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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.

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Speaker 3: I'm Joe Wisenthal and I'm Tracy Allaway.

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Speaker 2: Tracy, you know, we do all these episodes about private

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Speaker 2: credit and obviously hedge funds, multi strategy hedge funds in

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Speaker 2: particular lately, and of course it all sort of seems

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Speaker 2: to be part of a bigger story of a bunch

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Speaker 2: of things that used to happen inside banks no longer

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Speaker 2: happening inside banks.

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Speaker 3: Right, And this has been like a continual process ever

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Speaker 3: since like the two thousand and eight financial crisis, but

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Speaker 3: even before that we had like big periods of bank disintermediation,

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Speaker 3: which we talked about recently on that episode with Hugh

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Speaker 3: van steinas.

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Speaker 2: Totally, there's a lot going on and not all of

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Speaker 2: these trends date back to the final victual crisis, but

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Speaker 2: you know, this was obviously kind of an express goal.

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Speaker 2: I think of the Dobb Frank regulations and just from

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Speaker 2: my seed sitting here, like, yeah, it seems pretty good.

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Speaker 2: Bunch of risky stuff like multi strategy hedge funds, et cetera,

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Speaker 2: seems kind of risky. You can lose a lot of money.

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Speaker 2: In theory, lending to random middle market companies seems like

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Speaker 2: you could lose a lot of money. It's like, yeah,

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Speaker 2: it seems pretty good that it's not happening inside the banks,

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Speaker 2: and maybe that's good that it's not connected directly to

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Speaker 2: deposit taking institutions.

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Speaker 3: Yeah, And I think given the increases we've seen in

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Speaker 3: rates over the past couple of years, the fact that

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Speaker 3: like nothing really broke or exploded in the private credit

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Speaker 3: market seems like a good sign. But again, it's still

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Speaker 3: relatively small and it is growing very rapidly, so I

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Speaker 3: think there are more questions to be asking about this

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Speaker 3: particular space.

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Speaker 2: Well, you brought up something recently on an episode of

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Speaker 2: Synthetic Risk Transfers where banks sort of offload some of

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Speaker 2: their credit risk onto third party entities, And that's really

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Speaker 2: stuck in my head, which is, you know, Okay, so

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Speaker 2: these third party entities take the risk of the assets

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Speaker 2: from the banks, but then that's an asset that can

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Speaker 2: be levered up. And where do you get leveraged, presumably

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Speaker 2: from a bank, And so I have this like.

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Speaker 3: Sort of very circular, isn't it.

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Speaker 2: Yeah, And I just have this nagging thing in my

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Speaker 2: head somewhere it's like, okay, yeah, great, we moved it

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Speaker 2: all off the banks. There's okay, we're not going to

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Speaker 2: have another two thousand and eight. But what if the way,

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Speaker 2: what if in some way it still goes back to

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Speaker 2: the banks. Yea, and the risk still is there and

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Speaker 2: it just sort of takes the loop out and then comes.

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Speaker 3: It goes into prime brokerage instead of the balance sheet.

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Speaker 2: That's a good way to put it. And so like

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Speaker 2: I'm still like, I'm like, eh, things pretty good, but

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Speaker 2: maybe maybe there are still some reasons to be concerned.

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Speaker 2: Can you ever? I guess maybe we could title this

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Speaker 2: episode like, can you ever really de risk the banking system?

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Speaker 4: Oh?

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Speaker 3: That's a good one, let's use that.

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Speaker 2: Okay, Well, I am really excited. We have the perfect

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Speaker 2: guest on today's show, someone we've had on the podcast

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Speaker 2: before and someone we've known and talked to for a

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Speaker 2: long time. We're going to be speaking with Stephen Kelly,

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Speaker 2: Associate director of Research at the Yale Program on Financial Stability. So, Steven,

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Speaker 2: thank you so much for coming back on a lots.

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Speaker 4: Great to be back.

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Speaker 5: You know, sometimes you guys say literally the perfect guest,

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Speaker 5: and so I'm old for too on that I've only

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Speaker 5: gotten perfect guests.

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Speaker 3: But well, you coming, we have people who complain about

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Speaker 3: when we forget to say the perfect guest, but you've

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Speaker 3: kicked it up to another level and are complaining about

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Speaker 3: not saying, oh, literally the perfect guest. This is a

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Speaker 3: new era.

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Speaker 2: I do not think that the word perfect does not

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Speaker 2: actually need any adjectives, right, because either it's perfect or

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Speaker 2: it's not. It's sort of like the word when people

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Speaker 2: that call something very unique. It's like either it's unique,

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Speaker 2: one of a kinder, it's not. So I wouldn't take

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Speaker 2: that too uh, I would agree with you. I wouldn't

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Speaker 2: take that too literally.

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Speaker 5: I would agree with you if you followed your own Okay, okay,

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Speaker 5: that's fair enough.

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Speaker 2: Stephen Kelly, literally the perfect guest made that correction. I

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Speaker 2: just should I be like I said, Oh, everything seems fine.

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Speaker 2: But are the reasons to think and we're going to

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Speaker 2: get into specific so this is an incredibly broad question,

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Speaker 2: but just conceptually, are there reasons to think about how

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Speaker 2: these risks that migrate off of bank balance sheets find

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Speaker 2: a way to migrate back onto them.

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Speaker 5: It's totally valid. I mean, this is part of the

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Speaker 5: story of two thousand and eight right as there was

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Speaker 5: this whole shadow banking sector and it looked like risk

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Speaker 5: had moved, and really it hadn't. The banks brought everything back,

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Speaker 5: first voluntarily and then involuntarily. So you're asking the exact

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Speaker 5: right questions. The IMF is now asking these questions and

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Speaker 5: citing odd lots. I don't know if you saw the

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Speaker 5: recent Global financi Stability report citing Tracy on exactly this issue.

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Speaker 5: You talked about the synthetic risk transfers in your intro

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Speaker 5: and this idea of like, okay, but are the banks

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Speaker 5: really funding it? I would say, you know, to the

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Speaker 5: extent we're running risk through another balance sheet. I mean,

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Speaker 5: the banks really are more protected even if they are

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Speaker 5: lending to a firm that's taking credit risk, because they

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Speaker 5: do have that firm's capital and they have that firm's

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Speaker 5: you know, alleged skill at managing these risks. And so

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Speaker 5: part of the issue with all the financial crisis stuff

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Speaker 5: was a lot of it was unfunded. We can get

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Speaker 5: into synthetic risk transfers, and you had that great episode

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Speaker 5: about how they're different and they're funded, but broadly, Joe, yes,

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Speaker 5: you're asking.

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Speaker 4: The right questions.

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Speaker 3: Wait, okay, I have a very basic question, but what

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Speaker 3: is actually happening in the financial system when someone puts

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Speaker 3: money into private credit. So say I'm an investor and

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Speaker 3: I'm going to invest I don't know, a million dollars

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Speaker 3: in some private credit fund. What happens to that million dollars?

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Speaker 5: Well, first, Tracy, you're probably taking the million dollars from

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Speaker 5: an allocation towards junk bonds investment grade credit. So that's

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Speaker 5: step one. I mean, the idea of like private credit

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Speaker 5: is taking all these loans from banks or is eating

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Speaker 5: the bank's lunch. We can put a pin in that

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Speaker 5: for now, and we should come back to that. So

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Speaker 5: usually that's what's happening, is this is an allocation away

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Speaker 5: from whether it's other alternatives or other corporate credit. But

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Speaker 5: the reality is this is deposits move around the banking system.

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Speaker 5: There's no like people talk about private credit like its

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Speaker 5: deposits leaving the banking system or it's you know, deposits

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Speaker 5: are going to non banks. But there is no shadow

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Speaker 5: bank without a bank. Apollo has bank accounts, Blackstone has

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Speaker 5: bank accounts. When you transfer money into them, they put

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Speaker 5: it in their account and then it's lent on to

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Speaker 5: whomever is receiving the credit, and so you're changing the

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Speaker 5: nature of the aggregate deposit franchise to the extent deposits

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Speaker 5: are moving to a different kind of actor. But deposits

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Speaker 5: can't leave the banking system.

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Speaker 2: So we just take it a little step further. Just

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Speaker 2: to be clear, Okay, I sell some junk bonds. I

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Speaker 2: decided to allocate a million dollars to an Apollo private

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Speaker 2: credit fund. They lend the money. Is Apollo further leveraging

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Speaker 2: that lending up to juice returns or how leveraged are

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Speaker 2: these funds?

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Speaker 5: So what we're seeing is that they're increasingly so it's

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Speaker 5: pretty scarce so far. And that was part of the pitch, right,

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Speaker 5: is like Apollo came along in twenty twenty two when

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Speaker 5: private credit was booming and said, hey, why mean you

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Speaker 5: guys thought of this? We have like one times leverage,

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Speaker 5: two times leverage. That's generally sort of the space that's in.

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Speaker 5: But as we've sort of seen the market mature and

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Speaker 5: the market grow, like, there's a good reason to lever

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Speaker 5: these things up. If you're doing effectively bank credit, which

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Speaker 5: sometimes they are, there's a reason banks are ten times

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Speaker 5: levered like that that's the way the funding of the

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Speaker 5: system works, and that provides a whole host of other

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Speaker 5: benefits to the system. But there's also a cap on

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Speaker 5: how much unlevered equity is out there. If you think

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Speaker 5: about what the financial system exists to do, it's to

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Speaker 5: create as many financial goods for us. What we need deposits,

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Speaker 5: you know, other kinds of savings on as little equity

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Speaker 5: as possible. Equity is the scarce resource and it's the

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Speaker 5: input to the financial systems manufacturing process. And so you

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Speaker 5: cannot recreate ten x, twelve x, fifteen x leverage from

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Speaker 5: the banking system on one two x leverage in private credit.

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Speaker 5: And that's the limit, you know, to your fear, Joe,

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Speaker 5: that's the limit of how big this thing can grow.

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Speaker 5: And we're sort of seeing that a little bit is

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Speaker 5: the bigger private credit grows relative.

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Speaker 4: To the economy.

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Speaker 5: They're sort of nearing the kink on the funding curve

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Speaker 5: as far as like what amount of funding is willing

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Speaker 5: to be locked up as long term assets. Like the

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Speaker 5: fundamental idea that like on demand par deposits can become

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Speaker 5: locked up five year equity and a private credit fund

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Speaker 5: is not real.

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Speaker 3: Haven't we seen some private credit funds start to look

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Speaker 3: at structures where investors can take their money out as well,

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Speaker 3: like instead of having the five year lockup periods, people

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Speaker 3: can go in and out as they need.

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Speaker 5: Definitely, I mean, the long arc of financial history bends

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Speaker 5: towards banks, and we've sort of seen private credit start

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Speaker 5: to look more like banks. In One of the ways

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Speaker 5: is these sort of interval funds or evergreen funds they're called.

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Speaker 5: And basically these are just different types of structures that

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Speaker 5: allow some amount of liquidity in the short term. And

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Speaker 5: this is very very marginal steps. It's gated, it's limited,

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Speaker 5: but you know it's gated after a certain percentage. It's

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Speaker 5: limited by quarter, there's a certain time interval in which

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Speaker 5: you can get it. It's not deposits yet, but that's

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Speaker 5: one of the ways which funds have started to bend

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Speaker 5: towards a banking model in addition to leverage.

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Speaker 2: By the way, just speaking of the history of finance,

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Speaker 2: is that entities try to make illiquid things a little

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Speaker 2: bit more banked. Like there was a really interesting paper

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Speaker 2: that came out recently from Tim Barker and Chris Hughes

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Speaker 2: about the Penn Central bailout and in there, there was

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Speaker 2: some talk about the history of CDs specifically and how

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Speaker 2: there at one point there was this really hard lockup

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Speaker 2: on them, but then entity has found ways to sort

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Speaker 2: of you could liquidate and sell your right to that CD.

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Speaker 2: So they always find a way to create liquidity out

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Speaker 2: of illiquidity.

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Speaker 5: Yeah, you can tronch anything with cash flows. To paraphrase

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Speaker 5: reportentnerial on Meet the Parents, I mean, you can get

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Speaker 5: anything out of that.

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Speaker 3: Speaking of traanging, I wanted to ask one more basic question,

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Speaker 3: which is this term retranching of risk in the financial

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Speaker 3: system has come up a number of times. So Hugh

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Speaker 3: Vansteinas used it in a recent episode. I'm pretty sure

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Speaker 3: you've used it as well in your writing. Exactly what

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Speaker 3: risk is being retranched here? Like, give us an idea

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Speaker 3: of what types of things end up in private credit.

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Speaker 3: I imagine a lot of it is sort of middle

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Speaker 3: market stuff, stuff that, to your point earlier would have

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Speaker 3: been in the junk bond market or the leverage loan

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Speaker 3: market and is now going elsewhere.

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Speaker 4: Yeah, that's exactly right.

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Speaker 5: And so I mean I got this term from the GFC,

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Speaker 5: the global financial crisis literature. I believe it originated with

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Speaker 5: Gary Gordon Andrew metric and they used it to describe

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Speaker 5: increasing haircuts in two thousand and eight. So the idea

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Speaker 5: that you know, you have a triple A asset, you

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Speaker 5: were haircutting at one percent, but now the market to

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Speaker 5: resell that collateral is worse. You're more worried about your counterparty,

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Speaker 5: and so you're going to haircut it thirty percent. You've

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Speaker 5: sort of retransh what you've decided is triple A, and

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Speaker 5: a lot of that was driven by market perception of

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Speaker 5: risk as well as increased market demands from our capital.

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Speaker 5: What we're seeing in the banking system is a little

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Speaker 5: bit of market demands and a little bit of regulatory demand.

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Speaker 5: So obviously BASL three, you know, is looming next to

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Speaker 5: the maturity wall, and it's sort of saying banks may

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Speaker 5: have to have more capital. The other thing is investors

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Speaker 5: depositors are looking for a little more liquidity in banks

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Speaker 5: than they were pre twenty twenty three. And frankly, interest

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Speaker 5: rate risk at a certain point becomes credit risk, and

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Speaker 5: so when rates go to five percent, banks aren't really

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Speaker 5: like trying to be in the business of managing all

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Speaker 5: the credit risk at five percent that they were avoiding

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Speaker 5: at zero percent, and so getting out of that left

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Speaker 5: tail and sort of retranching by selling things out of

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Speaker 5: the banking system is sort of the aim. So it's

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Speaker 5: all those three things at once, and it makes sense

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Speaker 5: for banks to lean then on prime brokerage and lending

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Speaker 5: the senior layers of these funds.

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Speaker 3: Wait, this reminds me of something else I wanted to ask,

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Speaker 3: which is I hear a lot about comparative advantages when

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Speaker 3: it comes to private credit versus banks, in the sense

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Speaker 3: that private credit might be better at managing certain loans

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Speaker 3: to your point about higher interest rates? Is that true?

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Speaker 3: And like, what if that comparative advantage actually look like

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Speaker 3: Does it just mean the analysts that private credit firms

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Speaker 3: are like pouring over the paperwork more than a bank.

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Speaker 5: Can I think that's right? And I know Joe has

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Speaker 5: rude the failure of the high touch banks in twenty

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Speaker 5: twenty three. You know that banks that care about their

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Speaker 5: customers are the ones that failed. But what that misses

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Speaker 5: is that community banks didn't fail, and those do the

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Speaker 5: same thing, and those don't have the attention of the market.

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Speaker 5: And that's sort of kind of part of the pitch

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Speaker 5: of private credit as well. Is like, you know, we're

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Speaker 5: operating under less transparency. Again, we're seeing give on that

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Speaker 5: as they've sort of been towards banks. But in theory,

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Speaker 5: this is just a product and they do have some ability.

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Speaker 5: It's a smaller group, sometimes as small as one to

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Speaker 5: work with the lenders. We've seen lower default rates out

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Speaker 5: of private credit versus their competitors and in leverage zones,

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Speaker 5: but higher losses given to fault So you can multiply

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Speaker 5: those two things together and come up with some lesser

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Speaker 5: loss and in that case, you know, it makes sense

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Speaker 5: to be allocated a private credit.

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Speaker 2: You know, what I realized a little earlier in the

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Speaker 2: conversation is that I actually don't know the difference in

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Speaker 2: what the shadow banks the quote shadow banks were doing

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Speaker 2: prior to two thousand and eight, and how their relationship

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Speaker 2: with real banks was different than the current relationship. I mean,

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Speaker 2: it's interesting because I remember, you know, one of the

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Speaker 2: things that was going on, I think summer two thousand

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Speaker 2: and seven or summer two thousand and eight, it was

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Speaker 2: like a couple bear Sterns hedge funds, like just hedge

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Speaker 2: funds that seemed like a really big deal, like seemed

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Speaker 2: to be systemically important I think City had something maybe

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Speaker 2: do what was the nature of those quote shadow banks

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Speaker 2: and how they actually connected to the regulated banks.

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Speaker 5: So the short version is that the nature of those

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Speaker 5: is big banks with strong balance sheets like Bear Stearns

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Speaker 5: and City put their name all over those shadow banks,

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Speaker 5: but didn't actually have They weren't funding them themselves, they

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Speaker 5: weren't actually on the balance sheet of the banks. So

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Speaker 5: when pressure came in two thousand and seven and nobody

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Speaker 5: knew this was going to be like a repeat of

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Speaker 5: the Great Depression, City took all that stuff back on

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Speaker 5: its balance sheet to protect its reputation. Bear took one

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Speaker 5: of those hedge funds on back onto its balance sheet.

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Speaker 5: These banks did not have to take on this risk.

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Speaker 5: But they're going, Okay, we're going to stand behind our name.

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Speaker 5: We're going to stand behind our clients who thought they

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Speaker 5: were buying a Bear Stearns or a City Group product.

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Speaker 5: And maybe that's a risk today. I don't know, you know, Yeah,

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Speaker 5: well I was just going.

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Speaker 2: To ask because you see these headlines right now now

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Speaker 2: like JP Morgan is going to get into private credit

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Speaker 2: and so forth, and so I get the idea that

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Speaker 2: this is going to be be a separate funding vehicle

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Speaker 2: be like off balance kind of sounds similar.

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Speaker 5: Yeah, I think that's totally a risk. Is there a

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Speaker 5: world where, you know, Citygroup has to bail out its

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Speaker 5: Apollo partnership because they put Citygroup's name all over it?

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Speaker 3: Maybe maybe Wait, that JP Morgan mentioned just reminded me

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Speaker 3: of something. But a few years ago, well actually more

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Speaker 3: than a few years ago, maybe in like twenty fourteen

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Speaker 3: or something like that, I remember JP Morgan basically complaining

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Speaker 3: that the prime brokerage business was a lot harder nowadays,

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Speaker 3: and like the margins were slimmer and stuff like that.

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Speaker 3: I think that's what they said. And yeah, fast forward

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Speaker 3: to twenty twenty four and it seems like prime brokerage

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Speaker 3: is a moneymaker for the big banks at least what

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Speaker 3: happened there.

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Speaker 5: So part of it might just be the growth of

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Speaker 5: private credit. I mean, it has found a niche. I

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Speaker 5: would think about it like a product, you know, Like

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Speaker 5: I said, it's got this middle market like you alluded to,

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Speaker 5: it's sort of got a different model and there's no

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Speaker 5: reason that shouldn't exist along the spectrum of bank deposits

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Speaker 5: to thirty year locked up funding to fund buried treasure

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Speaker 5: expedition like it exists in that spectrum, which is kind

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Speaker 5: of an academic answer, but it's true. I mean Mark Rohan,

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Speaker 5: CEO of a POLLA recently had a comedy, said, you know,

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Speaker 5: we'll get competed with like crazy, and then what's the

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Speaker 5: difference between public and private? And I think that's right.

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Speaker 5: It arose as a product in the years. I mean

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Speaker 5: it doubled between twenty twenty and twenty twenty three. We

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Speaker 5: can talk about why, but now they have banking needs.

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Speaker 5: Like I said, there's no shadow bank without a bank,

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Speaker 5: and they have banking needs and hedge funds too.

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Speaker 2: So my takeaway so far from this conversation is that

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Speaker 2: some of the questions were asked. Is not that there's

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Speaker 2: like some big looming risk out there or like oh,

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Speaker 2: this is a disaster waiting to happen. But mostly these

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Speaker 2: are all like reasonable questions to be asking about where

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Speaker 2: at some point risks could merge, or at least where

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Speaker 2: regulators maybe want to think or try to get ahead

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Speaker 2: of things. What tools or specific lines of inquiry have

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Speaker 2: we seen from regulators or things regulators could do, or

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Speaker 2: like we want to monitor this and I know that's

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Speaker 2: already you've written about this, But what are the specific

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Speaker 2: mechanisms and questions and things they could do.

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Speaker 5: I mean, basically, so far, what we've seen is they've

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Speaker 5: just been really annoying to banks. That's a cost, right.

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Speaker 5: If you talk about why the economics of private credit

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Speaker 5: makes sense, some of it is that, Okay, the market

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Speaker 5: demands a lot less capital for certain risks than banking regulators,

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Speaker 5: and there's some supervision attached to those capital regulations too,

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Speaker 5: and so to the extent you're making supervision, you know,

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Speaker 5: just more costly. It's annoying and banks say whatever, you know,

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Speaker 5: like JPM Yeah, they're doing ten billion of private credit

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Speaker 5: on balance sheet. That's like they just found that in

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Speaker 5: the couch cushions and they're doing it. They put out

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Speaker 5: a press release so they can serve their clients. And

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Speaker 5: this goes back to kind of what we're talking about

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Speaker 5: Elier about what the differences between banks and private credit.

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Speaker 5: Banks being more about managing a deposit franchise, private credit

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Speaker 5: being more the lending side. But really we've seen from

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Speaker 5: the Bank of England, from the ECB, from the f

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Speaker 5: say in Japan, from the FED, they're all starting to

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Speaker 5: just probe banks about their exposure. They're lending to private

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Speaker 5: credit funds and prime brokerage. Frankly, but that's step one.

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Speaker 5: I mean, you hear regulators talk either one we need

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Speaker 5: more authority to regulate the non banking sector like banks,

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Speaker 5: or two. You know, the conservative side is, let's be

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Speaker 5: nicer with Basel three, so you don't push all this

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Speaker 5: stuff into private credit. The truth is always somewhere in

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Speaker 5: the middle. Right now, supervisors have just become more annoyed.

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Speaker 3: That's a good way of putting it. Wait, I have

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Speaker 3: a bunch of questions. Okay, One, have you noticed any

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Speaker 3: like substantial differences in supervisory approaches, Like is the BOE

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Speaker 3: doing something different to the FED versus the BOJ I

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Speaker 3: know you said they're all in info collection mode at

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Speaker 3: the moment, but like there must be some differences.

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Speaker 5: So generally this stuff goes better in foreign countries than

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Speaker 5: it does in the US, particularly the Bank of England.

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Speaker 5: They have like a system wide stress test now where

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Speaker 5: they simulate shocks in theory through like the whole financial system.

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Speaker 5: They're big on macro prudential stuff over there in the US,

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Speaker 5: like the fact that the f SoC, the Financial Stability

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Speaker 5: Oversight Council hasn't designated black Rock or its kin as

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Speaker 5: systemically important under a Biden administration, It'll never happen. And

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Speaker 5: I'm not saying they should have. I mean the idea

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Speaker 5: is like they're not doing banking, they have no short

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Speaker 5: term liabilities.

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Speaker 4: Blah blah blah.

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Speaker 5: But it just doesn't get that same reception abroad. So

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Speaker 5: there's more, you know. I think it'll lean harder in

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Speaker 5: Europe and elsewhere, but for right now, the US is

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Speaker 5: just kind of like poking at it in the stress

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Speaker 5: tests and in data collection.

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Speaker 2: By the way, you mentioned that, like one of the

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Speaker 2: binding constraints in the financial system is how much money

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Speaker 2: is just willing to be locked away on a permanent basis.

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Speaker 2: This is really, though, where the role of insurers comes in,

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Speaker 2: because this is money that people put into a pod

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Speaker 2: and they theoretically expect to get all of it back

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Speaker 2: maybe at some point over the course of a lifetime,

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Speaker 2: it's cetera. But that really is a great source of

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Speaker 2: cash for long term money. Can you talk a little

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Speaker 2: bit more about like how big that is?

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Speaker 5: Yeah, it's huge and growing. I think you're exactly right.

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Speaker 5: That is sort of a sticky source of funds and

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Speaker 5: if you hear Apollo talk about there a fine insurance,

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Speaker 5: it sounds like it's basically unlimited. I mean, they'll say,

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Speaker 5: like our limit of new private credit is finding good

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Speaker 5: things to invest in, not the source of funds. And

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Speaker 5: so we may see a bifurcation across the system of

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Speaker 5: like do you have an ensure attached to yourself? I mean,

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Speaker 5: this again goes back to sticky funny. Can you get

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Speaker 5: bank leverage? Do you have an insure attached to yourself?

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Speaker 5: I mean the other thing about insurance is that it

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Speaker 5: still is a savings vehicle, and so there still is

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Speaker 5: a limit. You know, annuities aren't on demand.

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Speaker 2: But they always and they tried to like layer in

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Speaker 2: stuff so that it looks more and more like an

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Speaker 2: investment right right for time, and looks more and more

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Speaker 2: like a mutual fund or something like that. And exactly

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Speaker 2: so even there the other question, so we're talking about

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Speaker 2: the distribution of risk across various entities, what about And

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Speaker 2: I kind of think this might be a core question

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Speaker 2: from an investor perspective. I guess, the distribution of profitability

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Speaker 2: and when you look at the profits that come out

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Speaker 2: of prime brokerge units at banks, how do those stack

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Speaker 2: up compared to the profits of traditional banking, And is

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Speaker 2: there a risk that making risky loans setting aside the

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Speaker 2: risk part is a profitable business And does that ultimately

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Speaker 2: impair over time how much money what we call banks

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Speaker 2: can make good question?

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Speaker 4: I think not.

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Speaker 5: And it goes back to the limit of funding in

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Speaker 5: private credit. Okay, Like take COVID for example, in the

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Speaker 5: two weeks after the pandemic really hit in March twenty twenty,

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Speaker 5: banks increased their business loans by twenty five percent half

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Speaker 5: a trillion dollars two weeks. They didn't go to market

438
00:21:49,600 --> 00:21:52,600
Speaker 5: and issue equity, They didn't go find investors. They are

439
00:21:52,640 --> 00:21:55,600
Speaker 5: able to create a posits. That a key stroke, and

440
00:21:55,680 --> 00:21:58,760
Speaker 5: that's always going to be the advantage of banks. And so,

441
00:21:58,960 --> 00:22:01,199
Speaker 5: like I said, private credit, we're seeing them sort of

442
00:22:01,200 --> 00:22:03,359
Speaker 5: get closer and closer to this kink on their funding

443
00:22:03,400 --> 00:22:06,719
Speaker 5: curve where all of a sudden, the long term wealth

444
00:22:06,800 --> 00:22:09,679
Speaker 5: lock up sources are scarcer, and frankly, we're seeing this

445
00:22:09,720 --> 00:22:13,600
Speaker 5: a little bit. Fundraising is falling in private credit, and

446
00:22:13,640 --> 00:22:17,360
Speaker 5: we're seeing more institutional investors say like, we're at our

447
00:22:17,400 --> 00:22:20,320
Speaker 5: alternatives allocation and now it's all the big push is

448
00:22:20,440 --> 00:22:23,320
Speaker 5: retail and again talk about looking more like a bank.

449
00:22:23,720 --> 00:22:26,480
Speaker 5: Like that was one of private credit's original promises to

450
00:22:26,560 --> 00:22:27,960
Speaker 5: us as well. It's like, oh, this is different, this

451
00:22:28,080 --> 00:22:32,080
Speaker 5: is just safe like institutional investors. Now everyone's after the

452
00:22:32,119 --> 00:22:34,520
Speaker 5: retail money. How can we make a retail vehicle, How

453
00:22:34,520 --> 00:22:37,879
Speaker 5: can we tap individuals etf.

454
00:22:37,240 --> 00:22:39,880
Speaker 3: They are moving into ETFs, which again is another good

455
00:22:39,960 --> 00:22:42,680
Speaker 3: example of like putting a liquid wrapper on a bunch

456
00:22:42,680 --> 00:22:43,760
Speaker 3: of illiquid assets.

457
00:22:43,840 --> 00:22:44,000
Speaker 4: Right.

458
00:22:44,040 --> 00:22:46,280
Speaker 5: That was the other thing is, oh, private credit doesn't

459
00:22:46,280 --> 00:22:48,879
Speaker 5: mark to market once you have an ETF, And we've

460
00:22:48,880 --> 00:22:51,359
Speaker 5: seen a bunch of banks and non banks start to

461
00:22:51,359 --> 00:22:54,800
Speaker 5: build out their secondary trading desks for private credit. I

462
00:22:54,800 --> 00:22:56,719
Speaker 5: mean it goes back to what Marc own said, eventually,

463
00:22:56,760 --> 00:22:58,320
Speaker 5: what's the difference between public and private?

464
00:22:59,400 --> 00:23:01,959
Speaker 3: Just to go back to something you touched on earlier,

465
00:23:02,280 --> 00:23:06,280
Speaker 3: do you get the sense that regulatory attitudes towards private

466
00:23:06,320 --> 00:23:10,040
Speaker 3: credit and banks and the relationship there are starting to

467
00:23:10,240 --> 00:23:12,760
Speaker 3: change in the sense that, you know, Joe and I

468
00:23:12,760 --> 00:23:14,919
Speaker 3: have talked a lot about how in the aftermath of

469
00:23:14,920 --> 00:23:18,440
Speaker 3: the two thousand and eight financial crisis there were deliberate

470
00:23:18,520 --> 00:23:23,040
Speaker 3: efforts to shift risk into the shadow banking system. Does

471
00:23:23,080 --> 00:23:27,760
Speaker 3: it feel like maybe there's some like change in the vibes,

472
00:23:27,840 --> 00:23:29,520
Speaker 3: the regulatory vibes now.

473
00:23:30,600 --> 00:23:31,280
Speaker 4: Not yet.

474
00:23:31,720 --> 00:23:35,160
Speaker 5: I think regulators are looking for sure, it's a matter

475
00:23:35,200 --> 00:23:37,840
Speaker 5: of do they find something. I mean, you talked about

476
00:23:37,840 --> 00:23:40,359
Speaker 5: this on the episode with Huge Tracy. How when you

477
00:23:40,480 --> 00:23:43,159
Speaker 5: ask a private credit investor, you say like, oh, you know,

478
00:23:43,200 --> 00:23:45,840
Speaker 5: are you guys eating the bank's lunch now? And they

479
00:23:45,920 --> 00:23:48,760
Speaker 5: sort of wax and wane and they say, well, it's

480
00:23:48,760 --> 00:23:51,520
Speaker 5: an ecosystem and we're partners, you know, And then they

481
00:23:51,560 --> 00:23:53,479
Speaker 5: go in the bathroom. Let's scream in the mirror at

482
00:23:53,480 --> 00:23:55,960
Speaker 5: how embarrassing that is. Like it goes back to them

483
00:23:56,000 --> 00:23:59,640
Speaker 5: needing the banks for one and two. I think everyone's

484
00:23:59,680 --> 00:24:02,199
Speaker 5: sort of happy with the status quo. The question is

485
00:24:02,240 --> 00:24:04,240
Speaker 5: the direction of travel, and that's where.

486
00:24:04,119 --> 00:24:04,800
Speaker 4: The risks are.

487
00:24:05,640 --> 00:24:08,040
Speaker 2: I'm just really fascinated by this idea of like the

488
00:24:08,119 --> 00:24:10,560
Speaker 2: kink and the funding curve for private credit, because I'm

489
00:24:10,560 --> 00:24:13,720
Speaker 2: trying to reconcile that with this idea that at least

490
00:24:13,760 --> 00:24:16,240
Speaker 2: from Apollo via all the money that they have for

491
00:24:16,320 --> 00:24:20,119
Speaker 2: their insurance vehicle, it sounds like there's still plenty of

492
00:24:20,119 --> 00:24:22,240
Speaker 2: money and that they don't need to go out to retail,

493
00:24:22,280 --> 00:24:24,479
Speaker 2: that they don't need to make etf that they just

494
00:24:24,520 --> 00:24:26,600
Speaker 2: have to find more good deals to employ all of

495
00:24:26,600 --> 00:24:28,320
Speaker 2: the premiums they're collecting from insurance.

496
00:24:28,840 --> 00:24:31,359
Speaker 5: Yeah, I think, like I said, we may see some

497
00:24:31,480 --> 00:24:34,160
Speaker 5: kind of bifurcation. I mean there's a question about how

498
00:24:34,200 --> 00:24:37,199
Speaker 5: popular annuities remain and if rates go lower and all

499
00:24:37,200 --> 00:24:39,159
Speaker 5: that stuff, and I don't have a view on that. Yeah,

500
00:24:39,240 --> 00:24:42,400
Speaker 5: what we see from other private credit lenders is they're

501
00:24:42,520 --> 00:24:46,280
Speaker 5: chasing retail money now because institutional investors are full on

502
00:24:46,320 --> 00:24:48,399
Speaker 5: private equity, which isn't given them their money back. You know,

503
00:24:48,400 --> 00:24:51,040
Speaker 5: they have hedge fund allocations, they have venture capital allocations,

504
00:24:51,280 --> 00:24:54,040
Speaker 5: and they say, hey, we're full on alternatives now. Insurance

505
00:24:54,080 --> 00:24:56,919
Speaker 5: is definitely a space where more money can come and

506
00:24:56,960 --> 00:25:00,720
Speaker 5: more diversification because it is so sticky and long term.

507
00:25:00,920 --> 00:25:02,560
Speaker 5: But there's a limit to that, and it may be

508
00:25:02,720 --> 00:25:05,800
Speaker 5: that to the partners go the spoils furnitures.

509
00:25:06,080 --> 00:25:10,159
Speaker 2: Tracy, I don't understand why doesn't every investing firm Heaven Insurance.

510
00:25:10,160 --> 00:25:12,080
Speaker 2: I mean, this is like Brookshire Hathaway, right, they just

511
00:25:12,080 --> 00:25:13,840
Speaker 2: collect all those premiums and they have all this money

512
00:25:13,880 --> 00:25:15,960
Speaker 2: that they can invest. It seems like such a big

513
00:25:16,000 --> 00:25:18,720
Speaker 2: advantage to Heaven Insurance and I know various hedge funds

514
00:25:18,760 --> 00:25:20,600
Speaker 2: they have their reinsurance thing is kind of similar. It

515
00:25:20,600 --> 00:25:22,520
Speaker 2: seems like such a huge advantage, Like you.

516
00:25:22,520 --> 00:25:25,239
Speaker 3: Should suggest it, Jack, we should have a make a

517
00:25:25,280 --> 00:25:26,800
Speaker 3: sales pitch a deck.

518
00:25:26,640 --> 00:25:28,760
Speaker 2: Like why would you be an investor without an insurance company?

519
00:25:28,800 --> 00:25:29,560
Speaker 2: I don't really get it.

520
00:25:29,720 --> 00:25:32,240
Speaker 3: The one thing I was thinking about, though, is just

521
00:25:32,280 --> 00:25:35,000
Speaker 3: going back to this lack of deals point. It kind

522
00:25:35,000 --> 00:25:37,159
Speaker 3: of feels like if you can't put your money in

523
00:25:37,680 --> 00:25:39,840
Speaker 3: good deals, like if you can't get a big enough

524
00:25:39,920 --> 00:25:44,199
Speaker 3: volume of those deals, then the temptation is presumably to

525
00:25:44,240 --> 00:25:46,560
Speaker 3: try to eke out more returns from the ones you

526
00:25:46,600 --> 00:25:49,879
Speaker 3: do get and apply of leverage. And that's again like

527
00:25:49,920 --> 00:25:52,480
Speaker 3: where some of the risks could come from. That's not

528
00:25:52,560 --> 00:25:55,000
Speaker 3: a question, that's just a point I will continue on.

529
00:25:55,200 --> 00:25:56,440
Speaker 5: Is that correct?

530
00:25:57,000 --> 00:25:59,920
Speaker 3: One thing I wanted to ask is you're obviously folks

531
00:26:00,400 --> 00:26:03,679
Speaker 3: on the financial stability aspect of all of this, but

532
00:26:03,760 --> 00:26:07,880
Speaker 3: I feel like there's been some macro impact from private

533
00:26:07,880 --> 00:26:10,159
Speaker 3: credit as well. And if you think about, you know,

534
00:26:10,240 --> 00:26:15,080
Speaker 3: financial stability is tied very much to fundamental economics, and

535
00:26:15,119 --> 00:26:17,879
Speaker 3: if the economy is good, then probably you're not going

536
00:26:17,920 --> 00:26:19,720
Speaker 3: to see a bunch of banks blowing up and that

537
00:26:19,840 --> 00:26:22,400
Speaker 3: sort of thing. But what are you watching in terms

538
00:26:22,440 --> 00:26:25,480
Speaker 3: of like the real world impact of private credit.

539
00:26:26,200 --> 00:26:29,080
Speaker 5: So there's absolutely a risk. It's almost a trope now

540
00:26:29,119 --> 00:26:31,480
Speaker 5: to say, like this stuff has not seen a downturn.

541
00:26:31,520 --> 00:26:33,400
Speaker 5: Private credit has not seen a downturn, and I don't

542
00:26:33,400 --> 00:26:35,240
Speaker 5: know what's going to happen to it in a downturn either.

543
00:26:35,760 --> 00:26:38,560
Speaker 5: So sorry, that's a terrible answer, But there obviously is

544
00:26:38,640 --> 00:26:41,639
Speaker 5: like a credit crisis type of risk to this, in

545
00:26:41,680 --> 00:26:43,720
Speaker 5: the same way there is for leverage lending, which you

546
00:26:43,720 --> 00:26:45,880
Speaker 5: know has held up well in the past. That's maybe,

547
00:26:46,080 --> 00:26:48,840
Speaker 5: you know, a good analogy. I think part of this

548
00:26:49,119 --> 00:26:53,600
Speaker 5: talk about stability. Private credit was really there to offset

549
00:26:54,280 --> 00:26:58,000
Speaker 5: the bank's hung loans problem in twenty twenty two, so

550
00:26:58,119 --> 00:27:00,879
Speaker 5: rates go from zero to five. Banks are sitting on

551
00:27:00,880 --> 00:27:02,760
Speaker 5: a ton on billions of dollars of hung loans, most

552
00:27:02,760 --> 00:27:06,640
Speaker 5: famously Twitter, and they're in the news again talk about

553
00:27:06,640 --> 00:27:09,520
Speaker 5: the benefits of being private Like everybody knew Morgan Stanley

554
00:27:09,560 --> 00:27:11,960
Speaker 5: had that Twitter a loan, like, so private credit was

555
00:27:12,000 --> 00:27:14,000
Speaker 5: really there to take a lot of deals and they

556
00:27:14,000 --> 00:27:16,719
Speaker 5: did a lot of refinancings in twenty twenty three. That

557
00:27:16,840 --> 00:27:19,520
Speaker 5: problem is sort of worked through on the bank side,

558
00:27:19,880 --> 00:27:21,520
Speaker 5: and now we're seeing the banks come back, and we're

559
00:27:21,560 --> 00:27:26,200
Speaker 5: seeing private credit do payment and kind modifications, do extend

560
00:27:26,240 --> 00:27:29,520
Speaker 5: and pretend type things. So the sort of longer part

561
00:27:29,560 --> 00:27:31,720
Speaker 5: of higher for longer, you know, it's like it goes

562
00:27:31,760 --> 00:27:33,560
Speaker 5: back to what I said about interest rate risk becoming

563
00:27:33,640 --> 00:27:36,119
Speaker 5: credit risk. We're sort of seeing that in private credit.

564
00:27:36,200 --> 00:27:39,119
Speaker 5: So in that sense, like it's nice that we have

565
00:27:39,240 --> 00:27:41,520
Speaker 5: these two side by side systems that can sort of

566
00:27:41,520 --> 00:27:45,119
Speaker 5: cushion each other, but as we've seen there increasingly becoming one.

567
00:27:45,840 --> 00:27:48,239
Speaker 2: I have one last question. It has nothing to do

568
00:27:48,320 --> 00:27:50,679
Speaker 2: actually with private credit, but I figure you're here and

569
00:27:50,720 --> 00:27:52,840
Speaker 2: I think you might have some thoughts on this topic.

570
00:27:53,600 --> 00:27:56,520
Speaker 2: We did an episode probably about two months or so

571
00:27:56,640 --> 00:28:01,000
Speaker 2: ago about stable client and we saw recently Stripe made

572
00:28:01,000 --> 00:28:03,879
Speaker 2: a one point one billion dollar acquisition of a stable

573
00:28:03,920 --> 00:28:07,960
Speaker 2: coin companies. There are some I think issues related to

574
00:28:08,000 --> 00:28:11,439
Speaker 2: financial stability related to stable coins, because anytime you have

575
00:28:11,520 --> 00:28:14,880
Speaker 2: an asset or a product that's pegged one to one

576
00:28:14,880 --> 00:28:16,920
Speaker 2: against the dollar, we all, you know, we can talk

577
00:28:16,920 --> 00:28:20,000
Speaker 2: about money markets all the time, but actually have like

578
00:28:20,040 --> 00:28:23,480
Speaker 2: a separate question than financial stability related to stable coins.

579
00:28:23,920 --> 00:28:28,159
Speaker 2: Do you, as a researcher in how the financial system works.

580
00:28:28,680 --> 00:28:32,120
Speaker 2: Take them seriously as something that will be important for

581
00:28:32,320 --> 00:28:34,560
Speaker 2: payments in the financial system going forward.

582
00:28:35,240 --> 00:28:37,320
Speaker 5: I'm going to hit you with another trope, which is

583
00:28:37,359 --> 00:28:40,280
Speaker 5: that I think the tech is good, the product is not.

584
00:28:40,760 --> 00:28:42,680
Speaker 5: I think this is another area where the big banks

585
00:28:42,680 --> 00:28:45,560
Speaker 5: will win. I mean, it'll be it'll be a stable

586
00:28:45,560 --> 00:28:50,200
Speaker 5: coin technology, but like now we don't actually experience ACCH

587
00:28:50,400 --> 00:28:54,760
Speaker 5: versus you know, fed wire versus whatever else. It'll be

588
00:28:54,840 --> 00:28:58,600
Speaker 5: that it's the right technology, But the ultimate question is

589
00:28:58,680 --> 00:29:01,280
Speaker 5: payment in what? And you don't want the answer of

590
00:29:01,320 --> 00:29:03,800
Speaker 5: that question to be USDC, like you want it to

591
00:29:03,840 --> 00:29:05,360
Speaker 5: be a deposit that.

592
00:29:05,440 --> 00:29:07,840
Speaker 2: I mean, I guess. My thing is, like, you know,

593
00:29:07,880 --> 00:29:10,720
Speaker 2: I actually buy kind of the argument from the stable

594
00:29:10,800 --> 00:29:14,920
Speaker 2: coin advocates that like it solves a lot of problems

595
00:29:14,960 --> 00:29:18,400
Speaker 2: with tech interoperability, that it could never you will never

596
00:29:18,520 --> 00:29:23,040
Speaker 2: get a sort of blockchain type solution from all the

597
00:29:23,040 --> 00:29:25,360
Speaker 2: big banks working together because of you know, lack of

598
00:29:25,400 --> 00:29:27,880
Speaker 2: trust or whatever it else. Like I buy that, but

599
00:29:27,920 --> 00:29:31,120
Speaker 2: I guess, like I guess to your point, specifically, I

600
00:29:31,160 --> 00:29:36,280
Speaker 2: don't know how big ultimately that demand will be, especially

601
00:29:36,360 --> 00:29:38,720
Speaker 2: since you put it away from most payments in most

602
00:29:38,760 --> 00:29:41,520
Speaker 2: of the world, these things are pretty abstracted away. I

603
00:29:41,520 --> 00:29:43,160
Speaker 2: would I don't know most I don't want to like

604
00:29:43,240 --> 00:29:46,040
Speaker 2: jump to conclusions because I know there are underdeveloped banking systems,

605
00:29:46,360 --> 00:29:48,160
Speaker 2: but for much of the world, for much of the

606
00:29:48,160 --> 00:29:51,560
Speaker 2: wealthy world, a lot of these problems are completely seem

607
00:29:51,560 --> 00:29:52,360
Speaker 2: abstracted away.

608
00:29:52,760 --> 00:29:54,760
Speaker 5: The other challenge is to go find a bunch of

609
00:29:54,840 --> 00:29:57,880
Speaker 5: safe assets to invest in. You know, if you're replacing

610
00:29:58,320 --> 00:30:00,480
Speaker 5: trillions of dollars of payments, you have to go find

611
00:30:00,480 --> 00:30:01,960
Speaker 5: a bunch of safe facets. And that's why we run

612
00:30:02,000 --> 00:30:03,880
Speaker 5: this through banks, because they don't have to find safe acets.

613
00:30:03,880 --> 00:30:04,840
Speaker 5: They can back to positive.

614
00:30:04,920 --> 00:30:08,120
Speaker 2: Yeah, Stephen Kelly, thank you so much for coming on AVAS.

615
00:30:08,160 --> 00:30:08,640
Speaker 4: That was great.

616
00:30:08,680 --> 00:30:11,080
Speaker 2: You answered a bunch of questions. I think that, least

617
00:30:11,080 --> 00:30:12,920
Speaker 2: in my head had been lingering for a long time.

618
00:30:13,240 --> 00:30:26,000
Speaker 4: Thanks guys.

619
00:30:27,040 --> 00:30:28,560
Speaker 2: Steven is so good. He's so clear.

620
00:30:29,440 --> 00:30:31,800
Speaker 3: Yes he is. It's always good to catch up with him.

621
00:30:32,080 --> 00:30:35,880
Speaker 3: I mean, I do think like the circular nature of

622
00:30:35,960 --> 00:30:39,640
Speaker 3: the leverage is obviously a concern. Again, like we're talking

623
00:30:39,640 --> 00:30:43,480
Speaker 3: about relatively small volumes right now, but it feels like

624
00:30:43,920 --> 00:30:46,400
Speaker 3: it could become problematic at some point.

625
00:30:46,880 --> 00:30:49,360
Speaker 2: It's interesting. I kind of forget when I think about

626
00:30:49,360 --> 00:30:52,160
Speaker 2: two thousand and eight and two thousand and nine, how

627
00:30:52,240 --> 00:30:55,840
Speaker 2: much of those first like tremors, I guess of the crisis.

628
00:30:56,200 --> 00:30:59,520
Speaker 2: We're literally you know, non banks. And I think you know,

629
00:30:59,600 --> 00:31:03,280
Speaker 2: people ever talk about those bear Sterns hedge funds that

630
00:31:03,440 --> 00:31:05,560
Speaker 2: blew up. Yeah, that was the start, but that was

631
00:31:05,600 --> 00:31:07,800
Speaker 2: like really kind of I mean, there was the quant quake,

632
00:31:07,880 --> 00:31:09,800
Speaker 2: what was that late two thousand and six, and that

633
00:31:09,920 --> 00:31:11,960
Speaker 2: was sort of freaked the market out a little bit,

634
00:31:12,080 --> 00:31:14,400
Speaker 2: But then it was really like those bear Sterns hedge funds,

635
00:31:14,840 --> 00:31:16,720
Speaker 2: and then you know, you mentioned the city line and

636
00:31:16,800 --> 00:31:18,920
Speaker 2: just this idea that they had these banks, they had

637
00:31:18,920 --> 00:31:22,280
Speaker 2: these off balance sheet vehicles, probably for many of the

638
00:31:22,320 --> 00:31:25,280
Speaker 2: reasons that you know, the same reasons that shadow banks

639
00:31:25,480 --> 00:31:28,520
Speaker 2: or private credit or multi strategy hedge funds exist today,

640
00:31:28,960 --> 00:31:31,920
Speaker 2: less capital intensive vehicles, and then they felt the need

641
00:31:32,000 --> 00:31:35,280
Speaker 2: to bring them on maybe for reputational reasons. I think

642
00:31:35,320 --> 00:31:37,760
Speaker 2: that's like a really interesting history that gets forgotten about.

643
00:31:37,840 --> 00:31:40,600
Speaker 3: No, you're absolutely right, and money market funds as well.

644
00:31:40,720 --> 00:31:43,320
Speaker 3: When they broke the book. You know, the other thing

645
00:31:43,360 --> 00:31:46,440
Speaker 3: I was thinking about was just this idea of again

646
00:31:46,560 --> 00:31:49,640
Speaker 3: liquid wrappers on ill liquid assets and I kind of

647
00:31:49,640 --> 00:31:52,840
Speaker 3: think like the ultimate expression of shadow banking has to

648
00:31:52,880 --> 00:31:56,520
Speaker 3: be someone putting an etf rapper like private credit.

649
00:31:57,000 --> 00:31:59,239
Speaker 2: It's so perfect. They always find a way to do that.

650
00:31:59,280 --> 00:32:02,320
Speaker 2: They always find we're going to get the ill liquidity premium,

651
00:32:02,360 --> 00:32:04,800
Speaker 2: and then we're going to still give you the liquidity.

652
00:32:05,000 --> 00:32:08,520
Speaker 2: I think one of the most important points that Steven makes,

653
00:32:08,560 --> 00:32:10,760
Speaker 2: and I've heard him make it before, is just this

654
00:32:10,880 --> 00:32:16,000
Speaker 2: idea that the key scarcity in the financial system is

655
00:32:16,480 --> 00:32:19,280
Speaker 2: cash that's willing to be locked up, right, cash that's

656
00:32:19,280 --> 00:32:22,040
Speaker 2: willing to not be sold in an instant or in

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00:32:22,080 --> 00:32:25,840
Speaker 2: a demand deposit. And so there is therefore then this

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00:32:26,040 --> 00:32:29,800
Speaker 2: natural constraint on how much, say a private credit firm

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00:32:29,840 --> 00:32:33,520
Speaker 2: could take away from the banking system, because in the end, banks,

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00:32:33,520 --> 00:32:36,400
Speaker 2: as we know, as you mentioned, are very levered. How

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00:32:36,400 --> 00:32:39,200
Speaker 2: do you recreate that leverage? How do you satisfy the

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00:32:39,240 --> 00:32:43,720
Speaker 2: financing demands of the real economy given this constraint and

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00:32:43,840 --> 00:32:46,280
Speaker 2: locked up capital. I think it's just a really important

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00:32:46,320 --> 00:32:47,360
Speaker 2: concept to keep in mind.

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00:32:47,480 --> 00:32:49,640
Speaker 3: Yeah, all right, well, shall we leave it there.

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00:32:49,720 --> 00:32:50,440
Speaker 2: Let's leave it there.

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00:32:50,600 --> 00:32:53,360
Speaker 3: This has been another episode of the All Blots podcast.

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00:32:53,480 --> 00:32:56,640
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway and.

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00:32:56,640 --> 00:33:00,000
Speaker 2: I'm Jill Wisenthal. You can follow me at the Stalwart Fellows,

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Speaker 2: Stephen Kelly at Stephen Kelly forty nine, follow our producers

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Speaker 2: Carmen Rodriguez at Carman Arman, Dashel Bennett at Dashbot and

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Speaker 2: Kell Brooks at Keilbrooks. Thank you to our producer Moses ONEm.

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Speaker 4: In