1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:36,879 Speaker 2: Terminal and the Bloomberg Business app. We begin with our 10 00:00:36,880 --> 00:00:39,400 Speaker 2: top story, a big saloff in big tech, sending the 11 00:00:39,479 --> 00:00:41,280 Speaker 2: S and P five hundred to its worst day since 12 00:00:41,280 --> 00:00:45,240 Speaker 2: December twenty two. Anastasia amorroso I Capital writing this tech 13 00:00:45,280 --> 00:00:49,080 Speaker 2: consolidation and saloff likely has more to go. Our performance 14 00:00:49,080 --> 00:00:51,760 Speaker 2: in terms of positive surprises led the significant mag seven 15 00:00:51,800 --> 00:00:54,520 Speaker 2: stocks out performance over the past year and a half, 16 00:00:54,800 --> 00:00:57,720 Speaker 2: but it now may be coming to an end. Alastaja 17 00:00:57,800 --> 00:00:59,600 Speaker 2: joins us for more. Anastaga, good morning, It's going to 18 00:00:59,600 --> 00:01:01,720 Speaker 2: see you to see what are we seeing take place here? 19 00:01:01,800 --> 00:01:04,720 Speaker 2: Just the massive technical unwind of consensus positions across the board. 20 00:01:05,080 --> 00:01:07,319 Speaker 2: Is it a growth scare, rotation of boarding gap, what 21 00:01:07,440 --> 00:01:07,839 Speaker 2: is this. 22 00:01:08,000 --> 00:01:10,360 Speaker 1: Well, I think the technical backdrop is part of the story. 23 00:01:10,440 --> 00:01:13,200 Speaker 3: And obviously you know the technicals were very stretched coming 24 00:01:13,200 --> 00:01:16,160 Speaker 3: into I would say June for technology shares in particular, 25 00:01:16,280 --> 00:01:18,200 Speaker 3: whether you looked at physicianing, whether you looked at the 26 00:01:18,240 --> 00:01:21,640 Speaker 3: overbought conditions. Remember we were the relative strength indicator over 27 00:01:21,680 --> 00:01:23,000 Speaker 3: seventy for quite some time. 28 00:01:23,240 --> 00:01:25,040 Speaker 1: So I think that explains partly on wine. 29 00:01:25,040 --> 00:01:26,600 Speaker 3: When you see a setup like that, you think, well, 30 00:01:26,640 --> 00:01:28,640 Speaker 3: something's going to happen to take us down. But I 31 00:01:28,720 --> 00:01:31,839 Speaker 3: do think also there's a more fundamental story here, which 32 00:01:31,880 --> 00:01:35,080 Speaker 3: is their earning surprises. As I mentioned, that's what really 33 00:01:35,120 --> 00:01:37,640 Speaker 3: lifted the Max seven stocks higher. If you look at 34 00:01:37,720 --> 00:01:39,920 Speaker 3: buy how much they were beating expectations. 35 00:01:40,120 --> 00:01:41,280 Speaker 1: That's one way to look at it. 36 00:01:41,319 --> 00:01:43,160 Speaker 3: The rest of the S and P was not doing much, 37 00:01:43,319 --> 00:01:45,440 Speaker 3: but the Max seven was doing a lot. The other 38 00:01:45,520 --> 00:01:47,760 Speaker 3: thing to think about is how much were their earnings 39 00:01:47,800 --> 00:01:50,360 Speaker 3: revisions going up for some of those technology stocks, And 40 00:01:50,400 --> 00:01:53,840 Speaker 3: again it's by a significant amount. That is not likely 41 00:01:53,880 --> 00:01:56,560 Speaker 3: to be the case going forward, and case in point, 42 00:01:56,600 --> 00:02:00,200 Speaker 3: Alphabet and Tesla did not see the positive surprises or 43 00:02:00,200 --> 00:02:02,680 Speaker 3: saw a negative surprise, and to your point, the market 44 00:02:02,720 --> 00:02:05,920 Speaker 3: is really severely punishing that. So you have lofty expectations, 45 00:02:05,920 --> 00:02:09,079 Speaker 3: you have lofty valuations, and now you don't have the same. 46 00:02:08,919 --> 00:02:10,720 Speaker 1: Surprise factor as you did before. 47 00:02:10,800 --> 00:02:14,560 Speaker 3: So that's why I think investors will continue this on 48 00:02:14,639 --> 00:02:15,399 Speaker 3: wine trade. 49 00:02:15,919 --> 00:02:17,800 Speaker 4: This is a very confusing market to me because on 50 00:02:17,800 --> 00:02:20,079 Speaker 4: one hand, I believe in this sort of unwined story, 51 00:02:20,120 --> 00:02:22,240 Speaker 4: and then it doesn't seem so pernicious. It's just basically 52 00:02:22,320 --> 00:02:25,799 Speaker 4: taking chips off the table cashing in just technically for 53 00:02:25,919 --> 00:02:28,399 Speaker 4: risk adjustment. On the flip side, I want to stick 54 00:02:28,400 --> 00:02:30,040 Speaker 4: on American air for a second, and I'm not asking 55 00:02:30,080 --> 00:02:32,639 Speaker 4: you to comment specifically on this airline, but the fact 56 00:02:32,639 --> 00:02:35,160 Speaker 4: that the shares are down so much, even after as 57 00:02:35,240 --> 00:02:37,400 Speaker 4: John was mentioning being punished all through the year, it 58 00:02:37,440 --> 00:02:40,680 Speaker 4: is down twenty six percent year to date really suggests 59 00:02:40,680 --> 00:02:44,280 Speaker 4: that we're coming off really low expectations and still getting 60 00:02:44,320 --> 00:02:46,280 Speaker 4: punished when earnings disappoint. 61 00:02:46,760 --> 00:02:48,000 Speaker 5: Doesn't that reflect this. 62 00:02:48,000 --> 00:02:51,120 Speaker 4: Feeling of sort of the unknown of how much and 63 00:02:51,120 --> 00:02:52,520 Speaker 4: how quickly growth is weakening? 64 00:02:52,880 --> 00:02:55,720 Speaker 3: Yeah, but I think the expectations were probably not low 65 00:02:55,840 --> 00:02:58,600 Speaker 3: enough coming into this quarter. If you think about how 66 00:02:58,680 --> 00:03:02,760 Speaker 3: much the expectations typically get revised down it's let's say 67 00:03:02,760 --> 00:03:05,160 Speaker 3: three or four percent this time around that got revised 68 00:03:05,160 --> 00:03:07,160 Speaker 3: down by all of half of a percent. So I 69 00:03:07,160 --> 00:03:10,160 Speaker 3: don't think we really reset the bar substantially lower. And 70 00:03:10,240 --> 00:03:12,400 Speaker 3: that's why going into the reporting season, one of the 71 00:03:12,400 --> 00:03:15,120 Speaker 3: things we've been flagging is there's likely this disconnect that's 72 00:03:15,120 --> 00:03:18,519 Speaker 3: building between the earnings expectations and what's happening in the economy. 73 00:03:18,720 --> 00:03:21,000 Speaker 3: And if you look at the Economic Surprise Index, it's 74 00:03:21,000 --> 00:03:21,799 Speaker 3: been negative for. 75 00:03:21,840 --> 00:03:22,520 Speaker 1: Quite some time. 76 00:03:22,880 --> 00:03:25,359 Speaker 3: If you look at the US consumer, Lisa, I think 77 00:03:25,400 --> 00:03:28,240 Speaker 3: I'm now maybe finally joining you in that camp. There 78 00:03:28,320 --> 00:03:31,000 Speaker 3: is a weakening in the US consumer, and there's the 79 00:03:31,080 --> 00:03:33,680 Speaker 3: unemployment rate that did go up from three point four 80 00:03:33,720 --> 00:03:35,040 Speaker 3: percent to four point one percent. 81 00:03:35,240 --> 00:03:36,800 Speaker 1: That's not something to disregard. 82 00:03:37,120 --> 00:03:40,000 Speaker 3: So I think that's the squaring that we have to 83 00:03:40,120 --> 00:03:43,200 Speaker 3: do in the markets is acknowledged, the fact that earnings 84 00:03:43,200 --> 00:03:46,000 Speaker 3: expectations were too high for the economic growth that we 85 00:03:46,040 --> 00:03:46,560 Speaker 3: have today. 86 00:03:46,720 --> 00:03:49,400 Speaker 4: What does that mean for how bullish bearish you are 87 00:03:49,680 --> 00:03:51,839 Speaker 4: on say, tech stocks, which you used to really love 88 00:03:51,960 --> 00:03:53,520 Speaker 4: and you used to lean into you so you can't 89 00:03:53,520 --> 00:03:56,080 Speaker 4: just throw them out because everybody loves them. Yeah, at 90 00:03:56,080 --> 00:03:57,920 Speaker 4: this point, are you looking to buy? 91 00:03:58,080 --> 00:03:59,720 Speaker 1: Is this sort of a biable dip. 92 00:03:59,560 --> 00:04:01,600 Speaker 4: Or is this thing that you stay away from because 93 00:04:01,920 --> 00:04:03,520 Speaker 4: you don't want to get in front of a freight train. 94 00:04:04,120 --> 00:04:06,440 Speaker 3: I think you don't buy just yet, or maybe you 95 00:04:06,600 --> 00:04:09,640 Speaker 3: buy very slowly, but with the with the idea that 96 00:04:09,680 --> 00:04:11,880 Speaker 3: this is likely to play out over the coming months. 97 00:04:11,960 --> 00:04:13,200 Speaker 1: And you know the reason I. 98 00:04:13,160 --> 00:04:16,400 Speaker 3: Say that lease is there's this, you know, Gardner's hype 99 00:04:16,760 --> 00:04:18,719 Speaker 3: chart that I'm sure a lot of us and a 100 00:04:18,720 --> 00:04:20,800 Speaker 3: lot of viewers have seen, and you go through this 101 00:04:21,600 --> 00:04:25,200 Speaker 3: peak of inflated expectations cycle and what's on the other 102 00:04:25,320 --> 00:04:28,360 Speaker 3: end is actually the trough of disillusionment. And I'm not 103 00:04:28,400 --> 00:04:31,120 Speaker 3: saying that we're necessarily going that way for all of 104 00:04:31,160 --> 00:04:33,400 Speaker 3: the AI stocks, but I think for some of them 105 00:04:33,400 --> 00:04:35,680 Speaker 3: we're likely are or it's going to take longer to 106 00:04:35,800 --> 00:04:39,480 Speaker 3: monetize the AI that we're all so excited about. 107 00:04:39,520 --> 00:04:41,320 Speaker 1: So that's why I think that part is going to 108 00:04:41,320 --> 00:04:42,760 Speaker 1: take a little bit longer to play out. 109 00:04:42,960 --> 00:04:43,120 Speaker 6: You know. 110 00:04:43,200 --> 00:04:44,799 Speaker 1: The other part is just given how. 111 00:04:44,720 --> 00:04:49,040 Speaker 3: Long investors have been some of the artificial intelligence stocks, 112 00:04:49,080 --> 00:04:50,919 Speaker 3: I think there's still a lot of selling pressure that 113 00:04:51,000 --> 00:04:54,279 Speaker 3: is likely to come forth. So that's why I would 114 00:04:54,560 --> 00:04:57,640 Speaker 3: think about having a shopping list. But executing that shopping 115 00:04:57,720 --> 00:05:00,560 Speaker 3: list probably over the next few months. The other thing too, 116 00:05:00,760 --> 00:05:03,720 Speaker 3: the market is typically consolidate into the first or I 117 00:05:03,720 --> 00:05:06,200 Speaker 3: should say after the first rate cuts. So whether it's July, 118 00:05:06,279 --> 00:05:08,719 Speaker 3: whether it's September, the market is three months after the 119 00:05:08,720 --> 00:05:10,039 Speaker 3: cut tended to consolidate. 120 00:05:10,800 --> 00:05:12,000 Speaker 1: Information technology. 121 00:05:12,000 --> 00:05:14,719 Speaker 3: If you use the nineteen ninety five cycle for example, 122 00:05:14,760 --> 00:05:18,200 Speaker 3: as a soft landing scenario, infotech rallied into the first 123 00:05:18,240 --> 00:05:21,200 Speaker 3: rate cut, but again it's sold off or consolidated after. 124 00:05:21,360 --> 00:05:23,359 Speaker 1: So that's why I don't. 125 00:05:23,200 --> 00:05:26,279 Speaker 3: Think it's a quick buy the dip here intoechnology, but 126 00:05:26,400 --> 00:05:28,720 Speaker 3: think about is more of a protracted, let's say three 127 00:05:28,720 --> 00:05:29,920 Speaker 3: months consolidation frame. 128 00:05:30,240 --> 00:05:32,240 Speaker 7: Given you've now come on to Lisa's side about these 129 00:05:32,240 --> 00:05:34,000 Speaker 7: concerns in the consumer. 130 00:05:34,120 --> 00:05:35,839 Speaker 1: Where will that play out in the market. 131 00:05:37,240 --> 00:05:39,880 Speaker 7: If consumers aren't spending, what does that mean for potentially 132 00:05:39,880 --> 00:05:42,040 Speaker 7: stocks you want to begin on or pull. 133 00:05:42,120 --> 00:05:44,240 Speaker 3: Well, first of all, what I would say, the consumers 134 00:05:44,279 --> 00:05:46,800 Speaker 3: are spending, right, but they're not spending as much as 135 00:05:46,800 --> 00:05:48,680 Speaker 3: they used to. If you look at credit card spending data, 136 00:05:48,680 --> 00:05:50,799 Speaker 3: for example, if it was up seven or eight percent 137 00:05:50,839 --> 00:05:52,760 Speaker 3: year of year, right now it's maybe three to five percent, 138 00:05:52,800 --> 00:05:54,640 Speaker 3: depending on what kind of a consumer you look at, 139 00:05:54,760 --> 00:05:57,120 Speaker 3: so I think it's a slow down story versus a 140 00:05:57,120 --> 00:06:01,240 Speaker 3: recessionary consumer spending print. But I will say that one 141 00:06:01,279 --> 00:06:04,560 Speaker 3: of the favorite trades that I have in the market today, 142 00:06:04,640 --> 00:06:06,520 Speaker 3: or the rotation trade, which is the other side of 143 00:06:06,520 --> 00:06:09,440 Speaker 3: the technology trade, which is going to things like regional 144 00:06:09,480 --> 00:06:10,400 Speaker 3: banks for example. 145 00:06:10,800 --> 00:06:13,880 Speaker 1: So it's probably not. 146 00:06:13,880 --> 00:06:15,840 Speaker 3: As levered to the consumer as it is to the 147 00:06:15,839 --> 00:06:18,800 Speaker 3: commercial real estate market for example, but regional banks are 148 00:06:18,839 --> 00:06:21,320 Speaker 3: really levered to lower interest rates. 149 00:06:21,440 --> 00:06:23,040 Speaker 1: I think the one or D that we have. 150 00:06:23,120 --> 00:06:25,160 Speaker 3: In this market environment is the FED is likely to 151 00:06:25,240 --> 00:06:27,960 Speaker 3: cut rates, if not this month, then probably in the 152 00:06:28,000 --> 00:06:29,960 Speaker 3: next couple of months. And if that's the case, you 153 00:06:30,000 --> 00:06:31,840 Speaker 3: want to go to those rate cutting beneficiaries. 154 00:06:32,120 --> 00:06:32,640 Speaker 1: If you have. 155 00:06:32,720 --> 00:06:35,440 Speaker 3: Lower rates than some of those unrealized losses on the 156 00:06:35,480 --> 00:06:38,600 Speaker 3: balance sheets of those banks should maybe become less so. 157 00:06:38,600 --> 00:06:39,440 Speaker 1: Than they were before. 158 00:06:39,800 --> 00:06:42,679 Speaker 3: If you have lower rates, you should also have better 159 00:06:42,760 --> 00:06:45,600 Speaker 3: income margins that interest margins for those banks. 160 00:06:45,839 --> 00:06:47,080 Speaker 1: So that's where I. 161 00:06:47,080 --> 00:06:50,120 Speaker 3: Would be looking to position in regionals and small caps 162 00:06:50,880 --> 00:06:54,600 Speaker 3: and utilities, which all of those sort of avoid the consumer. 163 00:06:54,839 --> 00:06:57,600 Speaker 2: Smozampi film in this morning equity features on a rush, 164 00:06:57,600 --> 00:06:59,600 Speaker 2: so by about two tens of one percent just a 165 00:06:59,640 --> 00:07:01,920 Speaker 2: opsode nation. More and more people sort of shift into 166 00:07:02,120 --> 00:07:05,080 Speaker 2: Ramo's camp on the consumer. You notice that it always 167 00:07:05,080 --> 00:07:06,440 Speaker 2: pointed view. They're like, I'm in your camp. 168 00:07:07,040 --> 00:07:09,880 Speaker 1: It's like you run the count, run the camp. 169 00:07:09,920 --> 00:07:11,840 Speaker 6: I'm sort of big pessimists. 170 00:07:11,880 --> 00:07:13,200 Speaker 5: I'm a sort of gloom and doom. 171 00:07:13,200 --> 00:07:16,160 Speaker 4: I think about the sixty forty and Sebastian page is 172 00:07:17,400 --> 00:07:20,040 Speaker 4: Allocation Committee, and basically the bond people are on one side, 173 00:07:20,040 --> 00:07:21,920 Speaker 4: the equity people on the other side, and there's sort 174 00:07:21,960 --> 00:07:24,600 Speaker 4: of a cloud hanging up from bond people and equity. 175 00:07:24,440 --> 00:07:25,040 Speaker 5: Without a die. 176 00:07:25,360 --> 00:07:27,600 Speaker 2: You are a bond person and a stage amoroso of 177 00:07:27,600 --> 00:07:40,440 Speaker 2: my capital and a stage of thank you. So here's 178 00:07:40,480 --> 00:07:43,400 Speaker 2: the latest. Donald Trump ramping up his attacks on Kamala Harris, 179 00:07:43,440 --> 00:07:47,120 Speaker 2: criticizing her record as San Francisco District Attorney and her 180 00:07:47,160 --> 00:07:50,600 Speaker 2: stance on abortion rights. Harris taking aim at Trump and 181 00:07:50,640 --> 00:07:53,960 Speaker 2: the GOP's ties to Project twenty twenty five Lebby Cantrill 182 00:07:54,000 --> 00:07:56,560 Speaker 2: of PIMCO, saying this, well, Trump remains favorite to win 183 00:07:56,600 --> 00:07:59,320 Speaker 2: at this point. His chances as well as the odds 184 00:07:59,360 --> 00:08:01,800 Speaker 2: of a Republican sweep in Congress, and now lower than 185 00:08:01,800 --> 00:08:04,720 Speaker 2: they were just last week. We now view the election 186 00:08:04,880 --> 00:08:08,400 Speaker 2: is more dynamic, with likely more twists ahead. Lebby joins 187 00:08:08,440 --> 00:08:10,120 Speaker 2: us for more Lebby, I can't imagine what those twists 188 00:08:10,200 --> 00:08:12,920 Speaker 2: might be. So let's not even let's not even entertain that. 189 00:08:12,960 --> 00:08:14,640 Speaker 2: I've got a poll in front of me. It's just dropped, 190 00:08:14,720 --> 00:08:15,920 Speaker 2: so I'm going to share it with you. It comes 191 00:08:15,920 --> 00:08:18,240 Speaker 2: from Emerson College, and it reads as follows. It's on 192 00:08:18,240 --> 00:08:21,320 Speaker 2: swing states. In Arizona forty nine percent support for Trump, 193 00:08:21,360 --> 00:08:25,280 Speaker 2: forty four for Harris. Georgia forty eight percent percent support 194 00:08:25,280 --> 00:08:28,480 Speaker 2: for Trump, forty six for Harris, in Michigan forty six 195 00:08:28,560 --> 00:08:31,560 Speaker 2: for Trump, forty five for Harris, Pennsylvania forty eight for Trump, 196 00:08:31,600 --> 00:08:34,880 Speaker 2: forty six for Harris. Wisconsin, they are tied in Wisconsin 197 00:08:34,920 --> 00:08:38,440 Speaker 2: at forty seven percent support Harris and Trump, respectively. When 198 00:08:38,440 --> 00:08:40,560 Speaker 2: we start to get polls like that, more polls like 199 00:08:40,559 --> 00:08:42,559 Speaker 2: that in the coming days and weeks, how much weight 200 00:08:42,640 --> 00:08:44,400 Speaker 2: do you put on them in the early days and 201 00:08:44,440 --> 00:08:45,360 Speaker 2: weeks of this contest. 202 00:08:45,440 --> 00:08:48,400 Speaker 8: Yes, I would say that not a lot right now. 203 00:08:48,480 --> 00:08:51,200 Speaker 8: I think that the polls will be much more telling 204 00:08:51,320 --> 00:08:54,679 Speaker 8: if after the convention and then really in September. And 205 00:08:54,720 --> 00:08:56,480 Speaker 8: this is what we have been telling clients even before 206 00:08:56,559 --> 00:08:59,559 Speaker 8: all this drama, is that really wait until September because 207 00:08:59,559 --> 00:09:01,920 Speaker 8: that's where and just statistically. 208 00:09:01,320 --> 00:09:02,720 Speaker 6: Pulling becomes more predictive. 209 00:09:02,760 --> 00:09:05,439 Speaker 8: Obviously, Poland's never going to be completely clearvoydt in terms 210 00:09:05,440 --> 00:09:09,240 Speaker 8: of who actually shows up to vote, but it becomes 211 00:09:09,240 --> 00:09:11,199 Speaker 8: more predictive as you get closer. So and I say 212 00:09:11,360 --> 00:09:14,600 Speaker 8: especially this because it is so dynamic, because she really 213 00:09:14,679 --> 00:09:16,760 Speaker 8: is reintroducing herself to voters. 214 00:09:17,440 --> 00:09:18,680 Speaker 6: That's good and that's bad. 215 00:09:18,720 --> 00:09:21,560 Speaker 8: I mean, she has a very progressive record that she 216 00:09:21,679 --> 00:09:23,360 Speaker 8: ran on in twenty twenty that she's going to have 217 00:09:23,400 --> 00:09:25,920 Speaker 8: to sort of defend and clarify and what have you. 218 00:09:26,679 --> 00:09:28,839 Speaker 8: But I wouldn't necessarily, I would take all of this 219 00:09:29,000 --> 00:09:31,480 Speaker 8: pulling with a big grain with a big grain of salt. 220 00:09:31,520 --> 00:09:35,000 Speaker 8: So really, after the convention, really wait until September. I 221 00:09:35,000 --> 00:09:37,280 Speaker 8: always tell clients that have a cocktail, go to the beach, 222 00:09:37,400 --> 00:09:39,920 Speaker 8: enjoy your vacation, and then come back to politics and 223 00:09:39,960 --> 00:09:42,160 Speaker 8: siss Sepember, because that's actually when I think it's really 224 00:09:42,280 --> 00:09:43,560 Speaker 8: what will be much more indicative. 225 00:09:43,600 --> 00:09:45,480 Speaker 7: It's hard to have a cocktail given the past few 226 00:09:45,520 --> 00:09:46,560 Speaker 7: weeks that we've been dealing. 227 00:09:46,360 --> 00:09:47,679 Speaker 1: With in US politics. 228 00:09:47,720 --> 00:09:49,719 Speaker 7: But now there's a lot of emphasis on who she's 229 00:09:49,720 --> 00:09:51,960 Speaker 7: going to pick as her running mate, who do you 230 00:09:52,000 --> 00:09:54,240 Speaker 7: think is best for her, not just to support her 231 00:09:54,240 --> 00:09:57,120 Speaker 7: and expand her views because you say she is very progressive, 232 00:09:57,559 --> 00:09:58,480 Speaker 7: but also the. 233 00:09:58,360 --> 00:10:00,480 Speaker 6: Math when it comes to electoral college. Yeah, and so 234 00:10:00,640 --> 00:10:02,400 Speaker 6: I mean, is she very progressive? We don't know. 235 00:10:02,440 --> 00:10:04,040 Speaker 8: I mean, just to clarify, I mean, she ran on 236 00:10:04,080 --> 00:10:07,599 Speaker 8: a very progressive platform. She was a Democratic primary. Yeah, yes, no, 237 00:10:07,720 --> 00:10:09,880 Speaker 8: And again she was running for national office even when 238 00:10:09,920 --> 00:10:11,880 Speaker 8: she was in the Senate. So for sure she has 239 00:10:11,920 --> 00:10:13,839 Speaker 8: a progressive record. I think that's the thing. Though it's 240 00:10:13,880 --> 00:10:16,120 Speaker 8: unknown about hers where does she stand on in many 241 00:10:16,160 --> 00:10:18,800 Speaker 8: of these issues. But you're absolutely right, her running mate 242 00:10:18,840 --> 00:10:21,640 Speaker 8: is going to be a really, really important both because it. 243 00:10:21,679 --> 00:10:23,840 Speaker 6: Is sort of the first public. 244 00:10:25,640 --> 00:10:29,240 Speaker 8: Decision that she is going to make, and oftentimes, you know, 245 00:10:29,240 --> 00:10:31,200 Speaker 8: picking your running mate is really a reflection of the 246 00:10:31,200 --> 00:10:34,440 Speaker 8: top of the ticket's judgment, but also, as you talk about, 247 00:10:34,760 --> 00:10:38,360 Speaker 8: is really the electoral college strategy Arizona, as John just said, 248 00:10:38,400 --> 00:10:41,720 Speaker 8: I mean she's lagging in Arizona. Mark Kelly, the Senator 249 00:10:41,760 --> 00:10:45,360 Speaker 8: from Arizona, who's more moderate, particularly in border issues, that's 250 00:10:45,400 --> 00:10:47,840 Speaker 8: going to be a big liability for her, but also 251 00:10:47,840 --> 00:10:50,480 Speaker 8: could help shore up support in Arizona and then Pennsylvania. 252 00:10:50,480 --> 00:10:53,160 Speaker 8: I I of all those six states that you just mentioned, 253 00:10:53,200 --> 00:10:56,880 Speaker 8: Pennsylvania is going to be the most critical state for 254 00:10:57,040 --> 00:11:00,000 Speaker 8: if Democrats are going to win, they have to win Pennsylvania. 255 00:11:00,200 --> 00:11:02,760 Speaker 8: It's necessary, but it's you know, asday, We're not sufficient. 256 00:11:02,760 --> 00:11:04,920 Speaker 8: I mean, they will have to win other states as well. 257 00:11:05,280 --> 00:11:07,920 Speaker 8: But if they lose Pennsylvania, Democrats have lost this race. 258 00:11:08,040 --> 00:11:09,200 Speaker 6: So Josh Shapiro, the. 259 00:11:09,200 --> 00:11:13,800 Speaker 8: Government popular governor who also has a more moderate stance 260 00:11:13,840 --> 00:11:16,560 Speaker 8: on things like fracking, which she said she was going 261 00:11:16,640 --> 00:11:19,520 Speaker 8: to ban. So yes, no exactly, and she says she's 262 00:11:19,520 --> 00:11:21,320 Speaker 8: talked him a medicare for all, she's talked about defending 263 00:11:21,320 --> 00:11:23,600 Speaker 8: the police, she's talking about banning fracking. I mean, again, 264 00:11:23,640 --> 00:11:27,200 Speaker 8: she has a platform that will be untenable for her 265 00:11:27,240 --> 00:11:30,000 Speaker 8: to run on and win. And that's why I think 266 00:11:30,000 --> 00:11:32,040 Speaker 8: she will need to start clarifying much of that. 267 00:11:32,320 --> 00:11:32,480 Speaker 6: Now. 268 00:11:32,480 --> 00:11:34,400 Speaker 8: The other challenge, sorry, the other challenge is that she's 269 00:11:34,400 --> 00:11:37,320 Speaker 8: the vice president and current city vice president, and she 270 00:11:37,360 --> 00:11:40,240 Speaker 8: can't necessarily distance herself so much from Biden as well. 271 00:11:40,320 --> 00:11:42,560 Speaker 8: So this is she has a lot of challenges, a 272 00:11:42,559 --> 00:11:44,640 Speaker 8: lot of twists and turns ahead in terms of really 273 00:11:44,720 --> 00:11:46,160 Speaker 8: navigating like the policy front. 274 00:11:46,240 --> 00:11:48,320 Speaker 7: You said, the top of the ticket is the judgment 275 00:11:48,600 --> 00:11:50,760 Speaker 7: of the candidate. What does that say about Trump and 276 00:11:50,800 --> 00:11:51,520 Speaker 7: his pick of JD. 277 00:11:51,640 --> 00:11:53,640 Speaker 6: Vans. Yeah, well, as we were. 278 00:11:53,480 --> 00:11:56,040 Speaker 8: Just talking about, I mean this, this decision to pick 279 00:11:56,120 --> 00:11:58,600 Speaker 8: Jade Vance was really a moment in time, right. It 280 00:11:58,640 --> 00:12:01,199 Speaker 8: was on the heels of the assass a Nation attempt. 281 00:12:02,160 --> 00:12:04,680 Speaker 8: It was when Biden was still in the race. It 282 00:12:04,800 --> 00:12:07,559 Speaker 8: was when folks had odds of Trump winning at seventy 283 00:12:07,600 --> 00:12:12,040 Speaker 8: five eighty percent. Republican sweep looked more likely than not, 284 00:12:12,760 --> 00:12:16,160 Speaker 8: and so he wasn't necessarily as concerned about expanding his 285 00:12:16,480 --> 00:12:20,320 Speaker 8: voter base. He wasn't as concerned about as being tight 286 00:12:20,400 --> 00:12:21,679 Speaker 8: as it might end up being. 287 00:12:22,800 --> 00:12:24,640 Speaker 6: So, you know, we'll see whether he, you. 288 00:12:24,559 --> 00:12:26,480 Speaker 8: Know, how how he feels about that Jake Advance. But 289 00:12:26,520 --> 00:12:28,960 Speaker 8: it is much more a doubling down on kind of 290 00:12:29,000 --> 00:12:32,880 Speaker 8: MAGA and on trump Ism than say a Doug Bergham 291 00:12:32,960 --> 00:12:36,280 Speaker 8: or even a Marco Rubio or certainly a Nicki Haley 292 00:12:36,320 --> 00:12:38,080 Speaker 8: some of the other folks who were in the mix. 293 00:12:38,400 --> 00:12:40,640 Speaker 4: So you note that Michelle Obama is still not going 294 00:12:40,640 --> 00:12:41,640 Speaker 4: to do the nominee for. 295 00:12:44,120 --> 00:12:47,480 Speaker 1: Get here, hold on a well, but hold on that 296 00:12:47,559 --> 00:12:47,880 Speaker 1: was full. 297 00:12:47,960 --> 00:12:49,920 Speaker 6: Okay, efinitely that was for us. 298 00:12:50,000 --> 00:12:51,880 Speaker 4: But I really I'm not going to ask you about 299 00:12:51,880 --> 00:12:54,120 Speaker 4: Michelle Obama. I don't think that I was the genesis 300 00:12:54,160 --> 00:12:55,800 Speaker 4: of that. I do want to ask you, though, about 301 00:12:55,800 --> 00:12:58,280 Speaker 4: the tenor of the discussions that you've been having with 302 00:12:58,440 --> 00:13:02,280 Speaker 4: clients overseas outside of the US, how they're viewing this, 303 00:13:02,559 --> 00:13:05,679 Speaker 4: how that affects their investment decisions, what questions they're asking 304 00:13:06,040 --> 00:13:08,640 Speaker 4: to understand the potential ramifications of this. 305 00:13:08,880 --> 00:13:09,120 Speaker 6: Yeah. 306 00:13:09,120 --> 00:13:11,800 Speaker 8: So actually I'm still getting questions about Michelle Obama from 307 00:13:11,840 --> 00:13:14,520 Speaker 8: our Asian clients and about Jamie Diamond. So you know, 308 00:13:14,679 --> 00:13:17,480 Speaker 8: hope spring's eternal, I guess. So I would say there's 309 00:13:17,480 --> 00:13:20,040 Speaker 8: sort of in two lanes. One is around fiscal and 310 00:13:20,080 --> 00:13:23,040 Speaker 8: of course a lot of our clients overseas have a 311 00:13:23,040 --> 00:13:25,400 Speaker 8: lot of dollar and a lot of treasuries exposure, so 312 00:13:26,280 --> 00:13:28,240 Speaker 8: just trying to navigate that, and I think, as we've 313 00:13:28,280 --> 00:13:31,160 Speaker 8: talked about, really the punchline here is that the deficit 314 00:13:31,240 --> 00:13:34,400 Speaker 8: is the biggest loser in November. So regardless of who wins, 315 00:13:34,760 --> 00:13:38,240 Speaker 8: the deficit will remain high, and not only because there 316 00:13:38,320 --> 00:13:40,520 Speaker 8: might be new spending and there might be more task cuts, 317 00:13:40,520 --> 00:13:42,520 Speaker 8: although I think that's going to be difficult just given 318 00:13:42,920 --> 00:13:45,640 Speaker 8: where deficits are right now, but mostly because as we've 319 00:13:45,640 --> 00:13:47,680 Speaker 8: talked about, there won't be a title bit reform, and 320 00:13:47,679 --> 00:13:49,760 Speaker 8: that's what you really need in order to you know, 321 00:13:49,920 --> 00:13:52,720 Speaker 8: to consolidate sort of the budget and what have you. 322 00:13:53,320 --> 00:13:55,520 Speaker 8: And the other concern they have is of course around 323 00:13:55,520 --> 00:13:58,599 Speaker 8: geopolitics and interestingly mixed views here, because I think a 324 00:13:58,640 --> 00:14:02,079 Speaker 8: lot of folks to think that well, at least President Trump, 325 00:14:02,120 --> 00:14:03,720 Speaker 8: we can negotiate. 326 00:14:03,120 --> 00:14:05,720 Speaker 6: With him, whereas maybe a Biden. 327 00:14:05,520 --> 00:14:08,520 Speaker 8: Or Harris may have more of an ideological view. So 328 00:14:08,920 --> 00:14:10,720 Speaker 8: I'm not sure that's actually I'm not sure that's right. 329 00:14:10,760 --> 00:14:12,800 Speaker 8: I mean again, I think the direction of travel here 330 00:14:13,280 --> 00:14:18,400 Speaker 8: around tariffs, around export controls, around even capital flows, around 331 00:14:18,440 --> 00:14:21,600 Speaker 8: scrutiny around you how US investors invest in China is 332 00:14:21,600 --> 00:14:24,120 Speaker 8: going to be sort of pervasive, regardless of who wins. 333 00:14:24,120 --> 00:14:25,960 Speaker 8: So in some ways there's I you know, my view 334 00:14:25,960 --> 00:14:28,600 Speaker 8: is there are maybe fewer distinctions than folks think, but 335 00:14:28,640 --> 00:14:30,840 Speaker 8: those are that's really where our clients are focused. 336 00:14:30,920 --> 00:14:36,560 Speaker 2: The message from get a cocktail, enjoy the beach. 337 00:14:35,120 --> 00:14:36,120 Speaker 4: Last week, how'd that work out? 338 00:14:36,200 --> 00:14:36,360 Speaker 6: Yeah? 339 00:14:36,600 --> 00:14:38,720 Speaker 8: Not well, I'll tell you, yes, this is what I'm 340 00:14:38,760 --> 00:14:40,960 Speaker 8: trying to do, and sort of self something, but it's 341 00:14:41,000 --> 00:14:42,160 Speaker 8: not really working out very well. 342 00:14:42,200 --> 00:14:42,400 Speaker 9: Thank you. 343 00:14:42,480 --> 00:14:43,200 Speaker 6: I like that advice. 344 00:14:43,280 --> 00:14:45,760 Speaker 2: Levi's good to say. Thank you. Letty Cantroll and fim 345 00:14:45,840 --> 00:14:58,080 Speaker 2: Co on the like to. Let's turned back to big tech. 346 00:14:58,240 --> 00:15:01,760 Speaker 2: I spending on AI program and computing needs at Google 347 00:15:01,840 --> 00:15:04,960 Speaker 2: parent Alphabet, prompting a sell off in big tech stocks 348 00:15:05,080 --> 00:15:07,760 Speaker 2: as investors look for more return on AI spending. One 349 00:15:07,800 --> 00:15:11,760 Speaker 2: area companies are investing heavily is in data center capacity. 350 00:15:12,080 --> 00:15:15,200 Speaker 2: Voldemare is Lasak is the global head of Digital Infrastructure 351 00:15:15,200 --> 00:15:18,480 Speaker 2: at KKR and says two mega trends are driving the 352 00:15:18,520 --> 00:15:22,320 Speaker 2: demand for data center capacity, migrating data to the cloud 353 00:15:22,480 --> 00:15:25,840 Speaker 2: and the rise of AI. Voldemarl joined just now for 354 00:15:25,920 --> 00:15:27,680 Speaker 2: more voter Mark. Good to see you, sir, Thanks for 355 00:15:27,680 --> 00:15:29,720 Speaker 2: having me, thank you for being here. Let's just talk 356 00:15:29,760 --> 00:15:33,320 Speaker 2: about what is digital infrastructure. Let's start there, super simple. 357 00:15:33,440 --> 00:15:34,560 Speaker 2: What are we describing here? 358 00:15:34,760 --> 00:15:36,760 Speaker 9: Yeah, it's great, it's a great question. I mean, I 359 00:15:36,760 --> 00:15:39,400 Speaker 9: think to ask the journal. Infrastructure really has three big pillars. 360 00:15:39,520 --> 00:15:43,280 Speaker 9: There's mobile infrastructure traditionally think of it as towers, telecom towers. 361 00:15:43,680 --> 00:15:46,840 Speaker 9: There is the fixed line infrastructure, so it could be 362 00:15:47,040 --> 00:15:50,520 Speaker 9: you know, fiber that delivers connectivity to homes or enterprises. 363 00:15:50,880 --> 00:15:52,800 Speaker 9: And of course I think the topic we're about to 364 00:15:52,800 --> 00:15:56,840 Speaker 9: discuss this is cloud sort of storage and computing infrastructure, 365 00:15:56,880 --> 00:15:59,520 Speaker 9: right ie, data centers most pronouncedly, So those to ours 366 00:15:59,560 --> 00:16:01,760 Speaker 9: are the three big pillars at least how we define 367 00:16:01,760 --> 00:16:03,400 Speaker 9: it digital infrastructure within KKR. 368 00:16:03,560 --> 00:16:06,080 Speaker 2: So let's talk about the investment opportunities and how much 369 00:16:06,160 --> 00:16:08,280 Speaker 2: is going to be invested over the next several years. 370 00:16:08,480 --> 00:16:10,200 Speaker 2: I want to reflect on a quote that came from 371 00:16:10,240 --> 00:16:12,960 Speaker 2: the Google CEO, the Alphabet CEO in the last couple 372 00:16:13,000 --> 00:16:16,000 Speaker 2: of days, when he said, the biggest risk here in 373 00:16:16,040 --> 00:16:19,600 Speaker 2: a cycle with a theme like this is underinvesting and 374 00:16:19,640 --> 00:16:22,920 Speaker 2: not over investing. I sent from your perspective, you're going 375 00:16:22,960 --> 00:16:24,320 Speaker 2: to agree with that stance, am I right? 376 00:16:24,640 --> 00:16:25,600 Speaker 5: Yes? Yes? 377 00:16:25,640 --> 00:16:27,720 Speaker 2: Why is that? Why is this such a big moment 378 00:16:27,760 --> 00:16:29,120 Speaker 2: and why is that the right way to look at 379 00:16:29,160 --> 00:16:29,920 Speaker 2: the balance of risks? 380 00:16:30,480 --> 00:16:32,880 Speaker 9: Well, I think if let's look at the computing piece 381 00:16:32,960 --> 00:16:34,480 Speaker 9: right of it, I think two mega themes that we 382 00:16:34,600 --> 00:16:37,480 Speaker 9: have are obviously under computing and last mile connectivity. And 383 00:16:37,520 --> 00:16:39,520 Speaker 9: I think maybe we'll touch a little bit later on Metronod, 384 00:16:39,520 --> 00:16:41,400 Speaker 9: which is a deal with announced yesterday with a partnership 385 00:16:41,440 --> 00:16:44,000 Speaker 9: with T mobile, but focusing on data center piece. I 386 00:16:44,000 --> 00:16:47,040 Speaker 9: think if you look at the United States and say, 387 00:16:47,320 --> 00:16:49,960 Speaker 9: what was the infrastructure, what was the spand to help 388 00:16:50,000 --> 00:16:52,840 Speaker 9: facilitate the build out of Internet infrastructure or cloud infrastructure, 389 00:16:52,840 --> 00:16:55,880 Speaker 9: So sixteen year cycle from nineteen ninety to two thousand and. 390 00:16:55,760 --> 00:16:57,280 Speaker 5: Six to gigle whatts. 391 00:16:57,440 --> 00:16:59,520 Speaker 9: No longer do we think about data centers in terms 392 00:16:59,560 --> 00:17:01,920 Speaker 9: of square feet. It's really about the amount of power 393 00:17:02,040 --> 00:17:05,040 Speaker 9: that the data centers have. So that's an important factor 394 00:17:05,080 --> 00:17:07,359 Speaker 9: there to consider, and we'll touch on that in a second. 395 00:17:07,760 --> 00:17:11,679 Speaker 9: So Internet infrastructure two gigabots, the next phase was Internet 396 00:17:11,720 --> 00:17:12,280 Speaker 9: two point. 397 00:17:12,160 --> 00:17:14,159 Speaker 5: Zero and cloud eight gigabotts. 398 00:17:14,160 --> 00:17:19,000 Speaker 9: About fifteen years, technology cycles have accelerated, so we're now 399 00:17:19,040 --> 00:17:22,720 Speaker 9: talking about AI build out, Cloud two point zero, Internet 400 00:17:22,760 --> 00:17:25,119 Speaker 9: three point zero as a five year cycle and twenty 401 00:17:25,160 --> 00:17:27,919 Speaker 9: five to thirty gigabotts of power required to fuel this. 402 00:17:28,560 --> 00:17:31,080 Speaker 9: So I think, you know, you had a more patient, 403 00:17:31,359 --> 00:17:36,200 Speaker 9: sort of highly visible investment cycle that's now gotten compressed 404 00:17:36,359 --> 00:17:39,439 Speaker 9: and perhaps is creating I think scaring some of the 405 00:17:39,520 --> 00:17:40,360 Speaker 9: investors out there. 406 00:17:40,440 --> 00:17:42,240 Speaker 4: Well, some people would argue that this might be one 407 00:17:42,240 --> 00:17:44,320 Speaker 4: big reason for the selloff we've actually seen in big 408 00:17:44,359 --> 00:17:47,840 Speaker 4: tech There is one investor who said this in a 409 00:17:47,840 --> 00:17:50,560 Speaker 4: recent story. The overarching concern is where is the return 410 00:17:50,600 --> 00:17:53,600 Speaker 4: on investment in all the A and AI infrastructure spending. 411 00:17:54,000 --> 00:17:54,960 Speaker 1: It'll pay off. 412 00:17:55,160 --> 00:17:57,560 Speaker 4: In a few years, but it's not going to come 413 00:17:57,680 --> 00:18:00,320 Speaker 4: anytime soon. That is what the fear is of our 414 00:18:00,400 --> 00:18:03,639 Speaker 4: How much are you seeing near term returns some of 415 00:18:03,680 --> 00:18:06,960 Speaker 4: these infrastructure projects that a lot of people would agree 416 00:18:07,080 --> 00:18:08,800 Speaker 4: may be crucial in say ten years. 417 00:18:09,080 --> 00:18:11,439 Speaker 5: Yeah, I mean, I think it's a great question. You know. 418 00:18:11,600 --> 00:18:14,280 Speaker 5: I would draw an analogy to similar questions. 419 00:18:13,960 --> 00:18:16,280 Speaker 9: Raised during the buildout of cloud in two thousand and 420 00:18:16,359 --> 00:18:20,800 Speaker 9: six and seven. So, you know, when Amazon really emerges 421 00:18:20,840 --> 00:18:23,320 Speaker 9: the cloud provider in two thousand and seven, I think 422 00:18:23,359 --> 00:18:25,720 Speaker 9: similar questions were raised about where is the ROI. A 423 00:18:25,760 --> 00:18:28,760 Speaker 9: tremendous amount of investment is needed to help facilitate the 424 00:18:28,760 --> 00:18:31,919 Speaker 9: build out before you actually start seeing the applications of that. 425 00:18:32,520 --> 00:18:35,240 Speaker 9: And if you fast forward two thousand and seven to today, 426 00:18:35,280 --> 00:18:38,119 Speaker 9: Amazon stock is up almost three thousand percent, right and 427 00:18:38,160 --> 00:18:39,000 Speaker 9: it's been forgotten. 428 00:18:39,320 --> 00:18:41,760 Speaker 5: So I think the concerns are valid. 429 00:18:42,480 --> 00:18:44,520 Speaker 9: You know, I do think that there will be there's 430 00:18:44,600 --> 00:18:48,760 Speaker 9: frothiness in parts of the ecosystem within digital infrastructure at 431 00:18:48,840 --> 00:18:52,080 Speaker 9: least how we're positioning ourselves. We don't see that most 432 00:18:52,119 --> 00:18:54,359 Speaker 9: of the capacity on the data center side it's coming 433 00:18:54,440 --> 00:18:57,199 Speaker 9: online is fully leased. Most of it is leased to 434 00:18:57,240 --> 00:19:00,520 Speaker 9: the large hyperscale customers. So the type of risks that 435 00:19:00,560 --> 00:19:04,600 Speaker 9: we're looking to take, we're not necessarily exposed to perhaps 436 00:19:04,600 --> 00:19:06,560 Speaker 9: some of their volatility. But I think it's a fair 437 00:19:06,680 --> 00:19:10,600 Speaker 9: question to ask, what is the ROI. I think AI 438 00:19:10,720 --> 00:19:14,600 Speaker 9: will be larger than potentially cloud. If you think about today, 439 00:19:14,640 --> 00:19:17,280 Speaker 9: cloud business is about a five hundred billion dollar business annually, 440 00:19:17,359 --> 00:19:20,080 Speaker 9: investing almost two hundred billion dollars to build that infrastructure. 441 00:19:20,400 --> 00:19:23,920 Speaker 9: I think the view is that this feels different than 442 00:19:24,040 --> 00:19:25,399 Speaker 9: late nineties perhaps Bubble. 443 00:19:25,720 --> 00:19:27,439 Speaker 4: That said, you said that there are certain pockets that 444 00:19:27,440 --> 00:19:30,760 Speaker 4: feel fraudy in certain pockets that seem very worthy. 445 00:19:31,320 --> 00:19:33,760 Speaker 1: What are those pockets? How do you distinguish the two? 446 00:19:34,000 --> 00:19:36,600 Speaker 9: Yeah, I mean that's why I think, you know, we're 447 00:19:36,600 --> 00:19:38,760 Speaker 9: trying to figure that out. So a big part of 448 00:19:38,760 --> 00:19:40,840 Speaker 9: what we're doing at KKR is really trying to map 449 00:19:40,840 --> 00:19:44,000 Speaker 9: the entire ecosystem from the silicon side, which is I 450 00:19:44,000 --> 00:19:47,480 Speaker 9: think we're talking about chips to the ultimate end point 451 00:19:47,520 --> 00:19:50,080 Speaker 9: of applications layer and trying to figure out how do 452 00:19:50,119 --> 00:19:53,040 Speaker 9: we participate to the different strategies that we have within KKR. 453 00:19:53,200 --> 00:19:55,720 Speaker 9: We're not a venture investor, so we're staying away from that. 454 00:19:56,080 --> 00:19:58,600 Speaker 9: An interesting point I would make in nineteen nineties, if 455 00:19:58,800 --> 00:20:01,080 Speaker 9: a lot of analogies are being round to the nineteen 456 00:20:01,160 --> 00:20:04,359 Speaker 9: nineties tech bubble and bust, there were thirty eight or 457 00:20:04,359 --> 00:20:06,560 Speaker 9: thirty nine stocks in nineteen ninety nine that were up 458 00:20:06,560 --> 00:20:08,280 Speaker 9: one hundred percent in a year. 459 00:20:08,440 --> 00:20:09,480 Speaker 5: Today there's only one. 460 00:20:10,160 --> 00:20:12,639 Speaker 9: So public markets, perhaps there isn't as much of a 461 00:20:12,680 --> 00:20:16,320 Speaker 9: fraughtiness private markets. There's fifteen billion dollars of capital that 462 00:20:16,359 --> 00:20:20,600 Speaker 9: has gone from venture capital funds into generative AI platforms. 463 00:20:20,640 --> 00:20:22,760 Speaker 5: That's ten x the prior trend line. 464 00:20:23,119 --> 00:20:25,560 Speaker 9: So I think perhaps there are parts of fraughtiness in 465 00:20:25,560 --> 00:20:28,680 Speaker 9: the private markets versus the public markets. But I think 466 00:20:28,760 --> 00:20:31,480 Speaker 9: we think of it as as you know, as a 467 00:20:31,520 --> 00:20:35,560 Speaker 9: long term trend sort of an industry three point zero 468 00:20:35,600 --> 00:20:37,200 Speaker 9: if you think about it in terms of long term, 469 00:20:37,240 --> 00:20:40,480 Speaker 9: three hundred year sort of a cycle, and we're pretty 470 00:20:40,480 --> 00:20:42,280 Speaker 9: confident we're still in early innings of that. 471 00:20:43,000 --> 00:20:45,840 Speaker 7: When you look at the investment, is it actual market 472 00:20:45,880 --> 00:20:48,080 Speaker 7: demand or some of this has to do with the 473 00:20:48,119 --> 00:20:49,920 Speaker 7: fiscal push coming out of Washington. 474 00:20:50,480 --> 00:20:55,680 Speaker 9: It's fundamental market demand. I think we're seeing government part 475 00:20:55,760 --> 00:20:59,160 Speaker 9: of this investment has not played a large role. Now 476 00:20:59,160 --> 00:21:01,439 Speaker 9: we think that in the long term, I think a 477 00:21:01,480 --> 00:21:06,000 Speaker 9: comprehensive solution which includes private capital, includes obviously a combination 478 00:21:06,080 --> 00:21:10,359 Speaker 9: of the tech companies, intervention from some government policies to 479 00:21:10,359 --> 00:21:12,760 Speaker 9: help facility to build out some of this power infrastructure, 480 00:21:12,760 --> 00:21:16,200 Speaker 9: which ultimately is a key component of this will be required. 481 00:21:16,560 --> 00:21:19,000 Speaker 9: From a KKR perspective, we think of it as a 482 00:21:19,000 --> 00:21:22,240 Speaker 9: pretty uniquely positioned to ultimately play a major only that 483 00:21:22,520 --> 00:21:22,960 Speaker 9: so you just. 484 00:21:23,000 --> 00:21:23,520 Speaker 6: Know it's the deal. 485 00:21:23,760 --> 00:21:28,200 Speaker 4: And it was actually not on high falutint cyber prowess 486 00:21:28,280 --> 00:21:32,280 Speaker 4: in artificial intelligence. It was in medium sized, smaller cities 487 00:21:32,480 --> 00:21:37,200 Speaker 4: getting connectivity, basic connectivity to the internet, to the cell phone. 488 00:21:37,520 --> 00:21:39,080 Speaker 1: How far behind. 489 00:21:38,720 --> 00:21:41,600 Speaker 4: Are we basic infrastructure at a time when we're trying 490 00:21:41,600 --> 00:21:43,640 Speaker 4: to build out a massive network. 491 00:21:43,760 --> 00:21:46,720 Speaker 9: Yeah, So two mega themes we touched on the cloud computing. 492 00:21:47,000 --> 00:21:48,920 Speaker 9: The other big theme we have is fiber to the home. 493 00:21:49,000 --> 00:21:53,480 Speaker 9: We've made over ten investments globally, over ten billion dollars 494 00:21:53,480 --> 00:21:55,040 Speaker 9: of capital just in the fiber to the home. 495 00:21:54,960 --> 00:21:58,920 Speaker 5: Strategies over the last decade. We're pretty bullish. We think 496 00:21:58,920 --> 00:21:59,800 Speaker 5: this is pretty important. 497 00:22:00,040 --> 00:22:03,040 Speaker 9: So in the US, about fifty million homes still don't 498 00:22:03,080 --> 00:22:07,240 Speaker 9: have access to full fiber. We think that's that's unacceptable 499 00:22:07,440 --> 00:22:10,560 Speaker 9: and that ought to change. And so Metromat, which is 500 00:22:10,560 --> 00:22:13,480 Speaker 9: the deal they renounced in partnership with T Mobile, it's 501 00:22:13,520 --> 00:22:16,040 Speaker 9: really meant to help facilitate the growth of that and 502 00:22:16,080 --> 00:22:19,200 Speaker 9: really bridge the digital divide, not only in the sort 503 00:22:19,200 --> 00:22:21,120 Speaker 9: of that as you call it, the smaller cities, which, 504 00:22:21,160 --> 00:22:23,080 Speaker 9: by the way, a smaller city in the United States 505 00:22:23,160 --> 00:22:27,240 Speaker 9: called sub fifty thousand population center has about the one 506 00:22:27,359 --> 00:22:30,440 Speaker 9: fifth of the speeds that you see in the major 507 00:22:30,520 --> 00:22:32,520 Speaker 9: urban areas, and even major urban areas. 508 00:22:32,920 --> 00:22:34,560 Speaker 5: It's it's it's pretty inadequate. 509 00:22:34,760 --> 00:22:36,960 Speaker 9: So I do think that we believe that there is 510 00:22:37,200 --> 00:22:40,320 Speaker 9: a large decade long investment cycle to help build out 511 00:22:40,359 --> 00:22:43,399 Speaker 9: fiber infrastructure in United States, and we're really happy to 512 00:22:43,440 --> 00:22:45,639 Speaker 9: be part of it and happy to partner with a 513 00:22:45,680 --> 00:22:47,200 Speaker 9: premier telet come operator. 514 00:22:46,880 --> 00:22:47,840 Speaker 5: Like T Mobile to do that. 515 00:22:48,040 --> 00:22:49,960 Speaker 2: You need to come back soon. We've only scratched the surface. 516 00:22:49,960 --> 00:22:51,639 Speaker 2: Seven way. This was great. It's going to catch up. 517 00:22:51,640 --> 00:22:52,479 Speaker 5: The surf raise love too. 518 00:22:52,720 --> 00:22:58,560 Speaker 2: Thank you of KKR. This is the Bloomberg Seventans podcast 519 00:22:58,680 --> 00:23:02,719 Speaker 2: bringing you the best Markets, economics, and geopolitics. You can 520 00:23:02,760 --> 00:23:05,520 Speaker 2: watch the show live on Bloomberg TV weekday mornings from 521 00:23:05,560 --> 00:23:08,840 Speaker 2: six am to nine am Eastern. Subscribe to the podcast 522 00:23:08,880 --> 00:23:12,439 Speaker 2: on Apple, Spotify, or anywhere else you listen, and as always, 523 00:23:12,440 --> 00:23:15,000 Speaker 2: on the Bloomberg Terminal and the Bloomberg Business app.