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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Let's just talk through this series of initiatives that you've

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Speaker 2: done in the region over the past twelve months, because

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Speaker 2: for what I can see, you're really doubling down in

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Speaker 2: your asset management business. Earlier this year, UNLS a partnership

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Speaker 2: with PIF in asset management. Last week you ANDLS that

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Speaker 2: you were expanding wealth management in Saudi Arabia as well.

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Speaker 2: So you know, what's the vision here and what's the

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Speaker 2: kind of growth that you're looking.

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Speaker 3: To Chief, Well, we're certainly excited about what's going on

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Speaker 3: in Saudi Arabia and what's going on in the GCC

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Speaker 3: more broadly. I think it's a big opportunity for our business.

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Speaker 3: We've been here for a while, but we've certainly been

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Speaker 3: investing in expanding. You know, here in Saudi Arabia. We

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Speaker 3: opened a new office this year. We've got about twenty

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Speaker 3: people on the ground here, but we're probably headed to

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Speaker 3: about sixty and the big reason for that expansion is

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Speaker 3: we've recently launched the initiative of our high end private

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Speaker 3: wealth business here in the region, and so that will

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Speaker 3: bring more resources, more attention, and more focus. We've been

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Speaker 3: in the region for quite some time. We've been active

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Speaker 3: as a member of the TATTLE. I think we were

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Speaker 3: one of the early participants in the equity markets here,

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Speaker 3: and so we've been very, very involved in the equity

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Speaker 3: markets as an international firm. We've led some of the

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Speaker 3: largest IPOs in the region. I think you're going to

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Speaker 3: continue to see an influx of capital markets transactions, and I.

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Speaker 1: Think that's something that certainly we want to sit in

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Speaker 1: the middle of those flows.

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Speaker 3: Financing has always been core to Goldman Sachs strategy in

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Speaker 3: any part of the world. You mentioned our partnership with

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Speaker 3: a private investment fund around private credit. That's something we're

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Speaker 3: certainly excited about too. So when you step back and

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Speaker 3: you think about the progress here in the Kingdom, the

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Speaker 3: need for foreign direct investment to come in to continue

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Speaker 3: to allow the population here to participate more economically, the

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Speaker 3: changes that are coming from the investment that the Kingdom's

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Speaker 3: making in infrastructure and the local economy here. We think

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Speaker 3: it's great opportunity for Goldman Sachs to continue to partner.

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Speaker 1: With the Kingdom.

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Speaker 2: Do you see that investment coming in.

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Speaker 1: I think there's great opportunity.

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Speaker 3: I think it's one of the things that the Crown

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Speaker 3: Prince is very focused on is how do you look

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Speaker 3: at when you think about, you know, the exports, particularly

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Speaker 3: of energy here, how do you create a more localized economy.

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Speaker 1: And so I do see signs of.

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Speaker 3: An increase in that activity, particularly on things like tourism

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Speaker 3: and investment infrastructure that can support tourism, but also in

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Speaker 3: certain manufacturing areas. And I do think one of the

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Speaker 3: things that's interesting is AI and the ability for there

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Speaker 3: to be AI infrastructure here that can be used and

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Speaker 3: can be exported to different places in the region.

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Speaker 2: Yeah, and certainly many people are eyeing up the opportunities there.

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Speaker 2: You also opened up an office in Kuwait as well,

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Speaker 2: so talk us through the plantin sure.

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Speaker 3: We have a partnership with Kuwait, and we've actually we've

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Speaker 3: actually been in Kuwait and have done business in Kuwait

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Speaker 3: going back to the nineteen seventies, so it's a long

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Speaker 3: term partnership. What I think is interesting about what's going

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Speaker 3: on in Kuwait at the moment is there's a real

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Speaker 3: effort after a period of time following the war in

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Speaker 3: the nineteen nineties where they really did not put the

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Speaker 3: capital into the infrastructure and growth locally and they had

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Speaker 3: a legislative branch that was stopping progress. The emir now

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Speaker 3: is taking action to really spur significant investments, significant growth,

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Speaker 3: and we're very proud to partner with the leadership there

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Speaker 3: and helping them think through strategically how to expand that growth.

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Speaker 2: So Golden has offices now in pretty much all of

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Speaker 2: the financial hubs of the region. And I just wonder

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Speaker 2: whether you think it is necessary or it helps to

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Speaker 2: get access to these types of pools of capital, you know,

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Speaker 2: to these long term commitments. Actually having a physical presence.

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Speaker 1: In the country, I think it helps enormously.

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Speaker 3: And you know, the world changes and there's lots of

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Speaker 3: technology and there's lots of flexibility, but showing up matters.

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Speaker 1: You don't have to look much farther than outside of us.

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Speaker 3: Here today, they're an awful lot of people from all

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Speaker 3: over the world that have shown up here because they

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Speaker 3: want to build relationships, partnerships, they want to participate. And

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Speaker 3: so whether it's here in this region or you can

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Speaker 3: go back to the United States. You know, why do

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Speaker 3: we have localized offices all across the country in the

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Speaker 3: United States, Because in those communities, people want presents, they

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Speaker 3: want direct connectivity, They want to show up. While technology

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Speaker 3: in the world evolves, human to human contact is not

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Speaker 3: going away.

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Speaker 2: Yeah, no, that's true. That's a fair point. But do

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Speaker 2: you think it's it's also fair to say that, you know,

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Speaker 2: in the old days, and typically you know, funds would

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Speaker 2: come here to get capital and then offer investment returns,

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Speaker 2: and nowadays socceral wealth funds are saying it's not just

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Speaker 2: enough to offer us investment returns.

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Speaker 3: Well, I think the whole economic the whole scope of

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Speaker 3: economic activity has has really changed enormously. There's no question

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Speaker 3: if you go back, you know, you know, my old

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Speaker 3: days are a lot older than your old days. But

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Speaker 3: if you go back, if you go back, if you

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Speaker 3: go back a while, these nations were exporters of capital

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Speaker 3: around the world, and they had not built the infrastructure

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Speaker 3: of professional investment capabilities here locally, and so they were

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Speaker 3: outsourcing those capabilities to institutions like ours and others. Now

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Speaker 3: they're really making long term investments to build their economies,

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Speaker 3: to allow their populations to participate, to attract investment here,

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Speaker 3: and so what they need, and they've got incredible investment

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Speaker 3: infrastructures here localized on the ground. What they need or

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Speaker 3: ideas What they need are liquidity and capital. What they

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Speaker 3: need is strategic initiatives. And so we're just in a

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Speaker 3: moment in time where they have the capacity to do

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Speaker 3: many more interesting things to.

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Speaker 1: Build their economies.

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Speaker 3: Think about Saudi Arabia here in the kingdom, thirty five

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Speaker 3: million people. You know, there's an enormous opportunity given that

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Speaker 3: population to continue to expand the economic activity on a

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Speaker 3: localized basis here, and they're looking for partners that can

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Speaker 3: help drive them.

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Speaker 2: Do you think alternates of assets are going to pick

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Speaker 2: up here?

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Speaker 3: This part of the world has always allocated a significant

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Speaker 3: portion of their surpluses to investing in privates. If what

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Speaker 3: you're asking is will there be interesting investment opportunities on

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Speaker 3: the ground.

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Speaker 1: Here in these local economies.

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Speaker 3: Yes, absolutely that as these economies grow, there will be

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Speaker 3: more interesting investment opportunities here on the ground that attract

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Speaker 3: international capital from around the world. And we've obviously been

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Speaker 3: seeing that in a more significant way over the course

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Speaker 3: in the last five years.

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Speaker 2: Yeah, okay, let's broaden this out a little bit. You know,

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Speaker 2: your earnings came through again. You know, it seems as

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Speaker 2: though the bank is really firing on all cylinders. Whether

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Speaker 2: it's trading, markets, activity, deal making, advisory, wealth management. You know.

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Speaker 2: So everything seems to be going quite well at the moment. Now,

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Speaker 2: how long do you expect these favorable market conditions to last?

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Speaker 3: Four Well, I appreciate that we certainly had a strong

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Speaker 3: quarter in our client franchises in terrific shape. But I

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Speaker 3: really think that the firm is benefiting from a bunch

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Speaker 3: of strategic decisions that we made five, six, seven years

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Speaker 3: ago to reposition the firm for growth, to really grow

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Speaker 3: our core business of investment banking and markets, put more

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Speaker 3: financial resources into the business so that we could take

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Speaker 3: more wallet share with our clients and be in a

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Speaker 3: position to better serve our clients as they were increasingly active,

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Speaker 3: and also to pull a group of businesses together to

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Speaker 3: create our asset and wealth management platform, which now supervises

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Speaker 3: three and a half trillion dollars. We've said publicly we

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Speaker 3: think it can grow in terms of its durable revenue

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Speaker 3: high single digits. It's growing better than that, and the

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Speaker 3: combination of those activities has materially uplifted the returns of

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Speaker 3: the firm. So the environment is conducive at the moment.

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Speaker 3: There will be times when the environment you know, is

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Speaker 3: a little less conducive. We live in a cyclical world,

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Speaker 3: but we think we have the firm position that over

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Speaker 3: the next five ten years, we can continue to grow

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Speaker 3: our earnings, grow our client footprint, and continue to compete

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Speaker 3: at the highest levels and the businesses that we're in.

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Speaker 2: So one thing I was thinking about this morning. You know,

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Speaker 2: if you just took a snapshot of where everything is trading,

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Speaker 2: you have equities at all time highs. You have you know,

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Speaker 2: US economy tracking north of three percent. If you look

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Speaker 2: at the real time indicators, you've got inflation at three

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Speaker 2: percent as well. And yet somehow the FED are going

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Speaker 2: to be cutting interest rates by twenty five basis points tomorrow.

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Speaker 2: Do you see this as the beginning of a sequential

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Speaker 2: easing cycle or just more of an insurance cut?

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Speaker 3: What I what I would say with respect to the FED,

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Speaker 3: is the Fed, you know, world cut rates tomorrow and

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Speaker 3: then we'll see I know, the can censuses. You'll get

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Speaker 3: another cut before the end of the year. But the

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Speaker 3: policy rate has been higher. I think they're looking to

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Speaker 3: move more toward neutral, and so we'll take a step

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Speaker 3: in that direction.

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Speaker 1: But I think the FED.

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Speaker 3: Always is an observer of what's going on in the

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Speaker 3: real time economy. The real time economy can shift very quickly.

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Speaker 3: At the moment, I would say the US economy is

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Speaker 3: in quite good shape.

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Speaker 1: But I wouldn't. I wouldn't jump forward.

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Speaker 3: There are lots of forward prognostications about the path of

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Speaker 3: interest rates. I would just highlight mostly, you know, i'd

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Speaker 3: look at the moment, you can project forward. But just

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Speaker 3: because there's a forward projection, it doesn't mean that's why

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Speaker 3: where we'll wind up.

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Speaker 1: There's a lot of uncertainty.

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Speaker 2: Do you believe that this is a case shaped economy?

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Speaker 2: Lots of academic circles have been talking about that, and

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Speaker 2: since that, you know, upper income earners seem to be thriving,

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Speaker 2: whereas lower income earners are struggling to keep up with

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Speaker 2: inflation and they're worried about potential job cuts to come.

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Speaker 1: I wouldn't. I wouldn't use that term.

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Speaker 3: But what I would say is businesses that are particularly

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Speaker 3: sensitive to lower income or paycheck to paycheck consumers have

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Speaker 3: been a little softer. And I would say, you know,

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Speaker 3: consumers that our paycheck to paycheck feel more pressure in

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Speaker 3: an environment with three percent inflation, and so there's no

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Speaker 3: question inflation is very, very difficult for people who live

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Speaker 3: paycheck to paycheck, and so it's something I think we

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Speaker 3: have to watch very carefully, you know. I know there's

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Speaker 3: been progress from where we were a few years ago

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Speaker 3: on inflation, but it's important that we get inflation back

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Speaker 3: to target because in any environment where it runs hotter,

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Speaker 3: certainly people in that income strata feel it more acutely.

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Speaker 3: But I'd still say overall, the US consumer is in

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Speaker 3: good shape. Most of the data that I see around

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Speaker 3: the US consumer is still quite constructive. But I think

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Speaker 3: you're highlighting something that needs to be watched carefully.

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Speaker 1: Yeah.

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Speaker 2: Another thing that needs to be watched carefully is perhaps,

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Speaker 2: you know, the credit situation. A couple of weeks ago,

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Speaker 2: we were talking about Tricolor first brands. You know, one

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Speaker 2: of your peers in the industry described there being cocker,

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Speaker 2: which is potentially cockroaches around. I don't know if you

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Speaker 2: know there's a certain insect reference that you want to

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Speaker 2: pick up on, but ultimately, you know, how worried are

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Speaker 2: you about some of these individual idiosyncratic credit incidents actually

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Speaker 2: becoming systemic.

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Speaker 3: I would put the the three situations that you mentioned

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Speaker 3: in the category at the moment of idiosyncratic events. But

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Speaker 3: what I would highlight is I think there's a great

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Speaker 3: opportunity for people that are in credit businesses and are

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Speaker 3: deploint significant capital as lenders and credit businesses to look

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Speaker 3: at the procedures, the practices, their underwriting standards, look through

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Speaker 3: their portfolio, and really take a strong evaluation of where

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Speaker 3: they are. You can't separate the fact that we've been

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Speaker 3: in a very, very long easy credit cycle, one of

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Speaker 3: the longest I've seen in my career, without a real

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Speaker 3: credit pullback, without a without you know, an economic environment

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Speaker 3: that's really put an enormous amount of pressure on credit.

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Speaker 3: And in that context, credit spreads are historically tight, and

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Speaker 3: I know at some point there will be a credit cycle.

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Speaker 3: It will probably come at a period of time when

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Speaker 3: the economy slows more acutely or there's some sort of

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Speaker 3: a macro event that changes confidence we have in growth

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Speaker 3: in the trajectory of the economy. And when that happens,

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Speaker 3: given the lossity of lending activity, there will be losses

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Speaker 3: and credit and those losses will be felt across the system.

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Speaker 1: But that's different than a systemic, you know, a systemic crisis.

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Speaker 1: And I don't see anything in the context of a

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Speaker 1: handful of.

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Speaker 3: Bad credit situations, it's leading me to say that we

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Speaker 3: have a systemic.

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Speaker 1: Issue around the corner.

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Speaker 3: Unfortunately, you know, lenders make mistakes. There is fraud and markets,

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Speaker 3: and you know that's something that is lenders we off

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Speaker 3: to try to protect against. But we should not be

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Speaker 3: fooled by the fact that this is a very robust

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Speaker 3: credit environment. Credit spreads are tight, and when we do

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Speaker 3: have a cycle, which probably will come when there's an

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Speaker 3: economic slow down, there will be losses and we'll feel

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Speaker 3: that across the economy.

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Speaker 2: Yeah, and that's trickling down to private credit as well.

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Speaker 2: We spoke about that a year ago, and I just

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Speaker 2: wonder whether you think the easy money, so to speak,

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Speaker 2: in private credits, those days are behind us now, just

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Speaker 2: because of you know, how much interest is mean and

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Speaker 2: how much spreads have compressed there.

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Speaker 1: I don't.

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Speaker 3: I don't think about when I think about lending, I don't.

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Speaker 3: I don't think about you know, easy money. You know,

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Speaker 3: lending is an activity, whether it's private credit or it's

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Speaker 3: banks lending activity. Lending is a through the cycle activity.

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Speaker 3: There's no question when spreads are tight, you actually learn

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Speaker 3: earn lower relative returns. But the real alpha for credit

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Speaker 3: market participants comes in the tough cycles when you have

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Speaker 3: to restructure credits. You have to have more conviction to

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Speaker 3: enter credits because you can earn higher returns. And so

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Speaker 3: the real alpha in long cycle credit investing comes for

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Speaker 3: being able to manage not just at times when credit

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Speaker 3: is credit spreads are tight, but also when there's a

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Speaker 3: difficult cycle. And so, you know, I don't think about

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Speaker 3: it easy money. If you're a lender, you're a lender.

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Speaker 3: You participate, and you hopefully have good underwriting standards, take

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Speaker 3: good reserves, and so when there is economic pressure and

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Speaker 3: there are losses, you can smooth through the cycle your

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Speaker 3: returns to a reasonable place.

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Speaker 1: And that's what good lenders do.

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Speaker 2: Okay, so we've talked about equities fed the credit. Let

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Speaker 2: me ask you about the dollar. The dollar, you know,

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Speaker 2: is done almost ten percent a year. Today has been

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Speaker 2: a challenging year for the USD People who are questioning

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Speaker 2: this theme of US exceptionalism. Do you worry that the

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Speaker 2: US is perhaps somehow losing its relative status?

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Speaker 1: I don't. I think the US.

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Speaker 3: I think US pre eminence, especially from an investment perspective,

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Speaker 3: is a theme that's still firmly in place that you

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Speaker 3: can walk around here and talk to capital allocators that

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Speaker 3: are here from all over the world and they're not

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Speaker 3: fundamentally changing their allocation, you know, across the globe. And

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Speaker 3: if you think about what are the more interesting places

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Speaker 3: in the world to invest at this point in the time,

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Speaker 3: the US is still at the top of the list

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Speaker 3: and is the largest, most important economy, the largest most

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Speaker 3: important tech innovation center in the world. You know, I

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Speaker 3: think that's firmly in place. The dollar has been softer

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Speaker 3: this year, the variety of reasons for it, but a

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Speaker 3: perspective would be it's certainly much stronger than it was

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Speaker 3: ten fifteen years ago when we saw, for example, you know,

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Speaker 3: dollar forty, you know, euro dollars. So everything's got to

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Speaker 3: be put through a longer term lens when you think

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Speaker 3: about the dollar, But don't I don't worry about the

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Speaker 3: US and it's pre eminence as an attractive place to invest,

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Speaker 3: the growth in that economy, the tech innovation ecosystem, you know,

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Speaker 3: I think the US is a is.

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Speaker 1: In a pretty good place.

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Speaker 2: Okay, David, I've got to round up asking you about

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Speaker 2: AI and sort of how you're incorporating it incorporating it

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Speaker 2: into your bank operations. You know, are you seeing efficiency

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Speaker 2: gains there?

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Speaker 1: Sure?

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Speaker 3: This is this is an enormous opportunity for every enterprise

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Speaker 3: in the world, and I think it's one of the

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Speaker 3: reasons why I'm very excited about growth in the world

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Speaker 3: over the course of the next few years, because I

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Speaker 3: think the productivity opportunity for enterprises large, even to very

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Speaker 3: very small businesses is enormous. We made an announcement last

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Speaker 3: week or ten days ago around our earnings about Golden

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Speaker 3: Sacks one Golden Sacks three point zero, where we laid

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Speaker 3: out six things that we wanted to accomplish around better

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Speaker 3: client service, more efficiency, and ability to really improve our.

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Speaker 1: Risk management across the firm.

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Speaker 3: And we are looking at a handful of processes where

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Speaker 3: we can really re underwrite these processes, create automation and efficiency,

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Speaker 3: but not just to take cost out, to allow us

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Speaker 3: to invest in growth.

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Speaker 1: In the business.

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Speaker 3: And so this is a theme that I think most

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Speaker 3: CEOs of large enterprises are looking closely at, and the

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Speaker 3: productivity benefit to the economy broadly as people execute on

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Speaker 3: this is very meaningful. It's starting, We're still early, but

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Speaker 3: I think over the next twenty four to thirty six months,

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Speaker 3: you're going to see real benefits from these efforts.

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Speaker 2: Is AI going to replace entruy level jobs, Analyst dolls.

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Speaker 1: I mean will it will replace?

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Speaker 3: It will change certain jobs, the same way technology has

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Speaker 3: changed certain jobs for my entire forty two years in

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Speaker 3: the business. So you think back when I started as

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Speaker 3: an analyst, I was required to do something.

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Speaker 1: I had to go to the library, I had to

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Speaker 1: go to the microfiche, I had to get data. It

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Speaker 1: took hours.

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Speaker 3: Things that take five that take five seconds now, like

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Speaker 3: doing a common stock comparison took six hours. Yet we

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Speaker 3: still have lots of very productive people doing more to

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Speaker 3: serve our clients. I think the lens that you have

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Speaker 3: to look at is technology is always changing work, changing jobs,

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Speaker 3: adjusting the mix of different kinds of jobs. But it

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Speaker 3: doesn't mean that businesses don't grow, economies don't grow, and

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Speaker 3: opportunities for very productive people don't grow. And I don't

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Speaker 3: think it's going to be different this time, although I

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Speaker 3: do think there are jobs that will be different, and

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Speaker 3: there are jobs that will go away, but that doesn't

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Speaker 3: mean new jobs won't be created.

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Speaker 2: Take me back to my banking days, M D would

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Speaker 2: send me an email at six pm on a Friday

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Speaker 2: to pitch a fix a pitch book by Monday morning,

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Speaker 2: and you know that your weekend was going to be good.

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Speaker 3: But that's long gone yet people are still working very

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Speaker 3: hard on the kind of work they do changes.

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Speaker 1: And here's the thing that I think is really really important.

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Speaker 3: Yet. You can teach investment bankings. You know this, you

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Speaker 3: are an investment banker at Golden Sex. You can teach

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Speaker 3: investment banking skills, but you can't teach relationship building, trust

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Speaker 3: advice giving. That's a apprenticeship, skill based business, and that's

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Speaker 3: something that I think is very sustainable. But technology tools

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Speaker 3: make the people that do that much much more productive.