WEBVTT - Apollo Global Management President Jim Zelter 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.760 --> 0:00:10.039 Jim's out to the president of a Pollo Global Management 0:00:10.240 --> 0:00:12.680 out with a new report asking the question, what if 0:00:12.680 --> 0:00:15.120 the world doesn't work the way you think it does? 0:00:15.440 --> 0:00:17.320 Zouch from the team, going on to write, the era 0:00:17.400 --> 0:00:20.120 of free money is over, ultra low interest rates our 0:00:20.280 --> 0:00:24.520 history inflation is structural, not transitory. It's redefining risk return 0:00:24.640 --> 0:00:26.320 and the cost of capital. 0:00:26.480 --> 0:00:28.240 Jim joins us. Now for more, Jim go Mornic. 0:00:28.320 --> 0:00:30.360 I got to hire you at Apollo as a marketing guy. 0:00:30.400 --> 0:00:31.240 You're doing a good job. 0:00:31.280 --> 0:00:32.600 I'm going to go one step further. 0:00:32.760 --> 0:00:33.080 Thank you. 0:00:33.200 --> 0:00:35.040 I woke up the other week, came into the office 0:00:35.040 --> 0:00:37.840 handwritten note from you, and it said, public markets power 0:00:37.880 --> 0:00:40.599 the narrative, Private markets power the economy. 0:00:41.000 --> 0:00:41.720 Just start there. 0:00:41.920 --> 0:00:44.360 What is the question you're posing for clients at the moment, 0:00:44.440 --> 0:00:46.080 what you want to get them to think about. 0:00:47.040 --> 0:00:51.120 Well, it's a bigger conversation about market structure and the 0:00:51.240 --> 0:00:55.560 changing backdrops, about how investors think about investing from a 0:00:55.600 --> 0:00:59.360 sixty to forty portfolio historically, and the tools they have 0:00:59.560 --> 0:01:04.240 to create better outcomes with less volatility. The reality is 0:01:04.440 --> 0:01:08.360 alternatives have worked for forty years for institutions, and if 0:01:08.360 --> 0:01:11.800 we think thoughtfully about the growing need for retirees around 0:01:11.800 --> 0:01:14.679 the globe, how do we augment which worked well in 0:01:14.720 --> 0:01:17.640 the past but may not be the compass for the future. 0:01:18.120 --> 0:01:21.080 On the other side of the coin, it's four companies 0:01:21.600 --> 0:01:24.960 eight thousand companies down to four thousand. The role of 0:01:25.080 --> 0:01:30.480 private capital is changing. Companies like SpaceX, Spie and Stripe 0:01:30.480 --> 0:01:33.480 can become to stay private for much longer. And so 0:01:33.800 --> 0:01:36.119 a little bit when I hear about your headlines this morning, 0:01:36.680 --> 0:01:40.160 I feel like many folks that come on talk a 0:01:40.160 --> 0:01:42.360 little bit about the world in the rear view mirror 0:01:42.640 --> 0:01:45.960 versus looking to the windshield. And the real aha moment 0:01:46.000 --> 0:01:49.360 for us came two three years ago when we heard 0:01:49.440 --> 0:01:51.760 when we saw what was going on with rates rising 0:01:51.840 --> 0:01:56.800 dramatically in this cycle, and universally we all thought that 0:01:57.000 --> 0:02:00.880 the economy would hit skids and they would be tightening 0:02:00.880 --> 0:02:04.440 financial conditions, and that really didn't happen. So that was 0:02:04.480 --> 0:02:09.320 a very practical situation where we really said, maybe our 0:02:09.320 --> 0:02:12.880 textbook that we've using all along is wrong. But changing 0:02:12.960 --> 0:02:18.919 market structure, how companies finance, how investors invest, it is 0:02:18.960 --> 0:02:19.920 a new playbook, a new. 0:02:19.800 --> 0:02:23.120 Paradigm, redefining public and private markets. Our good friend Mark 0:02:23.120 --> 0:02:25.040 around would often talk about this and say often the 0:02:25.080 --> 0:02:27.760 distinction was risk high risk in private markets. And now 0:02:27.760 --> 0:02:29.280 the distinction I think you and a team want to 0:02:29.280 --> 0:02:31.560 make is liquidity. 0:02:31.720 --> 0:02:34.120 Yeah, I mean the old idea when we grew up 0:02:34.160 --> 0:02:36.120 in a marketplace. This is my fortieth year in the 0:02:36.160 --> 0:02:40.960 business where private was was risky and volatile and public 0:02:41.120 --> 0:02:44.720 was safe and liquid. And there's many examples right now. 0:02:44.760 --> 0:02:47.560 I come from the world of credit and I started 0:02:47.560 --> 0:02:49.919 out as a high yeld slash junk bond trader back 0:02:49.960 --> 0:02:52.920 in the eighties, and there was it might have been 0:02:52.960 --> 0:02:54.880 it might have been a public security. But trust me, 0:02:54.960 --> 0:02:58.040 it was volatile and it was risky. And now over 0:02:58.160 --> 0:03:01.679 thirty years, is now bond to become high yield and 0:03:01.680 --> 0:03:05.600 asset class. There's still a lot of inherent volatility in that. 0:03:05.760 --> 0:03:08.200 And again we would say that across the whole risk 0:03:08.240 --> 0:03:11.160 reward spectrum. You know, I grew up in Rochester, New York, 0:03:11.280 --> 0:03:15.520 code Ax, Xerox, Boujalmaan, three great American icon companies. They 0:03:15.520 --> 0:03:18.800 didn't get the memo on disruption. They were safe in 0:03:18.800 --> 0:03:22.400 investment grade companies and Vohil they're not in existence anymore. 0:03:22.480 --> 0:03:23.919 Can we talk about how things have changed over the 0:03:24.000 --> 0:03:25.560 last forty years. So you and the tea would often 0:03:25.600 --> 0:03:28.040 talk about you are what you originate, you are what 0:03:28.160 --> 0:03:31.359 you create. The capex needs of companies now seem to 0:03:31.400 --> 0:03:33.960 have changed. I was reading the transcript from your address 0:03:33.960 --> 0:03:36.320 at a financial markets conference earlier this week, and you 0:03:36.400 --> 0:03:39.080 talked about the capex needs twenty to thirty forty years 0:03:39.080 --> 0:03:42.400 ago relative to now, and the change in quality, the 0:03:42.480 --> 0:03:45.680 changing character of things. How important is that even where 0:03:45.680 --> 0:03:46.200 we're at. 0:03:46.160 --> 0:03:48.680 Well, just just to reset that question. You know, in 0:03:49.040 --> 0:03:52.360 the last thirty years, the high yield market globally has 0:03:52.440 --> 0:03:55.480 finance companies that are going through either a regulatory change 0:03:55.560 --> 0:04:01.320 or technology change. Think cable, think shale, think airlines, telecommunications, 0:04:01.760 --> 0:04:04.280 And for the most part that massive catbas was on 0:04:04.360 --> 0:04:07.280 non investment grade companies. As we sit here in twenty 0:04:07.320 --> 0:04:10.600 twenty five. In the next ten years, massive cap backs 0:04:10.640 --> 0:04:17.040 boom between data, AI, sustainability, energy transition, transmission lines, the 0:04:17.080 --> 0:04:19.839 transaction we did for our we this year this week 0:04:19.880 --> 0:04:23.440 in Germany. And so I don't think people are still 0:04:23.480 --> 0:04:28.080 thinking that private credit and private capital is small, ill liquid, 0:04:28.200 --> 0:04:32.320 non investment grade companies, and the reality is eighty to 0:04:32.400 --> 0:04:36.240 ninety percent of the private credit market is really investment 0:04:36.279 --> 0:04:40.560 grade counter parties investment grade debt. And again many, many 0:04:40.600 --> 0:04:44.039 companies now are afforded the opportunity to stay private much 0:04:44.080 --> 0:04:47.240 longer because of the breadth and the breadth of the 0:04:47.240 --> 0:04:48.160 financing markets. 0:04:48.480 --> 0:04:51.000 To build on what John is talking about, does private 0:04:51.040 --> 0:04:52.720 debt have more of a role than private equity at 0:04:52.720 --> 0:04:53.080 this point? 0:04:54.080 --> 0:04:58.159 Well, the debt markets and the capital markets and the 0:04:58.200 --> 0:05:02.200 credit markets are as we As the Congress learned in 0:05:02.480 --> 0:05:05.680 seven h nine, it's the lifeblood of the economy. When 0:05:05.760 --> 0:05:08.680 ge could not roll over their commercial paper, it was 0:05:08.720 --> 0:05:11.159 the aha moment for the Congress to say, wait a second, 0:05:11.200 --> 0:05:13.920 we need to act here. And so when you think 0:05:13.960 --> 0:05:18.000 about the scope of private credit and scale, certainly the 0:05:18.240 --> 0:05:22.080 application with investment grade solutions, it's in the multi multi 0:05:22.080 --> 0:05:26.240 trillions tend to forty trillion, and the pe industry is 0:05:26.600 --> 0:05:28.840 a seven to ten trillion, depending on how you think 0:05:28.880 --> 0:05:31.680 about the dry powder and the overhang. So I would 0:05:31.800 --> 0:05:36.040 argue over the next decade the impact of private credit, 0:05:36.279 --> 0:05:39.720 investment grade and non investment grade will probably have as 0:05:39.920 --> 0:05:43.159 large an impact, if not larger, than private equity has 0:05:43.200 --> 0:05:44.520 had in the last decade, so. 0:05:44.480 --> 0:05:46.359 The peak of private equities over well, I. 0:05:46.640 --> 0:05:47.400 Wouldn't say that. 0:05:47.480 --> 0:05:50.719 I mean I think that the private equity industry is 0:05:50.760 --> 0:05:54.120 going to go through an evolution, and it's going to 0:05:54.120 --> 0:05:55.239 be a Darwinian evolution. 0:05:55.320 --> 0:05:56.320 And I think that. 0:05:57.680 --> 0:06:02.840 The challenges of monetization, the challenges of upfront capital commitments, 0:06:03.120 --> 0:06:05.919 there will be fewer and fewer firms that are able 0:06:06.000 --> 0:06:10.919 to go to investors and have that dialogue and have 0:06:11.040 --> 0:06:13.240 that relationship. We believe for one of them because of 0:06:13.279 --> 0:06:16.159 our investment track record, But the reality is, I think 0:06:16.200 --> 0:06:19.920 that many PE firms that business model is going to change, 0:06:20.279 --> 0:06:21.600 and how can they adapt. 0:06:22.000 --> 0:06:24.520 This is a really important conversation to be having, especially 0:06:24.520 --> 0:06:27.160 because on surveillance we keep talking about the divide between 0:06:27.240 --> 0:06:30.120 public markets and the underlying economy, and now it seems 0:06:30.160 --> 0:06:33.920 like it's growing an increasingly dramatic fashion, and we keep 0:06:34.000 --> 0:06:37.520 wondering whether the economy is really struggling right now, at 0:06:37.600 --> 0:06:39.760 least by virtue of some of these labor market pictures. 0:06:39.839 --> 0:06:41.479 The same time that you're seeing the oracles of the 0:06:41.480 --> 0:06:44.200 world do very well, are you seeing that? Are you 0:06:44.240 --> 0:06:45.920 seeing the need for money to be a little more 0:06:45.960 --> 0:06:49.520 free right now in order to rejucee some of that activity. 0:06:49.600 --> 0:06:51.360 You know, we're not seeing yet. 0:06:51.360 --> 0:06:53.719 But I do think the question you're really asking is 0:06:53.960 --> 0:06:56.599 and it is the same question about you know, with 0:06:56.680 --> 0:06:59.960 the amount public markets used to be a great diversify 0:07:00.040 --> 0:07:03.400 fuire for portfolios, and it really was the bellweather how 0:07:03.440 --> 0:07:06.039 the US economy and the global economy was doing. But 0:07:06.160 --> 0:07:09.760 as more companies have stayed private and more companies are 0:07:09.840 --> 0:07:13.160 funding privately, you really are questioning that barometer on what 0:07:13.240 --> 0:07:16.080 is telling you. Torson has a good piece out this 0:07:16.120 --> 0:07:20.080 morning talking about the concentration of the CAPEX cycle and 0:07:20.120 --> 0:07:23.760 how it's concentrated in a handful of companies in data, 0:07:23.840 --> 0:07:27.440 AI and technology. And while the capax is a massive 0:07:27.520 --> 0:07:30.200 number and it's driving a north start to growth, you're 0:07:30.240 --> 0:07:33.840 asking a provocative question, is it really hiding the underlying 0:07:33.880 --> 0:07:37.360 economy which is driven by private companies. Ninety percent of 0:07:37.400 --> 0:07:40.000 the hiring in America is by private companies, and is 0:07:40.000 --> 0:07:43.200 at a different story today? It could be we're seeing 0:07:43.400 --> 0:07:45.960 if you look at the public numbers in terms of 0:07:46.000 --> 0:07:49.120 earnings over the second quarter, it be consensus by seven 0:07:49.200 --> 0:07:52.360 hundred basis points eleven versus four and for the most part, 0:07:52.520 --> 0:07:56.680 the credit portfolios that we oversee the multi thousands of 0:07:56.760 --> 0:08:02.560 counterparty basinusite to four thousand, it actually showed quality upgrades 0:08:02.600 --> 0:08:05.680 three to one versus downgrades in terms of performance. So 0:08:06.240 --> 0:08:08.680 in the breadth of our credit portfolio is we're not 0:08:08.720 --> 0:08:11.960 seeing a weakness. I will tell you we definitely see 0:08:12.640 --> 0:08:18.120 more lingering inflation. And I do believe that the while 0:08:18.160 --> 0:08:22.600 this administration is dead set on getting rates lower, I 0:08:22.760 --> 0:08:26.960 believe that there is a legacy inflation issues in the economy. 0:08:27.000 --> 0:08:28.920 When's the last time any one of us bought something 0:08:28.920 --> 0:08:30.920 in the last year and he said, wow, that was 0:08:31.000 --> 0:08:32.040 cheaper than a year ago. 0:08:32.480 --> 0:08:33.559 It has not happened. 0:08:34.200 --> 0:08:37.240 And that's just in the and I do believe that's 0:08:37.280 --> 0:08:40.480 going to be the scourge of this rate cycle, because 0:08:40.520 --> 0:08:43.560 I do believe there's greater inflation and companies are having 0:08:43.559 --> 0:08:46.959 it a much more challenging time passing that along to 0:08:47.520 --> 0:08:49.640 consumers that we're seeing it across the board. 0:08:49.679 --> 0:08:50.600 There's a lot to impact that. 0:08:50.880 --> 0:08:52.160 One of the things I wanted to impact was the 0:08:52.200 --> 0:08:55.480 concentration risk and the AI financing that we've seen both 0:08:55.520 --> 0:08:58.600 in data centers and the energy transition. There's a quote 0:08:58.640 --> 0:09:00.400 in the last year that's just stuck with me for 0:09:00.440 --> 0:09:02.240 the last twelve months, and it came from the Alphabet 0:09:02.280 --> 0:09:05.320 CEO that the bigger risk is under investing and not 0:09:05.679 --> 0:09:10.800 over investing, And that just sounded like a commitment to overinvesting. Now, 0:09:10.840 --> 0:09:14.319 I'd want to understand how your industry avoids a massive 0:09:14.400 --> 0:09:18.160 misallocation of resources at a time when everyone is chasing 0:09:18.440 --> 0:09:19.280 the same story. 0:09:19.960 --> 0:09:23.200 Well, it feels like you have a bug in our 0:09:23.320 --> 0:09:26.240 investment committee rooms. I mean, I've been talking the last 0:09:26.280 --> 0:09:31.199 six months about the cycles of dark fiber in the 0:09:31.280 --> 0:09:35.360 late nineties, of shale on the early teens ten to 0:09:35.640 --> 0:09:40.560 twelve to sixteen, and certainly enterprise software the last five years. 0:09:40.920 --> 0:09:43.520 And you have to be concerned as an investor today, 0:09:43.960 --> 0:09:46.880 are you taking equity risk for a fixed rate of return? 0:09:47.200 --> 0:09:50.080 That's the ultimate sort of bubble if you would, And 0:09:51.360 --> 0:09:56.320 I don't think that the true economics. Certainly consumers industry, 0:09:56.480 --> 0:09:59.880 the economy is going to benefit, but not all in 0:10:00.000 --> 0:10:02.559 industries as they evolved. Was it a great investor to 0:10:02.640 --> 0:10:06.439 be an investor? The cell phone is U is a 0:10:06.440 --> 0:10:08.600 great example. Only in the last decade is it become 0:10:08.600 --> 0:10:13.000 a good investment for companies to invest? So don't I 0:10:13.000 --> 0:10:14.920 don't have the answer though, once it's a question we're 0:10:14.920 --> 0:10:19.199 asking ourselves now. We find ourselves both on the debt 0:10:19.320 --> 0:10:21.480 and the equity side of funding a lot of the 0:10:21.559 --> 0:10:27.000 data center activity. But there's a tremendous amount needed and 0:10:27.040 --> 0:10:30.600 there's a voracious appetite. But I certainly understand what the 0:10:30.600 --> 0:10:33.360 Alphabet executive was saying. 0:10:33.520 --> 0:10:35.559 Just then there's a bit of a duration mismatch between 0:10:35.600 --> 0:10:37.800 how long it takes to build a data center and 0:10:37.840 --> 0:10:40.240 how long it takes to build the energy infrastructure to 0:10:40.360 --> 0:10:40.920 enable it. 0:10:41.000 --> 0:10:42.040 And could that be problematic? 0:10:42.760 --> 0:10:46.960 There certainly is we have spent more time. The energy 0:10:47.000 --> 0:10:51.800 supply issue could be a governor to growth and that's 0:10:51.840 --> 0:10:53.800 a challenge that we've not seen yet. But if you 0:10:53.920 --> 0:10:56.520 pencil out the numbers, that could be a concern. But 0:10:56.559 --> 0:10:59.200 I think the bigger questions back the first one we 0:10:59.240 --> 0:11:05.000 asked is these are ten twenty thirty year infrastructure builds. 0:11:05.640 --> 0:11:11.120 Who really with our marketplace going towards indexes and ETFs 0:11:11.320 --> 0:11:16.320 and multipod shops that are all thinking about moment to 0:11:16.360 --> 0:11:19.760 moment liquidity, the era of the long investor is a 0:11:19.840 --> 0:11:20.360 question mark. 0:11:20.360 --> 0:11:21.600 Who is that long investor? 0:11:21.960 --> 0:11:25.400 And we would say it's the retirees of tomorrow. Every 0:11:25.480 --> 0:11:28.520 day twelve thousand folks in the US you hit sixty five, 0:11:29.200 --> 0:11:32.199 and the West, broadly speaking, in other countries around the 0:11:32.240 --> 0:11:34.760 world have not done a great job with retirees, and 0:11:34.840 --> 0:11:43.160 so the ability to thoughtfully introduce long duration infrastructure inflation 0:11:43.400 --> 0:11:46.920 hedge assets into these portfolios. In the UK they call 0:11:46.960 --> 0:11:51.400 it matching adjustment for insurance assets. Those are really where 0:11:51.400 --> 0:11:53.240 the growth of our business is going to go, and 0:11:53.240 --> 0:11:54.559 that's going to benefit investors. 0:11:54.720 --> 0:11:57.280 This makes a lot of sense, particularly if you're investing 0:11:57.280 --> 0:11:59.959 for retirement. You don't need daily liquidity. That's just launching. 0:12:00.480 --> 0:12:02.520 I think where the criticism is coming from for your 0:12:02.520 --> 0:12:04.760 industry at the moment is that family offices are already 0:12:04.760 --> 0:12:06.000 doing a lot of this. I think you had attain 0:12:06.080 --> 0:12:08.720 we talked about that a ton high net worth individuals 0:12:08.760 --> 0:12:11.320 are doing the same. You're now going go after retail, 0:12:11.760 --> 0:12:13.920 and then people start to feel a little bit uncomfortable 0:12:13.960 --> 0:12:15.680 with that. Are you're looking for a new bank helder? 0:12:15.760 --> 0:12:17.720 Are we looking for someone else to pick up the pieces? 0:12:17.880 --> 0:12:19.560 What's the response from you and the team to address 0:12:19.600 --> 0:12:20.000 that head on. 0:12:21.000 --> 0:12:25.880 I think it's all about doing it in a methodical, logical, 0:12:26.000 --> 0:12:30.560 diverse way. You know, this is all about the you know, 0:12:30.600 --> 0:12:34.679 the proper amounts and the proper diversity. Certainly, we would 0:12:34.720 --> 0:12:39.000 never advocate for someone taking an outsized portfolio of their 0:12:39.040 --> 0:12:43.240 retirement and putting it all into alternatives. But clearly, over 0:12:43.280 --> 0:12:45.600 the last thirty to forty years, history has shown us 0:12:45.679 --> 0:12:48.960 that an allocation of alternatives ten to twenty percent of 0:12:48.960 --> 0:12:53.840 a portfolio increases returns and brings down volatility. And so 0:12:54.040 --> 0:12:57.240 from our perspective, there's a variety of areas in the 0:12:57.280 --> 0:13:00.520 world of credit, in particular the world of infrastructure, the 0:13:00.520 --> 0:13:06.600 world of secondaries that are more yield oriented, compounding type 0:13:06.640 --> 0:13:07.359 of vehicles. 0:13:07.760 --> 0:13:08.920 And certainly we. 0:13:08.960 --> 0:13:12.439 Have a view that private equity, while a very attractive 0:13:12.480 --> 0:13:16.920 asset class, even in returns to the next ten decade 0:13:17.360 --> 0:13:20.160 mid to high teens, that that should be done in 0:13:20.280 --> 0:13:26.080 appropriate doses. So it's all about diversity and proper portfolio allocation. 0:13:26.280 --> 0:13:28.240 Jim's down to the president of a public global management 0:13:28.280 --> 0:13:30.680 still with us, Jim, let's continue this conversation. At the 0:13:30.679 --> 0:13:33.400 stand of the year, you talked about macro paralysis. This 0:13:33.520 --> 0:13:36.040 story is continuing. It just feels like this market public 0:13:36.080 --> 0:13:38.679 markets have moved on. Have you and a team moved on? 0:13:39.600 --> 0:13:39.800 Yes? 0:13:39.880 --> 0:13:43.320 I think if you landed from Mars today and you 0:13:43.960 --> 0:13:46.120 had not had the benefit of the last six months, 0:13:46.480 --> 0:13:49.320 the idea of the death of US exceptionalism would not 0:13:49.360 --> 0:13:51.200 be on your radar screen, and you'd have four or 0:13:51.200 --> 0:13:54.840 five things. You'd say, massive capex cycle in front of us. 0:13:55.160 --> 0:13:58.600 You'd say administration, pro business and determined to cut rates. 0:13:59.040 --> 0:14:01.680 You'd say that the last quarters public numbers in terms 0:14:01.720 --> 0:14:05.439 of equities and credit have been strong. And you'd say 0:14:05.440 --> 0:14:07.800 there's a big M and a pipeline. We're on record 0:14:07.800 --> 0:14:10.120 to have the second biggest M and a light a 0:14:10.200 --> 0:14:13.880 year versus twenty one. So all those things would point 0:14:13.920 --> 0:14:17.680 to invest rates are going lower, spreads are going to 0:14:17.679 --> 0:14:21.760 stay tight, and I can give butts to all of those, 0:14:21.840 --> 0:14:24.320 but that is that's the trend going on right now, 0:14:24.400 --> 0:14:28.760 and the idea that investors were going to you know, boycott. 0:14:28.800 --> 0:14:32.000 The us FDI has been massively strong in the last 0:14:32.040 --> 0:14:34.760 four or five months, and you know, knock Wood, we've 0:14:34.760 --> 0:14:37.440 had We've had a very strong year across our public 0:14:37.480 --> 0:14:41.560 and our private businesses, a lot of origination. This week 0:14:41.600 --> 0:14:44.600 we led a very large transaction for RWE, which is 0:14:44.640 --> 0:14:48.800 exactly what we're talking about about big private solutions. Energy 0:14:48.840 --> 0:14:54.560 transmission a very exciting business. It's a blockbuster business, one 0:14:54.600 --> 0:14:56.680 we would never have talked about years ago. But they 0:14:56.720 --> 0:15:00.360 have billions upon billions of needs to restruct sure the 0:15:00.480 --> 0:15:05.120 transmission system in Germany. So the markets, markets are the 0:15:05.160 --> 0:15:08.600 animal spirits are fairly are back. There are lots of 0:15:08.640 --> 0:15:13.200 little hiccups out there, and whether it's instability or valuations 0:15:13.320 --> 0:15:17.560 or other headaches, but yes, active market. We've been active 0:15:17.600 --> 0:15:21.080 in the US and Europe dramatically this year, and the 0:15:21.120 --> 0:15:22.200 pipeline is quite strong. 0:15:22.280 --> 0:15:24.240 Have you found the need to hedge from the US 0:15:24.360 --> 0:15:26.760 a little bit more given the fact that there is 0:15:26.800 --> 0:15:30.840 this policy uncertainty, but more so this question around the 0:15:30.880 --> 0:15:34.120 FED cutting rates, allowing inflation to run hot and an 0:15:34.160 --> 0:15:35.360 appreciation of the dollar. 0:15:36.560 --> 0:15:39.120 You know, you know, certainly there's been a lot more 0:15:39.160 --> 0:15:45.280 hedging of investments from overseas investors, and certainly, you know, 0:15:45.320 --> 0:15:49.080 we typically because most of our liabilities are into dollars, 0:15:49.440 --> 0:15:51.440 we will hedge back to the dollar as well. But 0:15:52.200 --> 0:15:55.280 we certainly want to have exposure to other economies in 0:15:55.280 --> 0:15:58.040 the addition to the US because the concern about inflation. 0:15:58.120 --> 0:16:00.200 Gee, and this is a real daily in Europe. Get 0:16:00.240 --> 0:16:00.760 the thinning you. 0:16:00.720 --> 0:16:03.480 Do, well, you know, there was an interesting article I 0:16:03.520 --> 0:16:06.520 read this morning that a year after the Drag report, 0:16:06.840 --> 0:16:10.480 like eleven percent of the proposals and put in place. 0:16:12.000 --> 0:16:16.760 So I think companies are. I see corporate leadership in 0:16:16.800 --> 0:16:20.960 a variety of sectors, and I see a few government leaders, 0:16:21.240 --> 0:16:25.560 you know, passionately, passionately pursuing this. But I think the 0:16:25.640 --> 0:16:29.440 overall pace is not what it should be, and the 0:16:30.440 --> 0:16:37.920 paralysis of the broad government oversight in Europe is holding 0:16:37.960 --> 0:16:41.280 the progress back. So it's not it's not as fast 0:16:41.280 --> 0:16:43.440 as we would like it, but it's a training we 0:16:43.480 --> 0:16:44.000 want to be on. 0:16:44.120 --> 0:16:46.040 What would be an easy change to make that train 0:16:46.040 --> 0:16:46.520 and go fast? 0:16:46.720 --> 0:16:50.160 You know, they've pushed for a variety of relaxation of 0:16:50.200 --> 0:16:54.400 some of the securitization rules. You know, basically a solvency 0:16:54.440 --> 0:16:58.120 two balance sheet for an insurer in Europe you have 0:16:58.200 --> 0:17:01.560 to own almost sixty five seventy percent of your assets 0:17:01.600 --> 0:17:05.119 need to be sovereign bonds. That's just too large an 0:17:05.200 --> 0:17:09.760 amount and it's very, very challenging and difficult to purchase 0:17:09.880 --> 0:17:15.159 and to hold securitized product asset based securities, which have 0:17:15.280 --> 0:17:18.600 proven to be a very good tool for insurance companies 0:17:18.880 --> 0:17:22.120 and other financial services firms in the US. It's good 0:17:22.119 --> 0:17:26.400 for dispersing risk, and it's good for versus corporate purchases. 0:17:26.480 --> 0:17:29.440 So I think something like that securitized products would be 0:17:29.480 --> 0:17:32.840 a very easy and important move to make. 0:17:33.000 --> 0:17:35.840 I think ceratlely many of us just conditioned by experience, 0:17:35.960 --> 0:17:38.480 conditioned to be disappointed by Europe. 0:17:38.640 --> 0:17:40.880 Are we allowed to be disappointed? I keep thinking about 0:17:40.880 --> 0:17:45.040 what Howard Mark said after they announced the regime of tariffs, 0:17:45.080 --> 0:17:46.960 and he said the US is still the best place 0:17:47.000 --> 0:17:49.840 to invest, but it's less of the best place to invest. 0:17:49.960 --> 0:17:52.680 And so you start looking at other places and saying, yeah, 0:17:52.720 --> 0:17:54.119 there's hair on this and not going to get their 0:17:54.160 --> 0:17:56.560 act together, but at least there's some investment. We might 0:17:56.600 --> 0:17:58.879 as well diversify. And I wonder how much that's driving 0:17:58.920 --> 0:18:01.480 people to like with seeing even when there still is 0:18:01.560 --> 0:18:02.520 a lot of skepticism. 0:18:02.680 --> 0:18:06.680 Jim I would say, they've looked around. They still come 0:18:06.720 --> 0:18:10.480 back to the US, strongest, largest, deepest market in the world, 0:18:10.640 --> 0:18:17.440 greatest economy, rule of law, unbelievable banking system, creativity, intellectual capital. 0:18:18.600 --> 0:18:20.000 It's it's the place to invest. 0:18:20.119 --> 0:18:23.360 That found like he's running sounded like a politician space, didn't. 0:18:23.119 --> 0:18:28.640 They maybe for mayor Yeah, he's run Jim. Jim's out 0:18:28.720 --> 0:18:30.879 of apology Jim, thank you, sir. You don't want anything 0:18:30.880 --> 0:18:31.359 to do with that.