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Speaker 1: Bloomberg Audio Studios, podcasts, radio.

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Speaker 2: News joining us now for long discussion Jim's out to

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Speaker 2: the president of Apollo Global Management, Jim, good morning, Good

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Speaker 2: morning John, and happy birthday, sirs.

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Speaker 3: Good Thank you very much. I appreciate it great.

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Speaker 2: They spend too much time on the Federal Reserve. But

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Speaker 2: I do want your reaction to this journal piece overnight.

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Speaker 4: Well, I think I think that the president's already won.

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Speaker 4: It's a great distraction of headlines. I personally don't think

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Speaker 4: he's going to name anybody too early because right now

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Speaker 4: he's in the catbird seat of blaming without accountability, which

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Speaker 4: is classic Trump playbook. So I think the fact that

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Speaker 4: we're talking about it is interesting. It's a great diversion

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Speaker 4: from the reality I think he does. And there's no

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Speaker 4: doubt he wants rates lower. That's what's part of his

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Speaker 4: plan for many, many years, and that's how he doesn't

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Speaker 4: like to pay debt and he likes to pay low

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Speaker 4: coupons on it. But the fact that you know, I

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Speaker 4: just don't think that if you're Trump right now and

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Speaker 4: you take his playbook, he'll make this a conversation. But

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Speaker 4: I don't suspect he's going to do anything premature because

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Speaker 4: he's able to put blame on the current resident of

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Speaker 4: the Fed, and he likes to be in that position.

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Speaker 2: Your wor it's blaming with accountability without accountability. Is this

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Speaker 2: something you think he should be accountable for.

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Speaker 4: Well, certainly, I think if you think about what's going

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Speaker 4: on in the last three or four months, the issues

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Speaker 4: of tariffs, it feels like that's a little bit on

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Speaker 4: the sidelines right now. I know we haven't resolved, but

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Speaker 4: the marketplace has absorbed the idea of a ten percent

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Speaker 4: plus or minus tariff, maybe a little bit higher, but

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Speaker 4: to Trump's benefit, in the administration's benefit, the market has

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Speaker 4: absorbed that, moved on the issues about the Middle East

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Speaker 4: and all the challenges of foreign policy. There was a

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Speaker 4: lot of action last ten days ago and a week

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Speaker 4: and a half ago, and now that has been sort

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Speaker 4: of absorbed in the marketplace. The big elephant in the

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Speaker 4: room is still our deficit issue. You guys have talked

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Speaker 4: about it quite a bit. It's obviously the topic of

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Speaker 4: appropriate conversation, and so I think that is an important

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Speaker 4: topic that still remains.

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Speaker 3: But we talked.

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Speaker 4: Earlier in this year about the decline of US exceptionalism.

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Speaker 4: I think Mark Twain was right that the PREMI that

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Speaker 4: my death is is a bit premature, and certainly the

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Speaker 4: market has moved on. So I think the tariffs are

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Speaker 4: little bit off on the side, The foreign policy issues

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Speaker 4: are a little bit off the side right now. The

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Speaker 4: deficit issue is a real issue. We could talk a

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Speaker 4: little bit about what's going on with the dollar. I

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Speaker 4: personally think what's going on with the dollar. I think

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Speaker 4: there was a lot of investors around the globe that

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Speaker 4: invested in US assets, and they made money both ways

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Speaker 4: on the currency and on the underlying assets for almost

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Speaker 4: ten years, and they turned around and they found themselves

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Speaker 4: really unhedged. And I think you're going to see some

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Speaker 4: pretty good numbers out of the big banks this quarter

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Speaker 4: because investors around the globe have been rushing to hedge

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Speaker 4: their dollar exposure. But I think it's a ten year

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Speaker 4: catchup that people just didn't hedge their portfolios in massive scale.

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Speaker 4: So I don't look at this dollar decline is I

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Speaker 4: look at it as more of a technical factor than

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Speaker 4: a long long run impact on the health of the

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Speaker 4: US economy.

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Speaker 1: There's a lot to impact there, including the breakout of

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Speaker 1: the hedging profits at some of the big banks, which

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Speaker 1: we'll all be now looking for. To build on what

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Speaker 1: John is asking about is the FED on the brink.

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Speaker 1: I don't want to say have a policy error, but

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Speaker 1: of being too late kind of to build on what

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Speaker 1: President Trump is accusing him, because you are seeing the

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Speaker 1: weakening and the dollar accompanied by the biggest negativity, the

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Speaker 1: biggest increase in downside economic surprises that we've seen in

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Speaker 1: a year.

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Speaker 4: If you look at the Bloomberg page on rates of

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Speaker 4: the G seven economies other than the UK, where the

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Speaker 4: outlier in terms of where our ten year yields are

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Speaker 4: and our yield curve is. I sit in my seat

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Speaker 4: and I see a variety of inputs that some tell

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Speaker 4: me the economy is slowing down a little bit with consumers.

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Speaker 4: Some tell me inflation is still a little bit more

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Speaker 4: represented in the economy. We see inflation around three percent,

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Speaker 4: three three and a half percent. And I don't think

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Speaker 4: it's obvious that the FED should be cutting right now.

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Speaker 4: I think it is a very legitimate question to be

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Speaker 4: asking what's the trajectory of the FED activity, And so

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Speaker 4: I don't think it's a slam dunk decision. I know

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Speaker 4: the market, the futures would tell you three cuts in

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Speaker 4: the next the rest of the year, three three and

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Speaker 4: f cuts. You know, Tors and I are a bit

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Speaker 4: skeptical on that. We see what's going on, and I

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Speaker 4: think there's maybe one cut. Your basic question, is the

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Speaker 4: FED conversation a really important one right now?

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Speaker 3: It is.

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Speaker 4: I have a view that rates are going to be

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Speaker 4: a little bit stickier and higher in the US than

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Speaker 4: people think. We've had that view for quite some time,

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Speaker 4: but so it is. It is a good question for

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Speaker 4: the administration to have right now, but I'm not sure

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Speaker 4: that's the primary question for the market.

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Speaker 1: One of the reasons why people keep asking this question

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Speaker 1: is would the FED be considering cutting for the right

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Speaker 1: reasons for the wrong reasons? The right reasons being just inflation,

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Speaker 1: which you reject, for the wrong reasons being because we

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Speaker 1: are seeing a weakening in the labor market as we

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Speaker 1: see as increase in jobless claims. What's your sense of

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Speaker 1: that based on what you've seen with portfolio companies, what

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Speaker 1: you've seen with your investments, is that valid?

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Speaker 4: Yes, I think long term you can't argue with the

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Speaker 4: long term deflationary impact of technology and AI that is

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Speaker 4: out there now, whether that's six twelve eighteen twenty four months.

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Speaker 4: There's a massive deflationary impact from that activity. I just

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Speaker 4: don't think it's on the center of the plate right

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Speaker 4: now in the markets. It's out there, and I think

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Speaker 4: that you're fighting with short term still supply interruptions, hiring interruptions,

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Speaker 4: and some short term challenges that are inflationary versus a

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Speaker 4: long term backdrop of deflationary trends because of AI around

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Speaker 4: the globe. I think that's sort of the center conversion.

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Speaker 4: When I'm back here in twenty twenty six and twenty

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Speaker 4: twenty seven, I think raids will probably be a bit

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Speaker 4: lower because of the technology impact. But I think in

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Speaker 4: the next six to nine months, I don't think rates

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Speaker 4: are going to be dramatically lower.

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Speaker 2: If you'd taken six months off and came back to

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Speaker 2: work and look where the market was, I don't think

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Speaker 2: you'd have a clue. When I think it happened here.

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Speaker 2: Equity's close to all time highs, credit spreads are very tight.

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Speaker 2: It's not a market is screaming out for rake cuts.

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Speaker 2: From your standpoint at Apollo, when you look at valuation, underwriting,

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Speaker 2: any red flags getting your attention at all at the moment,

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Speaker 2: you know.

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Speaker 3: The economy is amazingly resilient. In the US.

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Speaker 4: And I was here three or four months ago, there

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Speaker 4: was concern handering about the trajectory of the economy.

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Speaker 3: There was handeringing.

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Speaker 4: About non US investors, global investors investing in the US.

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Speaker 4: I've been all around the world in the last twelve weeks.

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Speaker 4: American exceptionalism is front and center. Back you talk about

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Speaker 4: where valuations are and levels of equities and raids, they're back.

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Speaker 4: Global investors want to invest in the US. They made

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Speaker 4: a lot of way, they thought they were going to

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Speaker 4: diversify themselves away and they realized the breadth and depth

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Speaker 4: and the strength of the US economy and the scale

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Speaker 4: of what they need to invest, and the US is

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Speaker 4: the primary place to invest.

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Speaker 3: It still is.

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Speaker 4: So you know, it's sharing as I was in Europe

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Speaker 4: a few weeks ago as well, your folks, I want

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Speaker 4: to talk about that amazing thing is going on in

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Speaker 4: Germany right now. The reality is public markets are the narrative,

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Speaker 4: but private capital drives the economy, and we're seeing it.

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Speaker 4: We've been amazingly active. Edn F last week a lout

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Speaker 4: of matica. What's going on in a variety of financing

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Speaker 4: So It's been a very, very busy time, but I'm

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Speaker 4: not seeing any red flags going off, and I really

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Speaker 4: I want to make sure we talk today about this

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Speaker 4: concern about the private capital private credit bubble versus just

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Speaker 4: an economic cycle. We're due for a credit cycle, but

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Speaker 4: that does not mean it's a bubble and private capital

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Speaker 4: is playing a bigger and bigger role.

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Speaker 3: Look what we did last week for ED and F

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Speaker 3: in the UK.

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Speaker 4: And Germany billion dollars strowing private capital financing long duration

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Speaker 4: debt to finish out their nuclear power plant build.

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Speaker 3: Really really important that we're playing that role.

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Speaker 2: Well, sit in Europe, let's just stay there off the

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Speaker 2: back of your travel. So you mentioned AD and F,

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Speaker 2: big stealing transaction. Also big target from you and the

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Speaker 2: team to invest was it one hundred billion in Germany

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Speaker 2: over the next decadal set.

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Speaker 4: If you're a leadership a journey right now, your goal

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Speaker 4: is to get a four trillion economy to a six

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Speaker 4: trillion economy, and you are I was with the administration.

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Speaker 4: You can talk to Tomerz. You know, they really are

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Speaker 4: embracing the role of private capital along with government spending

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Speaker 4: over the next five or ten years.

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Speaker 2: They've been so dependent on the banking system in Europe

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Speaker 2: for such a long time, Can they get away from that?

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Speaker 2: Because I feel like I've been talking about this for

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Speaker 2: more than a decade.

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Speaker 4: Well, I think the evidence is here to if you

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Speaker 4: look at the last twenty four months and what's going

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Speaker 4: on with the leading Italian banks. Look what's going on

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Speaker 4: with HSBC. You know what's going on with Barkley's and

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Speaker 4: Deutsche Bank. They're operating in a much different capital regime,

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Speaker 4: with a focus on shareholder value, with a focus on

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Speaker 4: ROE and they're really not taking all the policy lending

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Speaker 4: on their balance sheet like they had in the past, So.

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Speaker 3: They're actually operating the right way.

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Speaker 4: What you didn't really see before is the government really

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Speaker 4: embracing in Germany, in France, in the UK they want

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Speaker 4: private capital to be part of the solution because they

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Speaker 4: know the government balance sheets cannot do all that's needed

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Speaker 4: in terms of the massive capex of transmission, line of transportation,

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Speaker 4: of AI, of data centers.

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Speaker 3: They know they're behind.

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Speaker 4: So if anything, this administration in the US, the memo

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Speaker 4: they sent out about what's going on in the US

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Speaker 4: and Europe stepping forward, European leadership has taken notice. Let

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Speaker 4: there be no doubt. I go to Europe three four

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Speaker 4: times a year. I've never been so embraced as we

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Speaker 4: were three weeks ago in Germany and France about the

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Speaker 4: role of private capital in this buildout.

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Speaker 1: How much is that driven by this US administration?

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Speaker 3: A lot.

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Speaker 4: I mean, it's clear that they know that the European

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Speaker 4: leadership has even if you look this morning about how

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Speaker 4: they're stepping up on defense spending with NATO. So I think,

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Speaker 4: you know, when I think about the globe right now, again,

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Speaker 4: taros are a little bit off on the sidelines. They're

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Speaker 4: part of the conversation. It's a question of how much,

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Speaker 4: not if, or when. And I do think they feel

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Speaker 4: like there's a responsibility that they have for their citizens,

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Speaker 4: because when you look at the last fifteen years and

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Speaker 4: where the US has grown versus europe growth, it's startling.

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Speaker 4: You know, when I got out a college a few

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Speaker 4: decades ago, it was all about Japan. Japan was going

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Speaker 4: to take over the world. It was all about Germany

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Speaker 4: industrial taking over the world.

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Speaker 3: That did not come to play.

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Speaker 4: And I know they have a lot of catching up

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Speaker 4: to do, and I just think it's a very very now.

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Speaker 4: You know, if you watch, if you listen, if you

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Speaker 4: read the draggy letter and what he put forth eighteen

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Speaker 4: months ago. Now, if they followed that all one hundred

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Speaker 4: and fifty six pages in great detail, it would be

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Speaker 4: a watershed economic opportunity. And I think parts of that

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Speaker 4: will to come forth. But they're already making moves on

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Speaker 4: securitization other activities. And to Jonathan's point, the European banks

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Speaker 4: are a bit behind the US in terms of the

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Speaker 4: fundamental focus on roe and shareholder return and capital efficiency.

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Speaker 4: But I think, I don't want to say they're catching up,

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Speaker 4: but they're getting in line.

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Speaker 2: Clearly, you've talked about macro paralysis in the past. I

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Speaker 2: don't see any sign of paralysis when I look at, saye,

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Speaker 2: high yield issuance, when I look at activity, Do you

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Speaker 2: see paralysis at all?

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Speaker 3: I don't. And back to this last topic.

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Speaker 4: I mean, as you point out, at least pointing out

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Speaker 4: the two big topics that they need to really deal

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Speaker 4: with right now is the tariffs on July ninth and

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Speaker 4: the big beautiful bill. But we're not talking about that

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Speaker 4: this point. We're talking about a FED chairman in nine months.

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Speaker 4: And I look at everything through what this president has

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Speaker 4: been in the past is a real estate developer. It's

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Speaker 4: all about location, location, location, pick will be about loyalty, loyalty, loyalty.

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Speaker 4: Let's not get confused. There isn't paralysis in the market.

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Speaker 4: As I mentioned before you the public markets in the narrative,

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Speaker 4: the private capital is really the driver the economy. A

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Speaker 4: lot of activity going on in the US on refinancing,

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Speaker 4: in Europe, on the global industrial renaissance. So we are

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Speaker 4: on pace to have our busiest quarter in origination. We've

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Speaker 4: had in a number of years, a tremendous amount of

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Speaker 4: activity across our equity platform, our infrastructure platform, our credit platform.

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Speaker 4: So I do think there was a lot of handeringing

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Speaker 4: as I said six six or three four months ago,

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Speaker 4: and I think that's now on the sidelines, maybe not

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Speaker 4: on the narrative, but certainly on activity.

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Speaker 1: Is that activity in lieu of some of the deals

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Speaker 1: activity that we were expecting. Was it sort of expected

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Speaker 1: to be the deals and the IPOs and the big

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Speaker 1: boom for the banks, and instead it's a Powell coming

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Speaker 1: in and doing a lot of financing deals in.

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Speaker 3: The back Well, I think too.

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Speaker 4: I think beginning of the year people projected that the

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Speaker 4: busiest folks on Wall Street would have been the ECM

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Speaker 4: equity capital markets teams and the M and A teams,

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Speaker 4: And while they've both been busy, the busiest folks have

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Speaker 4: been their rate hedging and derivatives teams because of what's

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Speaker 4: going on in the dollar and concern about tariffs and such.

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Speaker 3: But it's an interesting backround.

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Speaker 4: Even listening to your program this morning, the fundamental economy

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Speaker 4: is doing fine. It's doing well, maybe not to the

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Speaker 4: growth expectations that people had earlier this year, and will

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Speaker 4: come out somewhere around a two percent growth with about

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Speaker 4: three percent inflation. But whether it was Nvidia, whether it

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Speaker 4: was Micron, you know, a lot of cappec still going,

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Speaker 4: a lot of companies in the AI space raising tremendous

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Speaker 4: amounts of capital at high valuations with long list of

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Speaker 4: investors coming in, and the activity, as I said earlier,

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Speaker 4: what's going on in Europe right now about that industrial renaissance.

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Speaker 4: It's still going on. So again, I think there's the

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Speaker 4: headlines and then there's the reality of the underlying economy

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Speaker 4: and the role of private capital, which is a much

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Speaker 4: much bigger, longer term story.

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Speaker 1: How do you think you're going to decipher the reality

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Speaker 1: versus the headlines when it comes to New York City.

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Speaker 3: You have a huge company here.

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Speaker 1: In New York, and a lot of people are concerned

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Speaker 1: about a Democratic.

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Speaker 3: Socialist becoming the mayor of the city.

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Speaker 4: You know, it's probably one of the most complicated jobs

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Speaker 4: in the world on the political stage, in terms of

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Speaker 4: bringing a variety of the five girls together, the business,

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Speaker 4: the community, the unions, all the folks that make New

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Speaker 4: York the special place it is. As I've mentioned before,

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Speaker 4: three out of every one hundred college graduates a year

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Speaker 4: come to New York. In the US, it's still the

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Speaker 4: magnet of talent and ambition. So when you see somebody

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Speaker 4: that on the surface does not appear to have a

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Speaker 4: long resume of leadership and making tough decisions, really concerning.

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Speaker 4: And I think that we'll see now just winning the primary, well,

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Speaker 4: in the past it might have been the litmus test

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Speaker 4: for being the mayor. I think there's still a long

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Speaker 4: time coming until November.

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Speaker 2: Build down the office in Florida. Is that what you'll

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Speaker 2: hear in that's there was the most diplomatic response.

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Speaker 4: We we we are, we we we are, we are,

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Speaker 4: we are a New York company, and we got we

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Speaker 4: we are. We are determined to be here. I'm determined

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Speaker 4: to be here. Our leadership is determined to be here.

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Speaker 4: We have people in the office five days a week.

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Speaker 1: He's running.

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Speaker 3: You know. It's uh January, Jim.

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Speaker 2: It's good to see you. Happy birthday, Jimi, a polit