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Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul swing you

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Speaker 1: along with my co host Lisa Brahma Waits. Each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money, whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple

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Speaker 1: podcast or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. We are awaiting the minutes from

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Speaker 1: the last f O MC meeting. They are due out

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Speaker 1: today at two pm Eastern time. Although we have a

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Speaker 1: good sense of what will probably be the headline here

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Speaker 1: and will have to do with the expansion of the

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Speaker 1: balance sheet that will not by any means be called

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Speaker 1: quantitative easing by Fed officials. Joining us here in our

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Speaker 1: interactive broker studios is Phil Blancado. He is chief executive

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Speaker 1: officer for Leidenburg Salmon Asset Management funds UH and I

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Speaker 1: I want to start their Phil the idea that the

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Speaker 1: Fed seems to be poised to expand the balance sheet

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Speaker 1: in short order, according to what j. Pali said yesterday,

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Speaker 1: but this is not necessarily part of any sort of easing.

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Speaker 1: Do you buy that well? I think he said clearly

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Speaker 1: this is not que profoundly more than once. Actually I

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Speaker 1: agree with that for a minute. I would give the

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Speaker 1: FED credit on this front. That we took a three

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Speaker 1: trillion dollar balance sheet and reduced it down to one

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Speaker 1: point four and in that process there were going to

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Speaker 1: be some hiccups along the way, and I think this

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Speaker 1: is the one thing we can point to that they

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Speaker 1: got to where they wanted to be. They want to

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Speaker 1: where they the right amount of cash on hand to

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Speaker 1: be backing up the reserves, backing up the banking system,

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Speaker 1: and now they've reached where Okay, we probably went a

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Speaker 1: little too far to tune of a hundred and fifty

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Speaker 1: two billion dollars, and then that would solve this problem.

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Speaker 1: I don't think there's a systemic problem. Also had a

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Speaker 1: little bit of the calendar involved. Also had a little

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Speaker 1: bit to do with how much banks are going to

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Speaker 1: loan to each other. So the FEDS doing what it's

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Speaker 1: supposed to do, which is fixed these disruptions in the market.

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Speaker 1: I'm okay with what happened that. I don't think it's

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Speaker 1: a big deal, so Phil, the expectation is that the

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Speaker 1: FED will continue to ease maybe at the end of

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Speaker 1: this month. I kind of argument, however, might be, you know,

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Speaker 1: what do they really need to the economies? You know

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Speaker 1: pretty doing pretty well. Yes, yes we know manufacturing this week,

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Speaker 1: but the consumers still hanging in there. Isn't it better

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Speaker 1: to save our ammunition for later if and when the

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Speaker 1: economy perhaps weekends. Further to the Chairman's comments just today

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Speaker 1: that the US economy is actually pretty good, there's nothing

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Speaker 1: hot in the economy, and I would agree on both fronts.

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Speaker 1: When your consumer is gainfully employed at a historical level

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Speaker 1: of loads of unemployment, you're seeing wages will be a

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Speaker 1: bit modestly but still going higher. It's hard for me

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Speaker 1: to understand why we feel this dramatic need to cut

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Speaker 1: to your points save it for later. Now, I would say,

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Speaker 1: what the Fed funds rate is higher than the tenure.

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Speaker 1: That concerns me. I'd rather see those flat. Why. I

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Speaker 1: want to see more stimulus on both sides of the curve,

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Speaker 1: not just a short end of the curve. So for

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Speaker 1: that reason I could see another quarter point coming out

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Speaker 1: That makes sense to me. But beyond that, why use

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Speaker 1: up that ammunition? Now use up that firepower when you

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Speaker 1: might need it if something dressed it happens down the road.

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Speaker 1: So what are you buying right now? That's a great

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Speaker 1: question for me. I still want to rotate towards. For

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Speaker 1: First of all, in your equity portfolios, we're up over

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Speaker 1: near there on the SMP five D. Give or take

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Speaker 1: a point or two. Take some profit. I think we've

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Speaker 1: forgotten about rule one on one. You're in October, you've

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Speaker 1: made a lot of money. Take someone at the table.

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Speaker 1: Then rotate towards two places. First, short term fixed income

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Speaker 1: is yielding over two percent. That's a panacea. Right now.

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Speaker 1: You're doing really well by hiding out in your shirt reserves.

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Speaker 1: Nothing wrong with waiting for this to resolve yourself, whether

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Speaker 1: it's the tariff battle or something along those lines. But

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Speaker 1: add to that, where your opportunities are, you could still

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Speaker 1: go into that staple sector, albeit carefully, and find those

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Speaker 1: quality names they're going to earn your income. Whether it's

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Speaker 1: a cost co, whether it's a Walmart. You could even

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Speaker 1: look at something like a tech company that's got a

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Speaker 1: value bent to it, like a Microsoft, or even to

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Speaker 1: a degree to a degree, Apple, who has had really

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Speaker 1: spectacular that to come out recently. Where you're but you're

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Speaker 1: getting paid a nice dividend, So that's where your rotate now.

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Speaker 1: So you know the we have the trade delegation from

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Speaker 1: China coming into Washington, the negotiations start tomorrow. What do

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Speaker 1: you think the market's kind of discounting right now? Is

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Speaker 1: it released a trade because that's been one of the

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Speaker 1: big issues that that's been whipping the market around, one

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Speaker 1: of my favorite topics. I think there is this expectation

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Speaker 1: that this is going to get solved in the blank

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Speaker 1: of and I I think that's really a reach. There's

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Speaker 1: just too many movies, too many people who are actually

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Speaker 1: expecting an easy solution at this point. Well, here's why

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Speaker 1: I think that. Look at the market's reaction just today.

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Speaker 1: I mean, grant the light volume day, but we watch

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Speaker 1: these crazy minuscule headlines and we're up two hundred, down

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Speaker 1: two hundred, and I'm saying to myself, there must be

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Speaker 1: some enigma of people out there that think that this

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Speaker 1: is going to get solved instantly. That's just not gonna

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Speaker 1: work that way. Whether it's the election cycle, whether it's

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Speaker 1: China wanted to solve this on intellectual property issue, or

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Speaker 1: it's just what the next president mayor man, all of

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Speaker 1: these components, I think This is a multi year issue,

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Speaker 1: not a multi month issue, and for that reason we're

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Speaker 1: gonna be stuck with this for a while. I want

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Speaker 1: to ask you a question that I've been thinking about

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Speaker 1: all morning, which is at a time of an everything rally.

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Speaker 1: Yet again, it's not a comfortable everything rally with a

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Speaker 1: lot of rotation under the surface, but if you look

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Speaker 1: at the averages, it is a very strong performance nonetheless

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Speaker 1: in bonds and equities. What's the argument as an active

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Speaker 1: manager at that point when the Fed's basically back stopping markets,

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Speaker 1: suppressing volatility and forcing people to do things that they're

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Speaker 1: uncomfortable with and into assets that are going to keep

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Speaker 1: rallying even if they shouldn't be. This is behavioral finance.

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Speaker 1: One oh one, my gosh. Rup now on the act

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Speaker 1: nearly on the SMP. Take your money off the table.

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Speaker 1: We thrilled you made this kind of money this year,

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Speaker 1: and rotate to a neutral position because of the point

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Speaker 1: you made. Whether you call this a potempan market, whether

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Speaker 1: it's financed by the FEB artificial earnings, it's time to

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Speaker 1: take some money off the table. Yeah, but the FED

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Speaker 1: is still going to be back stopping the market over

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Speaker 1: the next couple of months and into next year. So

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Speaker 1: my question is you could take out you know, your money,

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Speaker 1: but then when you put it back it might actually

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Speaker 1: be at an even higher point. Right, neutral not overweight.

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Speaker 1: There's the answer to that is don't go underweight, go neutral,

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Speaker 1: And by that you're right about the FED. But I

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Speaker 1: don't think the FED could stimulate enough to really right

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Speaker 1: as is higher. The reality is that the Canarian coal

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Speaker 1: mine here is do we get a business procession that

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Speaker 1: impacts unemployment and causes consumer confidence to a road. So

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Speaker 1: far it hasn't happened, and if it doesn't happen, we're

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Speaker 1: gonna trade along in this bound for a while until

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Speaker 1: we get a catalyst higher or lower. And for me,

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Speaker 1: I don't want to take that political or that economic risk,

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Speaker 1: So neutral is a lot safer than overweight. We are

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Speaker 1: coming up on earnings starting next week. It's something we

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Speaker 1: haven't talked about, probably for because there's been so much

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Speaker 1: more on the macro front to talk about. But earnings

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Speaker 1: outlook isn't that great. I don't think the earnings necessarily

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Speaker 1: are something that supports equities. How are you thinking about

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Speaker 1: the echo markets going into earnings? The most important earning

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Speaker 1: season in three years. Simply put, this is the one

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Speaker 1: that matters. This is the guerrilla because the first two

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Speaker 1: we got through, whether they ratcheted down expectations or we

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Speaker 1: somehow surpassed it. And I'm less worried about the e

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Speaker 1: I'm more worried about the revenue side of the sales side.

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Speaker 1: If we can get positive sales momentum plus two plus

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Speaker 1: three percent, we're going to survive this because then we

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Speaker 1: get into the fourth quarter of the year, we get

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Speaker 1: in the last year the presidential cycle, which tendably stimulative.

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Speaker 1: Fourth quote of tends to be a big buying season

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Speaker 1: as we all know, Holidays, Santa clas Rally, blah blah blah.

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Speaker 1: So if we can get through this earning seven, we're

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Speaker 1: gonna be okay. But the key is if we go

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Speaker 1: negative on sales and earnings, it could be very problematic.

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Speaker 1: From markets. I could see it's giving back a good

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Speaker 1: percent would not surprise me at all. Phil Blancada, thank

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Speaker 1: you so much for joining us. Well. You apppreciate you

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Speaker 1: coming and sharing your thoughts. Fills the chief executive officer

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Speaker 1: for laden Berg tom and Asset Management Funds. Braving the

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Speaker 1: rain here in New York City, joining us here in

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Speaker 1: a Bloomberg Interactive broker studio giving us some thoughts on

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Speaker 1: the markets. Yeah, I want to shift gears to the

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Speaker 1: bankrupt utility in California, PG and E. It has come

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Speaker 1: up with a new defense against wildfires, simply shutting down

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Speaker 1: joining us now Kick Conneledge Senior Industrials and Utility is

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Speaker 1: analyst for Bloomberg Intelligence. Is this a viable solution to

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Speaker 1: basically just say to everybody, Hey, guys, you know what,

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Speaker 1: the risk of fire is high, So we're just gonna

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Speaker 1: shut down your energy for a couple of days and

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Speaker 1: uh just you know, we're not responsible for any fires

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Speaker 1: because we're not operating. Well. We're going to find out

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Speaker 1: how viable it is, obviously, but I think it's to

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Speaker 1: my mind, it's it's clearly in the context of uh

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Speaker 1: we lost billions and billions of dollars and we went

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Speaker 1: bankrupt by having the electricity on uh in in these conditions, right,

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Speaker 1: so that you know, there's I don't think there's any

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Speaker 1: way to tell from the outside. Are they being quote

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Speaker 1: unquote too cautious or overly you know, aware of possibilities.

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Speaker 1: Is there a one percent chance that something could happen

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Speaker 1: or a ten percent chance obviously that would that would

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Speaker 1: make a big difference. But they're clearly airing on the

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Speaker 1: side of caution and trying not to burn down the

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Speaker 1: whole counties the way they've done before. Well, I've seen

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Speaker 1: the map of the the outage area, um and it's

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Speaker 1: just a huge part of the you know, the central

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Speaker 1: northern part of the state and impact a lot of people.

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Speaker 1: Is there any precedent for this happening before? I think

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Speaker 1: they're on on a smaller scale, There's definitely been these

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Speaker 1: kinds of situations. I mean, utilities do it to some

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Speaker 1: extent a lot of the time when there are floods

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Speaker 1: and other you know, problematic situations where there are live

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Speaker 1: wires in you know that could really hurt people. Is

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Speaker 1: it just the up to PGEN or the utilities to

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Speaker 1: decide when and how and they do it or do

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Speaker 1: they have to get approval from the regulators? It's almost like, hey,

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Speaker 1: who's watching out for the homeowners and who are people

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Speaker 1: who need electricity? Uh? My understanding is they can do

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Speaker 1: it on their own. They're the experts. They have to,

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Speaker 1: but they certainly have people potentially second guessing them. If

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Speaker 1: they keep doing it consistently and enough people feel like

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Speaker 1: it wasn't a problem and they're making it a problem.

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Speaker 1: U uh. And especially if bad things happen to people,

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Speaker 1: like medical devices go you know, go off and can't

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Speaker 1: be helped and so on, then they will have that uh,

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Speaker 1: you know, that fallout from from other people. Yeah, and

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Speaker 1: then there is this that the director of the Climate

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Speaker 1: Energy Policy Program at Stanford University estimated that the economic

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Speaker 1: impact could rise to as much as two point six

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Speaker 1: billion dollars for PG and ease blackout for just two days.

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Speaker 1: So there is a sort of economic bleed through in

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Speaker 1: addition to just the inconvenience. I have to wonder, though,

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Speaker 1: why is it that they have to put the the

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Speaker 1: the area at risk of a fire with their with

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Speaker 1: their infrastructure. I mean, I don't understand exactly. Are there

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Speaker 1: just live wires next to trees hanging out there? I mean,

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Speaker 1: that's basically it is that northern California is an especially

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Speaker 1: um problematic area to have big industrial operations. And there's

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Speaker 1: a lot of mountains, that's a lot of trees, there's

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Speaker 1: a lot of you know, steep uh. There's a lot

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Speaker 1: of of towns in remote areas, So there's a lot

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Speaker 1: of wires going all over the place. If you want

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Speaker 1: to have wires, you know that that go to where

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Speaker 1: people are as opposed to having people run their own

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Speaker 1: generator or their own rooftop solars. So arguably that would

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Speaker 1: be kind of a a better solution someday. But obviously

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Speaker 1: we're talking about hundreds of thousands of customers, millions of

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Speaker 1: people being affected by this. It's not going to happen

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Speaker 1: overnight if they did fix it that way. So real quick,

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Speaker 1: um kid, just give us a sense of how pg

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Speaker 1: n E is doing right now. I know they're still

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Speaker 1: in bankruptcy. How are they? You know, everybody um is

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Speaker 1: has their eye on June next year, which is when

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Speaker 1: uh they have to be out of bankruptcy if they're

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Speaker 1: going to take advantage of the multibillion dollar um fun

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Speaker 1: that the state is set up. So they're going back

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Speaker 1: and forth with the victims of the fires, with the

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Speaker 1: bond holders over potentially reaching some settlement at some point here. Uh.

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Speaker 1: You know, it's an intricate uh process in bankruptcy. But

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Speaker 1: it looks for now like the current shareholders of PGNI

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Speaker 1: have the their own exclusivity still in place. But you know,

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Speaker 1: the judge ultimately makes that decision, and that's coming up

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Speaker 1: judge any day. He's supposed to make a decision on

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Speaker 1: whether they keep exclusivity. Uh, and that would you know,

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Speaker 1: tend to lean in one direction or the other to

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Speaker 1: the you know, outside bondholders or the shareholders. Okay, kick

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Speaker 1: kind of LEDs. Thanks so much for joining us kid

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Speaker 1: as a senior industrials and utilities animals for Bloomberg Intelligence,

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Speaker 1: joining us here in our Bloomberg Interactive Broker studio getting

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Speaker 1: update on PGEN and potentially and shutting down power for

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Speaker 1: you know, half million homes. And there are all these

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Speaker 1: images of people going to grocery stores and wocking up

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Speaker 1: on flashlights. I was thinking to myself though, I mean,

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Speaker 1: what if somebody lights a candle to get light during

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Speaker 1: a high fire period because they don't have electricity. I mean,

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Speaker 1: my mind was going a little a little while exactly

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Speaker 1: We'll see how this goes. I suspect that maybe a

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Speaker 1: little bit of an experiment here to see how it goes.

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Speaker 1: But clearly the liability has been major for those utilities

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Speaker 1: out there. Blimberg reported earlier today that Turkey did begin

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Speaker 1: their offensive into Syria after the US said that it

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Speaker 1: was going to withdraw. Now there are reports that there

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Speaker 1: are rockets being shot from Syria towards Turkey. Joining US

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Speaker 1: now is Ali Cenar, president of the Turkish Heritage Organization, Ali,

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Speaker 1: thank you so much for joining US. I want to

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Speaker 1: just start with what has Turkey's role traditionally been with

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Speaker 1: Syria and given some of the turmoil that we've seen

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Speaker 1: in that nation. It's government. Sure, as you know, there's

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Speaker 1: a war going on over six seven years in Syria

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Speaker 1: and Turkey is one of the country that's suffering from

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Speaker 1: the Syria of war. Turkeys hosting over three point six

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Speaker 1: million Syrian refugees and ISIS attack fourteen times to Turkey

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Speaker 1: and lost three hundred four lives by ISIS attacks. So

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Speaker 1: Turkey is fighting against terrorism for many years and Turkey

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Speaker 1: at the national security concern from the neighborhood. That's why

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Speaker 1: this operation was needed by the Turkish government and with

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Speaker 1: the Trump administration decisions, they gave the green light Turkey's

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Speaker 1: operation in Syria. Ali, you know, one, if you could

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Speaker 1: just give us a sense of what the goals are

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Speaker 1: are of the Turkish government with this operation. Sure, So

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Speaker 1: the operation will NERA line is terror threats against Turkey.

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Speaker 1: That me talk about terror threats. As you know, YPG

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Speaker 1: is linked to p k K, which is a terrorist

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Speaker 1: organization recognized by United States and European Union. So Turkey

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Speaker 1: is saying that suing course label as as Sarian course,

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Speaker 1: but it's a terrorist organization. So Turkey feels the threat

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Speaker 1: from YPG, which is them two p k K. So

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Speaker 1: the aim is to naturalize the terror threats in Syria.

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Speaker 1: The second objective is led to establishment of a safe

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Speaker 1: song they play that can be a facilitation the return

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Speaker 1: of serial refugees to their host As I said, there

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Speaker 1: are over three point six million serial refugees and it's

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Speaker 1: the cost of forty billion dollars to Turkey. So Turkey

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Speaker 1: wants the Sudian refugees to go back to their homeland.

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Speaker 1: Therefore this operation will also help them to go back

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Speaker 1: to their own country. How much involvement are you expecting

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Speaker 1: from some Turkish allies I'm thinking about, for example of Russia.

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Speaker 1: Any idea that there has been speculation that that that

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Speaker 1: Vladimir Putin will want to get involved and help Turkey

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Speaker 1: out in order to get sort of a foothold in

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Speaker 1: a strategically beneficial area. I know today Present ar Don

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Speaker 1: and Putting spoke on the phone and gave some information

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Speaker 1: about operation, but overalls, I mean lookated Turkey and Russia

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Speaker 1: are not on the same page. In Syria. Russia is

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Speaker 1: supporting ASSAT and because of the crisis, Russian and ran

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Speaker 1: are behind of this IT disaster. So I think Turkyo

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Speaker 1: and United States have more the same agenda in the region.

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Speaker 1: I don't think Russia is happy with the Turkey's operation,

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Speaker 1: but at the same time, Russian troops are not in

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Speaker 1: that region. I'm we are talking about operation in northern Syria,

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Speaker 1: which is domained by YPG, which is into p k K.

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Speaker 1: So as I said this, I think Russia and Turkey partnership.

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Speaker 1: I don't think it's working in Syria and which shouldn't be.

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Speaker 1: So I know Turkey informed Present Putting, but at the

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Speaker 1: same time they're not also happy with the operation. If

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Speaker 1: the U. S And Turkey are more aligned when it

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Speaker 1: comes to Syria than many people think, why hasn't this

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Speaker 1: happened earlier Because Turkey many times explained the concern about YPG,

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Speaker 1: which is linked to p KK terrorious organizations, and Turkey

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Speaker 1: as United States not support YPG or train them or

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Speaker 1: armed them. Turkey also offered to fight against ISIS in

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Speaker 1: the region, but United States chose to work with YPG,

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Speaker 1: and YPG is clearly working with p k K. They

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Speaker 1: are linked to each other. That's why Turkey felt a

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Speaker 1: threat and it didn't work out. But at the same time,

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Speaker 1: United States and Turkey wants are said to be removed

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Speaker 1: and both countries, both NATAL airlines are also we're working

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Speaker 1: on it lit crisis, but unfortunately for the Northern Syria,

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Speaker 1: two NATAL allies didn't agree on YPG. It just quickly

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Speaker 1: thirty seconds. What is the expected duration of this military operation.

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Speaker 1: My expectation is at least two to three weeks. I

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Speaker 1: know President are Domb you'll be meeting President Trump on

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Speaker 1: November thirteen, So till then, I think we might see

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Speaker 1: a clear outcome or some results out of this operation.

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Speaker 1: But if it takes longer, it's it would be bad

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Speaker 1: for Turkey because there's a best semear champion against Turkey

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Speaker 1: for this operation. So I don't think it's gonna take

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Speaker 1: for many months to complete this operation. Alice, thank you

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Speaker 1: so much for joining us. Ali is a president of

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Speaker 1: the Turkish Heritage Organization, joining us on the phone, giving

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Speaker 1: us his thoughts on the operation taking place just beginning

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Speaker 1: today Turkey entering Syria to retake some territory there. As

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Speaker 1: Mr Senor explained to us, we are very lucky to

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Speaker 1: have with us here in our Bloomberg Gonna Active broker

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Speaker 1: studio studios. Noah Gottiner, Chairman and Chief executive Officer of

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Speaker 1: Duff and Phelps, which advises the whole host of private

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Speaker 1: equity firms and is also a recipient, has been a

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Speaker 1: recipient of private equity funding itself and has grown as

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Speaker 1: a result of it. So uh a great bird's eye

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Speaker 1: view into the market at a time of growing emphasis

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Speaker 1: on it, certainly by way of the Business Week cover

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Speaker 1: feature on private this week. No, I want to start

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Speaker 1: with the idea that we're seeing so many companies that

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Speaker 1: are going that are moving from private to public seeing

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Speaker 1: a rocky road, and whether there's any significance to that.

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Speaker 1: What do you think the main takeaway should be? Well?

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Speaker 1: I think that, um, you have seen some difficult situations, Lisa,

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Speaker 1: with public offerings that have not done well, and I

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Speaker 1: think that what the public has woken up to is

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Speaker 1: they want to see a path to profitability. It's no

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Speaker 1: longer great just to keep losing money. It's okay if

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Speaker 1: there's a way to become profitable and to have a

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Speaker 1: profitable model. I think there's also right now, as the

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Speaker 1: exuberance has died down, a much greater focus on good

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Speaker 1: governance and transparency. Those things kind of got lost in

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Speaker 1: all the excitement of the heady public offerings, but now

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Speaker 1: people are focused on that. So no, when I look

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Speaker 1: at the private equity business, UM, it seems to me

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Speaker 1: I've been a Wall Street almost third earty years. It's

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Speaker 1: kind of the one of the last bastions where you

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Speaker 1: can make outsized returns UM. One of the concerns, however,

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Speaker 1: is there's a lot of money slashing around in private equity. Word,

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Speaker 1: every time we open the paper, look at the Bloomberg terminal,

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Speaker 1: is another multibillion dollar fund being raised. My concern, I

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Speaker 1: think some concerning a lot investors is too much money

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Speaker 1: chasing too few deals, pushing valuations of how do you

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Speaker 1: view the market right now? Well, Paul, that's absolutely right.

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Speaker 1: More money has come into the industry. Private equity in

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Speaker 1: in in a way is almost a victim of its

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Speaker 1: own success. It's done well, it's generated great returns and

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Speaker 1: money has kept flowing into private equity. That's caused prices

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Speaker 1: to go up, and that's put pressure on private equity

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Speaker 1: firms to really find different ways to create value on

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Speaker 1: their investments and really focus on growth. So the old

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Speaker 1: days of just cut cutting costs and getting the low

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Speaker 1: hanging fruit isn't sufficient to generate the returns that private

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Speaker 1: equity needs to generate today. So I want to dig

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Speaker 1: in a little bit to some of the sect ers

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Speaker 1: and where some of your clients are seeing opportunities right now.

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Speaker 1: I was speaking with James Gellard, chairman and CEO of

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Speaker 1: Rapid Ratings, and he was saying that there are a

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Speaker 1: whole slew of companies that are probably overvalued in the

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Speaker 1: private space, particularly what within the energy sector. Are actually no,

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Speaker 1: he didn't say energy, tech and biotech. He said energy.

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Speaker 1: He actually sees an opportunity given how beating up it's gotten.

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Speaker 1: Are you hearing something similar from your clients that they're

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Speaker 1: trying to steer steer clear from tech and biotech names

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Speaker 1: at this point? Well, listen, Whenever valuations begin to rise

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Speaker 1: dramatically in certain sectors, people become more cautious but the

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Speaker 1: realities there are opportunities in every sector, in every slice

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Speaker 1: of the economy, and private equity guys are really good

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Speaker 1: at finding those areas where there there is the possibility

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Speaker 1: of transformation and creating value. So I wouldn't rule out

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Speaker 1: any sectors, uh where where there may be opportunities for

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Speaker 1: private equity. One of things I noticed in the private

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Speaker 1: equity over over the years is only the big get bigger,

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Speaker 1: whether it's you know, KKR, Blackstone or Carlisle Group. Is

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Speaker 1: there is there still a market for kind of the

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Speaker 1: smaller private equity firms doing smaller deals or is it

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Speaker 1: just all the spoils are going to the big players.

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Speaker 1: That's a great question, Paul. I think it comes back

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Speaker 1: to that to that earlier question, is there going to

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Speaker 1: be a shake up in private equity? And obviously, um

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Speaker 1: the higher performing firms are always going to do well.

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Speaker 1: The lower performing firms are going to fall away or

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Speaker 1: may not be in business. But there's another um bifurcation

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Speaker 1: I would say in private equity, which is firms will

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Speaker 1: either get very big like you described and have multi

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Speaker 1: strategies around capital deployment and become global, or if they're

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Speaker 1: smaller they'll probably be very specialized around certain industries and

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Speaker 1: create their competitive advantage through the intellectual capital they have,

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Speaker 1: whether it's financial services or technology or software or whatever.

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Speaker 1: One thing I wonder about with the big companies, the

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Speaker 1: big private equity firms is how difficult it is for

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Speaker 1: them to find big enough companies to deploy cash too.

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Speaker 1: Because they have so much money, they have to do

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Speaker 1: bigger deals in order to make a dent. Has that

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Speaker 1: been problematic it I you know, I would say maybe, Uh,

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Speaker 1: they definitely have to write bigger checks. Uh, they have

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Speaker 1: to find bigger companies to buy. But you know, it's

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00:24:33,400 --> 00:24:36,200
Speaker 1: a big, brave world out there. There's a lot there,

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00:24:36,440 --> 00:24:39,240
Speaker 1: but there's a lot of There has been talk that

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Speaker 1: some of the biggest private companies get the biggest amounts

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00:24:43,359 --> 00:24:46,760
Speaker 1: of money new money. Uh, they get flooded at them

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Speaker 1: just because of this dynamic, because they're big enough to

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00:24:49,600 --> 00:24:52,680
Speaker 1: receive it. I mean, what's the fear that it sort

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00:24:52,680 --> 00:24:56,080
Speaker 1: of creates behemoths that aren't ready to be behemoths yet?

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00:24:56,760 --> 00:24:59,840
Speaker 1: I listen, I think that those those fears, I guess

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00:25:00,000 --> 00:25:04,160
Speaker 1: are legitimate. Um, but there are opportunities for private equity

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00:25:04,200 --> 00:25:08,119
Speaker 1: with big companies, small companies. There are ways to navigate,

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Speaker 1: So no, one of the trends I thought was interesting.

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Speaker 1: I've seen a KKRS they've brought a lot of the

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Speaker 1: capital markets operations in house. Um, I just trying to

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Speaker 1: save fees on what they pay to the investment banks. Um.

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Speaker 1: Do you think this is a trend across the industry

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Speaker 1: because I haven't necessarily seen others do it to the

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Speaker 1: extent KKR has, But I would think it would create

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Speaker 1: some conflicts with their investment banking seal side, you know,

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Speaker 1: customers partners. However you want to terminate relationship. Yeah, listen, Uh,

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Speaker 1: going back to the previous point, private equity firms have

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Speaker 1: to find a way to distinguish themselves, to differentiate themselves.

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Speaker 1: KKR has has, as you've described, used that strategy, which

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Speaker 1: actually has worked very effectively for them, and I actually

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00:25:50,040 --> 00:25:53,919
Speaker 1: actually haven't seen uh that conflicts holding them up in

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00:25:53,920 --> 00:25:58,080
Speaker 1: any way. And other firms like Blackstone have become sort

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00:25:58,080 --> 00:26:01,400
Speaker 1: of diversified asset managers and have done a fantastic job

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00:26:01,440 --> 00:26:04,600
Speaker 1: as well. So there are different ways of of skinning

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Speaker 1: the baby. No, thank you so much for joining us.

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Speaker 1: Really appreciate your thoughts. No, it got Deaner, Chairman and

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Speaker 1: CEO of Duffin Phelps giving us the lay of the

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Speaker 1: land in the financial services business. Business focusing on the

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Speaker 1: private equity UH portion of the financial services industry, and

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Speaker 1: it continues to be an asset class that just really

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Speaker 1: attracts a tremendous amount of capital from all parts, whether

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Speaker 1: it's pension funds or endowments. It just seems to be

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Speaker 1: one of those asset classes I think as people look

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Speaker 1: for yield and return increasing and looking to private equity.

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Speaker 1: Thanks for listening to the Bloomberg P and L podcast.

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Speaker 1: You can subscribe and listen to interviews at Apple Podcasts

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00:26:41,760 --> 00:26:44,879
Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on

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00:26:44,880 --> 00:26:47,560
Speaker 1: Twitter at pt Sweeney. I'm Lisa abram Woyds. I'm on

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00:26:47,560 --> 00:26:50,480
Speaker 1: Twitter at Lisa abramoy It's one before the podcast. You

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00:26:50,480 --> 00:26:53,000
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio