WEBVTT - Bloomberg Wall Street Week - May 3rd, 2024 0:00:00.280 --> 0:00:02.599 This is Bloomberg Wall Street Week. 0:00:02.680 --> 0:00:07.040 The global push into infrastructure, breaking the IPO logjam in text. 0:00:07.160 --> 0:00:10.640 The financial stories that shape are work cutting inflation without 0:00:10.640 --> 0:00:13.240 losing jobs. Do we need rate cuts? And if so, 0:00:13.400 --> 0:00:16.120 how many? Investing in a time of geopolitical turmoil. 0:00:16.200 --> 0:00:18.560 Through the eyes of the most influential voices. 0:00:18.720 --> 0:00:22.480 Ten Rogueff economists of Harvard, former FDIC had Shila Bert 0:00:22.680 --> 0:00:27.360 ge CEO, Larry Kulp, San Francisco FED President Mary Daily, Bloomberg. 0:00:26.840 --> 0:00:30.480 Wall Street Week with David Weston from Bloomberg Radio. 0:00:30.280 --> 0:00:33.800 Shuttle diplomacy in the Middle East, protests on college campuses, 0:00:34.000 --> 0:00:36.720 and the FED pretty much stays the course for now. 0:00:37.360 --> 0:00:40.800 This is Bloomberg Wall Street Week. I'm David Weston. This 0:00:40.880 --> 0:00:43.760 week Josh Easterly of Sixth Street on private credit and 0:00:43.840 --> 0:00:46.240 investing in professional sports. 0:00:45.600 --> 0:00:46.680 The fundamentals of sports. 0:00:46.880 --> 0:00:49.320 It's great And if sny beche loss of Rock Creek 0:00:49.479 --> 0:00:53.040 on what US dominance means for emerging market investments. 0:00:53.479 --> 0:00:56.360 Maybe we shouldn't even be using the term emerging Marcus 0:00:56.400 --> 0:00:58.520 because they've diverged from each other so much. 0:01:11.440 --> 0:01:14.280 But we start with all those important data coming out 0:01:14.319 --> 0:01:16.680 this week, and we turn to our very special contribute 0:01:16.720 --> 0:01:18.840 here on Waltreet Week. He is Larry Summers of Harvard, 0:01:19.000 --> 0:01:22.600 So Larry, welcome back. It's been a very consequential week. 0:01:23.120 --> 0:01:25.399 We of course had the FED chair giving a news 0:01:25.400 --> 0:01:28.039 conference with the decision, We had ECI data, and then 0:01:28.040 --> 0:01:29.800 we have the jobs numbers at the end. What do 0:01:29.840 --> 0:01:30.399 you make of it all? 0:01:30.959 --> 0:01:34.000 Look, there's been a lot of movement, but I don't 0:01:34.040 --> 0:01:37.600 know that we're in a fundamentally different place than we 0:01:37.600 --> 0:01:42.040 were at the beginning of the week. We have been 0:01:42.120 --> 0:01:47.600 realizing now for several months that disinflation is not on 0:01:47.640 --> 0:01:51.000 the secure path that the Fed had hoped it would 0:01:51.000 --> 0:01:55.840 be a few months ago. That's why the market has 0:01:56.000 --> 0:02:00.640 moved to go from six cuts this year to about 0:02:00.680 --> 0:02:04.600 one cut this year. And that has been a broadly 0:02:04.640 --> 0:02:08.480 appropriate move on the part of the market. And it 0:02:08.520 --> 0:02:11.880 was a blunder, frankly, of the Fed to be as 0:02:11.960 --> 0:02:18.200 confident as it was about the prospect of disinflation. If 0:02:18.240 --> 0:02:21.040 you add up this week's numbers, what did you get? 0:02:21.160 --> 0:02:26.560 You got an ECI that was disturbing on the high side, 0:02:27.080 --> 0:02:31.720 suggesting that wage inflation wasn't coming down, that service sector 0:02:31.760 --> 0:02:35.040 inflation wasn't likely to be coming down, and the way 0:02:35.120 --> 0:02:40.320 people hoped. You got a housing number suggesting more housing 0:02:40.360 --> 0:02:44.079 inflation than many people had been expecting in the presence 0:02:44.120 --> 0:02:50.160 of seven percent mortgages, and then you got a relatively 0:02:50.440 --> 0:02:58.760 soft number this morning and some corroborative ism evidence for 0:02:58.880 --> 0:03:02.520 that that reminds everybody that the economy may well not 0:03:02.600 --> 0:03:07.160 be on fire, that inflation may not accelerate. So I 0:03:07.200 --> 0:03:09.680 think you're at the end of it all about where 0:03:09.720 --> 0:03:15.080 you were at the beginning of the week, with a 0:03:15.320 --> 0:03:20.680 sense that the most likely thing is no cut or 0:03:20.760 --> 0:03:24.680 a little bit of cutting this year. That there's some 0:03:25.000 --> 0:03:31.680 risk that, as sometimes happens, the economy will slide off suddenly, 0:03:32.200 --> 0:03:36.600 But probably greater than that risk is the no landing 0:03:36.760 --> 0:03:44.200 kind of scenario where inflation remains robust. So I think 0:03:44.240 --> 0:03:47.800 everybody's going to have to be watching all this data 0:03:49.080 --> 0:03:54.280 very closely and ironically, the more we learn, it's not 0:03:54.320 --> 0:03:58.080 really true that the more we know in terms of 0:03:58.160 --> 0:04:00.240 the uncertainties. 0:04:00.280 --> 0:04:02.960 About the economy at this point. 0:04:03.480 --> 0:04:05.960 So I suspect the share power would agree with you, 0:04:06.000 --> 0:04:08.640 we need more data. He likes to wait for data, 0:04:08.680 --> 0:04:10.120 and he's the data dependent. 0:04:09.760 --> 0:04:10.360 As they say. 0:04:10.480 --> 0:04:12.160 At the same time, what I took away at least 0:04:12.160 --> 0:04:14.520 from his news conference this week was a little bit 0:04:14.520 --> 0:04:16.800 different from the no landing possibility. It was sort of 0:04:16.800 --> 0:04:18.520 we're on the right course, it's just going to take 0:04:18.560 --> 0:04:20.800 us longer to get there. We are restrictive in what 0:04:20.839 --> 0:04:23.000 we're doing, and we will get there and we don't 0:04:23.040 --> 0:04:25.839 need to consider hikes. Is that a fair interpretation what 0:04:25.920 --> 0:04:28.960 he said? And if so, is that where he should be. 0:04:29.640 --> 0:04:34.160 He's much more confident the policy is restrictive than is 0:04:34.240 --> 0:04:38.680 warranted in light of the various factors we've talked about 0:04:38.720 --> 0:04:42.040 pushing up the neutral interest rate, in light of good 0:04:42.080 --> 0:04:47.240 reasons to think that spending may be less intrasensitive than 0:04:47.360 --> 0:04:53.440 had previously been supposed, because, for example, higher interest rates 0:04:53.480 --> 0:04:56.839 with all the government's short term debt mean more income 0:04:57.800 --> 0:05:01.080 for people. I think that the Chair is making a 0:05:01.160 --> 0:05:07.520 mistake if he is confident that policy is meaningfully restrictive. 0:05:08.320 --> 0:05:10.240 Right now. 0:05:10.720 --> 0:05:14.320 So yeah, I have never said that I expect the 0:05:14.400 --> 0:05:17.720 next move to be a hike. I just think there's 0:05:17.839 --> 0:05:22.000 more of a possibility that that's going to be necessary 0:05:22.600 --> 0:05:25.960 than I think. He has been the view at the FED, 0:05:26.080 --> 0:05:34.880 and to some extent has been the view in the markets. 0:05:34.760 --> 0:05:37.279 A HILARI. Besides the data, the wealth of data that 0:05:37.320 --> 0:05:40.000 came in. A big topic in the news this week 0:05:40.240 --> 0:05:42.920 was the Japanese yen and what's going on exactly the yen, 0:05:43.040 --> 0:05:45.919 whether the government there is intervening or not intervening to 0:05:45.960 --> 0:05:47.919 sort of support the end when it went up to 0:05:47.960 --> 0:05:51.159 one to sixty. Actually, you have some experience with intervention 0:05:51.440 --> 0:05:53.919 and currencies. Give us where you think we are right now. 0:05:53.960 --> 0:05:55.599 And of course this is related to the FED, because 0:05:55.600 --> 0:05:58.080 part of the issue is if the FED stays higher 0:05:58.080 --> 0:06:00.159 for longer, it supports the strength of the US. 0:06:00.080 --> 0:06:05.280 Dollar given the massive size of the capital Marcus, I 0:06:05.320 --> 0:06:11.200 think the evidence is reasonably clear that intervention doesn't work, 0:06:11.800 --> 0:06:14.560 even in the scales that the Japanese engaged in. 0:06:15.200 --> 0:06:18.920 It's just overwhelmed by the broad. 0:06:18.720 --> 0:06:25.679 Magnitude of private sector capital flows. That said, nations tend 0:06:25.680 --> 0:06:31.680 to intervene when currencies have gotten very far from normal levels, 0:06:31.720 --> 0:06:34.800 and when they've gotten very far from normal levels, they 0:06:34.920 --> 0:06:40.000 sometimes bounce back. So I wouldn't want to confidently presume 0:06:40.560 --> 0:06:44.680 that the end will devalue further from here. 0:06:45.080 --> 0:06:46.440 It could go either way. 0:06:46.839 --> 0:06:50.080 But even if the end does appreciate, I'm going to 0:06:50.360 --> 0:06:54.120 attribute that much more to snapback. Then I'm going to 0:06:54.120 --> 0:06:58.680 attribute it to the efficacy of intervention. But I think 0:06:58.720 --> 0:07:03.320 this points up in important issue, which is that the 0:07:03.440 --> 0:07:08.320 dollar is extremely strong right now. That's been a factor 0:07:08.400 --> 0:07:13.800 that's contributed to our relatively favorable inflation performance. 0:07:14.960 --> 0:07:18.640 I'm sad to say the disputes on college campuses growing 0:07:18.680 --> 0:07:21.640 out of the Israeli Gods' situation have continued some ways 0:07:21.680 --> 0:07:24.240 have gotten worse. Actually this week we saw police going 0:07:24.240 --> 0:07:26.480 in various places here in New York at Columbia, but 0:07:26.520 --> 0:07:29.360 across the country. You've been outspoken in the past on 0:07:29.400 --> 0:07:32.040 this issue as a former college president, yourself at Harvard 0:07:32.320 --> 0:07:35.400 and is now a scholar at Harvard. What do you 0:07:35.440 --> 0:07:37.880 think is going on? And more important, perhaps what should 0:07:37.960 --> 0:07:40.680 the colleges be doing? What should the leadership be doing? 0:07:40.800 --> 0:07:41.280 Right now? 0:07:41.600 --> 0:07:45.920 This is very depressing and worrisome to me. As I've 0:07:45.960 --> 0:07:49.160 said on your show before, David, I think the United 0:07:49.240 --> 0:07:53.600 States is in the most dangerous geopolitical moment we've been 0:07:54.320 --> 0:07:59.960 in probably two generations, given what's happening in China, Russia, 0:08:00.240 --> 0:08:04.120 rod North Korea, and so forth. And it seems to 0:08:04.160 --> 0:08:07.800 me that anybody sitting in one of those countries has 0:08:07.880 --> 0:08:13.920 to be taking great encouragement from the spectacle that is 0:08:13.960 --> 0:08:19.240 being made by our young future elits on so many 0:08:19.320 --> 0:08:24.720 of our leading college campuses, and even more by the 0:08:24.880 --> 0:08:31.800 craven responses that are typifying university leaderships. 0:08:32.559 --> 0:08:34.320 Larry, thank you so very much for being with us, 0:08:34.320 --> 0:08:36.679 says Larry Summer is our special contributor here on at 0:08:36.679 --> 0:08:39.920 Wall Street Week. The equity markets dipped in the middle 0:08:39.920 --> 0:08:41.920 of the league, but came back on Friday, as the 0:08:41.920 --> 0:08:44.160 S and P five hundred added just over half a 0:08:44.160 --> 0:08:46.400 percent for the week to end at fifty one to 0:08:46.400 --> 0:08:49.400 twenty eight. That is just under the Bloomberg Elves consensus 0:08:49.559 --> 0:08:52.400 year end number of fifty one to seventy. The NAZAC 0:08:52.440 --> 0:08:54.800 had a particularly good week, adding one point four to 0:08:54.800 --> 0:08:57.400 three percent, while the yield on the tenure was down 0:08:57.520 --> 0:09:01.040 almost sixteen basis points, closing the way at four point 0:09:01.120 --> 0:09:03.320 five to one percent. Here to take us through it 0:09:03.360 --> 0:09:07.440 all is David Bianco, DWS Equities CIO for Americas. There's David. 0:09:07.480 --> 0:09:09.240 Welcome back. Always great to have you, Thanks for having me. 0:09:09.360 --> 0:09:11.000 Let's start with the jobs. There's a lot of data 0:09:11.040 --> 0:09:12.920 this week. Let's start with the jobs numbers. What did 0:09:13.000 --> 0:09:14.800 they tell you? What did they tell us about where 0:09:14.840 --> 0:09:15.680 we are in the economy. 0:09:15.720 --> 0:09:18.600 It was a really big week and that was a 0:09:18.640 --> 0:09:21.920 very powerful segment from Larry Summers and difficult to follow. 0:09:22.520 --> 0:09:26.120 The Job's report was one of the indicators that we 0:09:26.160 --> 0:09:29.080 got during the week that the economy is slowing, but 0:09:29.120 --> 0:09:32.120 it's still a healthy economy. Employment is still strong, and 0:09:32.160 --> 0:09:36.120 the employment market is still tight. But the FED should 0:09:36.120 --> 0:09:38.680 get a little bit of help from a slowing economy. 0:09:39.000 --> 0:09:40.960 That said, I very much agree with what Larry said 0:09:41.040 --> 0:09:43.480 regarding the Fed and many other things that the Fed 0:09:43.480 --> 0:09:46.280 shouldn't take this slowing for granted. Has mean that inflation 0:09:46.360 --> 0:09:48.200 is going to keep working its way down. They need 0:09:48.280 --> 0:09:50.240 to keep an eye on this risk because the risk 0:09:50.280 --> 0:09:52.840 of inflation staying above their two percent target is still 0:09:52.920 --> 0:09:55.480 very much with us. But the good news this week 0:09:55.800 --> 0:09:58.840 was relief in the bond market. We saw yields across 0:09:58.880 --> 0:10:02.280 the curve come down, especially toward the end of the week, 0:10:02.760 --> 0:10:06.720 and that rally and fixed income rally in equity markets 0:10:06.800 --> 0:10:09.360 upon that lower yield environment. 0:10:09.559 --> 0:10:11.360 What we saw is that May. 0:10:11.960 --> 0:10:16.800 Followed a tough April April showers brought in some mayflowers early. 0:10:16.920 --> 0:10:20.000 Months early in the month. A month so I talked 0:10:20.000 --> 0:10:23.040 about about growth, you said, it's a slowing economy. We 0:10:23.240 --> 0:10:26.360 heard share J. Powell this week say he doesn't see stagflation, 0:10:26.440 --> 0:10:28.920 doesn't need the stag, he doesn't see the flation. Are 0:10:29.000 --> 0:10:31.640 you all concerned about really slowing growth to such a 0:10:31.640 --> 0:10:33.280 degree they should be worried about the economy. 0:10:34.040 --> 0:10:35.600 I'm not worried about the economy yet. 0:10:36.360 --> 0:10:39.800 I would have to really see the job's growth number 0:10:39.800 --> 0:10:41.920 fall below one hundred thousand before I really started getting 0:10:41.920 --> 0:10:45.000 worried about jobs. And the economy is very resilient because 0:10:45.040 --> 0:10:47.839 it's a service oriented economy, and we already went through 0:10:47.840 --> 0:10:51.360 a good amount of inventory liquidation and correction already, and 0:10:51.360 --> 0:10:53.800 that often is a cause of at least small. 0:10:53.520 --> 0:10:55.160 Recession, so a lot of risks. 0:10:55.320 --> 0:10:58.160 There are always tail risks, but this economy I think 0:10:58.200 --> 0:11:01.599 has a real safe distance away from a recession. And 0:11:02.160 --> 0:11:04.120 because of that, I think the fitches stay focus on 0:11:04.200 --> 0:11:08.160 making sure inflation keeps on working its way down to target. 0:11:08.559 --> 0:11:11.880 But things have slowed down. I would say US GDP 0:11:12.000 --> 0:11:13.720 growth is still in a two probably a little bit 0:11:13.720 --> 0:11:17.600 above of two percent trend, and that's healthy, but inflation 0:11:18.000 --> 0:11:21.040 relative to that growth rate is still too high. 0:11:21.720 --> 0:11:23.040 Earnings this season. 0:11:24.360 --> 0:11:27.800 We're another encouraging part of the week, really good news 0:11:27.800 --> 0:11:30.560 out of most tech companies, not bad news, but not 0:11:30.760 --> 0:11:32.480 as good as hoped out of the non tech company. 0:11:32.520 --> 0:11:34.640 We'll talk about that specifically. We've had such a fibrication 0:11:34.800 --> 0:11:37.440 in the SPP five hundred and the stock market generally 0:11:37.480 --> 0:11:40.080 on that. What about earnings for the top guys, the 0:11:40.080 --> 0:11:41.840 big tech asppose of the rest? How do they com 0:11:41.840 --> 0:11:42.319 bear well? 0:11:42.600 --> 0:11:44.760 The biggest or what I call the Grade eight, which 0:11:44.760 --> 0:11:49.080 would cut across big cap tech and communication stocks and 0:11:49.120 --> 0:11:53.520 a couple of consumer discretionary companies. These great eight companies 0:11:53.640 --> 0:11:56.080 continue to lead the market upward, and their earnings growth 0:11:56.120 --> 0:11:59.360 will be over fifty percent on a year on year basis, 0:11:59.360 --> 0:12:01.920 whereas the other four hundred and ninety two companies of 0:12:01.960 --> 0:12:05.160 the s and P only about two percent Ernie's growth 0:12:05.240 --> 0:12:09.240 year on year. So it's a bifurcated market. We're here 0:12:09.280 --> 0:12:13.600 in a bunch of consumer oriented companies, staples, retailers, fast 0:12:13.600 --> 0:12:17.160 food companies saying they're seeing a slowdown, nothing falling off 0:12:17.160 --> 0:12:20.480 a cliff, but slow down and their customers more price conscious. 0:12:20.600 --> 0:12:22.240 David, it's always great to have you here. Thank you 0:12:22.240 --> 0:12:25.320 so much for being here. That's David Bianco of DWS 0:12:26.960 --> 0:12:30.400 coming up, investing in professional sports as an asset class. 0:12:30.640 --> 0:12:33.000 We talk with Josh Easterly of Sixth Street. 0:12:33.760 --> 0:12:36.840 It's recession proof, content, super valuable. 0:12:38.360 --> 0:12:40.720 That's next on Wall Street Week on Bloomberg. 0:12:44.520 --> 0:12:48.760 This is Bloomberg Wall Street Week with David Weston from 0:12:48.880 --> 0:12:49.800 Bloomberg Radio. 0:12:56.400 --> 0:12:59.520 This is Wall Street Week. I'm David Weston. Professional sports 0:12:59.559 --> 0:13:02.360 has wrapped gone from something the very wealthy do for 0:13:02.520 --> 0:13:05.559 fun and prestige to a serious asset class in its 0:13:05.600 --> 0:13:07.800 own right. One of those at the front of the 0:13:07.880 --> 0:13:10.520 sports as an investment movement is Sixth Street and we 0:13:10.600 --> 0:13:13.800 welcome now it's co founding partner, co president and co CIO. 0:13:13.920 --> 0:13:16.160 He is Josh Easterly. Josh, welcome, It's great to have 0:13:16.200 --> 0:13:16.800 you on Wall Street. 0:13:16.760 --> 0:13:18.400 Well, David, thanks for having me here. 0:13:18.480 --> 0:13:20.600 So let's talk about this investing in sports. As I say, 0:13:20.600 --> 0:13:23.520 it's become a real asset class for investment. How is 0:13:23.559 --> 0:13:25.960 that developed? It seems to have happened fairly quickly. 0:13:26.679 --> 0:13:29.680 I don't know if it's fairly quickly or or or 0:13:30.160 --> 0:13:33.079 a long over a long time. The fundamentals are sports 0:13:33.400 --> 0:13:38.880 is great. It's recession proof, content super valuable in a 0:13:38.960 --> 0:13:44.560 day and age where you're doing where there's streaming and 0:13:44.600 --> 0:13:47.560 so life content is super valuable. And what Sixth Street 0:13:47.559 --> 0:13:51.120 we alway does is we finance the ecosystem. So like 0:13:51.240 --> 0:13:53.280 all the things we do at Sixth Street, we pick 0:13:53.360 --> 0:13:56.640 the best risk reward and some of those we buy assets, 0:13:56.720 --> 0:13:58.599 some of them we finance assets. And I'm happy to 0:13:58.600 --> 0:13:59.120 talk about that. 0:13:59.240 --> 0:14:03.079 Well, I'm curious about that that very question, debt versus equity, 0:14:03.240 --> 0:14:04.240 because you've done both. 0:14:04.320 --> 0:14:04.920 We've done both. 0:14:04.960 --> 0:14:07.160 You have equity in some teams, you also have taken 0:14:07.200 --> 0:14:08.920 debt positions. How do you make that decision? 0:14:09.440 --> 0:14:11.640 I think that what offers the best fisk reward. So 0:14:12.200 --> 0:14:14.839 for example, where the owner of the franchise the Bay 0:14:14.840 --> 0:14:18.960 Area Football Club in San Francisco on the Women's Soccer League, 0:14:19.200 --> 0:14:22.960 that was a new franchise, so we stood up that franchise. 0:14:23.880 --> 0:14:28.040 And then on Real Madrid, for example, we financed the stadium. 0:14:28.200 --> 0:14:31.320 Bernabo was redoing that stadium and we provided financing. And 0:14:32.160 --> 0:14:36.000 FC Barcelona we bought Metea rites and then the Santas 0:14:36.000 --> 0:14:39.200 Spurs were a minority equity owner and partners with the 0:14:39.280 --> 0:14:41.000 owners there. So we've done it all. 0:14:41.600 --> 0:14:43.680 You refer to something that it strikes me certain the 0:14:43.760 --> 0:14:46.720 United States and Also in Europe, we've seen the ancillary 0:14:46.760 --> 0:14:49.360 businesses around the sports teams. It's not just the sports 0:14:49.400 --> 0:14:51.920 team anymore then, even with the sports meetings, winning or not, 0:14:52.080 --> 0:14:54.680 but they're also an ancillary business, often around the stadium 0:14:54.680 --> 0:14:57.920 as you have in Madrid. So how do you decide 0:14:58.280 --> 0:15:01.800 how valuable the an businesses around the team? 0:15:02.320 --> 0:15:05.320 So they're super valuable, there's revenue streams in those businesses. 0:15:05.400 --> 0:15:07.480 We own a business with the Cowboys and the Yankees 0:15:07.600 --> 0:15:14.000 called Legends, which provides services to that ecosystem. And that 0:15:14.120 --> 0:15:19.600 ecosystem is growing because their sports owners are trying to 0:15:19.600 --> 0:15:23.840 find different ways to monetize the asset they own sports 0:15:23.840 --> 0:15:26.560 team owners and that could be through concessions, that could 0:15:26.560 --> 0:15:29.920 be through merchandise, and so Legends is our platform that 0:15:29.960 --> 0:15:32.560 we get to participated in that trend. 0:15:33.320 --> 0:15:35.560 Is there a continuing demand for more capital on the 0:15:35.560 --> 0:15:37.560 part of team owners, that is to say, we need 0:15:37.600 --> 0:15:39.400 to raise more capital so we can invest it back 0:15:39.400 --> 0:15:41.240 into some of those ancillary businesses. 0:15:41.520 --> 0:15:44.960 Yeah, so capital. Think about COVID. Take a step back 0:15:44.960 --> 0:15:48.760 and think about COVID for a second. The government supported 0:15:48.760 --> 0:15:51.360 a whole bunch of small businesses. The one sector they 0:15:51.360 --> 0:15:56.120 did not sport, was live sports and so in that 0:15:56.160 --> 0:15:58.320 moment in time, there was a need for capital, and 0:15:58.360 --> 0:16:01.400 that capital still exists. I think sports owners want to 0:16:01.440 --> 0:16:06.560 make the product better for the fans, and so Legends 0:16:06.560 --> 0:16:08.240 is a part of that. Sixth Streets a part of that, 0:16:08.400 --> 0:16:10.400 and it's been a good theme for us. 0:16:10.600 --> 0:16:14.480 What's next? How big can this grow sports investment? 0:16:15.200 --> 0:16:18.240 I think that ecosystem can continually. There's more opportunity in 0:16:18.240 --> 0:16:21.920 that ecosystem, for sure, so I think, and it's going 0:16:21.960 --> 0:16:27.160 to need more capital. And that ecosystem historically hasn't had 0:16:27.200 --> 0:16:31.680 institutional money and now is opening up to institutional money. 0:16:31.840 --> 0:16:33.400 So I think it will continue to grow. 0:16:33.240 --> 0:16:35.520 In any market, I think some things are fully priced 0:16:35.520 --> 0:16:37.480 and some things aren't. And you look for things that 0:16:37.520 --> 0:16:40.280 are not yet fully priced. Where do you see opportunities 0:16:40.280 --> 0:16:42.920 that maybe are not fully priced in the sports area, Well, I. 0:16:42.920 --> 0:16:44.960 Think that's so. I think that's for us. That's a 0:16:45.000 --> 0:16:47.640 really unique thinking about Sixth Street is, as you point out, 0:16:48.400 --> 0:16:51.800 if capitalism is working, things get fully priced and it 0:16:51.800 --> 0:16:54.680 goes through cycles and then they feel cheap and being 0:16:54.720 --> 0:16:58.080 able to have flexible capital across the capital structure, from 0:16:58.120 --> 0:17:02.400 buying assets to buying revenues, streams the financiing stadiums to 0:17:02.520 --> 0:17:07.280 buying teams to do a minority and majority control investments. 0:17:07.440 --> 0:17:09.760 I think that's the power of the platform is we 0:17:09.800 --> 0:17:12.879 can actually, you know, when things become fully priced, we 0:17:12.920 --> 0:17:15.600 can move on. Who do you compete with all different 0:17:15.640 --> 0:17:18.720 types of people? That being said, there isn't that much 0:17:18.760 --> 0:17:23.240 institutional capital in this space right now, and or general 0:17:23.280 --> 0:17:26.440 partners are gps that have built brands. I think there's 0:17:26.480 --> 0:17:29.840 only a handful, including Six Street, has really built brands 0:17:29.880 --> 0:17:31.040 in this fource ecosystem. 0:17:31.400 --> 0:17:34.600 How related is the success of the team to the 0:17:34.680 --> 0:17:37.080 value asset I mean, I'll pick on one that you mentioned. Actually, 0:17:37.160 --> 0:17:40.760 Dallas Cowboys very very valuable as a business. I understand 0:17:40.800 --> 0:17:42.440 it maybe one of the most valuable that there is. 0:17:42.800 --> 0:17:44.439 They won a Super Bowl in a long time, so 0:17:44.480 --> 0:17:46.560 maybe it's not so essentially a win a super Bowl 0:17:46.840 --> 0:17:48.840 to really deliver asset value. 0:17:48.920 --> 0:17:52.000 Well, I think our experience the Cowboys are a partner 0:17:52.800 --> 0:17:55.600 and Legends, and our experience with the Cowboys is they 0:17:55.640 --> 0:18:01.040 have an excellent management team Jerry Jones and Steven and 0:18:01.160 --> 0:18:04.119 Jared Junior as an excellent management team. My guess is 0:18:04.160 --> 0:18:06.600 a Super Bowl is going to come their way. But 0:18:07.359 --> 0:18:10.359 it's an excellent group of folks and we're happy to 0:18:10.400 --> 0:18:11.200 be partners with them. 0:18:11.280 --> 0:18:13.760 So, Josh, let's talk more broadly about private credit. There's 0:18:13.760 --> 0:18:15.520 an awful lot of talk about it right now. It's 0:18:15.560 --> 0:18:18.520 grown really fast. At the same time, as you look 0:18:18.560 --> 0:18:21.120 at the overall size of it, it's still relatively modest 0:18:21.119 --> 0:18:22.960 compared to a lot of data out there. 0:18:23.160 --> 0:18:24.800 Yeah, I mean, I think when you think when we 0:18:24.840 --> 0:18:26.520 think about private credit, I think there's a lot of 0:18:26.520 --> 0:18:30.000 growth areas. And it really started in the lower middle market, 0:18:30.320 --> 0:18:32.960 non investment grade market. Now is expanded into the upper 0:18:32.960 --> 0:18:35.440 middle market and at some point it's going and we're 0:18:35.440 --> 0:18:39.080 at the beginning to continue on the sports talk when 0:18:39.119 --> 0:18:43.040 the first and second ending on the non corporate lane. 0:18:43.440 --> 0:18:47.520 So think about asset backfinance or asset based finance for 0:18:47.640 --> 0:18:48.240 non corporate. 0:18:48.320 --> 0:18:50.960 So let's talk about that. It started the middle market 0:18:50.960 --> 0:18:54.920 and some risk of your lending, it's grown beyond that. 0:18:55.000 --> 0:18:57.000 Why is that, I mean, why is it that you 0:18:57.040 --> 0:18:59.399 can take that away from banks or from syndicated loans. 0:18:59.520 --> 0:18:59.680 Yeah. 0:18:59.840 --> 0:19:03.800 I'll argue with the premises risk here, I don't think 0:19:03.840 --> 0:19:06.080 it's actually riskier when you look at the loss rates. 0:19:06.119 --> 0:19:08.560 The loss rates are on par with the leverage low 0:19:08.640 --> 0:19:14.320 market historically, and this actually has better loss rates than 0:19:14.320 --> 0:19:18.560 the high old market, about fifty basis points less on 0:19:18.560 --> 0:19:22.080 the high old market, and it offers better spread. 0:19:22.320 --> 0:19:24.199 Are you seeing the sorts of rates of growth that 0:19:24.240 --> 0:19:26.560 we're seeing overall? I've heard it said that it's going 0:19:26.560 --> 0:19:28.240 to grow like fifteen percent a year for the next 0:19:28.240 --> 0:19:28.720 few years. 0:19:29.240 --> 0:19:32.280 Yeah, Look, I think so. I think private credit somewhere 0:19:32.280 --> 0:19:36.520 on the non investment grade corporate size between one point 0:19:36.520 --> 0:19:39.879 five and two joint dollars. But there's all these growth 0:19:39.920 --> 0:19:43.160 aspects of private credit outside of non investment grade corporate, 0:19:43.520 --> 0:19:48.080 including investment grade non corporate. So think of it as 0:19:48.320 --> 0:19:54.399 consumer receivables, figure it as credit cards, mortgages, and then 0:19:54.480 --> 0:19:59.040 the non investment grade tranches. So those growth rates seem 0:19:59.119 --> 0:20:03.720 right to me. But there's there's large areas that private 0:20:03.720 --> 0:20:05.399 credit continue to expand in. 0:20:05.800 --> 0:20:07.800 So so what about the risk factor you were saying, 0:20:07.840 --> 0:20:10.040 it's a mistake to say that this is risky than others. 0:20:10.320 --> 0:20:12.919 So look, I think this has been a little bit 0:20:12.960 --> 0:20:16.760 of the narrative from from banks who are trying to 0:20:16.800 --> 0:20:21.440 protect their their syndicated business. But I think when you 0:20:21.480 --> 0:20:24.840 look at private credit, private credit is unique compared to 0:20:24.960 --> 0:20:27.960 where banks banks have a business we're studying where actually 0:20:28.000 --> 0:20:31.199 we study business models is a living and private credit 0:20:31.640 --> 0:20:35.840 unlike banks, have match funding, and so banks quite frankly, 0:20:36.400 --> 0:20:40.879 they lived long. They fund short with deposits and moments 0:20:40.920 --> 0:20:45.200 of crisis, deposits come out of system. Private credits match funded. 0:20:45.280 --> 0:20:50.720 So the asset class itself is more durable than those 0:20:50.880 --> 0:20:53.240 same loans sitting in the banks, mostly because of the 0:20:53.240 --> 0:20:53.800 funding model. 0:20:53.920 --> 0:20:55.560 They can't be a run on your bank, so to speak, 0:20:55.760 --> 0:20:58.159 can't be a run on our bank. Depositors can't come 0:20:58.200 --> 0:20:59.560 and say I want one buy back now because it's 0:20:59.560 --> 0:21:00.960 locked up for brit Look. 0:21:00.920 --> 0:21:03.359 Look what happened in Silicon Valley Bank. Not to name names, 0:21:03.359 --> 0:21:06.800 but that was a lot of their assets for high 0:21:06.880 --> 0:21:10.280 quality assets. A lot of them were actually government guaranteed mortgages. 0:21:11.400 --> 0:21:13.439 We could all agree those didn't have risk on the 0:21:13.440 --> 0:21:16.120 assets side, but they had a business model issue which 0:21:16.160 --> 0:21:19.280 is a really funding issue, which was their funding ran 0:21:19.400 --> 0:21:20.960 from private credits. 0:21:20.960 --> 0:21:23.240 Is not a secret anymore. I mean you read the Bloomberg. 0:21:23.280 --> 0:21:25.000 Any given day there's an expansion of For I have 0:21:25.040 --> 0:21:28.400 a credit, that must mean there's more competition in your sphere. 0:21:28.840 --> 0:21:32.200 Does that actually push you to take bigger risks because 0:21:32.400 --> 0:21:34.639 other people are willing to do things maybe you otherwise 0:21:34.680 --> 0:21:35.760 wouldn't be well. 0:21:36.000 --> 0:21:39.040 Sixth Street were investors first, So when I think about 0:21:39.080 --> 0:21:41.520 our business, so when we think about our business, we 0:21:42.400 --> 0:21:45.560 have a way of thinking about credit visk reward. We're 0:21:45.560 --> 0:21:49.359 going to continue to be investors first. That's how markets work. 0:21:49.760 --> 0:21:52.320 And so what I would say is on the competition side, 0:21:52.440 --> 0:21:57.440 there's been more competition that total addressable market has grown significantly, 0:21:58.640 --> 0:22:02.159 where so at the same time it's more capital the 0:22:02.240 --> 0:22:06.080 addressable market has grown too, and so that fills I 0:22:06.119 --> 0:22:09.119