WEBVTT - Day Two at Schwab Impact in Philadelphia 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.680 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.520 --> 0:00:22.800 Live at Schwab Impact twenty twenty. 0:00:22.640 --> 0:00:26.440 Three here in Philadelphia. And we just turned Charlie wrapping up. 0:00:26.360 --> 0:00:27.240 The markets right now. 0:00:27.280 --> 0:00:29.320 But the S and P five hundred still headed toward 0:00:29.360 --> 0:00:32.680 its toward it's lois since May gauge briefly crossing the 0:00:32.720 --> 0:00:35.760 threshold of a correction, down ten percent from its July peak. 0:00:35.800 --> 0:00:38.120 So I'm curious what Jeff Klinapp has. 0:00:38.000 --> 0:00:38.680 To say about all of this. 0:00:38.760 --> 0:00:41.720 He's chief Global investment strategist at Charles Schwab and he's 0:00:41.720 --> 0:00:43.519 here with us on site. 0:00:43.640 --> 0:00:44.960 It's good to see you. It's been a while. 0:00:45.120 --> 0:00:45.800 Thanks for having me. 0:00:45.840 --> 0:00:46.680 Yeah, it's great to be bad. 0:00:46.920 --> 0:00:48.760 So what do you make about I don't know. 0:00:48.800 --> 0:00:50.360 I don't know whether it's smart to ever look at 0:00:50.400 --> 0:00:53.960 one day, given trend, day of trade or really think 0:00:54.000 --> 0:00:56.640 about kind of where we are from the summer, Like, 0:00:56.680 --> 0:00:57.440 how do you look at it? 0:00:57.480 --> 0:00:58.960 There's been a lot of days like this Carol, though, 0:00:59.000 --> 0:00:59.640 that's what I'll say. 0:00:59.640 --> 0:01:01.560 Recently, Well, and this is a wacky one where we 0:01:01.680 --> 0:01:05.680 got aggressive growth data backward looking, and then yields moved lower. 0:01:05.800 --> 0:01:08.000 So how do you look at it? 0:01:08.080 --> 0:01:10.960 Yeah, they came down, and those Magnificent seven stocks weren't 0:01:11.000 --> 0:01:13.240 so magnificent today. They were the Keystone cops, I guess, 0:01:13.240 --> 0:01:15.440 just tripping over themselves. And I think that's one of 0:01:15.480 --> 0:01:18.640 the interesting things I've noticed, particularly in recent months, but. 0:01:18.560 --> 0:01:19.560 Really over the last year. 0:01:20.120 --> 0:01:24.080 The average international stock is outperforming the average US stock. 0:01:24.160 --> 0:01:25.680 So if we look at the equal weight of benchmarks, 0:01:25.720 --> 0:01:28.319 the equal weighted ETH index outperforming the equal weighted SMP 0:01:28.400 --> 0:01:32.080 five hundred, and I think because doesn't have those Magnificent 0:01:32.080 --> 0:01:35.640 seven stocks in it, but also because they're more value oriented, right, 0:01:35.680 --> 0:01:38.440 lower valuations. But interestingly, in the third quarter, what do 0:01:38.440 --> 0:01:40.840 we get today? We got really strong US economic data. 0:01:41.040 --> 0:01:43.160 Not true in Europe. Germany is probably in its fourth 0:01:43.319 --> 0:01:46.200 quarter of negative economic growth. But that's what central banks 0:01:46.240 --> 0:01:49.120 want to see. And so you know, we're seeing probably 0:01:49.200 --> 0:01:52.720 a clearer path to rate cuts over seas than in 0:01:52.760 --> 0:01:53.200 the US. 0:01:53.280 --> 0:01:54.560 I think that's favoring those equities. 0:01:54.600 --> 0:01:56.400 All right, So wait a minute, though, so it doesn't. 0:01:56.560 --> 0:02:00.000 It feels more dire overseas, right in terms of the economy, economics, 0:02:00.000 --> 0:02:02.040 so right economically, so it makes sense that those stocks 0:02:02.080 --> 0:02:04.440 are under more pressure versus what we're seeing in the US. 0:02:04.480 --> 0:02:06.840 Note, Well, what I'm saying is they're outperforming on an 0:02:06.840 --> 0:02:10.080 equal weight basis in almost every sector, which is counterintuitive 0:02:10.600 --> 0:02:13.919 looking at the economic and earnings picture. But they're undervalued, 0:02:14.000 --> 0:02:15.640 and I think, looking forward to great. 0:02:15.480 --> 0:02:17.080 Cuts, outperforming undervalua. 0:02:17.760 --> 0:02:20.080 So essentially they're ahead of us when it comes to 0:02:20.760 --> 0:02:25.600 great cuts from their own central banks. And perhaps that's 0:02:25.600 --> 0:02:27.679 why we're seeing, in your opinion, opportunity there. 0:02:27.960 --> 0:02:30.240 Yeah, I think so. I think that's where I want 0:02:30.240 --> 0:02:33.000 to be focused for next year. And there are a 0:02:33.000 --> 0:02:36.640 couple different reasons. One valuations, they're braced for more difficult environment. 0:02:36.800 --> 0:02:38.200 I really do think we're going to see it turned 0:02:38.200 --> 0:02:41.040 down in the job environment. You know, there's so many 0:02:41.120 --> 0:02:43.400 leading indicators of a softening in the labor market. I 0:02:43.400 --> 0:02:46.000 think we're starting to begin to see beginning to see that, 0:02:46.160 --> 0:02:47.600 and I don't think the US markets are as well 0:02:47.639 --> 0:02:48.880 positioned for that that overseas. 0:02:48.880 --> 0:02:50.799 We did just hear from Mark Bitzer, the CEO of Whirlpool, 0:02:50.840 --> 0:02:52.280 who said you know, we're not at the same place 0:02:52.320 --> 0:02:54.360 we were when it comes to employees over the last 0:02:54.360 --> 0:02:56.760 two years. I mean, you know, raises aren't the same. 0:02:57.240 --> 0:02:59.200 It's not as difficult to get them as they've been. 0:02:59.560 --> 0:03:02.200 But still, I mean, look at Jeff the data that 0:03:02.240 --> 0:03:05.040 we get each week when it comes to the jobs market, 0:03:05.080 --> 0:03:06.760 and then each month we're still adding more than two 0:03:06.800 --> 0:03:08.639 hundred thousand dollars two undre thousand jobs a month in 0:03:08.680 --> 0:03:09.040 the US. 0:03:09.280 --> 0:03:11.440 Yeah, it's interesting. I think there's a bit of a lag. 0:03:11.600 --> 0:03:14.480 And what we're seeing is, you know, credit conditions tightening 0:03:14.480 --> 0:03:17.040 banks are the tightening lending standards. We're hearing more from 0:03:17.080 --> 0:03:19.600 CEOs that we moved out of a labor shortage environment 0:03:19.639 --> 0:03:22.680 to maybe a labor glut, and that's maybe that's overstated. 0:03:22.720 --> 0:03:24.160 I haven't heard about a glut yet. 0:03:24.120 --> 0:03:26.480 But they've talked more about, you know, just tracking the 0:03:26.560 --> 0:03:30.440 number of mentions of layoffs or headcount reductions or euphemisms 0:03:30.440 --> 0:03:33.760 for layoffs versus those for hiring in recent quarters has 0:03:33.800 --> 0:03:35.680 really started to pick up, and we're now seeing more 0:03:35.720 --> 0:03:39.560 layoff announcements than hiring discussions or talking about jobs being 0:03:39.560 --> 0:03:41.560 difficult to fill. I think that's the start of a 0:03:41.600 --> 0:03:43.040 turn here that what may see towards the end of 0:03:43.040 --> 0:03:43.280 the quarter. 0:03:43.400 --> 0:03:45.040 I will say our Bloomberg Economics team, I was just 0:03:45.080 --> 0:03:48.280 looking through my notes. The surgeon continuing unemployment insurance claims 0:03:48.280 --> 0:03:51.520 indicates workers are find finding it increasingly difficult to find 0:03:51.560 --> 0:03:54.280 new jobs. So if you start to parse through, as 0:03:54.320 --> 0:03:56.560 just the CEO of Worldpool said, go below the headlines, 0:03:56.600 --> 0:03:58.520 like you start to see some weak points, all right, 0:03:58.600 --> 0:04:01.360 So hmm okay, So I'm want to go back to international. 0:04:01.400 --> 0:04:04.960 So if they are out performing even though their economy 0:04:05.000 --> 0:04:09.040 is underperforming, are investors they're already factoring good news or 0:04:09.080 --> 0:04:12.440 good news to come at some point because they're starting 0:04:12.480 --> 0:04:14.920 to kind of trade on what their expectations of kind 0:04:14.960 --> 0:04:15.480 of where things go. 0:04:15.480 --> 0:04:17.320 I'm trying to get an idea of yes as being 0:04:17.320 --> 0:04:18.120 a forward looking mark. 0:04:18.200 --> 0:04:20.760 Yeah, that's a good way to put it. Rampant pessimism 0:04:20.800 --> 0:04:24.479 in Europe. We've got war recession beginning to turn around, 0:04:24.520 --> 0:04:27.360 some signs of improvement. Some get tied to China's economic 0:04:27.360 --> 0:04:29.680 growth actually showing some signs of improving. I like to 0:04:29.680 --> 0:04:31.680 watch air pollution in China that's been on the rise 0:04:31.720 --> 0:04:32.560 for a couple of months now. 0:04:32.600 --> 0:04:34.760 That's depressing, but that's like a good news. 0:04:35.040 --> 0:04:35.560 It's good news. 0:04:35.600 --> 0:04:37.560 I'm just going to throw that up right, like. 0:04:37.480 --> 0:04:39.320 What the different metrics you what you watch yet? 0:04:39.320 --> 0:04:42.040 But sort of the Magnificent four in Europe are luxury 0:04:42.040 --> 0:04:45.280 good stocks and they benefit from a stronger Chinese consumer, 0:04:45.279 --> 0:04:46.680 So they're already starting a price in that turn. 0:04:46.800 --> 0:04:48.040 So we've had a mixed bag with some of that 0:04:48.120 --> 0:04:49.480 luxury guys we have. 0:04:49.640 --> 0:04:51.440 I mean, I think it's early to count on that, 0:04:51.480 --> 0:04:53.080 but I think they're beginning to price in a better 0:04:53.120 --> 0:04:53.800 twenty twenty four. 0:04:54.200 --> 0:04:56.120 So you're saying, if you have new money to put 0:04:56.279 --> 0:04:58.440 to work, you would go to Europe? 0:04:58.560 --> 0:04:59.800 I would you would go to Europe? 0:05:00.400 --> 0:05:02.520 And so what's your exposure to the US, Like how 0:05:02.600 --> 0:05:04.599 much of you scaled back? I'm assuming you would still 0:05:04.600 --> 0:05:06.960 suggest some position to the United States? People are are 0:05:07.000 --> 0:05:07.640 you saying, no. 0:05:07.760 --> 0:05:10.760 What the right allocation is to international versus US? And 0:05:10.760 --> 0:05:12.960 I'm just saying more international than you have. Now it's 0:05:12.960 --> 0:05:16.000 been fifteen years, it's probably time to reconsider that and 0:05:16.040 --> 0:05:18.400 rebalance back into it. So I think almost any exposure 0:05:18.440 --> 0:05:19.520 is going to benefit of portfolio. 0:05:19.600 --> 0:05:21.520 Okay, that's interesting because sorry. 0:05:21.320 --> 0:05:23.440 Go ahead, Well, but then I want to get an 0:05:23.440 --> 0:05:24.800 idea of like, what would you say in terms of 0:05:24.800 --> 0:05:25.719 the US exposure? 0:05:26.960 --> 0:05:28.960 You know, I worry a little bit more about the 0:05:29.040 --> 0:05:30.920 very narrow US market. So I think if you can 0:05:30.960 --> 0:05:33.840 get away from those, you know, the thirty percent of 0:05:33.839 --> 0:05:36.880 the market, the magnificent seven, I think the market's looking better. 0:05:37.120 --> 0:05:40.200 But I would favor energy and financials in the US, 0:05:40.279 --> 0:05:42.400 which are where you can find the more attractive values 0:05:42.440 --> 0:05:44.640 and the stronger cash flow, which I think is going 0:05:44.680 --> 0:05:45.320 to be king of all right. 0:05:45.320 --> 0:05:48.400 So you're not going to say thirty percent US. I 0:05:48.480 --> 0:05:50.200 know it's all individual, but I just try and get 0:05:50.200 --> 0:05:53.400 an idea of how aggressive you are saying Europe VERSUS 0:05:53.440 --> 0:05:55.320 are outside US versus US. 0:05:55.400 --> 0:05:57.200 I mean, I think you could look at it in 0:05:57.279 --> 0:06:00.760 the way you might look at the all country world, right, 0:06:00.760 --> 0:06:03.560 which is like sixty percent US and forty percent international. 0:06:03.680 --> 0:06:05.000 I don't think that's a bad allegation. 0:06:05.080 --> 0:06:07.040 Okay, what would you say to someone who would push 0:06:07.040 --> 0:06:08.440 back on you and say, wait a second, if you 0:06:08.440 --> 0:06:09.080 look at the stocks in. 0:06:09.080 --> 0:06:11.680 The S and P five I say, wait a second, Wait. 0:06:11.480 --> 0:06:13.200 A second, that so many of the stocks in the 0:06:13.279 --> 0:06:15.640 S and P five hundred have huge exposure internationally. I mean, 0:06:15.760 --> 0:06:18.480 especially those those big you know, big ones like Apple, 0:06:18.839 --> 0:06:21.000 you know, the majority of its revenue comes from outside 0:06:21.000 --> 0:06:21.479 of the US. 0:06:21.480 --> 0:06:23.880 For example, They're huge international companies that have a lot 0:06:23.880 --> 0:06:26.000 of US revenue. So I think what it really comes 0:06:26.040 --> 0:06:28.880 down to is where is the investor base. For example, NESLEI, 0:06:28.920 --> 0:06:30.880 I think, is the second largest stock in the EF index. 0:06:30.920 --> 0:06:33.520 Compare that to Coca Cola. They stealt beverages and snacks 0:06:33.560 --> 0:06:36.360 to literally the same people around the world. Their revenue 0:06:36.360 --> 0:06:39.520 growth is almost exactly the same every year, but one 0:06:39.600 --> 0:06:42.400 trades three or four multiple points above the other Coca Cola. 0:06:42.440 --> 0:06:44.960 Why Because eighty percent of Cokes investors are US based, 0:06:45.640 --> 0:06:48.320 about eighty percent of Nestle's investors are European based. And again, 0:06:48.560 --> 0:06:52.240 recession war, their pessimism is giving you a cheaper valuation. 0:06:52.320 --> 0:06:53.720 I think those converted opportunities. 0:06:54.480 --> 0:06:58.320 Okay, how confident do you feel about making calls right now? Well, 0:06:58.640 --> 0:07:01.960 you know, do you even have like the federals, You know, 0:07:02.000 --> 0:07:04.640 you have Jay Powell to talk about. Listen, there's multiple 0:07:04.680 --> 0:07:06.719 that the idea in terms of what kind of scenarios 0:07:06.720 --> 0:07:09.360 could come why, you know, I forget how we said it, 0:07:09.400 --> 0:07:11.800 but there's a lot out there in terms of how 0:07:11.840 --> 0:07:15.600 we could move from here globally in markets, in the economy. 0:07:15.640 --> 0:07:17.160 Obviously, his focus is on the US. 0:07:17.360 --> 0:07:18.320 So I think the. 0:07:18.280 --> 0:07:20.080 Thinking was like, all right, so how confident does he 0:07:20.120 --> 0:07:21.520 feel about making forecasts? 0:07:21.520 --> 0:07:23.080 How confident do you feel at this point? 0:07:23.680 --> 0:07:26.880 I think that benefits a broader allocation rather than a 0:07:26.880 --> 0:07:29.520 concentrated one. Right, when you're super confident in an outcome, 0:07:29.560 --> 0:07:32.800 you can concentrate. I think now broader global acid allocation 0:07:33.040 --> 0:07:34.760 makes even more sense in a more uncertain world. 0:07:34.800 --> 0:07:36.520 Yeah, when's the last time you made that kind of call? 0:07:37.200 --> 0:07:37.800 Oh gosh? 0:07:38.160 --> 0:07:42.120 I mean, so we liked international in the two thousands, 0:07:42.200 --> 0:07:43.880 right in the twenty tens, a long time. We were 0:07:43.880 --> 0:07:46.320 in a different cycle where interest rates were so low 0:07:46.480 --> 0:07:48.560 and barrow, you know, borrowing was so cheap. Now you 0:07:48.600 --> 0:07:50.320 want cash rich companies, You're going to find more. 0:07:50.240 --> 0:07:50.920 Of those overseas. 0:07:51.000 --> 0:07:53.440 China. You like China too, You know. 0:07:53.440 --> 0:07:56.120 China's a tougher call. I do think the economy is improving, 0:07:56.200 --> 0:07:58.600 but you have political risk is such a wild card 0:07:58.640 --> 0:08:01.680 over there, and the stocks can swing sixty percent on 0:08:01.840 --> 0:08:02.840 you know, up or or down. 0:08:02.880 --> 0:08:04.080 We we've even seen that this year. 0:08:04.240 --> 0:08:09.480 I know, I'm more confident in developed markets than Yeah, Okay, 0:08:09.480 --> 0:08:10.000 well here's. 0:08:09.800 --> 0:08:11.800 The develop market that's close to home the US. Are 0:08:11.800 --> 0:08:13.520 we headed into a recession or are we in a recession? 0:08:13.520 --> 0:08:13.840 Are adding? 0:08:13.920 --> 0:08:16.720 I think we are in a cardboard box recession. Manufacturing 0:08:16.720 --> 0:08:19.119 and trade are inner recession things we put in a box. 0:08:19.160 --> 0:08:20.560 If you can't put it in a box, it's not 0:08:20.600 --> 0:08:22.760 in a recession. I lived three miles from Walt Disney World. 0:08:22.800 --> 0:08:25.440 There's no recession at Space Mountain right now, and so 0:08:25.840 --> 0:08:29.760 I'm a little worried that services slide into a recession 0:08:29.760 --> 0:08:32.600 and meet we're manufacturing is rather than a rapid rebound 0:08:32.640 --> 0:08:34.679 in manufacturing. So I'm gonna watch for that next year. 0:08:34.760 --> 0:08:36.480 Jeff, what do you think we've got thirty seconds left? 0:08:36.480 --> 0:08:38.520 What every investor should be asking themselves at this. 0:08:38.520 --> 0:08:39.760 Point right now? 0:08:39.840 --> 0:08:43.120 I think I think asking themselves about their you know, 0:08:43.440 --> 0:08:45.480 their allocation international. I'm going to come back to this 0:08:45.520 --> 0:08:48.240 because when international is in favor, it tends out performed 0:08:48.280 --> 0:08:50.280 five six hundred basis points a year. That's important to 0:08:50.280 --> 0:08:50.800 stay on track. 0:08:50.679 --> 0:08:52.240 To You're find I have to say, when I started, 0:08:52.240 --> 0:08:54.559 I feel like we used to talk about international investing. 0:08:54.320 --> 0:08:55.120 So much more. 0:08:55.240 --> 0:08:58.400 And you know, our global investing, including the whatever you 0:08:58.400 --> 0:09:00.400 know but it's just interesting how it's gone kind to 0:09:00.400 --> 0:09:01.080 the wayside. 0:09:01.280 --> 0:09:02.760 Yeah, Timer, what's good reason? 0:09:02.800 --> 0:09:05.559 Maybe, but maybe it's a different environment. Jeff, thank you 0:09:05.559 --> 0:09:06.319 so much, my pleasure. 0:09:06.360 --> 0:09:06.800 Thanks for having me. 0:09:06.880 --> 0:09:07.200 Really fun. 0:09:07.280 --> 0:09:10.640 Jeff clientop Chief Global Investment Strategies at Charles Schwab obviously 0:09:10.760 --> 0:09:13.319 onsite with us here in Philadelphia at Schwab Impact twenty 0:09:13.400 --> 0:09:15.679 twenty three. A lot going on, Carol Master, timstead of It, 0:09:15.760 --> 0:09:19.000 a lot more interviews to come actually from the Saved. 0:09:19.360 --> 0:09:22.959 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:22.960 --> 0:09:26.320 live weekday afternoons from three to six Eastern Listen on 0:09:26.400 --> 0:09:30.439 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, 0:09:30.679 --> 0:09:33.199 or watch us live on YouTube. 0:09:34.080 --> 0:09:37.120 So much going on in the market environment, and we've 0:09:37.160 --> 0:09:39.640 got a great guest. Chloe Berry is Managing director and 0:09:39.679 --> 0:09:42.960 head of the Infrastructure Income Strategy over at Brookfield Asset 0:09:42.960 --> 0:09:45.439 Management firm, very well known to our audience, of course, 0:09:45.520 --> 0:09:47.480 run by Bruce Flatt, and she joins us here at 0:09:47.480 --> 0:09:48.240 Schwab Impact. 0:09:48.360 --> 0:09:50.640 Welcome, Welcome, so nice to have you. Thank you, it's 0:09:50.679 --> 0:09:51.400 great to be here. 0:09:52.200 --> 0:09:55.680 Tell us about your world and how you think about 0:09:55.760 --> 0:09:58.320 the environment that's out there in a day where you know, 0:09:58.360 --> 0:10:01.040 we get a hot GDP report and yet guilds go down, 0:10:01.080 --> 0:10:04.239 like things don't always make sense, and we're trying. 0:10:04.040 --> 0:10:06.920 To read the tea leaves. So tell us how you 0:10:06.920 --> 0:10:07.520 guys see it. 0:10:08.040 --> 0:10:12.400 Yeah, so look in infrastructure. The beautiful thing about infrastructure 0:10:12.520 --> 0:10:15.880 is that it's really an assa class for all cycles. Right, 0:10:16.000 --> 0:10:19.680 So so current environment to only plays a small part 0:10:20.080 --> 0:10:23.600 in what we're looking for, because infrastructure are essential assets. 0:10:23.960 --> 0:10:26.760 They're the backbone of the global economy. They're you know, 0:10:26.960 --> 0:10:30.680 electricity transmission lines powering the buildings we're sitting in. It's 0:10:30.720 --> 0:10:34.720 the telecom towers you know, pinging the signal for this call, 0:10:34.840 --> 0:10:37.720 or the you know, data centers housing our photos, and 0:10:37.760 --> 0:10:41.360 so these are essential assets with long term contracted revenues, 0:10:42.360 --> 0:10:48.080 inflation linkage and downside protection through these stable cash flows. 0:10:48.120 --> 0:10:52.000 And so infrastructure is really like what we like to say, 0:10:52.280 --> 0:10:55.560 is an asset class for all cycles, and so we 0:10:55.640 --> 0:10:58.120 don't have to predict what's going to happen tomorrow to 0:10:58.160 --> 0:10:59.880 have a stable, predictable cash flow stream. 0:11:00.400 --> 0:11:02.719 To what extent do you watch governments spending around the 0:11:02.720 --> 0:11:05.440 world affecting your asset classes. 0:11:05.679 --> 0:11:07.760 So it's a really good question, because so much is 0:11:07.800 --> 0:11:10.000 going on in that right now. Right We've seen the 0:11:10.000 --> 0:11:15.360 Inflation Reduction Act, the Chips Act, the Infrastructure and Jobs Act. 0:11:16.120 --> 0:11:19.480 It's all positive. We love people talking about infrastructure. They 0:11:19.480 --> 0:11:22.960 should be talking about infrastructure. We need to modernize our infrastructure, 0:11:23.400 --> 0:11:26.400 and so it's great that it's more of a household topic. 0:11:27.000 --> 0:11:30.679 And all that influx of capital, all the incentives that 0:11:30.679 --> 0:11:33.800 the government is putting, multiple governments are putting really into 0:11:33.840 --> 0:11:38.760 the infrastructure sector is really a tailwind. We at Brookfield, 0:11:38.800 --> 0:11:41.400 we don't rely on those, you know, to make an 0:11:41.440 --> 0:11:45.640 economic return r in our investments, but they are huge tailwinds. 0:11:45.080 --> 0:11:45.640 For the sector. 0:11:45.760 --> 0:11:47.800 But what one challenge with rising interest rates, of course, 0:11:47.920 --> 0:11:50.480 is also the deficit. And there's a concern too that 0:11:50.720 --> 0:11:52.880 Washington might pull back on some of the spending as 0:11:52.920 --> 0:11:55.600 a result of rising rates and as a result of look, 0:11:55.840 --> 0:11:57.000 you know, there's no other way to put it, but 0:11:57.040 --> 0:12:00.319 disagreements between Democrats and Republicans. Things are pretty frack even 0:12:00.360 --> 0:12:03.240 within parties as we speak. How does that concern you? 0:12:04.160 --> 0:12:07.320 So so again we're not relying on you know, the 0:12:07.360 --> 0:12:11.520 government programs to to earn our return that we're looking 0:12:11.600 --> 0:12:13.960 you know, with the you know down to it, we 0:12:14.000 --> 0:12:16.600 are economic investors looking for a return, and we don't 0:12:16.600 --> 0:12:23.080 rely on that. It's helpful, but really we're looking, you know, 0:12:23.160 --> 0:12:28.040 for assets that withstand that and and and I think 0:12:28.160 --> 0:12:32.679 just more generally, it's you know, the interest rate environment 0:12:32.840 --> 0:12:37.160 and capitalized or i should say more constrained balance sheets, 0:12:37.160 --> 0:12:39.840 whether that's governments or corporates right that are trying to 0:12:39.880 --> 0:12:42.559 de lever in this environment. That creates opportunity for us 0:12:42.600 --> 0:12:47.520 because we're private capital investors, and there's a huge deficit 0:12:47.600 --> 0:12:50.600 in what these governments and corporates who have traditionally funded 0:12:50.600 --> 0:12:54.880 infrastructure can spend in today's market relative to the trillions 0:12:54.920 --> 0:12:59.160 of dollars that needs to be spent to upgrade our infrastructure. 0:12:59.160 --> 0:13:02.000 And so we play a really critical role and opportunities 0:13:02.040 --> 0:13:03.000 are opening all the time. 0:13:03.000 --> 0:13:03.560 Because of that. 0:13:03.679 --> 0:13:06.199 We're more opportunities public or private infrastructure. 0:13:07.320 --> 0:13:11.040 So we're predominantly private market infrastructure, right, but we see 0:13:11.040 --> 0:13:15.400 opportunity in the public markets to take assets or companies private. 0:13:16.600 --> 0:13:18.760 What that really allows us to do is take a 0:13:18.800 --> 0:13:22.440 longer term view on the asset. Right, we're not subject 0:13:22.480 --> 0:13:25.080 to the whim of the market and the shareholders on 0:13:25.240 --> 0:13:27.960 any one day or what is the sentiment of that day. 0:13:28.440 --> 0:13:32.920 We can drive value and really long term compounded growth 0:13:33.720 --> 0:13:38.439 over significant periods of time instead of making decisions based 0:13:38.440 --> 0:13:40.160 on really what's on vogue today. 0:13:40.640 --> 0:13:44.800 When I do wonder what expands or reduces maybe the 0:13:45.040 --> 0:13:48.080 expected timeline for returns for your investors. Right, you guys 0:13:48.080 --> 0:13:50.679 do these massive fundraises and I think there's is it 0:13:50.720 --> 0:13:55.880 one hundred billion dollars twenty twenty three your goal for 0:13:56.400 --> 0:13:57.160 is it going to happen? 0:13:58.080 --> 0:14:01.680 So, look, infrastructure, I think that number is across Brookfield 0:14:01.679 --> 0:14:06.240 more broadly in the infrastructure space. Look, we're raising huge 0:14:06.240 --> 0:14:09.559 amounts of capital and it's still coming in. It's still 0:14:09.559 --> 0:14:13.199 coming in. Look that you know, capital is more constrained 0:14:13.240 --> 0:14:15.800 than it has been in the past. But infrastructure assets 0:14:15.800 --> 0:14:20.160 are what people are looking for today. Inflation linkage, right, 0:14:20.280 --> 0:14:23.880 so topical, Maybe we're peaked on inflation, but it's still high, 0:14:24.040 --> 0:14:27.640 right right, interesst rate protection rates all the higher for longer, 0:14:27.720 --> 0:14:30.120 all that sentiment. These are assets that can be financed 0:14:30.160 --> 0:14:33.360 with long term fixed rate debt, and so the assets 0:14:33.360 --> 0:14:35.880 are protected from that interest rate environment. And when we 0:14:35.920 --> 0:14:38.240 buy new assets, you know, we're pricing that in to 0:14:38.320 --> 0:14:39.760 the assets that we're buying. 0:14:39.560 --> 0:14:41.560 What would you say, Chloe, are the most interesting assets 0:14:41.560 --> 0:14:43.680 out there when it comes to infrastructure investing that you 0:14:43.720 --> 0:14:46.200 guys are just really keen on. You're known for, you know, 0:14:46.280 --> 0:14:48.880 certain trends and plays, but what is it in particular? 0:14:49.400 --> 0:14:51.440 So so we like to talk about what we call 0:14:51.480 --> 0:14:57.920 the three d's, and this is decarbonization, deglobalization, and digitalization. 0:14:58.280 --> 0:15:01.200 And so really this is about dec urbanization. It's everything 0:15:01.320 --> 0:15:05.360 from you know, more renewable power generation of course, you 0:15:05.360 --> 0:15:07.880 know that's an obvious one, but it's going beyond that. 0:15:07.960 --> 0:15:11.840 It's building out electricity transmission lines to connect that renewable 0:15:11.880 --> 0:15:14.920 power to population centers or to the grids, and it's 0:15:14.960 --> 0:15:20.880 in our homes. It's residential infrastructure, rooftop solar panels, heat pumps, generators, 0:15:20.880 --> 0:15:22.000 ev charging stations. 0:15:22.040 --> 0:15:22.800 What about nuclear? 0:15:23.440 --> 0:15:26.680 So nuclear where we like to play in nuclear is 0:15:26.680 --> 0:15:32.000 on nuclear services, right, So nuclear generation itself is often 0:15:32.040 --> 0:15:35.840 done by governments or government utilities because projects. 0:15:35.440 --> 0:15:37.880 So this is again where public drives it. But you 0:15:37.920 --> 0:15:38.720 guys find. 0:15:38.560 --> 0:15:41.760 Exactly will we will service it and be around the ancillary, 0:15:41.920 --> 0:15:44.360 but we will not generate the nuclear pack. 0:15:45.360 --> 0:15:47.040 Where do you rely on that in terms of like 0:15:47.040 --> 0:15:48.480 do you believe more of that will happen in the 0:15:48.560 --> 0:15:51.360 US or those projects too big and too daunting for 0:15:51.880 --> 0:15:53.800 local governments to take on just the last thirty seconds 0:15:53.800 --> 0:15:54.760 that we yes, So. 0:15:55.240 --> 0:15:58.200 We believe that nuclear will pay a critical role in 0:15:58.200 --> 0:16:02.200 decarbonizing our environment and really you know, energizing the world 0:16:02.320 --> 0:16:05.560 of the future. It's really critical for that baseline power even. 0:16:05.320 --> 0:16:08.760 In the US. Yes, really do you see signs of it? 0:16:10.120 --> 0:16:13.520 Look, there's there's opportunities kind of around the world where 0:16:13.560 --> 0:16:18.400 we're seeing it. You know, we we just looked in 0:16:18.480 --> 0:16:22.960 Poland and got some opportunities there. You know, geopolitical concerns 0:16:23.000 --> 0:16:26.800 around the world that's really driving you know, on shoring 0:16:26.960 --> 0:16:30.160 of critical industries and energy security and so you know, 0:16:30.200 --> 0:16:30.760 could it happen? 0:16:30.840 --> 0:16:31.040 Yeah? 0:16:31.040 --> 0:16:31.360 I think so. 0:16:31.640 --> 0:16:33.560 Really interesting. Chloe, thank you. 0:16:33.480 --> 0:16:34.640 So much for the infrastructure. 0:16:34.720 --> 0:16:37.000 Come back. So do we come back into here, come 0:16:37.040 --> 0:16:39.120 back and join us. We do love it infrastructure. 0:16:39.320 --> 0:16:41.800 Chloe Berry, she's managing director and head of the Infrastructure 0:16:41.840 --> 0:16:45.080 Income Strategy over at Brookfield Asset Management. Joining us here 0:16:45.280 --> 0:16:48.360 live in Philadelphia at Schwab Impact twenty twenty three. 0:16:49.320 --> 0:16:52.880 You're listening to the Bloomberg Business Week podcast. Catch us 0:16:52.920 --> 0:16:56.880 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:16:57.120 --> 0:17:00.440 the Bloomberg Business app, and YouTube. You can also listen 0:17:00.520 --> 0:17:03.600 live on Amazon Alexa from our flagship New York station 0:17:04.040 --> 0:17:06.840 Just Say Alexa playing Bloomberg eleven thirty. 0:17:08.320 --> 0:17:10.199 You know, earning is certainly front and center right now, 0:17:10.280 --> 0:17:12.639 especially in the blackout period as we wait for the 0:17:12.680 --> 0:17:15.360 next FED meeting. Having said that, one of the things 0:17:15.400 --> 0:17:17.600 we continue to talk about here at Schwab Impact twenty 0:17:17.680 --> 0:17:21.040 twenty three is all about the fixed income market higher 0:17:21.119 --> 0:17:24.960 for longer rate environment. We heard Janet Yellen, former FED 0:17:25.040 --> 0:17:29.920 official head of the FED, obviously US Treasury Secretary, making 0:17:29.960 --> 0:17:32.240 some comments. Well, it continues to be top of mind 0:17:32.240 --> 0:17:35.680 for investors. And what's interesting is Schwab has actually done 0:17:35.720 --> 0:17:40.480 Schwab Asset Management a survey specifically on ETFs. They do 0:17:40.600 --> 0:17:44.679 it an annually survey and it's called ETFs and Beyond. 0:17:44.920 --> 0:17:46.760