Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stenovic on Bloomberg Radio. Let's get too
Speaker 1: if you had a great guest, uh, and we're gonna
Speaker 1: get a great perspective and what investors who have lots
Speaker 1: of money to put to work are most interested. Let's
Speaker 1: get right to it with Julian Salisbury, global head of
Speaker 1: Goldman Sacks Asset Management, with us on site at the
Speaker 1: Milk and Global Conference. How are you great? Thank you?
Speaker 1: So the environment people are eager to put money up.
Speaker 1: A lot of things going on. Look, we are in
Speaker 1: a record fundraising environment, a record capital deployment environment, and
Speaker 1: a record environment for monetizations from the same portfolios. So
Speaker 1: it's overwhelming the amount of money that is coming into
Speaker 1: the investment space at large. If you look at alternatives,
Speaker 1: just the top five listed alternative managers raised I believe
Speaker 1: a hundred and fifty three billion last quarter billion of
Speaker 1: dry powder. That's two x the amount of dry powder
Speaker 1: that existed five years ago. That being said, well, that
Speaker 1: may seem overwhelming and concerning to some extent, the magnitude
Speaker 1: the opportunity has also grown substantially. If you look at
Speaker 1: explain that in terms of the options that are out there. So,
Speaker 1: first of all, if you just look at M and
Speaker 1: A activity, we just had a one point six trillion
Speaker 1: dollar quarter of em ANDY, the biggest quart of ever.
Speaker 1: That's five consecutive quarters of north of a trillion. I
Speaker 1: just did a panel with global co heads of City
Speaker 1: in Deutsche and they said we're on track for like
Speaker 1: four point one globally, and they think it could be
Speaker 1: five trillion. I mean, it's it's on it's a And
Speaker 1: if you look at the share of that that's being
Speaker 1: prosecuted by sponsors, I mean last year was a record
Speaker 1: year for the share of em ANDY activity prosecuted through
Speaker 1: the private equity community. This year it's running at thirty
Speaker 1: six percent. So it's a higher percentage of a higher volume,
Speaker 1: and I think a greater opportunity set is a function
Speaker 1: of a number of things. First, well, we had a
Speaker 1: pretty big pause last year, when there's a dearth of
Speaker 1: activity for a really six month plus hiatus of activity.
Speaker 1: And now off the back of that, if you look
Speaker 1: at the accelerating trends that were already taking place in
Speaker 1: the global economy, many of those trends were just ccelerated
Speaker 1: by COVID, and now I think there's in addition to
Speaker 1: the pause and the catch up, there's a greater sense
Speaker 1: of urgency too. Um transform your business, whether it be
Speaker 1: through M and A, through investment through um UH, through
Speaker 1: through digital transformation of the business, and all of these
Speaker 1: things are leading to people wanting to raise capital. But Julian,
Speaker 1: are you finding effective places to deploy all of that capital?
Speaker 1: We you know, we spoke to Scott Minor. We're gonna
Speaker 1: air the interview in just a few minutes. He said,
Speaker 1: this is a period of time where he looks across
Speaker 1: set classes and things are so expensive, with the exception
Speaker 1: of residential real estate. Yeah, I was talking to somebody
Speaker 1: about this earlier today. UM, I can remember back as
Speaker 1: far as twenty years doing business planning. I've been at
Speaker 1: for twenty three years. I don't quite remember the first
Speaker 1: three years. Maybe I wasn't invited to business planning the
Speaker 1: first three years. But each and every year that I
Speaker 1: can remember, we sit every year, including you know, the
Speaker 1: end of oh nine, you know, when things were still
Speaker 1: pretty just like every year you sit there, how are
Speaker 1: you going to make money last year? Because when you
Speaker 1: look back, it always seems it was so obvious with
Speaker 1: hindsight how you made money. It was never that easy.
Speaker 1: It was never that obvious, and I think it's true today.
Speaker 1: I would that being said, it is, you know, valuations
Speaker 1: are particularly high on many metrics, growth in particular relative
Speaker 1: to value is expensive on many metrics, but it's it's
Speaker 1: always more complicated than that. I look at our take
Speaker 1: our Growth Equity Investment Committee. Every week, two or three
Speaker 1: companies comes through that committee that are capable of being
Speaker 1: multi bill in dollar companies that didn't exist to three
Speaker 1: or four years ago, um and something that they won't
Speaker 1: all win, some will not succeed, some will go on
Speaker 1: to be worth tens of billions of dollars. And by
Speaker 1: most valuation metrics, traditional valuation metrics frankly don't really work
Speaker 1: when you're looking at these businesses any kind of near
Speaker 1: term revenue multiple earnings monopole. You really have to look
Speaker 1: at what's this company capable of becoming over the next
Speaker 1: five to ten years and taking a more forward looking view.
Speaker 1: And I think that's another reason why more of this
Speaker 1: is being conducted in the private markets, where people are
Speaker 1: able to take a longer term view focus on things
Speaker 1: like unit economics UM. You know, does it create healthier
Speaker 1: companies that ultimately do go public, whether it's through direct listing,
Speaker 1: whether it's an IPO or spack because they're able to
Speaker 1: kind of incubate for longer periods. Yeah, I think that UM. Look,
Speaker 1: private markets are are a great way for companies to
Speaker 1: scale and grow. The public market route is also a
Speaker 1: very valuable tool for capital raising for companies money when
Speaker 1: companies that including raising money through traditional IPOs or spoke
Speaker 1: there's no UM, there's a root. There's room for all
Speaker 1: of these things. But I would say, UM that the
Speaker 1: patients required to scale some of these businesses, the capital
Speaker 1: that's required to scale some of these businesses, and the allienstances,
Speaker 1: it probably is easier to prosecute that in in private markets.
Speaker 1: And also, look, some of these companies are just this
Speaker 1: are often quite small. Ye. They have a a few
Speaker 1: senior entrepreneurs at the top of the They need real
Speaker 1: kind of help and guidance and governance growing the businesses. Angeliane,
Speaker 1: I'm wondering what the questions that the clients have Goldman
Speaker 1: Success that management are coming to you with right now?
Speaker 1: What did I buy dose coin? Is that what they're
Speaker 1: asking you, Jillian, I'm not I'm not surely going to
Speaker 1: comment on the value of any individual. What do you
Speaker 1: mean there's like, there's some interesting trends out there. Yeah,
Speaker 1: I think that everybody's struggling with this question of where
Speaker 1: the deploy capital. They can't make the returns that they
Speaker 1: need through traditional fixed income product they look at equity markets,
Speaker 1: which have been and will continue to be a great
Speaker 1: source of return of the right time horizon. Um. I
Speaker 1: always think there's a very large room in your portfolio
Speaker 1: for public equities. It's not all about private markets, but
Speaker 1: what they're looking for is ways to pivot into private markets.
Speaker 1: Is an alternative source to the lack of return that's
Speaker 1: really available in fixed income. Just got about twenty five
Speaker 1: seconds leftter, What do you think is the investment people?
Speaker 1: Maybe it is not on everybody's radar, but they should
Speaker 1: be watching closely, just quickly. I know, don't say rowing,
Speaker 1: don't say canoeing, kayaking, claus keep okay, Um, I think
Speaker 1: the the transformation that's going to happen in real estate
Speaker 1: over the next um five years is on the appreciated residential, commercial,
Speaker 1: old forms of those things. Nicely done. Yeah, I gotta
Speaker 1: get you back Julian Salsbury Global ahead of Global of
Speaker 1: Goldman Sachs Asset Management. Right here on Bloomberg. You are
Speaker 1: listening to Bloomberg Business Week Carl Master along with Tim
Speaker 1: Stanovic here at the Milk and Conference. Well, earlier today
Speaker 1: we spoke with Guggenheim Global CEE I O. Scott Minor
Speaker 1: here at the Milk and Institute Global Conference. It was
Speaker 1: a great conversation and in this excerpt Scott discusses market
Speaker 1: headwinds and bubbles. Check it out. I have never seen
Speaker 1: a time like this where there is nothing that I
Speaker 1: can point to that I can call cheap. You know, historically,
Speaker 1: I remember being interviewed on Bloomberg in two thousand and
Speaker 1: six and telling uh, the interviewer that the cheap thing
Speaker 1: was ten year Treasury notes at five and a quarter,
Speaker 1: And I said, want who would want ten year tread
Speaker 1: three notes? Well, you know, I was concerned about the
Speaker 1: housing crisis. Today, I can't point to anything that I
Speaker 1: think that if we got ourselves into trouble that would
Speaker 1: actually be cheap to buy today that has value. So
Speaker 1: you're left in this world, which I'm not real comfortable in,
Speaker 1: where you have to find things that are expensive that
Speaker 1: are probably going to become more expensive, and so you know,
Speaker 1: you know, well, I mean cryptocurrency, right, you know, I
Speaker 1: mean Sheba. If you'd invested in sheba coin back in
Speaker 1: the first quarter of this year, a thousand dollars today
Speaker 1: would be worth two point one million, right, I mean,
Speaker 1: can I find another Sheba coin? I don't know, But okay,
Speaker 1: but we're talking about something that a lot of people
Speaker 1: think it's a joke. Well, sheba coin was a joke
Speaker 1: created to mimic doge coin, which was a joke, right,
Speaker 1: So I mean cancel each other out. Yeah, well, I
Speaker 1: don't know it's it's a second derivative joke cryptocurrency. But
Speaker 1: you know, it just shows you how much cash is
Speaker 1: out there, how it's lifting asset prices. Like I was
Speaker 1: asked that the Federal Reserve to do a thing on
Speaker 1: bubbles and what markets did I think we're in bubbles?
Speaker 1: And I went through every market I could think of,
Speaker 1: and the one I said, Um, sports memorabilia isn't a bubble.
Speaker 1: Baseball cards are clearly in a bubble, right, Um. But
Speaker 1: you know you look at stocks, right, are they in
Speaker 1: a bubble? Well? Not with interest rates where they're at.
Speaker 1: It isn't it and isn't it so much of it's
Speaker 1: got kind of bounced back from falling off a cliff
Speaker 1: and things recovering or do you think you know we've
Speaker 1: done that and then we've gone a little bit more Well,
Speaker 1: I think, you know, normally at this point in a recovery,
Speaker 1: I would say, oh, you know, we're kind of in
Speaker 1: the second or third ending, right like when the Dodgers
Speaker 1: are winning the World Series. But uh that you know,
Speaker 1: this is like we went right to the fifth ending,
Speaker 1: you know, the immediately the incredible rally that we've got
Speaker 1: coming out of the pandemic and the amount of stimulus.
Speaker 1: You know, people compare this to uh, a war, right,
Speaker 1: the pandemic was a war. And so I've gone back
Speaker 1: and I've studied wars and when you get what's there
Speaker 1: is an interesting coroll area is when you you you
Speaker 1: have a major war like the First World War the
Speaker 1: Second World War, right after the war is over and
Speaker 1: there's been all this stimulus from defense spending and money printing,
Speaker 1: you get a spike in inflation, which is transitory. So
Speaker 1: when people talk to me about is this transitory? Which
Speaker 1: I'm always like everything's transitory. Life is transitory. But but
Speaker 1: you know, is you know, is this something that is
Speaker 1: permanent and should we be worried about it in the
Speaker 1: long run? And I think today the answer is no. Well, well,
Speaker 1: if you look at all the things that have gone
Speaker 1: up in price that have that are in the CPI components,
Speaker 1: You've got hospitality industry stuff, hotels, arab lines, automobiles, right,
Speaker 1: which are due to the supply chain interruption. Uh, you
Speaker 1: know it's really a bounce back from what we had
Speaker 1: in the decline. Now you can say, well, wait a
Speaker 1: minute's got autos. Well, the supply chain interruption to me
Speaker 1: looks like the retooling that occurred at the end of
Speaker 1: the Second World War. Right, all of every all output
Speaker 1: auto plants, everything had been converted to wartime production. There
Speaker 1: was a transition period in the in the earl in
Speaker 1: the mid forties, and during that transition period, people who
Speaker 1: had saved all this money from the stimulus from the
Speaker 1: war wanted to spend it, and so auto prices went up.
Speaker 1: But you know it's interesting is there was one one
Speaker 1: period in there, I think it was in forty six
Speaker 1: or forty seven where inflation actually was at but bond
Speaker 1: yields never went above two and a quarter, which doesn't
Speaker 1: quite make sense, does it. Well, I think we're living
Speaker 1: in it today. What a great way to wrap up
Speaker 1: that interview. Google Time Global Chief Investment Officer Scott Minored,
Speaker 1: well known to the Bloomberg audience. He caught up on
Speaker 1: a great panel with our own Scarlet Food here at Milkin,
Speaker 1: and he joined us earlier today to sit down. But
Speaker 1: I love how he looks at history and likens after
Speaker 1: the World World War two to where we are today.
Speaker 1: And I was I have to say sometimes, you know,
Speaker 1: if you were watching on YouTube, you probably saw my
Speaker 1: jaw dropped when he mentioned dojcoin. I couldn't believe that
Speaker 1: word came out of his mouth. But he's someone who
Speaker 1: you know, he looks at all the different nasset classes,
Speaker 1: tries to understand the relationships and you know, why is
Speaker 1: something you know, going up, something going down? What's going on?
Speaker 1: More broadly, I think also he used it as a
Speaker 1: point to illustrate the exuberance that we're seeing in many
Speaker 1: from parts of the market right now. Yeah, I'm not
Speaker 1: going to ask our own Charlie V about dogecoin. He's
Speaker 1: on set with us helping us make sure that this
Speaker 1: broadcast is working. Thumbs up to Doscoin, Charlie, thumbs up,
Speaker 1: comes up. All right, check out that full interview. You
Speaker 1: can find that online and on the Bloomberg. All right, Well,
Speaker 1: she has been a longtime pup look service. We servant,
Speaker 1: excuse me, we've been having a good conversation behind the scene.
Speaker 1: Former Labor and Transportation secretary worked in several administrations, the
Speaker 1: Reagan administration, President George W. Bush, President Trump. We welcome
Speaker 1: the honorable Lange out. So nice to have you here
Speaker 1: with us. Thanks so much. Great to be here. Well,
Speaker 1: it's interesting, you know, labor transportation. I feel like these
Speaker 1: are the two hot topics right now we're looking at.
Speaker 1: Are their changes going on in the labor force? Will
Speaker 1: we never go back to levels in terms of the
Speaker 1: potential workforce that we saw pre pandemic. Let's start there.
Speaker 1: What do you think? What are your observations of it? Well,
Speaker 1: it's great to be here at the Milligan Institute because
Speaker 1: these issues are being discussed, and I just came home
Speaker 1: a panel discussion with five large employers who are talking
Speaker 1: about what will be the work patterns of their employees
Speaker 1: in the future. They're taking polling more, they're asking their
Speaker 1: employees more, and clearly some kind of hybrid working environment
Speaker 1: arrangement will be much more accepting two employees. And I
Speaker 1: think employers are trying to work this out right. And
Speaker 1: you know, at first they we're going to come back
Speaker 1: to work. The workforce is going to come back to
Speaker 1: work Glass of ten. Then it was lost December, then
Speaker 1: it was the spring, then it was gonna be September,
Speaker 1: and now people are talking about spring of So clearly
Speaker 1: we're all feeling our way as to how to come
Speaker 1: back at that. But it's changed. It has changed, at
Speaker 1: least very much. In the short term. It's greater flexibility.
Speaker 1: And this is going to present challenges to the labor
Speaker 1: laws because so much of the labor laws are over
Speaker 1: seventy years old, and they think about a workplace that
Speaker 1: is you know, fixed and that has uh forty hour
Speaker 1: work week people come to work, and so all of
Speaker 1: that is going to change, and that's gonna put tremendous
Speaker 1: impetus on changing the labor laws, which are traditionally very
Speaker 1: very very very difficult to change because you know, they're
Speaker 1: so fought with politics. There is this imbalance happening though
Speaker 1: right now, when we look at the labor market, there
Speaker 1: is an oversupply of workers, and but they are not
Speaker 1: actually returning to the workforce. Do you think we ever
Speaker 1: get back to a workforce that looks like it looked
Speaker 1: before the pandemic? Like, is it realistic? Those Yeah, it's
Speaker 1: even more before the pandemic. When I was Labor secretary,
Speaker 1: the labor participation ray was about sixty with the workforce
Speaker 1: of about a hundred and fifty seven million people. And
Speaker 1: then we have a great recession and then the labor
Speaker 1: participation ray dropped to about sixty three and it kind
Speaker 1: of never recovered. And with the COVID then it went
Speaker 1: from sixty three point you know, three or four down
Speaker 1: to sixty one point seven, sixty one point one. So
Speaker 1: we're continuing to see declines in labor participation, which is
Speaker 1: terrible because we need these workers to come back to
Speaker 1: fuel a full recovery. But there's also another factor, another
Speaker 1: dynamic at play here, and that is the skills gap. Well,
Speaker 1: we've got tired of this for years, a lame just
Speaker 1: like and I'm gonna throw in another problem. We've been
Speaker 1: talking about infrastructure for years, how many administrations, right, and
Speaker 1: this is something that has had bipartisan support. What ultimately,
Speaker 1: from your perspective, do we have to start spending on
Speaker 1: when it comes to infrastructure, Well, look at the supply
Speaker 1: chains for obviously, you know, investing in transportation infrastructure. The
Speaker 1: reason that the Trump administration was never able to succeed
Speaker 1: in the infrastructure proposal was because there was a big
Speaker 1: debate about whether there should be one dollar or for
Speaker 1: one dollar of investment spending. And the Republicans believe that
Speaker 1: there can be leverage, that we can use public private
Speaker 1: partnerships and leverage you know, existing government dollars, and the
Speaker 1: Democrats felt that they wanted one dollar for one dollar
Speaker 1: deficits spending, which obviously the pros and const to both.
Speaker 1: So we were never able to galvanize enough consensus around
Speaker 1: public private partnerships this time around. You know, I think
Speaker 1: there could be there. I think there's an infrastructure bill,
Speaker 1: a transportation infrastructure bill to be had. Unfortunately now it's
Speaker 1: being held hostage to the Budget Reconciliation Bill. If it
Speaker 1: were to be standard alone, there is a deal to
Speaker 1: be made and passed on the infrastructure bill, and I'm
Speaker 1: hopeful that it would be passed before your end I
Speaker 1: feel like politics. I mean, I want to ask you
Speaker 1: because you've been in politics or I'm not a politics.
Speaker 1: I am a public servant. I've always viewed myself as
Speaker 1: being in public servant. Did say you are? We're a
Speaker 1: long time public servant. Um the Republican Party that you know,
Speaker 1: if I think about the January six Capital riot, you
Speaker 1: resigned after that? Yes, I left the Trump administration. You
Speaker 1: were there, you know, almost to the to the to
Speaker 1: the end. Um, do you regret being part of that administration.
Speaker 1: I'm very grateful for the opportunity to serve my country.
Speaker 1: I'm an immigrant to this country. I came when I
Speaker 1: was eight years old. I didn't get my citizenship until nineteen.
Speaker 1: And it used to be that if the president asked,
Speaker 1: the only answer you can give is yes. I didn't
Speaker 1: know the president very well. But I also believe that
Speaker 1: the American people deserve to have a functioning government. But
Speaker 1: going back to the infrastructure bill, the real drama is
Speaker 1: on the Democrats side, because, as I mentioned, there's a
Speaker 1: bill to be had. There was bipartisan support. Republicans signed
Speaker 1: on to this infrastructure bill. But the Speaker, and you know,
Speaker 1: she and I share birthday. By the way. Uh, she's
Speaker 1: in a tough Yes, she's in a tough spot because
Speaker 1: she's got moderates who want to hold back on the spending. Well,
Speaker 1: she's got progressives that want to spend more. So she's
Speaker 1: trying to balance that. But if left alone, that infrastructure
Speaker 1: bill can move on its own. Many all the drama
Speaker 1: is on the Democrats side. And you know this, you know,
Speaker 1: you follow what's been going on. The economy is certainly
Speaker 1: in the pandemic milk and covers this left and right,
Speaker 1: the inequities that we have seen and it's not new,
Speaker 1: and there are people who have not shared in the
Speaker 1: wealth creation, and so that softer infrastructure that the presidents
Speaker 1: team are trying to get through. I mean, this is
Speaker 1: part of the battle. And I think for those people
Speaker 1: that are questioned that they're not saying that these social
Speaker 1: infrastructure proposals are unworthy. What they're saying basically is should
Speaker 1: they be included. You know, what was originally going to
Speaker 1: be called a transportation infrastructure politics works that, you know,
Speaker 1: but they like instructure done. We're done. So it was
Speaker 1: originally the original infrastructure bill had only six percent of
Speaker 1: what is traditionally defined as transportation infrastructure. If you expand
Speaker 1: the explanation and the description a bit more generously, you
Speaker 1: get up to thirty of the dollars. But clearly there's
Speaker 1: a need for transportation infrastructure, Rhodes bridges, transports, airports, drive
Speaker 1: around New York. Absolutely. I mean the governor got elected
Speaker 1: on this. We've got her slogan. We have to ask
Speaker 1: because we have about a minute. I know you consider
Speaker 1: yourself a public servant, but we got to ask more politics.
Speaker 1: Oh shoot, why are you talking? I heard from Donald
Speaker 1: Trump at all. Uh, we have not spoken, not at all.
Speaker 1: So but I'm not you know, like I'm out of
Speaker 1: politics the public policy. You served in three administrations. Do
Speaker 1: you consider President Trump is the leader right now of
Speaker 1: the Republican Party? Well, I think that is in the
Speaker 1: process of being decided and sorted out. There's still some
Speaker 1: time to go. There's two coming up, and then there's
Speaker 1: should he be the leader of the Republican Party. That's
Speaker 1: up to the people. You know. I think for those
Speaker 1: who wonder about his appeal, they should be asking what
Speaker 1: is it that prompts so many Americans to support him?
Speaker 1: And I think that's a very the answer will be very,
Speaker 1: very revealing and you, and it's a teaching you know,
Speaker 1: It's it's something that I think, um, you know, the
Speaker 1: leadership should understand. But as someone who's who came to
Speaker 1: this country as an immigrant, um and became a citizen,
Speaker 1: do you think a voting citizen that he should be
Speaker 1: president or should leader of the Republic. I will support
Speaker 1: the nominee. I'm a Republican, so I will support whoever
Speaker 1: the nominee is. Okay, Oh my gosh, I wish we
Speaker 1: had more time. You have such great energy. Thank you,
Speaker 1: Thank you for having me and come at things from
Speaker 1: so many different perspectives. Elane to how of course former
Speaker 1: Secretary of Transportation, former Secretary of Labor. I remember talking
Speaker 1: to you years ago in the monthly jobs reports came out,
Speaker 1: Um say some great history. We've had another great day
Speaker 1: at Milkin and it's only too I know. We have
Speaker 1: one more day and I'm gonna talk to Kathy Wood
Speaker 1: in a few minutes. Are you go get ready for that?
Speaker 1: This is Bloomberg