WEBVTT - BNY Mellon Pershing Insite Day One Part Two 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:21.560 --> 0:00:23.240 Did I the up with me? Emily Schlosser? 0:00:23.280 --> 0:00:26.200 She's chief operating officer for B and Y mailing persian 0:00:26.480 --> 0:00:30.120 here on site. Before we get into some different stuff, 0:00:30.160 --> 0:00:31.480 I want to ask you what we were. 0:00:31.280 --> 0:00:31.840 Just talking about. 0:00:31.920 --> 0:00:34.080 Yeah, because I am blown away by the number of 0:00:34.120 --> 0:00:37.760 women in senior positions here at B and my milling. 0:00:37.960 --> 0:00:42.040 Yes, how is that? Because it's not you know that 0:00:42.120 --> 0:00:43.000 it's not always the case. 0:00:43.080 --> 0:00:44.520 No, it's certainly not edge the case. 0:00:44.600 --> 0:00:44.640 No. 0:00:44.800 --> 0:00:46.320 Look, I've been in the industry a long time, and 0:00:46.360 --> 0:00:50.200 it's certainly not the case. Everywhere across the street. Bank 0:00:50.240 --> 0:00:53.400 of New York Mellon has incredible female representation at the 0:00:53.479 --> 0:00:56.360 top and within Pershing. I can tell you more than 0:00:56.400 --> 0:00:59.320 half of the members of our executive committee are female. 0:00:59.800 --> 0:01:00.959 And I did do that? 0:01:01.120 --> 0:01:01.840 How did we do it? 0:01:02.840 --> 0:01:06.119 Look, we have a really strong focus on diversity and recruiting, 0:01:06.280 --> 0:01:09.000 but I can tell you that it's largely happened organically. 0:01:09.040 --> 0:01:11.640 It's not like we have an opening and we go 0:01:11.680 --> 0:01:13.120 out and say we have to hire a woman for 0:01:13.160 --> 0:01:15.720 this role. That's never the case. But we are seeing 0:01:15.760 --> 0:01:18.360 more and more just awesome talent rising to the top 0:01:18.400 --> 0:01:19.600 that's organically female. 0:01:19.840 --> 0:01:22.080 Right, So you're staying within the organization. 0:01:21.720 --> 0:01:25.160 Within the organization, and we have more and more women 0:01:25.240 --> 0:01:27.880 kind of coming up through our ranks and being promoted 0:01:27.959 --> 0:01:30.679 within the Bank of New York Mellon and within Pershing, 0:01:31.959 --> 0:01:34.880 And we're doing a lot of kind of experienced tires 0:01:35.080 --> 0:01:35.959 that are female too. 0:01:36.120 --> 0:01:36.440 All right. 0:01:36.520 --> 0:01:38.040 So I know one thing that Matt and I really 0:01:38.080 --> 0:01:40.360 want to get into and I love coming to I've 0:01:40.360 --> 0:01:43.319 been several years to this event. So year every year 0:01:43.360 --> 0:01:44.720 you get to feel like kind of a change in 0:01:44.720 --> 0:01:47.000 tone or what's on top of mine? And I was 0:01:47.080 --> 0:01:49.680 kidding with you. Last year it was like, oh my god. 0:01:49.400 --> 0:01:52.120 Masks off and it was like together again. 0:01:52.200 --> 0:01:53.720 It was like, oh my god, I can actually talk 0:01:53.760 --> 0:01:57.360 to somebody. There was this kind of euphoria. How do 0:01:57.440 --> 0:02:00.680 you compare some of the conversations about the market environment? 0:02:00.960 --> 0:02:03.640 Last year was a tough, tough year. It feels like everywhere, 0:02:03.960 --> 0:02:06.000 So how do you compare what's being talked about this 0:02:06.080 --> 0:02:08.040 year versus kind of what we talked about last year. 0:02:08.320 --> 0:02:10.280 Yeah, number of things. 0:02:10.280 --> 0:02:12.239 So it is less like, oh my god, we're back 0:02:12.240 --> 0:02:16.000 in person together and more about I think some of 0:02:16.040 --> 0:02:17.919 the dynamics that we're seeing in the market. 0:02:19.040 --> 0:02:19.960 Jim just mentioned. 0:02:20.120 --> 0:02:24.720 Jim Crowleyard Pershing CEO just mentioned in his main stage opener, 0:02:25.800 --> 0:02:28.760 you know, the recent events in March with the regional 0:02:28.800 --> 0:02:32.600 bank crisis and the uncertainty around the debt ceiling, and 0:02:33.120 --> 0:02:36.080 what we are seeing a little bit in tempered markets 0:02:36.120 --> 0:02:38.720 with many people and more of sort of a risk 0:02:38.760 --> 0:02:42.800 off posture. I think what's really important right now is 0:02:42.960 --> 0:02:47.000 strength and stability, and so we are leaning quite heavily 0:02:48.120 --> 0:02:50.440 in with our clients on just kind of the power 0:02:50.560 --> 0:02:54.560 that Bny Mellon brings to the market, and particularly to 0:02:54.639 --> 0:02:59.040 this space in the custodial market, where having that strength 0:02:59.080 --> 0:03:00.760 and stability in your partner there so critical. 0:03:00.800 --> 0:03:02.200 All Right, I've got to bring madd in because I 0:03:02.240 --> 0:03:04.519 know he's got some great views on the markets and 0:03:04.520 --> 0:03:06.040 probably has a bunch of questions for you. 0:03:06.080 --> 0:03:06.679 Matt take it away. 0:03:06.760 --> 0:03:10.680 Well, I was wondering Emily more about your experience and 0:03:10.760 --> 0:03:12.880 your role there. What do you spend most of your 0:03:12.919 --> 0:03:14.760 time doing as chief operating officer. 0:03:14.919 --> 0:03:16.360 As chief operating. 0:03:15.919 --> 0:03:19.120 Officer, yeah, chief operating officer means something different everywhere, right, 0:03:19.240 --> 0:03:23.480 So for me, I partner very closely with Jim Crowley 0:03:23.720 --> 0:03:28.760 in leading all things pershing. Technically speaking, I oversee our 0:03:28.800 --> 0:03:34.040 operations team, our product team, our transformation office. Practically speaking, 0:03:34.080 --> 0:03:36.440 I have my hands sort of in everything, and a 0:03:36.560 --> 0:03:40.680 large part of what I'm focused on is transformational change. 0:03:40.720 --> 0:03:44.840 I've really spent my whole career driving transformational change for 0:03:44.880 --> 0:03:48.720 companies across the sector, and I suspect that that's a 0:03:48.800 --> 0:03:51.880 large part of what attracted Jim to my background when 0:03:51.880 --> 0:03:54.360 I joined here three years ago. Is you know, he 0:03:54.400 --> 0:03:56.720 had been in the CEO seat for about a year 0:03:56.760 --> 0:03:58.520 at the time, and I think he saw a lot 0:03:58.560 --> 0:04:01.640 of opportunity to continue to evolve this business, which is 0:04:01.680 --> 0:04:05.440 on awesome footing with great growth prospects, and there's a 0:04:05.440 --> 0:04:07.360 lot that we can do to change and continue to 0:04:07.360 --> 0:04:07.720 be better. 0:04:07.800 --> 0:04:11.200 So that's what do you mean by transformational change? Because 0:04:11.240 --> 0:04:15.440 that sounds like an amazing buzz phrase, but I don't 0:04:15.480 --> 0:04:19.159 really get it. Where were you and where do you 0:04:19.279 --> 0:04:22.800 want to be? What are you transforming? What are you transforming. 0:04:22.960 --> 0:04:24.520 Yeah, there is substance behind it. Let me give you 0:04:24.600 --> 0:04:27.000 a couple of examples. So one thing that we're really 0:04:27.000 --> 0:04:30.800 focused on is our service and we've been embarking on 0:04:31.160 --> 0:04:35.520 a major transformation of our service model. It's multifaceted. One 0:04:35.600 --> 0:04:38.800 of the aspects is to re engineer the processes that 0:04:38.880 --> 0:04:42.839 are hardest for our clients, so things like asset movements 0:04:42.880 --> 0:04:47.440 and account openings. We're totally reworking those processes. And then 0:04:47.480 --> 0:04:51.159 we're also reworking our service operating model, so the way 0:04:51.160 --> 0:04:54.680 that our service individuals actually cover our clients, or the 0:04:54.680 --> 0:04:58.000 way that we're structured when our clients call in ask questions. 0:04:59.279 --> 0:05:02.200 We've set up a new model where you have a 0:05:02.240 --> 0:05:04.599 team that knows you very well and can answer most 0:05:04.600 --> 0:05:07.159 of your questions on the spot, but then you also 0:05:07.279 --> 0:05:10.120 have direct access to a really well curated set of 0:05:10.160 --> 0:05:13.960 our experts that can answer your more nuanced needs on 0:05:14.040 --> 0:05:14.480 the spot. 0:05:14.839 --> 0:05:19.240 Soon to be replaced by AI. I'm just kidding, no wonder. 0:05:19.040 --> 0:05:21.239 It's constantly being enhanced by AI. 0:05:21.480 --> 0:05:25.520 So we are actually employing AI in the tools that 0:05:25.560 --> 0:05:28.760 our service representatives have at their fingertips, so that they're 0:05:28.800 --> 0:05:31.880 better equipped to search quickly for answers that you may 0:05:31.960 --> 0:05:35.200 need when you call in, and we're putting those tools 0:05:35.240 --> 0:05:37.159 in front of our clients so that they can self 0:05:37.160 --> 0:05:37.680 serve well. 0:05:37.720 --> 0:05:39.280 Emily, I mean Matt and I spent a lot of 0:05:39.320 --> 0:05:42.320 time talking about generative AI ever since Microsoft made that 0:05:42.839 --> 0:05:45.480 announcement and that investment, But I mean AI has been 0:05:45.520 --> 0:05:47.719 part of the financial short landscape for a long time. 0:05:48.000 --> 0:05:50.120 How is it, though, that you guys are thinking about 0:05:50.200 --> 0:05:53.200 kind of the next leg and the generative AI piece 0:05:53.240 --> 0:05:54.440 of this and what it means. 0:05:54.440 --> 0:05:55.640 Were you playing with it already? 0:05:55.960 --> 0:05:57.559 We've been playing with it for a while. 0:05:57.640 --> 0:06:02.039 We have had artificial intelligence embedded in a lot of 0:06:02.040 --> 0:06:05.599 our processes and in our search, et cetera like many 0:06:05.600 --> 0:06:09.000 companies have. But with the large language models and the 0:06:09.040 --> 0:06:14.520 generative AI capabilities, you know, we're now looking at much 0:06:14.720 --> 0:06:19.960 broader functionality, like being able to have our clients search 0:06:20.400 --> 0:06:23.840 databases of their own data and be able to kind 0:06:23.839 --> 0:06:26.440 of pull out anything they want just using natural language 0:06:26.480 --> 0:06:29.200 and not having to have a coding background. We will 0:06:29.279 --> 0:06:31.640 quickly get to a place where we can be coding 0:06:31.680 --> 0:06:34.000 with natural language and imagine what that will do to 0:06:34.080 --> 0:06:37.320 the speed at which we can deliver new features and functionalities. 0:06:37.520 --> 0:06:40.160 The possibilities are just awesome, and the things that our 0:06:40.200 --> 0:06:42.360 tech teams are doing and our product teams are doing 0:06:42.720 --> 0:06:45.800 to play with the with the capabilities is really cool 0:06:45.800 --> 0:06:46.320 to see. 0:06:46.680 --> 0:06:50.159 Emily, how do you deal with an increasingly global trading world? 0:06:50.920 --> 0:06:53.360 You know, today we have been busy talking about the 0:06:53.400 --> 0:06:59.760 SEC going after Binance and coinbase based on a law 0:06:59.800 --> 0:07:05.279 that was written in nineteen forty six, back before virtual 0:07:05.800 --> 0:07:09.880 private networks even existed. So what do you do now 0:07:09.920 --> 0:07:13.880 that people can trade anywhere from anywhere from anywhere. 0:07:14.360 --> 0:07:19.120 Yeah, Look, we're constantly thinking about how we expand our 0:07:19.160 --> 0:07:22.320 reach and how we make sure that the investors who 0:07:22.360 --> 0:07:26.960 are on our platform have access through their advisors to 0:07:27.400 --> 0:07:33.360 the global markets. We have global trading capabilities, We leverage 0:07:33.400 --> 0:07:36.280 capabilities from other parts of the Bank of York Mellon. 0:07:37.120 --> 0:07:40.160 We have a really strong partnership with our Markets division 0:07:40.320 --> 0:07:43.760 to make sure that the trading access is there. So 0:07:43.800 --> 0:07:48.200 we're constantly thinking globally because our advisors that we serve, 0:07:48.280 --> 0:07:50.360 in our investors that we serve, or thinking globally. 0:07:50.520 --> 0:07:55.080 What's difficult about this environment, either as a chief operating 0:07:55.080 --> 0:07:57.400 officer or just even with the market environment. I mean, 0:07:57.400 --> 0:08:00.640 it's if you think about the stuff that investors have 0:08:00.720 --> 0:08:02.960 had to deal with just in the last year alone, 0:08:03.440 --> 0:08:04.440 it's a lot. 0:08:04.640 --> 0:08:05.160 Yeah. 0:08:05.240 --> 0:08:09.240 I think from the investor perspective, what's difficult is uncertainty. 0:08:09.680 --> 0:08:10.960 It's access to data. 0:08:11.200 --> 0:08:14.640 It's feeling like you have the right information to make 0:08:14.680 --> 0:08:19.400 the informed decisions. And I would say it's just time, 0:08:20.040 --> 0:08:23.200 the productivity in your time and not feeling like you know, 0:08:23.320 --> 0:08:25.760 you have the time to really focus. So it's having 0:08:25.760 --> 0:08:30.160 that easy access to the solutions that you're looking for. 0:08:31.440 --> 0:08:34.439 What's hard for us, and what we're constantly grappling with 0:08:34.760 --> 0:08:39.320 is the rapid pace of change and growth, right, which 0:08:39.360 --> 0:08:43.160 is an awesome problem to have, but we're just constantly 0:08:43.240 --> 0:08:46.040 thinking about how do we stay ahead of the growth 0:08:46.040 --> 0:08:48.440 in the industry in One of our major kind of 0:08:48.480 --> 0:08:52.120 pillars is that we're here to scale so that our 0:08:52.120 --> 0:08:54.720 clients can grow. Were committed that our clients will never 0:08:54.800 --> 0:08:55.800 outgrow our platform. 0:08:56.400 --> 0:08:59.640 Madam deceived a last question for you get thirty seconds. 0:09:00.200 --> 0:09:03.800 Oh that's so kind of you. All right, So do 0:09:03.800 --> 0:09:05.480 you think we're going to hit a new record right now? 0:09:07.679 --> 0:09:08.559 One minute? Yeah? 0:09:08.720 --> 0:09:12.199 Do you think about the market a new record, Well. 0:09:11.720 --> 0:09:13.480 I should say a bowl market rather than a new 0:09:13.480 --> 0:09:16.760 record twenty percent. We're almost there from our October lows 0:09:16.960 --> 0:09:20.400 or is this a fake out? A fake out? Yeah? 0:09:20.440 --> 0:09:22.720 Look, I don't have a crystal ball. I'm not the 0:09:22.760 --> 0:09:24.680 right person to obigh in on that, but what I 0:09:24.679 --> 0:09:25.720 can tell you is that. 0:09:26.040 --> 0:09:27.720 Okay, demand and enthusiasm. 0:09:27.760 --> 0:09:29.839 From what you're seeing from demand and enthusiasm. 0:09:29.880 --> 0:09:34.280 Look, the wealth market is growing significantly, Our investor base 0:09:34.440 --> 0:09:39.040 is growing significantly. Interest in advisory services is growing significantly, 0:09:39.640 --> 0:09:42.319 and we're prepared for that growth, and we're prepared for 0:09:42.360 --> 0:09:43.840 whatever the market has to throw at us. 0:09:43.920 --> 0:09:46.600 It definitely speaks to the wealth creation, certainly with a 0:09:46.600 --> 0:09:48.559 certain sector of our economy. 0:09:48.920 --> 0:09:51.040 Emily, thank you so much, Thanks Carol, thank you, Matt. 0:09:51.200 --> 0:09:52.760 Yeah, I really appreciate it. Emily Schlosser. 0:09:52.840 --> 0:09:55.079 She's chief operating officer for b and y Mail and 0:09:55.160 --> 0:09:58.760 Pershing right here on site at Insite twenty twenty three 0:09:58.760 --> 0:09:59.960 in Orlando, Florida. 0:10:00.280 --> 0:10:03.800 If you're listening to the Bloomberg Business Week podcast, catch 0:10:03.840 --> 0:10:07.199 us live weekday afternoons from three to six Eastern Listen 0:10:07.280 --> 0:10:10.760 on Bloomberg dot com, the iHeartRadio app, and the Bloomberg 0:10:10.800 --> 0:10:14.520 Business App, or watch us live on YouTube. 0:10:14.880 --> 0:10:17.480 We're live on YouTube above Bloomberg Originals and I'm here 0:10:17.480 --> 0:10:19.960 in Orlando at B and Y Mellenen purshing insight. 0:10:20.360 --> 0:10:22.760 Matt, of course back at Blomberg headquarters in New York City. 0:10:22.920 --> 0:10:24.200 I want to get right to our guest. 0:10:24.720 --> 0:10:28.480 Interesting background, Joe de Grossa chairman and CEO at Access Capital, 0:10:28.600 --> 0:10:31.040 chairman of the private equity firm to Grossa Capital Partners. 0:10:31.080 --> 0:10:34.000 We're going to talk about pe a lot. He also 0:10:34.080 --> 0:10:37.360 co founded Quinn Residences, which is a real estate investment 0:10:37.360 --> 0:10:40.560 trust focused on the acquisition development of single family home 0:10:40.600 --> 0:10:44.160 rentals throughout the United States, which now you've passed on 0:10:44.720 --> 0:10:47.440 to another generation of your family. 0:10:47.840 --> 0:10:49.920 He's here though in Orlando. Great to have you here. 0:10:50.000 --> 0:10:51.880 Let's start big picture. Matt and I are. 0:10:52.320 --> 0:10:54.120 We've had a lot of great conversations, but kind of 0:10:54.120 --> 0:10:55.400 want to get into the weeds a little bit about 0:10:55.480 --> 0:10:57.360 kind of what's going on in sentiment in the markets. 0:10:57.600 --> 0:10:59.880 How do you see it? Because you sound like you 0:11:00.200 --> 0:11:01.600 a couple of different vantage points. 0:11:02.000 --> 0:11:03.800 Well, first of all, we have a long term view 0:11:03.840 --> 0:11:06.120 as private equity investors, so we tend not to get 0:11:06.120 --> 0:11:09.040 caught up in the day to day machinations of the market. 0:11:09.080 --> 0:11:12.600 Having said that, certainly the you know pretty significant rise 0:11:12.640 --> 0:11:14.839 in interest rates over the past year have affected all 0:11:14.880 --> 0:11:19.640 industries in our industries no different. So we're bullish certainly 0:11:19.679 --> 0:11:22.640 medium to long term. We think the next six months 0:11:22.679 --> 0:11:24.000 will be a good time to sort of wait and 0:11:24.000 --> 0:11:27.040 see what happens. But six to twelve months from now, 0:11:27.080 --> 0:11:28.800 I think it's going to be a great entry point 0:11:28.800 --> 0:11:31.160 back into private equity and private credit for that matter. 0:11:31.200 --> 0:11:32.360 What are you waiting to see happen? 0:11:32.440 --> 0:11:34.560 In other words, the good the bad, because it sounds 0:11:34.640 --> 0:11:36.240 like we have the discussions where it feels like you 0:11:36.240 --> 0:11:37.520 could go a couple of different places, right. 0:11:37.559 --> 0:11:39.040 You know, It's funny on any given day, I wake 0:11:39.120 --> 0:11:40.800 up either on the buy side or the cell side, 0:11:40.840 --> 0:11:42.520 so I have, you know, sort of mixed emotions about 0:11:42.559 --> 0:11:45.240 what's happening. But I try to stay somewhat to detach. 0:11:45.679 --> 0:11:48.800 But the reality is, when you're a borrower, the first 0:11:48.920 --> 0:11:51.520 bad thing that happens in a rising interest rate environment 0:11:52.000 --> 0:11:54.720 is your cash flows are diminished. You know, indust rates 0:11:54.720 --> 0:11:57.160 go up, cash flow get dibminished. First thing that happens 0:11:57.200 --> 0:12:00.440 is you trip on bank covenants, and banks generally like 0:12:00.559 --> 0:12:03.720 to be forgiving if they can. The next thing that 0:12:03.800 --> 0:12:07.280 happens is you actually have payment to faults. When those 0:12:07.280 --> 0:12:10.960 payment de faults occur, banks have to take action. And 0:12:10.960 --> 0:12:13.240 we're not yet at that sort of Malcolm Gladwell tipping 0:12:13.320 --> 0:12:16.000 point where we're seeing payment to faults. But when that happens, 0:12:16.040 --> 0:12:18.320 there's going to be some we believe, some for sales, 0:12:18.480 --> 0:12:21.320 particularly in the commercial real estate market, which we're paying 0:12:21.360 --> 0:12:24.120 a very close keeping a very close close eye on, 0:12:24.840 --> 0:12:26.720 and I really believe that's where the opportunity is going 0:12:26.800 --> 0:12:28.520 to be in the second half of the year. So 0:12:28.559 --> 0:12:30.319 those payment to faults start to happen. 0:12:30.080 --> 0:12:33.160 But manageable and not stressful in terms of the overall 0:12:33.160 --> 0:12:34.040 market environment. 0:12:34.559 --> 0:12:37.160 I figure you're absolutely right, it's going to be Certainly 0:12:37.200 --> 0:12:40.040 commercial real estate is a big sector in our economy, 0:12:40.080 --> 0:12:43.600 but we still have a vibrant, robust economy where you know, 0:12:44.040 --> 0:12:47.080 employment is close to an all time low. We have 0:12:47.120 --> 0:12:50.280 a very strong economy that can weather this, and we've weathered. 0:12:50.320 --> 0:12:52.760 You know, I've been in this business got since nineteen 0:12:52.800 --> 0:12:54.840 seventy nine. I started as a messenger, so I've seen 0:12:54.960 --> 0:12:58.640 multiple sites. Yeah, absolutely, and you know, time and time 0:12:58.679 --> 0:13:01.160 again it's it's time to buy. When there's the proverbial 0:13:01.160 --> 0:13:02.000 blood in the streets. 0:13:02.160 --> 0:13:02.800 Matt come on in. 0:13:03.240 --> 0:13:06.000 Yeah, I mean, Joe, if you could just explain why 0:13:06.040 --> 0:13:09.079 you're a buyer and a seller. Usually I would look 0:13:09.080 --> 0:13:13.680 at your company and imagine that you guys are lenders. 0:13:14.640 --> 0:13:15.880 What are you borrowing? 0:13:18.480 --> 0:13:20.679 Well, we're not necessarily borrowers. 0:13:20.720 --> 0:13:25.200 Now, having said that, we we look at it things 0:13:25.280 --> 0:13:27.960 sometimes to a different prism, a buy versus build prism, 0:13:28.120 --> 0:13:29.839 and we think this is an interesting time to build 0:13:29.880 --> 0:13:35.040 businesses for us. Capital is still relatively cheap when that 0:13:35.160 --> 0:13:37.640 shakeout occurs, and it will occur in the you know, 0:13:37.640 --> 0:13:39.920 on the dead side. We want to be buyers about 0:13:39.920 --> 0:13:43.760 debt and the companies that are being restructured, and personally, 0:13:43.760 --> 0:13:47.200 I've had experience, you know, buying three distressed companies and 0:13:47.240 --> 0:13:49.440 turning them around, and you know you can create an 0:13:49.440 --> 0:13:52.200 awful lot of value. So you know, we're we're up 0:13:52.200 --> 0:13:55.320 in the batter's box. We're we're watching some pitches going by. 0:13:55.480 --> 0:13:59.200 That's okay, there's no no strikeouts unless we swing, and 0:13:59.240 --> 0:14:02.079 we're waiting for the pitch to come across the transfer. 0:14:02.360 --> 0:14:05.600 So how are we gonna know? You know, private credit 0:14:05.720 --> 0:14:10.880 has been so huge over the last year. Retail investors 0:14:10.880 --> 0:14:14.000 are falling over themselves to get in and you can 0:14:14.080 --> 0:14:17.079 understand why to some extent. But after the FED has 0:14:17.200 --> 0:14:20.200 raised you know, five hundred and twenty five basis points 0:14:20.520 --> 0:14:24.120 and so many other things. You know, external factors are 0:14:24.400 --> 0:14:28.520 tightening up financial conditions. You got to start to be 0:14:28.640 --> 0:14:31.840 worried about defaults. So when are we going to start 0:14:31.840 --> 0:14:33.760 seeing that happen? What are you watching for sort of 0:14:33.800 --> 0:14:34.720 the sign posts? 0:14:36.560 --> 0:14:38.440 Well, first of all, if you're putting new money to work, 0:14:38.480 --> 0:14:41.840 this is an excellent time. Interest rates are up, covenants 0:14:41.880 --> 0:14:44.280 are far tougher than they were two or three years ago. 0:14:44.720 --> 0:14:46.760 I mean I was involved in a financing three years 0:14:46.800 --> 0:14:48.800 ago when we closed the deal in three weeks, and 0:14:48.840 --> 0:14:51.560 it was the most covenant light deal I'd ever seen. 0:14:52.040 --> 0:14:53.880 Basically we had money thrown at us and it is 0:14:53.960 --> 0:14:57.040 exactly the opposite today. So there's so much more discipline 0:14:57.080 --> 0:14:59.360 in the market. So this is time to be you know, 0:14:59.400 --> 0:15:03.960 putting cap to work in debt with new commitments. To 0:15:04.040 --> 0:15:06.720 the extent you're buying into an existing portfolio, you have 0:15:06.760 --> 0:15:09.240 to make sure they've been marked market properly. That'd be 0:15:09.240 --> 0:15:12.040 my biggest concern in someone going into a pre existing 0:15:12.080 --> 0:15:16.360 fund that there's a fair marked market. I personally believe 0:15:16.360 --> 0:15:19.800 there's there's generally a lag among sponsors between when they're 0:15:19.800 --> 0:15:22.640 willing to recognize a change in value of their investments, 0:15:22.800 --> 0:15:23.760 either up or down. 0:15:23.920 --> 0:15:26.360 So, but that reckoning's coming, That reckoning's coming. 0:15:27.000 --> 0:15:29.680 I'm curious about valuations when you are looking for you've 0:15:29.680 --> 0:15:32.320 got money to put to work, okay, more you have 0:15:32.360 --> 0:15:34.160 more money to put to work versus things you want 0:15:34.200 --> 0:15:34.600 to exit. 0:15:35.200 --> 0:15:35.960 Yes, okay. 0:15:36.000 --> 0:15:38.320 Well we're not under pressure to sell anything, so we 0:15:38.560 --> 0:15:39.400 can weather a storm. 0:15:39.480 --> 0:15:41.800 Okay, So tell me about valuations. What you're seeing in 0:15:41.880 --> 0:15:43.760 terms of the opportunities that are out there. 0:15:43.840 --> 0:15:47.280 Well, it's interesting because there's so much private equity capital 0:15:47.280 --> 0:15:50.680 out there. It's something like fourteen trillions. It's insane. There's 0:15:50.680 --> 0:15:53.160 a lot of dry power we talk about, yes, but 0:15:53.280 --> 0:15:55.720 you know a lot of it is focused that there 0:15:55.760 --> 0:15:57.240 can I ask you something please, and I. 0:15:57.200 --> 0:15:59.040 Talk about cash on the side drive. It feels like 0:15:59.080 --> 0:16:00.000 it's always out there. 0:16:00.520 --> 0:16:01.640 It is always out there. 0:16:01.720 --> 0:16:04.480 Yeah, there's always capital ready to be put to work 0:16:04.520 --> 0:16:06.800 for the right opportunity. But you know a lot of 0:16:06.800 --> 0:16:09.040 shrewd investors are saying, wait, let let's wait for this 0:16:09.080 --> 0:16:12.680 dislocation to play out. When that happens, you typically get 0:16:12.720 --> 0:16:16.840 this disconnect between what sellers expect and what buyers are 0:16:16.840 --> 0:16:19.480 willing to pay. So markets tend to freeze up in 0:16:19.520 --> 0:16:21.800 those times. And it's no different than the private equity markets. 0:16:21.840 --> 0:16:24.480 The markets freeze up, but ultimately there is capital to 0:16:24.520 --> 0:16:26.840 put to work. That capital has to be put to 0:16:26.880 --> 0:16:29.360 work in a defined period of time. You know, certainly 0:16:29.400 --> 0:16:31.800 over the next two to three years, two plus trillion 0:16:31.840 --> 0:16:33.520 has to be put to work. So it is going 0:16:33.560 --> 0:16:35.480 to go back to work. But what we're seeing at 0:16:35.480 --> 0:16:38.600 the very top among the largest private equity firms is 0:16:38.360 --> 0:16:41.280 there's no strong impetus to go public anymore. So what 0:16:41.360 --> 0:16:45.160 you see is the big guys trading private companies. The 0:16:45.160 --> 0:16:48.240 investment side, yeah, yeah, there's you know, that used to 0:16:48.240 --> 0:16:50.400 be the holy grail, you know, take a company public, 0:16:50.520 --> 0:16:53.520 because one you got liquidity, number two you got an 0:16:53.560 --> 0:16:57.960 evaluation jump. There was that arbitrage. But we don't see 0:16:57.960 --> 0:17:01.520 that today. That arbitrage isn't there. That private company value 0:17:02.560 --> 0:17:07.080 is starting to reach public company comps, and there is liquidity, 0:17:07.119 --> 0:17:08.679 not as much as you have in the public markets. 0:17:08.680 --> 0:17:11.280 But the flip side is for sponsors, the guys who 0:17:11.320 --> 0:17:13.879 can folks who control companies. You know, at the end 0:17:13.880 --> 0:17:15.800 of the day they you know, they don't want the 0:17:15.840 --> 0:17:19.040 regulatory pressure and scrutiny that comes with being public. So 0:17:19.560 --> 0:17:21.920 the trade off is stay private and sell to another 0:17:21.920 --> 0:17:22.520 private equity. 0:17:22.640 --> 0:17:24.240 But does that mean because there is so much money 0:17:24.280 --> 0:17:26.399 out there that you have money propping up maybe private 0:17:26.520 --> 0:17:30.760 entities that shouldn't be propped up, Like, what's the transparency 0:17:30.960 --> 0:17:34.960 for like it or not? Public markets? Ultimately, if things 0:17:35.000 --> 0:17:39.200 come undone right, investors certainly vote, you know. 0:17:39.880 --> 0:17:41.280 And it's very clear how they feel. 0:17:41.320 --> 0:17:43.520 But so what's the transparency and way of kind of 0:17:43.600 --> 0:17:45.960 keeping a check on those private investments? 0:17:46.000 --> 0:17:47.240 Well, well, it's very interesting. 0:17:47.359 --> 0:17:50.800 You know, good sponsors recognize that they can't be throwing 0:17:50.800 --> 0:17:53.359 good money at bad money, and sometimes you just have 0:17:53.440 --> 0:17:56.080 to let companies go and that happens, and that's life. 0:17:56.400 --> 0:17:58.960 In other cases, you could have a good company that 0:17:59.160 --> 0:18:01.240 had an overtax balan sheet and you have to step 0:18:01.280 --> 0:18:03.560 in and provide more equity. But it's an otherwise good 0:18:03.560 --> 0:18:05.720 and growing business. And as a sponsor, you have to 0:18:05.800 --> 0:18:07.240 understand the difference between the two. 0:18:07.640 --> 0:18:08.840 Matt, you want to come back. 0:18:08.920 --> 0:18:12.480 Well, I just wanted to get Joe your take on rates. 0:18:12.520 --> 0:18:14.119 I mean, when you look at the economy, when you 0:18:14.160 --> 0:18:17.040 look at the FED, what do you see right now? 0:18:17.080 --> 0:18:19.240 I think the markets are pricing in a hike in 0:18:19.320 --> 0:18:22.600 July and maybe one or two cuts before a year end. 0:18:25.080 --> 0:18:26.360 Yeah, it's interesting. 0:18:26.400 --> 0:18:30.760 You look at you know this, the Sofur curve going 0:18:30.760 --> 0:18:34.160 two years out, and you see a maturely lower rate environment. 0:18:34.520 --> 0:18:37.240 I'm not so sure that's going to happen. I'm not 0:18:37.280 --> 0:18:39.199 sure I buy that. It's funny. I was just on 0:18:39.240 --> 0:18:42.879 a call earlier today and one of our analysts was 0:18:42.920 --> 0:18:46.520 looking was building a model and pricing it off of 0:18:46.680 --> 0:18:49.040 two years out, which is like two seventy five to eighty. 0:18:49.359 --> 0:18:51.199 I said, look that that's insane. There's no way we 0:18:51.240 --> 0:18:55.560 can predicate a deal based on that. So I'm I 0:18:55.560 --> 0:18:56.680 don't think that's going to happen. 0:18:56.680 --> 0:18:58.800 Personally, what do you predicate a deal on. What do 0:18:58.840 --> 0:19:02.280 you say then to that car or employee and say 0:19:02.400 --> 0:19:04.120 you got to think more about this rate. 0:19:04.560 --> 0:19:06.200