11: was at KKR for twenty one years and during that time.

839
00:38:57,640 --> 00:39:00,799
Speaker 11: I don't recall ever working with a lender that just

840
00:39:00,840 --> 00:39:04,040
Speaker 11: was the once you did if you were a mainstream borrower.

841
00:39:04,320 --> 00:39:06,240
Speaker 8: But the idea for Blualla.

842
00:39:05,800 --> 00:39:08,759
Speaker 11: And today so to answer this question has been to

843
00:39:08,800 --> 00:39:13,320
Speaker 11: create actually a real value proposition in having a partner

844
00:39:13,400 --> 00:39:16,160
Speaker 11: to really work with a long dated capital pool for

845
00:39:16,239 --> 00:39:19,280
Speaker 11: someone who has long dated needs and long dated ambitions

846
00:39:19,280 --> 00:39:22,840
Speaker 11: with their business. So our typical company today often backed

847
00:39:22,840 --> 00:39:26,360
Speaker 11: by a private equity firm, a sponsor. Sometimes it's just

848
00:39:26,400 --> 00:39:30,560
Speaker 11: private family owned businesses or other corporate enterprises, but typically

849
00:39:30,640 --> 00:39:33,759
Speaker 11: a private equity backed business and they're buying a very

850
00:39:33,880 --> 00:39:36,760
Speaker 11: large company and they're looking for a long term partner

851
00:39:36,920 --> 00:39:39,759
Speaker 11: to buy it. So typically when we do a transaction,

852
00:39:40,280 --> 00:39:44,160
Speaker 11: we're lending maybe forty percent of the purchase price and

853
00:39:44,239 --> 00:39:46,760
Speaker 11: the buyer is putting up sixty percent of the capital.

854
00:39:46,840 --> 00:39:50,320
Speaker 11: So that's a very very low leverage structure compared to

855
00:39:50,360 --> 00:39:51,279
Speaker 11: what people are used to.

856
00:39:51,480 --> 00:39:53,880
Speaker 8: If you go back again ten years and twenty.

857
00:39:53,680 --> 00:39:56,920
Speaker 11: Years, and the company today, our average company in our

858
00:39:56,960 --> 00:40:01,080
Speaker 11: portfolio has over two hundred million dollars of ibadag. I mean,

859
00:40:01,080 --> 00:40:04,240
Speaker 11: these are big companies today, and that's been a dramatic

860
00:40:04,280 --> 00:40:06,160
Speaker 11: shift from ten years ago when it was really a

861
00:40:06,239 --> 00:40:08,200
Speaker 11: market for smaller businesses.

862
00:40:08,480 --> 00:40:10,760
Speaker 2: So let's get to that five to seven year time horizon,

863
00:40:10,840 --> 00:40:14,040
Speaker 2: because ten years ago that's the exact same conversation I'd

864
00:40:14,040 --> 00:40:16,480
Speaker 2: be having with private equity, right, and then we see

865
00:40:16,520 --> 00:40:19,600
Speaker 2: where things get tough and things get stickier, when vintages

866
00:40:19,640 --> 00:40:22,640
Speaker 2: don't work out or there come under different times of

867
00:40:22,680 --> 00:40:26,640
Speaker 2: market stress. How does that apply to the credit space?

868
00:40:27,360 --> 00:40:29,719
Speaker 11: So I think it applies for sure in the sense

869
00:40:29,760 --> 00:40:33,359
Speaker 11: that every market evolves. In every market we'll have it's

870
00:40:33,480 --> 00:40:36,800
Speaker 11: maybe slightly higher and lower moments, but there's an important distinction. Okay,

871
00:40:37,280 --> 00:40:39,239
Speaker 11: at the end of the day, private equity, if I

872
00:40:39,360 --> 00:40:41,680
Speaker 11: kind of use this metaphor, private equity, which is a

873
00:40:41,680 --> 00:40:47,200
Speaker 11: business I personally participated in for decades, is about mining

874
00:40:47,239 --> 00:40:49,799
Speaker 11: for gold. Right, It's about going out and maybe in

875
00:40:49,800 --> 00:40:53,200
Speaker 11: our simplified parlance, might call and to get rich strategies.

876
00:40:53,360 --> 00:40:55,600
Speaker 11: How do you out there and shoot the moon on

877
00:40:55,920 --> 00:40:59,520
Speaker 11: great returns? So they're mining for gold. Our business in

878
00:40:59,760 --> 00:41:02,480
Speaker 11: price credit is to be the picks and shovels provider

879
00:41:02,680 --> 00:41:06,200
Speaker 11: to those miners. So we're not trying to find a

880
00:41:06,239 --> 00:41:08,920
Speaker 11: big gold vein. We're not betting on the price of

881
00:41:08,960 --> 00:41:11,360
Speaker 11: gold what we're saying is if the miners are active,

882
00:41:11,400 --> 00:41:14,279
Speaker 11: and miners in this case would be any corporate user

883
00:41:14,320 --> 00:41:16,800
Speaker 11: of capital, so they are always active, we want to

884
00:41:16,800 --> 00:41:19,600
Speaker 11: supply them, and we take a less risky position, and

885
00:41:19,680 --> 00:41:23,960
Speaker 11: we expect a corollary attractive return. So on the one hand,

886
00:41:24,080 --> 00:41:26,560
Speaker 11: of course, every market evolves, and I want to suggest

887
00:41:26,560 --> 00:41:28,839
Speaker 11: anybody that lives in a vacuum. But the purpose of

888
00:41:28,880 --> 00:41:32,120
Speaker 11: our strategies and the purpose of private credit from private

889
00:41:32,120 --> 00:41:34,799
Speaker 11: credit from an investor's point of view, is to have

890
00:41:34,840 --> 00:41:39,240
Speaker 11: something that's much more about downside protection, stability and income

891
00:41:39,320 --> 00:41:42,560
Speaker 11: generation through times of uncertainty, which is a bit why

892
00:41:42,600 --> 00:41:45,040
Speaker 11: I say this sort of red environment. Today is actually

893
00:41:45,120 --> 00:41:47,480
Speaker 11: a good time to have the conversation because what we're

894
00:41:47,520 --> 00:41:51,279
Speaker 11: trying to build our portfolios and successfully have down over

895
00:41:51,320 --> 00:41:53,919
Speaker 11: one hundred billion dollars of loans, and our running loss

896
00:41:54,000 --> 00:41:56,759
Speaker 11: rates have been eleven basis points, and I think it

897
00:41:56,800 --> 00:41:58,960
Speaker 11: speaks to the idea that this is about durability and

898
00:41:59,000 --> 00:42:02,560
Speaker 11: predictability when times are uncertain. And I think it's probably

899
00:42:02,600 --> 00:42:05,520
Speaker 11: safe to say today everyone's looking around saying, gosh, it

900
00:42:05,560 --> 00:42:06,799
Speaker 11: feels uncertain out there.

901
00:42:07,160 --> 00:42:08,399
Speaker 6: Mark, we got about a minute left.

902
00:42:08,840 --> 00:42:10,440
Speaker 5: What do you say to those folks who say, as

903
00:42:10,520 --> 00:42:12,160
Speaker 5: the business evolves.

904
00:42:11,800 --> 00:42:14,400
Speaker 6: The dollars get bigger, regulation is needed. What do you

905
00:42:14,440 --> 00:42:16,000
Speaker 6: say to those folks.

906
00:42:15,640 --> 00:42:18,719
Speaker 11: Well, we're a highly regulated business as is, so you

907
00:42:18,760 --> 00:42:22,040
Speaker 11: know today, Look, we're regulated by the SEC. We're a

908
00:42:22,239 --> 00:42:24,520
Speaker 11: public company as a manager, we have public vehicles, we

909
00:42:24,600 --> 00:42:27,280
Speaker 11: have a lot of regulators we work.

910
00:42:27,160 --> 00:42:29,120
Speaker 8: With constructively, happy to do it.

911
00:42:29,520 --> 00:42:32,360
Speaker 11: I don't think if what we mean by more regulation

912
00:42:32,520 --> 00:42:36,040
Speaker 11: is more direction from sort of a central source as

913
00:42:36,120 --> 00:42:39,160
Speaker 11: to what you should or shouldn't lend money to Remember,

914
00:42:39,560 --> 00:42:41,960
Speaker 11: when we look back where the sources of problems have been,

915
00:42:42,480 --> 00:42:46,320
Speaker 11: they actually tend to be in the regulated institutions, not outside.

916
00:42:46,440 --> 00:42:47,280
Speaker 8: Even recently.

917
00:42:47,440 --> 00:42:50,359
Speaker 11: Of course, everyone remembers the financial crisis, but don't forget

918
00:42:50,400 --> 00:42:52,600
Speaker 11: over the last few years as private credit has thrived.

919
00:42:52,680 --> 00:42:55,719
Speaker 11: One of the moments we worked through was the run

920
00:42:55,760 --> 00:42:58,920
Speaker 11: on the bank at Silicon Valley Bank. So you know,

921
00:42:58,960 --> 00:43:01,320
Speaker 11: what's old is new. If you have one day capital

922
00:43:01,320 --> 00:43:03,360
Speaker 11: and you do long term things with it, that's challenging.

923
00:43:03,440 --> 00:43:06,240
Speaker 11: We have long term capital to do long term things,

924
00:43:06,640 --> 00:43:08,000
Speaker 11: So I think at the end of the day, look,

925
00:43:08,000 --> 00:43:10,640
Speaker 11: we don't touch depositors. We're not systemic. So it's a

926
00:43:10,719 --> 00:43:14,719
Speaker 11: nice compliment to a traditional banking market and a public marketplace.

927
00:43:15,239 --> 00:43:16,759
Speaker 6: Great stuff, Mark, thank you so much for your time.

928
00:43:16,760 --> 00:43:19,560
Speaker 5: Market lipshoalw It's Blue Out Capital co CEO talking about

929
00:43:19,600 --> 00:43:21,920
Speaker 5: the private credit business and what a growth business it

930
00:43:22,000 --> 00:43:22,799
Speaker 5: has been for sure.

931
00:43:23,600 --> 00:43:28,279
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932
00:43:28,480 --> 00:43:32,440
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933
00:43:32,640 --> 00:43:35,920
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934
00:43:36,040 --> 00:43:39,880
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935
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