WEBVTT - Bloomberg Surveillance TV: May 5th, 2026 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordernt. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.360 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.280 Terminal and the Bloomberg Business app. So here's the latest 0:00:37.280 --> 0:00:39.640 this morning, the US and Iran trading, fresh strikes, and 0:00:39.680 --> 0:00:42.760 the Persian golf putting the fragile ceasfile very much in down. 0:00:42.880 --> 0:00:45.080 Let's extend the conversation with John Leber of your Rager 0:00:45.120 --> 0:00:47.920 group right in the following. Risk of ceasefire collapsing remains 0:00:47.920 --> 0:00:52.280 elevated as a deal is unlikely until June. Negotiations appear deadlocked, 0:00:52.440 --> 0:00:55.880 with both sides believing they hold the advantage. John joined 0:00:55.920 --> 0:00:57.720 us now for more, John, welcome to the program. Just 0:00:57.760 --> 0:01:00.040 out of interest, Why is it unlikely until. 0:01:01.440 --> 0:01:03.640 You know both sides I think aren't at their pain threshold? 0:01:03.720 --> 0:01:06.319 Yet certainly the US is starting to feel some of 0:01:06.319 --> 0:01:09.240 the economic pain from this war, but mostly it's being 0:01:09.240 --> 0:01:12.720 felt abroad. And for the Iranians, they're dug in. They're 0:01:12.760 --> 0:01:15.600 not willing yet to give the concessions that Donald Trump 0:01:15.640 --> 0:01:18.319 wants to see on the nuclear program, and they think 0:01:18.360 --> 0:01:20.600 they have the superior leverage and the deal. That's what 0:01:20.640 --> 0:01:23.840 these attacks over the last twenty four hours we're about 0:01:23.880 --> 0:01:27.520 reasserting Iranian dominance over the strait. So while we think 0:01:27.560 --> 0:01:30.039 there will be a deal, the deal will probably come 0:01:30.240 --> 0:01:32.640 sometime in June. It could come in May. We think 0:01:32.680 --> 0:01:35.080 it probably comes sometime in June, which means a very 0:01:35.120 --> 0:01:39.080 delayed reopening of the Strait of Hormuz. But for right now, 0:01:39.200 --> 0:01:41.480 both sides are kind of still circling around each other. 0:01:41.760 --> 0:01:44.960 They're having these preliminary talks that aren't really going anywhere, 0:01:45.080 --> 0:01:47.920 and until they unlock this nuclear issue, I don't think 0:01:47.920 --> 0:01:50.200 there's space yet for a deal to come together until 0:01:50.240 --> 0:01:51.040 the pain is higher. 0:01:51.160 --> 0:01:51.360 John. 0:01:51.440 --> 0:01:53.480 For anyone watching the events play out yesterday, it was 0:01:53.560 --> 0:01:57.080 clear violation of the ceasefire. Is this administration prepared to 0:01:57.120 --> 0:01:59.160 say that no. 0:01:59.160 --> 0:02:01.680 Because they don't want the cease fired end, So structurally 0:02:01.720 --> 0:02:04.400 I think we think both sides really don't want to 0:02:04.440 --> 0:02:06.800 go back to fighting. The US doesn't have the domestic 0:02:06.840 --> 0:02:09.680 political space to do so, and the Iranians just want 0:02:09.720 --> 0:02:12.480 to stop being bombed. So I don't think either side 0:02:12.520 --> 0:02:15.440 wants to see the seasfire breakdown. And I think that's 0:02:15.480 --> 0:02:18.880 what yes yesterday demonstrated. The Iranians were able to send 0:02:18.919 --> 0:02:21.880 a message, we still control the straight United States. You 0:02:21.960 --> 0:02:25.519 cannot escort ships out of here easily without US retaliating. 0:02:25.880 --> 0:02:28.519 And the US had the opportunity to declare the ceasefire 0:02:28.560 --> 0:02:30.639 over and strike back, and they didn't. And I think 0:02:30.680 --> 0:02:33.880 that really shows kind of the structural incentive set that 0:02:33.919 --> 0:02:36.040 both sides here have to keep the peace. 0:02:36.360 --> 0:02:39.680 Clearly, the blockade is hitting the Iranian economy, though at 0:02:39.680 --> 0:02:43.000 what point will the pain be enough on this regime 0:02:43.040 --> 0:02:45.200 though to bring them to their table or does that 0:02:45.240 --> 0:02:47.840 point not even exist when you're dealing with regime like this. 0:02:48.320 --> 0:02:50.120 Yeah, so you look at the blockade and Iran's now 0:02:50.120 --> 0:02:53.720 shipping about thirty percent of its pre war oil out 0:02:53.760 --> 0:02:56.680 of Iran, but prices are much higher, so the hit 0:02:56.760 --> 0:02:59.040 to their budget is only about thirty to forty percent 0:02:59.040 --> 0:03:00.959 of their pre war pre war or budget. It's not 0:03:01.040 --> 0:03:03.280 great for them, and they've got a lot of reconstruction 0:03:03.360 --> 0:03:05.600 to pay for now, but they can keep going and 0:03:05.680 --> 0:03:10.360 the regime is solid in that scenario, so they again, 0:03:10.520 --> 0:03:12.680 they don't want to keep this fighting up. I don't 0:03:12.720 --> 0:03:15.760 think the economic pain is necessarily the thing that's going 0:03:15.800 --> 0:03:18.760 to drive them to the negotiating table. But at some point, 0:03:18.880 --> 0:03:22.120 you know, they're now putting out plans to open the 0:03:22.120 --> 0:03:25.320 strait with a phase discussion about the nuclear targets, and 0:03:25.400 --> 0:03:27.160 the US is saying, no, we have to do the 0:03:27.240 --> 0:03:30.000 nuclear first. You can kind of see the contours of 0:03:30.040 --> 0:03:32.079 a deal, and I don't think the Iranians would be 0:03:32.080 --> 0:03:34.760 engaging in these talks and putting out these proposals if 0:03:34.760 --> 0:03:35.760 they didn't want to get there. 0:03:36.240 --> 0:03:38.400 John, A lot of people thought that the deadline was 0:03:38.680 --> 0:03:42.960 May fourteenth, when President Trump and Jijinpang of China were 0:03:43.000 --> 0:03:46.200 supposedly going to meet. President Trump says that meeting is 0:03:46.240 --> 0:03:48.360 still on. Do you think that it's feasible that it 0:03:48.360 --> 0:03:51.280 could take place without some sort of better agreement in 0:03:51.320 --> 0:03:53.800 place between Iran and the United States. 0:03:54.320 --> 0:03:54.560 Yeah. 0:03:54.600 --> 0:03:55.120 Absolutely. 0:03:55.280 --> 0:03:56.960 I don't think the Chinese need to see a deal 0:03:57.000 --> 0:04:00.560 come together, and they're not really that involved. They might 0:04:00.640 --> 0:04:02.600 end up being involved in some aspects of how the 0:04:02.760 --> 0:04:05.440 piece deal comes together, but right now they're not important 0:04:05.640 --> 0:04:10.080 interlockers in this debate. And Trump himself is basically domestically 0:04:10.160 --> 0:04:14.800 resilient to the fight so far. You had a clip 0:04:14.800 --> 0:04:17.560 on him earlier talking about how much worse he thought 0:04:17.560 --> 0:04:19.200 this was going to be. So I don't think that 0:04:19.240 --> 0:04:21.719 the Iran conflict is in any way an impediment to 0:04:22.279 --> 0:04:25.839 what both sides in the US China deal a relationship want, 0:04:26.040 --> 0:04:28.400 which is just calm right now. They don't want anything 0:04:28.400 --> 0:04:31.360 to disrupt their critical mineral supplies in the case of 0:04:31.400 --> 0:04:34.520 the US, and China's access to global markets in the 0:04:34.600 --> 0:04:36.440 case of China. So I think that that is going 0:04:36.480 --> 0:04:39.640 to be the overall state of play for US China 0:04:39.680 --> 0:04:41.400 for the near term, and Iran is not going to 0:04:41.440 --> 0:04:41.960 disrupt that. 0:04:42.080 --> 0:04:44.640 Are there any checks then on exactly how long this 0:04:44.720 --> 0:04:46.560 goes for? Some people used to think that it was 0:04:46.600 --> 0:04:48.839 oil prices. Oil price is now well above one hundred 0:04:48.839 --> 0:04:50.360 dollars a barrel, and when you take a look at 0:04:50.400 --> 0:04:52.960 Brent in December were over ninety dollars a barrow. 0:04:53.160 --> 0:04:54.200 Some people were saying. 0:04:53.960 --> 0:04:56.680 This meeting with jimping that doesn't seem to be an issue. 0:04:56.680 --> 0:04:59.040 Other people were saying popularity, that doesn't seem to be 0:04:59.080 --> 0:05:02.599 an issue based on the p that are currently coming out. 0:05:02.680 --> 0:05:04.800 So what are the checks on how long this could 0:05:04.839 --> 0:05:05.080 go on? 0:05:05.600 --> 0:05:06.440 Yeah, great question. 0:05:06.480 --> 0:05:08.559 I mean I think that this has been gone longer 0:05:08.560 --> 0:05:10.279 than we anticipated, for sure. But if you look at 0:05:10.279 --> 0:05:13.160 this accumulating economic damage, I mean, it's hard to see 0:05:13.279 --> 0:05:16.960 oil staying contained where it is right now. If this 0:05:17.040 --> 0:05:19.920 conflict does go on another several weeks, you also have 0:05:20.320 --> 0:05:23.720 the enormous pain that's being felt globally from shortages of helium, 0:05:23.960 --> 0:05:27.360 from shortages of fertilizer, from shortages of aluminum, and all 0:05:27.400 --> 0:05:30.720 these disruptive effects across global supply chains are going to 0:05:30.760 --> 0:05:33.640 start to have an impact on the US economy in particular. 0:05:33.920 --> 0:05:37.440 And I think that that mounting pressure. I would be 0:05:37.560 --> 0:05:39.400 very surprised if you don't see oil going up from 0:05:39.440 --> 0:05:41.960 where it is today. And I think that mounting pressure 0:05:42.000 --> 0:05:45.039 is ultimately what makes the US say, okay, fine, we'll 0:05:45.040 --> 0:05:47.400 do a deal here, but we don't expect that for 0:05:47.400 --> 0:05:50.320 another several weeks, which is a pretty bad economic story. 0:05:50.480 --> 0:05:52.320 That's not a good one, that's for sure. John, Thank you. 0:05:52.360 --> 0:05:54.720 Sir John Labade, if you I shouldgree with his own 0:05:54.720 --> 0:05:59.120 predictions on why this is going stay with us. Multilinpag 0:05:59.160 --> 0:06:11.280 Savanas coming up after this, the New York Fed President 0:06:11.360 --> 0:06:14.440 John Williams staying positive on text a labor market impact 0:06:14.440 --> 0:06:18.200 Torson Slock of Apollo writing AI will drive productivity gains 0:06:18.200 --> 0:06:22.159 and create opportunities that will more than replace jobs lost. 0:06:22.160 --> 0:06:24.520 Today Torston joins us now for more Torston. 0:06:24.240 --> 0:06:25.320 Good morning, Monday morning. 0:06:25.440 --> 0:06:28.160 So the headline we got from coinbase earlier on was 0:06:28.240 --> 0:06:31.400 job cuts and job cuts attributed to becoming more of 0:06:31.440 --> 0:06:35.480 a startup like culture AI all those things. Can we 0:06:35.520 --> 0:06:37.880 start with call centers in the Philippines and tell everyone 0:06:38.080 --> 0:06:39.280 where they're wrong about all of this? 0:06:39.520 --> 0:06:41.640 Well, what's so interesting about this is that running a 0:06:41.640 --> 0:06:44.000 call center has become cheaper and cheaper and cheaper, and 0:06:44.040 --> 0:06:46.840 in particular cheaper when you have of course voice recognition, 0:06:46.880 --> 0:06:49.680 when you have AI helping you. So that's why employment 0:06:49.960 --> 0:06:52.080 in call centers in the Philippines for the last ten 0:06:52.160 --> 0:06:52.680 years has. 0:06:52.520 --> 0:06:53.640 Actually been going up. 0:06:53.920 --> 0:06:55.920 Telling you that running a call center is cheaper, that 0:06:56.040 --> 0:06:59.080 means more companies are using call centers and they're expanding 0:06:59.360 --> 0:07:02.080 because it's becoming cheaper to produce the service of being 0:07:02.080 --> 0:07:02.600 a call center. 0:07:02.720 --> 0:07:04.600 Now, is that just co centers or do you see 0:07:04.640 --> 0:07:07.000 this applying to a bigger proportion of the labor market. 0:07:07.080 --> 0:07:09.760 It is exactly something you can apply to the whole economy, 0:07:09.800 --> 0:07:13.640 because the issue is essentially that inputs are becoming cheaper, 0:07:13.720 --> 0:07:16.400 and when inputs become cheaper, maybe there's more demand for 0:07:16.440 --> 0:07:19.960 those inputs. So think of this for radiologists. Radiologists readers 0:07:20.400 --> 0:07:22.480 scan and the scan of course can be readen now 0:07:22.520 --> 0:07:25.080 by AI. But as that has become cheaper and cheaper, 0:07:25.360 --> 0:07:27.840 the salary for radiologists at the moment around five hundred 0:07:27.880 --> 0:07:30.680 thousand has continued to go up, and employment for radiologists 0:07:30.720 --> 0:07:33.000 has also continued to go up, and across the board, 0:07:33.040 --> 0:07:36.640 across industries, inputs of production have basically gone down, very 0:07:36.640 --> 0:07:39.000 similar to what we saw during the China Shock, when 0:07:39.080 --> 0:07:42.600 China ended WGO and goods coming from China became cheaper, 0:07:42.720 --> 0:07:43.640 the unemployer rate. 0:07:43.520 --> 0:07:44.120 Didn't go up. 0:07:44.360 --> 0:07:46.800 It was the case that cheaper goods from China made 0:07:46.840 --> 0:07:49.040 it cheaper to produce things in the US, and as 0:07:49.040 --> 0:07:52.000 a result of that you saw therefore higher economic activities. 0:07:52.040 --> 0:07:54.640 So broadly speaking, if you take your economic textbook out 0:07:54.640 --> 0:07:56.720 and you ask the question what happens when it becomes 0:07:56.800 --> 0:07:59.560 cheaper to produce something, the answer is there's much more 0:07:59.600 --> 0:08:00.800 demand for that thing. 0:08:00.960 --> 0:08:02.280 The answer will be different if you go to the 0:08:02.320 --> 0:08:04.080 Ross Belt. The answer will be different if you go 0:08:04.160 --> 0:08:06.880 to centers of production in the United States that experienced 0:08:06.920 --> 0:08:10.400 complete washouts during the globalization. How do you ensure that 0:08:10.440 --> 0:08:13.240 the Jevins paradox of AI doesn't leave a lot of 0:08:13.280 --> 0:08:17.160 people unmoored, without work and not feeling the benefit of 0:08:17.200 --> 0:08:18.320 all of these advances. 0:08:18.400 --> 0:08:20.800 And that is absolutely correct that the China shog are 0:08:20.800 --> 0:08:23.080 the entering of China into the trading system. It did 0:08:23.160 --> 0:08:26.520 create some very regional specific shocks in the manufacturing sectors 0:08:26.560 --> 0:08:29.880 in the US. They certainly could not compete with US 0:08:29.920 --> 0:08:32.280 and with Chinese production and US production at the same time. 0:08:32.480 --> 0:08:35.440 So instead we're now also seeing similarly that those job 0:08:35.559 --> 0:08:39.040 categories that are most impacted, they may see some negative impact, 0:08:39.080 --> 0:08:42.160 in particular, of course, in programming and some parts of software, 0:08:42.360 --> 0:08:45.240 or more broadly speaking, this is input to the bigger 0:08:45.280 --> 0:08:47.680 part of the US business universe, and that means that 0:08:47.720 --> 0:08:49.960 when that input becomes cheaper, we should of course see 0:08:50.000 --> 0:08:52.880 growth in employment. The best example is look at the 0:08:52.880 --> 0:08:55.720 weekly data for how many businesses are created in the US. 0:08:55.920 --> 0:08:59.120 It is literally at the highest level in US history. 0:08:59.280 --> 0:09:02.040 We've never seen so many businesses created in the US. 0:09:02.160 --> 0:09:04.240 So some of these businesses, of course, will also result 0:09:04.280 --> 0:09:06.440 in more employment. So in the last few years, the 0:09:06.559 --> 0:09:09.840 very significant infection point of seeing more business creation is 0:09:09.880 --> 0:09:12.520 indeed also going to result in more employment and at 0:09:12.520 --> 0:09:14.040 the same time also more productivity. 0:09:14.160 --> 0:09:15.640 This is what a lot of people are saying, which 0:09:15.679 --> 0:09:17.560 is the reason why you have even Kevin Moosh saying 0:09:17.600 --> 0:09:19.640 they could end up with stronger growth and even a 0:09:19.640 --> 0:09:23.280 disinflationary force because of all this productivity that's being introduced 0:09:23.320 --> 0:09:25.880 to the system. The transition period though, is faster than 0:09:25.920 --> 0:09:27.199 anything we've ever seen before. 0:09:27.280 --> 0:09:28.440 This isn't like globalization. 0:09:28.480 --> 0:09:30.280 This is even a faster transmission and a lot of 0:09:30.320 --> 0:09:32.840 people are being rendered, even me and my own home 0:09:33.000 --> 0:09:35.360 useless by Claude. So at what point does it become 0:09:35.880 --> 0:09:38.400 a problem by virtue of its speed and how quickly 0:09:38.440 --> 0:09:39.400 it is displacing people. 0:09:39.520 --> 0:09:41.760 And what's really interesting about that because that connects with 0:09:41.800 --> 0:09:44.440 the discussion we have zdain markets about inflation is going 0:09:44.520 --> 0:09:46.880 up because of all prices. Inflation is going up because 0:09:46.920 --> 0:09:49.760 of terrors, Inflation is going up because of restrictions of immigration. 0:09:50.120 --> 0:09:53.800 So so far inflation is not being negatively impacted mean 0:09:53.880 --> 0:09:56.880 disinflationary because of AI. So it's that transition period that 0:09:56.920 --> 0:09:59.400 becomes so important. But even though we all agree that 0:09:59.440 --> 0:10:02.240 we will get activity gains and therefore downward pressure on inflation, 0:10:02.640 --> 0:10:04.680 clearly markets are not looking at it that way. The 0:10:04.720 --> 0:10:06.640 next expectation is, of course, as we know that the 0:10:06.679 --> 0:10:09.440 FED will be cutting only December twenty twenty seven, and 0:10:09.440 --> 0:10:10.960 that's now a higher problem is that they will be 0:10:11.000 --> 0:10:13.480 hiking in the beginning of next year. So in that sense, yes, 0:10:13.520 --> 0:10:15.880 that transition is critical. But if this is going to 0:10:15.920 --> 0:10:18.720 take several years, which it likely will, then we still 0:10:18.760 --> 0:10:20.520 need to talk about, well, maybe there's a risk of 0:10:20.600 --> 0:10:24.200 razors stay higher for longer before we get that this inflationary. 0:10:23.559 --> 0:10:25.440 Asat is she tossed, And how much of a sequencing 0:10:25.480 --> 0:10:26.200 problem is there. 0:10:26.640 --> 0:10:29.240 Well, there is also an identification problem, because maybe the 0:10:29.320 --> 0:10:30.800 risk is that this is just going to take a 0:10:30.800 --> 0:10:32.959 lot longer than what people expect. At the macro level, 0:10:33.080 --> 0:10:35.040 it's very clear we're seeing it. At the micro level, 0:10:35.080 --> 0:10:37.360 there's a lot of corporate finance examples of where this 0:10:37.400 --> 0:10:40.000 is coming very very quickly. But at the macro level 0:10:40.160 --> 0:10:43.000 that's much much more slower moving animal. Because at the 0:10:43.040 --> 0:10:45.360 macro level, before we begin to see inflation come down, 0:10:45.400 --> 0:10:47.560 before we begin to see this have impacts on the 0:10:47.559 --> 0:10:50.240 broader economy, it can take several years, and it may 0:10:50.320 --> 0:10:52.520 even take longer than several years, up to five years. 0:10:52.640 --> 0:10:54.480 And if that's the case, then the FED will not 0:10:54.559 --> 0:10:57.199 have the luxury of saying, oh ai, is this inflationary, 0:10:57.320 --> 0:10:59.240 because the FED is that has to look at inflation 0:10:59.280 --> 0:11:01.800 that's going up because of the conflict in the middle. 0:11:01.559 --> 0:11:04.520 This massive capex in certain places driving up prices too. 0:11:05.240 --> 0:11:06.240 This is part of the problem. 0:11:06.280 --> 0:11:07.520 This has been a huge issue so far. 0:11:07.600 --> 0:11:12.240 Capex has been incredibly, incredibly inflationary. At what point does 0:11:12.280 --> 0:11:14.679 that alone end up leading the FED to have to 0:11:14.760 --> 0:11:17.360 hike rates given the fact that the sequencing is so off, 0:11:17.360 --> 0:11:19.120 do you think that we're underpricing that risk yees. 0:11:19.200 --> 0:11:21.880 So that's exactly why the big, big capecks we're seeing 0:11:21.920 --> 0:11:25.080 is inflationary. Of course by semi conductor prices very clearly, 0:11:25.280 --> 0:11:28.240 it's also very inflationary for wages for those who construct 0:11:28.320 --> 0:11:30.840 data centers, it's also inflationary, of course for the price 0:11:30.880 --> 0:11:33.160 of energy, not only because of the Middle East, because 0:11:33.200 --> 0:11:35.839 of what's required to build the energy build out. All 0:11:35.880 --> 0:11:38.439 that combined is exactly saying that the sequence is which 0:11:38.440 --> 0:11:40.960 should be expecting inflation to go up initially as a 0:11:41.000 --> 0:11:43.280 result of the data center build out, and then once 0:11:43.320 --> 0:11:45.160 we begin to see the gains and the question is 0:11:45.200 --> 0:11:47.840 maybe a few years away, we should expect to see. 0:11:47.679 --> 0:11:48.800 Inflation begin to come down. 0:11:48.840 --> 0:11:51.040 And that's particularly challenging for the FED when we, at 0:11:51.040 --> 0:11:53.679 the same time have energy prices continuously going up at 0:11:53.679 --> 0:11:54.040 the moment. 0:11:55.040 --> 0:11:57.560 Tolstan Stock cu Apollo Telston appreciate it. Loves to think 0:11:57.559 --> 0:12:01.160 about in the labor market right now. Stay with us. 0:12:01.480 --> 0:12:13.839 More Bloomberg surveillance coming up after this, and let's turn 0:12:13.920 --> 0:12:17.720 to private credit and private equity KKR reporting first quarter 0:12:17.760 --> 0:12:21.640 earnings that beat Wall Street estimates. The KKR CFO Robert 0:12:21.679 --> 0:12:24.000 Lewin joins us now for more. Rob welcome to the program. 0:12:24.040 --> 0:12:25.760 I want to start with the stock price and then 0:12:25.800 --> 0:12:29.240 talk about the underlying business. The stock into today down 0:12:29.360 --> 0:12:31.880 nineteen percent so far this year. Then I look at 0:12:31.880 --> 0:12:34.040 the underlying business and it just feels like there's a 0:12:34.080 --> 0:12:36.920 massive disconnect right now, Rob, what explains it? 0:12:37.920 --> 0:12:38.079 Well? 0:12:38.120 --> 0:12:40.079 First, thank you so much for having me on this morning. 0:12:40.120 --> 0:12:42.520 I really appreciate it. You know, Q one was a 0:12:42.520 --> 0:12:44.480 really great quarter for us and a lot of respects, 0:12:44.920 --> 0:12:48.120 a lot of momentum across our different business lines geographies. 0:12:48.640 --> 0:12:50.320 You know, I spend a lot of time here talking 0:12:50.320 --> 0:12:52.960 about the health of our business, and I tell people 0:12:53.000 --> 0:12:55.360 that the number one metric to look at is management fees, 0:12:55.400 --> 0:12:56.559 and our management fees in the. 0:12:56.520 --> 0:12:58.400 Quarter we're up thirty percent year on year. 0:12:59.040 --> 0:13:02.640 That translated to do our second highest fee related earnings 0:13:02.720 --> 0:13:06.560 quarter in our history, our third largest adjusted at income 0:13:06.640 --> 0:13:08.160 quarter that the firm has ever have. 0:13:08.800 --> 0:13:09.800 And so when I take. 0:13:09.640 --> 0:13:11.880 A step back, there's definitely a lot of market noise. 0:13:11.920 --> 0:13:13.880 We can't control our near term share price, but what 0:13:13.920 --> 0:13:16.760 we can do is we can lean into share buybacks, 0:13:16.760 --> 0:13:18.840 which you saw us do in Q one. You also 0:13:18.880 --> 0:13:21.800 saw our co CEOs and several of our directors by stock. 0:13:21.600 --> 0:13:22.520 Personally in the quarter. 0:13:22.840 --> 0:13:25.040 You know, all we can do here is control how 0:13:25.040 --> 0:13:27.400 we're performing and operating, and if we do that over 0:13:27.400 --> 0:13:29.520 a long period of time, we feel really confident that 0:13:29.600 --> 0:13:30.760 our share price will follow. 0:13:31.120 --> 0:13:34.240 How would you describe the macro backdrop underpinning some of 0:13:34.280 --> 0:13:37.079 the noise, as you call it, or some of the fears, particularly. 0:13:36.600 --> 0:13:37.720 Around private credit. 0:13:38.040 --> 0:13:40.719 We did see negative returns for the first time in. 0:13:40.679 --> 0:13:42.480 A while in that asset class. 0:13:42.800 --> 0:13:44.920 How do you view things as changing in terms of 0:13:44.960 --> 0:13:46.720 investor appetite around this area. 0:13:47.960 --> 0:13:49.120 Yeah, thanks for question, Lisa. 0:13:49.200 --> 0:13:51.440 You know, it's interesting if you look in Q one 0:13:51.559 --> 0:13:53.720 of this year, this was one of our best credit 0:13:53.720 --> 0:13:56.679 fundraising quarters in our history, and a lot of that 0:13:56.880 --> 0:14:00.079 is because we're in the very earliest of innings of 0:14:00.120 --> 0:14:03.719 investors allocating more to asset based finance. And while there's 0:14:03.760 --> 0:14:06.640 a lot of noise around the direct lending space, which 0:14:06.679 --> 0:14:09.280 for us is around a forty billion dollar business today 0:14:09.360 --> 0:14:12.480 relative to our close to seven hundred and sixty billion 0:14:12.520 --> 0:14:15.240 of AUM, so about five percent of our business, we 0:14:15.320 --> 0:14:17.920 have a number of institutional investors calling us up right 0:14:17.960 --> 0:14:21.400 now wandering because of the pullback we're seeing across the 0:14:21.400 --> 0:14:25.240 private wall space for private credit, for direct lending, is 0:14:25.280 --> 0:14:28.000 now a good time to be entering as an entry 0:14:28.040 --> 0:14:30.360 point into direct lending, and we think it is. 0:14:30.640 --> 0:14:31.480 What you've seen is. 0:14:31.440 --> 0:14:36.120 Because capitals come out of the direct lending space, spreads 0:14:36.120 --> 0:14:38.240 have gone out a little bit, and I think that 0:14:38.360 --> 0:14:43.640 is positioning some institutional investors for an interesting compelling point 0:14:43.680 --> 0:14:46.040 to enter, and that's in part why you've seen such 0:14:46.600 --> 0:14:49.320 strong fundraising numbers and credit for KKR this quarter. 0:14:49.520 --> 0:14:51.760 Do you think the pain is behind us then some 0:14:51.800 --> 0:14:54.320 of the shakeout tied to software, tied to some of 0:14:54.320 --> 0:14:57.440 the lending standards that have gotten loosened up. Yeah. 0:14:57.480 --> 0:14:59.360 No, Listen, I think you had a lot of capital 0:14:59.400 --> 0:15:02.960 come in too the private credit space very quickly. You 0:15:03.040 --> 0:15:06.600 were also through a period of time time where the 0:15:06.600 --> 0:15:09.320 markets were really benign and default rates were really low. 0:15:09.880 --> 0:15:12.280 So we could see a scenario here as things play 0:15:12.280 --> 0:15:15.040 out where some of that capital that came in very 0:15:15.080 --> 0:15:17.720 quickly continues to come out in redemption levels and private 0:15:17.760 --> 0:15:22.240 wealth around the private credit space remain a little bit elevated. 0:15:22.360 --> 0:15:23.760 I think that would be our base case. 0:15:24.040 --> 0:15:26.680 You could definitely see defaults increasing a little bit. You know, 0:15:26.800 --> 0:15:29.400 we've talked about that often. We were in a period 0:15:29.440 --> 0:15:31.880 of time that has been unusual the last few years, 0:15:32.280 --> 0:15:33.920 and so both things we think could be true. 0:15:33.960 --> 0:15:35.920 At the same time, we still view this. 0:15:35.880 --> 0:15:38.840 As a compelling asset class to deploy capital against, and 0:15:38.920 --> 0:15:40.320 I think our investors agree. 0:15:40.440 --> 0:15:41.920 Roll. Could you tell us a little bit more about 0:15:41.960 --> 0:15:44.160 that the money coming in very quickly. Is that another 0:15:44.200 --> 0:15:46.280 way of saying we sold to retail too much? And 0:15:46.360 --> 0:15:49.520 not just you, I'm talking about as an industry at wide. 0:15:49.920 --> 0:15:50.120 Yeah. 0:15:50.200 --> 0:15:53.200 I think what you saw is for a period of time, 0:15:53.360 --> 0:15:57.280 the individual investor allocating very quickly to the private credit 0:15:57.320 --> 0:16:00.720 space and some of the other asset is like private 0:16:00.760 --> 0:16:03.840 equity and infrastructure. We're more measured in terms of how 0:16:04.360 --> 0:16:06.880 investors is allocated income. That might be while you're seeing 0:16:06.880 --> 0:16:09.280 a little bit more strength in those asset classes with 0:16:09.320 --> 0:16:12.520 the individual investor, you take a big step back. You know, 0:16:12.600 --> 0:16:15.320 we see the individual investor today one to two percent 0:16:15.360 --> 0:16:19.760 allocated to alternatives. The most sophisticated institutional investors in the 0:16:19.800 --> 0:16:23.920 world can have thirty to fifty percent allocated to alternatives. Now, 0:16:23.920 --> 0:16:26.600 we obviously don't see the individual investor getting to that level. 0:16:26.600 --> 0:16:28.680 But what we do see is the individual investor over 0:16:28.720 --> 0:16:32.160 time going to four to five percent plus allocated to alternatives, 0:16:32.320 --> 0:16:34.560 really as a means to saving against their retirement. 0:16:34.600 --> 0:16:36.160 Well, what do you think the lessons will be with 0:16:36.200 --> 0:16:39.120 regards to marketing through retail channels? What are the lessons 0:16:39.160 --> 0:16:41.440 from the last year or so? 0:16:41.560 --> 0:16:41.880 Yeah? 0:16:41.960 --> 0:16:46.760 So, Well, listen, I could speak for what's happened at 0:16:46.800 --> 0:16:48.560 KKR and the private well side, and if you look 0:16:48.560 --> 0:16:51.880 at our business in Q one, we have seven scaled products. 0:16:52.160 --> 0:16:54.000 All seven of them had net inflows. 0:16:54.240 --> 0:16:57.040 In the quarter. We raise roughly four billion dollars. 0:16:56.800 --> 0:16:58.840 Of capital and we had two hundred and fifty million 0:16:58.880 --> 0:17:01.720 of redemption. We feel like we're pacing it pretty well, 0:17:02.000 --> 0:17:03.800 and we're focused on the long term and how we 0:17:03.880 --> 0:17:07.680 build products and vehicles that can really scale over time, 0:17:07.960 --> 0:17:09.800 and that we're really proud of the performance that we're 0:17:09.840 --> 0:17:12.959 delivering to clients, and we're really proud of the experience 0:17:13.040 --> 0:17:17.440 that they're having in one of our KKUR private wealth products. 0:17:18.320 --> 0:17:19.480 It's a long term focus. 0:17:19.720 --> 0:17:23.480 We really aren't focused on the quarter to quarter capital raising. 0:17:24.920 --> 0:17:26.359 As much as I think the market is. 0:17:26.800 --> 0:17:29.000 On a broader level, there's a question about all of 0:17:29.000 --> 0:17:31.240 the money that's been going into private credit and private 0:17:31.280 --> 0:17:34.760 asset management just in general, that's been going toward financing 0:17:34.960 --> 0:17:38.240 this push out for hyperscalers. Given the needs to build 0:17:38.240 --> 0:17:40.440 out data centers and other infrastructure. 0:17:40.960 --> 0:17:43.080 How do you both participate. 0:17:42.560 --> 0:17:46.840 In an industry that is going through an absolute revolution 0:17:47.040 --> 0:17:50.880 while not having over concentration In particular areas. 0:17:51.560 --> 0:17:53.439 Yeah, it's a really good question, and we spend a 0:17:53.440 --> 0:17:55.760 lot of time talking about that. Anytime you see a 0:17:55.760 --> 0:17:58.639 lot of capital going into a space very quickly, we 0:17:58.680 --> 0:18:00.399