1
00:00:02,520 --> 00:00:07,000
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:07,840 --> 00:00:10,080
Speaker 2: I am so pleased to say that joining me now

3
00:00:10,200 --> 00:00:13,440
Speaker 2: is Bruce Flatt, the chief executive officer of Brookfield. Bruce,

4
00:00:13,480 --> 00:00:15,120
Speaker 2: thank you so much for having us and for sitting

5
00:00:15,160 --> 00:00:15,600
Speaker 2: down with me.

6
00:00:15,800 --> 00:00:16,599
Speaker 1: Thanks for being here.

7
00:00:16,640 --> 00:00:18,759
Speaker 2: So your investor dat today comes off the heels. I

8
00:00:18,800 --> 00:00:21,280
Speaker 2: think a really exciting announcement for this industry of how

9
00:00:21,280 --> 00:00:24,520
Speaker 2: you're positioning Brookfield that is growing your insurer and really

10
00:00:24,600 --> 00:00:28,120
Speaker 2: letting that lead your investments. If this is, in your words,

11
00:00:28,120 --> 00:00:31,080
Speaker 2: an evolution, If this is Brookfield two point zero, what

12
00:00:31,120 --> 00:00:32,600
Speaker 2: does Brookfield two point oh look like?

13
00:00:32,880 --> 00:00:35,080
Speaker 1: I think it's Brookfield five point zero.

14
00:00:35,640 --> 00:00:38,000
Speaker 3: But look, I would just say that the world is

15
00:00:38,200 --> 00:00:40,440
Speaker 3: always evolving, and we're always just trying to figure out

16
00:00:40,479 --> 00:00:46,200
Speaker 3: how do we fit, how do we take enough risk

17
00:00:46,720 --> 00:00:49,319
Speaker 3: to expand the business to grow it over time and

18
00:00:49,360 --> 00:00:54,120
Speaker 3: not take any undo risk for shareholders. So we continually

19
00:00:54,200 --> 00:00:57,640
Speaker 3: try to do that in the business. And the thing

20
00:00:57,720 --> 00:01:01,200
Speaker 3: that has what we been doing is taking our own

21
00:01:01,280 --> 00:01:05,400
Speaker 3: capital outside of our investment management business, taking our own

22
00:01:05,400 --> 00:01:12,399
Speaker 3: capital and putting it into back insurance annuities and continuing

23
00:01:12,440 --> 00:01:14,920
Speaker 3: to push that business out there and really just doing

24
00:01:14,920 --> 00:01:17,280
Speaker 3: the same thing that we do in our have always

25
00:01:17,319 --> 00:01:19,080
Speaker 3: done in our investment business. Just do it in the

26
00:01:19,120 --> 00:01:23,200
Speaker 3: insurance company because the things that we invest into are

27
00:01:23,240 --> 00:01:28,080
Speaker 3: ideally suited to back long tailed liabilities in an insurance business.

28
00:01:28,160 --> 00:01:30,679
Speaker 1: And so it's just traditional insurance.

29
00:01:30,760 --> 00:01:33,200
Speaker 3: You make money out of insurance and you try to

30
00:01:33,240 --> 00:01:35,039
Speaker 3: not lose money in investing.

31
00:01:35,760 --> 00:01:37,880
Speaker 1: And if you flip that on its head.

32
00:01:38,200 --> 00:01:41,640
Speaker 3: We're trying to not lose money insurance and make our

33
00:01:41,680 --> 00:01:44,560
Speaker 3: money in investing. And it's just a different way of

34
00:01:44,600 --> 00:01:47,320
Speaker 3: looking at insurance. And there's been some obviously that have

35
00:01:47,400 --> 00:01:50,280
Speaker 3: successfully deployed that methodology for years.

36
00:01:50,360 --> 00:01:52,920
Speaker 2: Oh not because you have Apollo your Berkshire Halfaway. To

37
00:01:52,920 --> 00:01:55,480
Speaker 2: what degree do you look like your rivals or not look.

38
00:01:55,400 --> 00:01:58,560
Speaker 1: Like your rivals? I'd say we're probably somewhere in the

39
00:01:58,600 --> 00:01:59,920
Speaker 1: middle of those two.

40
00:02:00,720 --> 00:02:05,800
Speaker 3: Apollo is a credit led insurance business and Berkshire Hathaway

41
00:02:05,880 --> 00:02:09,840
Speaker 3: is an investment led insurance business, and we're probably somewhere

42
00:02:09,840 --> 00:02:14,200
Speaker 3: between the two, but probably closer to Berkshire Hathaway than Apollo.

43
00:02:14,600 --> 00:02:17,200
Speaker 2: So it is this moment where more capital is coming

44
00:02:17,240 --> 00:02:20,840
Speaker 2: into this industry, be it from insurance or retail money.

45
00:02:21,400 --> 00:02:22,760
Speaker 2: I know that this is something that a lot of

46
00:02:22,760 --> 00:02:24,679
Speaker 2: people want to get their hands on, and Bank of

47
00:02:24,680 --> 00:02:27,160
Speaker 2: America recently put out a note saying Brookfield is maybe

48
00:02:27,160 --> 00:02:29,480
Speaker 2: behind some of its peers. Do you feel like this

49
00:02:29,560 --> 00:02:31,840
Speaker 2: is a moment of catch up for Brookfield? No.

50
00:02:32,880 --> 00:02:35,920
Speaker 3: I would say, Look, we're in the we're in the

51
00:02:35,919 --> 00:02:38,520
Speaker 3: first inning. We're not even in the first inning of

52
00:02:38,560 --> 00:02:41,320
Speaker 3: retail wealth like this. There's a there's a twenty trillion

53
00:02:41,360 --> 00:02:43,760
Speaker 3: dollar market out there. We spent twenty five years on

54
00:02:43,840 --> 00:02:47,320
Speaker 3: the first twenty trillion, which is in institutional management, and

55
00:02:47,360 --> 00:02:51,720
Speaker 3: now allocations to alternatives are twenty thirty forty fifty percent

56
00:02:52,080 --> 00:02:54,800
Speaker 3: in institutions, they are zero in retail. And we have

57
00:02:54,840 --> 00:02:59,480
Speaker 3: a twenty year runway. What's going to going to lead

58
00:02:59,520 --> 00:03:05,560
Speaker 3: to six is those that have experience and products that

59
00:03:05,639 --> 00:03:09,720
Speaker 3: can fit into retail accounts. And we have a twenty

60
00:03:09,919 --> 00:03:13,959
Speaker 3: five year track record in the exact products that should

61
00:03:14,000 --> 00:03:15,280
Speaker 3: be in retail wealth.

62
00:03:15,360 --> 00:03:17,960
Speaker 2: So if we're not even in the first innings yet,

63
00:03:18,400 --> 00:03:21,959
Speaker 2: what does this industry look like in five ten years

64
00:03:21,960 --> 00:03:25,639
Speaker 2: from now when you have unlocked this retail capital, when

65
00:03:25,720 --> 00:03:29,000
Speaker 2: retail becomes one of the bigger investor bases. What happens

66
00:03:29,040 --> 00:03:30,520
Speaker 2: to you in your peers? What does that look like?

67
00:03:30,919 --> 00:03:34,480
Speaker 3: I think private markets for the last twenty years have

68
00:03:34,600 --> 00:03:39,680
Speaker 3: just been increasing increasing because you just own businesses and

69
00:03:39,720 --> 00:03:42,240
Speaker 3: you don't have the distractions of the public markets. Public

70
00:03:42,280 --> 00:03:44,520
Speaker 3: markets are going to if you need liquidity, be in

71
00:03:44,520 --> 00:03:49,600
Speaker 3: the public markets and generally be in ETFs, and that

72
00:03:50,520 --> 00:03:54,160
Speaker 3: allows us as private market investors to use the capital

73
00:03:54,200 --> 00:03:56,560
Speaker 3: markets actually to buy things because the people that get

74
00:03:56,640 --> 00:03:59,880
Speaker 3: left aside from the ETF market, you can take them private.

75
00:04:00,400 --> 00:04:02,960
Speaker 3: But increasingly, just more and more money is going into

76
00:04:02,960 --> 00:04:06,600
Speaker 3: privates and that's exciting for all of us, and it'll

77
00:04:07,200 --> 00:04:09,920
Speaker 3: it's going to grow continue to grow, both in institutional

78
00:04:09,960 --> 00:04:13,480
Speaker 3: management as these sovereign institutional pension funds in the world

79
00:04:13,520 --> 00:04:16,599
Speaker 3: just get bigger and bigger as they keep compounding returns.

80
00:04:17,160 --> 00:04:20,400
Speaker 3: But in retail, you're starting at zero and if we

81
00:04:20,480 --> 00:04:24,520
Speaker 3: end up at twenty thirty percent in retirement accounts, that's

82
00:04:24,560 --> 00:04:28,400
Speaker 3: an enormous amount of money to deliver to an industry

83
00:04:28,400 --> 00:04:31,760
Speaker 3: of alternatives, and there's just not that many people that

84
00:04:31,920 --> 00:04:33,160
Speaker 3: can do what we do.

85
00:04:33,600 --> 00:04:35,760
Speaker 2: I know another area that you've identified as a really

86
00:04:35,800 --> 00:04:38,760
Speaker 2: big opportunity, and I speaking with Connor about this earlier

87
00:04:38,960 --> 00:04:43,159
Speaker 2: is AI infrastructure, and Brookfield is so uniquely placed because

88
00:04:43,200 --> 00:04:45,240
Speaker 2: not only are you in the infrastructure side, but you're

89
00:04:45,279 --> 00:04:47,680
Speaker 2: on the energy side as well. It's an industry AI

90
00:04:47,800 --> 00:04:51,560
Speaker 2: infrastructure that takes a lot of resources, be it human resources,

91
00:04:51,839 --> 00:04:54,919
Speaker 2: be it capital, be it that energy. Is there a

92
00:04:55,040 --> 00:04:58,240
Speaker 2: risk that it's crowding out that so many resources are

93
00:04:58,240 --> 00:05:02,280
Speaker 2: being plowed into AI infrastructure, sure that other private investment,

94
00:05:02,440 --> 00:05:05,520
Speaker 2: other public investment as well doesn't get the attention it needs.

95
00:05:05,560 --> 00:05:08,960
Speaker 3: So I would say we're at the early early again,

96
00:05:09,120 --> 00:05:11,760
Speaker 3: we're at the early early stages of this, and the

97
00:05:11,800 --> 00:05:15,920
Speaker 3: buildout of artificial intelligence globally is going to be very,

98
00:05:16,080 --> 00:05:18,760
Speaker 3: very It is very large, but it is getting bigger

99
00:05:18,800 --> 00:05:20,840
Speaker 3: every single year. And you've seen some of the big

100
00:05:20,839 --> 00:05:23,640
Speaker 3: technology companies what they've been doing of late.

101
00:05:23,720 --> 00:05:28,360
Speaker 1: But this is going to be It starts in the

102
00:05:28,440 --> 00:05:29,200
Speaker 1: United States, but.

103
00:05:29,160 --> 00:05:33,680
Speaker 3: It's going global, and it's really just the next backbone

104
00:05:33,839 --> 00:05:36,240
Speaker 3: of the global economy. And we've been building out the

105
00:05:36,240 --> 00:05:38,039
Speaker 3: backbone of the global economy.

106
00:05:37,560 --> 00:05:38,719
Speaker 1: For decades and decades.

107
00:05:39,240 --> 00:05:42,680
Speaker 3: The artificial intelligence is going to be just really the

108
00:05:42,720 --> 00:05:46,839
Speaker 3: table stakes that you must build in a country to

109
00:05:47,040 --> 00:05:50,840
Speaker 3: deploy your businesses and for your businesses to get better,

110
00:05:51,000 --> 00:05:53,040
Speaker 3: because what this is going to lead to is productivity

111
00:05:53,080 --> 00:05:58,920
Speaker 3: advances in businesses and those that don't have it will lose,

112
00:05:58,960 --> 00:06:00,680
Speaker 3: and those that have it were going to win. So

113
00:06:00,720 --> 00:06:02,160
Speaker 3: it's going to be built out around the world, and

114
00:06:02,240 --> 00:06:07,360
Speaker 3: the amount of capital that's getting put into into data centers,

115
00:06:07,440 --> 00:06:12,520
Speaker 3: into power for this, and really the compute capacity buildout

116
00:06:12,720 --> 00:06:14,440
Speaker 3: is very, very large.

117
00:06:14,440 --> 00:06:15,760
Speaker 1: Fact. I've never we've.

118
00:06:15,600 --> 00:06:20,480
Speaker 3: Actually never seen anything like this, and that probably says

119
00:06:20,480 --> 00:06:23,760
Speaker 3: a lot from one of the largest backbone investors out there.

120
00:06:23,800 --> 00:06:25,640
Speaker 2: For sure, Well, you're talking about that there are going

121
00:06:25,680 --> 00:06:27,640
Speaker 2: to be a lot of winners from this, but Bruce,

122
00:06:27,680 --> 00:06:30,000
Speaker 2: it also sounds like there's going to be some real losers,

123
00:06:30,000 --> 00:06:32,200
Speaker 2: some real people who are left out in this transition.

124
00:06:32,560 --> 00:06:37,799
Speaker 3: You know, I actually think that these transformations. Of course,

125
00:06:37,800 --> 00:06:40,920
Speaker 3: there's always on the edges, there's always things that happen

126
00:06:41,000 --> 00:06:45,360
Speaker 3: that aren't what you would want, but generally transformation think

127
00:06:45,400 --> 00:06:47,520
Speaker 3: of the computer when it came out, everyone thought that

128
00:06:47,760 --> 00:06:50,840
Speaker 3: people were going to lose, and your iPhone, people thought

129
00:06:50,880 --> 00:06:54,040
Speaker 3: people were going to lose. What happens is we are

130
00:06:54,560 --> 00:06:58,479
Speaker 3: we're a shrinking population generally in the world, and robotics

131
00:06:58,520 --> 00:07:01,440
Speaker 3: and advanced productivity is just helping us do things better

132
00:07:02,080 --> 00:07:04,640
Speaker 3: and we're all going to be more productive. It means

133
00:07:04,680 --> 00:07:07,599
Speaker 3: there's going to be greater wealth to spread around, and

134
00:07:07,640 --> 00:07:10,520
Speaker 3: if we do it right, I think it's going to

135
00:07:10,560 --> 00:07:11,640
Speaker 3: be great for the world.

136
00:07:11,680 --> 00:07:14,040
Speaker 2: But what about the Sam Altman comment a couple of

137
00:07:14,080 --> 00:07:15,960
Speaker 2: weeks ago, basically saying we're in the phase right now

138
00:07:16,000 --> 00:07:18,440
Speaker 2: where investors are over excited about AI. Do you think

139
00:07:18,480 --> 00:07:20,680
Speaker 2: there is some overexcitement, especially when it comes to pricing

140
00:07:20,680 --> 00:07:21,160
Speaker 2: and things.

141
00:07:21,280 --> 00:07:24,080
Speaker 3: So remember, what we do is build the backbone of

142
00:07:24,280 --> 00:07:25,480
Speaker 3: the global economy.

143
00:07:25,760 --> 00:07:26,880
Speaker 1: So we are.

144
00:07:26,720 --> 00:07:31,400
Speaker 3: Building power, data centers, compute capacity for the best of

145
00:07:31,480 --> 00:07:36,119
Speaker 3: the world and for sovereign countries, and all of those

146
00:07:36,240 --> 00:07:40,920
Speaker 3: have long term contracts in place, and we're behind the

147
00:07:40,920 --> 00:07:43,280
Speaker 3: scenes providing them enormous amounts of money like this is

148
00:07:43,440 --> 00:07:47,400
Speaker 3: we're talking per center twenty five to fifty one hundred

149
00:07:47,400 --> 00:07:48,120
Speaker 3: billion dollars.

150
00:07:48,160 --> 00:07:49,600
Speaker 1: This is enormous capital.

151
00:07:50,880 --> 00:07:56,240
Speaker 3: Of course, when people, when excitement happens and everyone wants

152
00:07:56,240 --> 00:07:59,320
Speaker 3: to get in on something, there are mistakes made by people.

153
00:07:59,800 --> 00:08:02,680
Speaker 3: I'm I'm not saying there will not be mistakes, but

154
00:08:03,360 --> 00:08:04,720
Speaker 3: I'd say for us, we're.

155
00:08:04,520 --> 00:08:05,320
Speaker 1: Behind the scenes.

156
00:08:05,680 --> 00:08:08,280
Speaker 3: We've been around this doing it a long time, and

157
00:08:09,000 --> 00:08:12,280
Speaker 3: I think for it's a great investment area for a

158
00:08:12,320 --> 00:08:13,160
Speaker 3: long period of time.

159
00:08:13,720 --> 00:08:16,320
Speaker 2: You've again been part of this for a while. Remember

160
00:08:16,360 --> 00:08:18,560
Speaker 2: in twenty twenty two you had that partnership with Intel

161
00:08:18,600 --> 00:08:20,880
Speaker 2: building out some infrastructure there. One of the things that's

162
00:08:21,000 --> 00:08:23,120
Speaker 2: changed in this is you have, just taking Intel as

163
00:08:23,160 --> 00:08:26,560
Speaker 2: an example, more involvement from the government, a ten percent

164
00:08:26,600 --> 00:08:29,559
Speaker 2: stake the US government looking at taking Does it change

165
00:08:29,600 --> 00:08:32,160
Speaker 2: the calculus for investing in these types of things if

166
00:08:32,160 --> 00:08:33,640
Speaker 2: you have governments more involved.

167
00:08:34,360 --> 00:08:37,880
Speaker 3: No, I look, I think they did that for specific reasons,

168
00:08:37,920 --> 00:08:40,240
Speaker 3: which I don't need to comment on. I just think

169
00:08:40,360 --> 00:08:45,760
Speaker 3: the business world evolves. There's a lot of money out there,

170
00:08:45,840 --> 00:08:49,920
Speaker 3: and businesses continue to grow and build out, and we're

171
00:08:49,920 --> 00:08:53,400
Speaker 3: going to see we are going to see governments are

172
00:08:53,400 --> 00:08:56,920
Speaker 3: going to have to facilitate the AI build out because

173
00:08:57,000 --> 00:08:59,439
Speaker 3: they need a lot of sovereign capacity themselves, like they

174
00:08:59,480 --> 00:09:03,760
Speaker 3: need government government's to your passport, driver's license, and everything else.

175
00:09:04,000 --> 00:09:06,040
Speaker 3: When you come into the when you come into the

176
00:09:06,120 --> 00:09:08,120
Speaker 3: United States, you go to the border now and it

177
00:09:08,600 --> 00:09:13,080
Speaker 3: reads your picture on the screen and let you in

178
00:09:13,120 --> 00:09:17,680
Speaker 3: the country. And that's data center capacity. And when you

179
00:09:17,720 --> 00:09:20,400
Speaker 3: get down to it, like to take it really simple,

180
00:09:21,080 --> 00:09:24,880
Speaker 3: that's what it is. And every day those kind of

181
00:09:24,880 --> 00:09:28,520
Speaker 3: things are going to artificial intelligence. You just thought that

182
00:09:28,600 --> 00:09:31,600
Speaker 3: they saw your picture and let you in the country.

183
00:09:32,160 --> 00:09:34,760
Speaker 3: But it's checked as you come to the border, it's

184
00:09:34,800 --> 00:09:36,880
Speaker 3: checked your face, it's checked everything going on with you,

185
00:09:36,880 --> 00:09:40,520
Speaker 3: and it lets you in. And what happens is it

186
00:09:40,600 --> 00:09:44,240
Speaker 3: just seeps into your life and people don't recognize it's happening.

187
00:09:44,240 --> 00:09:47,959
Speaker 3: But what's behind that is trillions and trillions and trillionstead

188
00:09:47,960 --> 00:09:48,640
Speaker 3: of dollars.

189
00:09:48,400 --> 00:09:50,160
Speaker 2: Of in I don't know whether to be excited or

190
00:09:50,320 --> 00:09:52,960
Speaker 2: terrified about what you just said to me, Bruce, But

191
00:09:53,000 --> 00:09:54,480
Speaker 2: if we are in this and governments need to be

192
00:09:54,520 --> 00:09:56,640
Speaker 2: more involved, I mean the US measures. Again, some have

193
00:09:56,679 --> 00:09:58,440
Speaker 2: kind of criticized it, being like, oh, this is central

194
00:09:58,480 --> 00:10:01,080
Speaker 2: planning taking stakes and companies and at the same time

195
00:10:01,160 --> 00:10:03,160
Speaker 2: trying to get revenue share from the likes of Nvidia

196
00:10:03,200 --> 00:10:05,960
Speaker 2: and AMD. Do those kinds of moves concern you or again,

197
00:10:06,000 --> 00:10:07,800
Speaker 2: do you just see them as necessary in this new

198
00:10:07,800 --> 00:10:08,320
Speaker 2: world we're in.

199
00:10:08,679 --> 00:10:13,760
Speaker 3: Look, I just think the United States government has a strategy,

200
00:10:13,760 --> 00:10:16,640
Speaker 3: they're deploying it. They've done an excellent job and many

201
00:10:16,640 --> 00:10:20,400
Speaker 3: of the things they're doing, and they're supporting American business

202
00:10:20,600 --> 00:10:23,840
Speaker 3: and they're going to build out American enterprise the way

203
00:10:23,880 --> 00:10:26,480
Speaker 3: they best see fit and they're doing a great job.

204
00:10:26,840 --> 00:10:28,560
Speaker 2: Just to that point, Bruce, because you were just so

205
00:10:28,679 --> 00:10:31,920
Speaker 2: uniquely positioned not only to see all the investment going

206
00:10:31,920 --> 00:10:34,760
Speaker 2: into AI infrastructure, but just on the large swath of

207
00:10:34,760 --> 00:10:38,320
Speaker 2: this economy that Brookfield touches between AI build out and

208
00:10:38,360 --> 00:10:41,439
Speaker 2: at the same time a labor market slowing, maybe corporations

209
00:10:41,480 --> 00:10:44,120
Speaker 2: that are a little less certain. How do you feel

210
00:10:44,120 --> 00:10:46,520
Speaker 2: about this American economy? Is it a moment of weakness,

211
00:10:46,600 --> 00:10:48,480
Speaker 2: is it a moment of slowing, or is this still

212
00:10:48,520 --> 00:10:49,679
Speaker 2: a very strong economy.

213
00:10:51,000 --> 00:10:55,560
Speaker 3: I'm a long term thinker, and I would say what

214
00:10:55,640 --> 00:10:57,880
Speaker 3: happens in the short term is not really relevant.

215
00:10:57,880 --> 00:10:59,240
Speaker 1: We don't pay too much attention to it.

216
00:10:59,320 --> 00:11:03,360
Speaker 3: Remember, we're building AI instructure for the next forty or

217
00:11:03,440 --> 00:11:07,640
Speaker 3: fifty years. That's what we're thinking about. The United States

218
00:11:07,720 --> 00:11:12,160
Speaker 3: today has energy dominance, technology dominance, one of the largest

219
00:11:12,160 --> 00:11:13,959
Speaker 3: economies in the world, one of the richest economy of

220
00:11:14,000 --> 00:11:17,320
Speaker 3: the world, and a very entrepreneurial working class. It is

221
00:11:17,360 --> 00:11:19,559
Speaker 3: going to win, and we continue to put a.

222
00:11:19,520 --> 00:11:20,640
Speaker 1: Lot of money behind that.

223
00:11:21,320 --> 00:11:24,600
Speaker 3: I think we've probably invested thirty forty fifty billion dollars

224
00:11:24,640 --> 00:11:27,560
Speaker 3: in the US this year. The United State is going

225
00:11:27,600 --> 00:11:29,160
Speaker 3: to be a great place to invest for a long

226
00:11:29,240 --> 00:11:30,000
Speaker 3: period of time.

227
00:11:30,160 --> 00:11:31,959
Speaker 2: Bruce. I think that's the perfect note to end it on.

228
00:11:32,080 --> 00:11:34,600
Speaker 2: Thank you so much for joining really really fastining to get.

229
00:11:34,559 --> 00:11:36,200
Speaker 1: Thanks you for being the warm up act of our

230
00:11:36,240 --> 00:11:36,839
Speaker 1: investor day.

231
00:11:36,880 --> 00:11:39,160
Speaker 2: I was going to say best of luck for everything else.

232
00:11:39,160 --> 00:11:41,720
Speaker 2: Hopefully you're feeling warm and ready to address the crowd, Bruce.

233
00:11:42,080 --> 00:11:44,599
Speaker 2: Thanks again, Bruce Flatt of Brookfield,