WEBVTT - Brookfield Asset Management Chair & CEO Bruce Flatt 

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>I am so pleased to say that joining me now

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<v Speaker 2>is Bruce Flatt, the chief executive officer of Brookfield. Bruce,

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<v Speaker 2>thank you so much for having us and for sitting

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<v Speaker 2>down with me.

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<v Speaker 1>Thanks for being here.

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<v Speaker 2>So your investor dat today comes off the heels. I

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<v Speaker 2>think a really exciting announcement for this industry of how

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<v Speaker 2>you're positioning Brookfield that is growing your insurer and really

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<v Speaker 2>letting that lead your investments. If this is, in your words,

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<v Speaker 2>an evolution, If this is Brookfield two point zero, what

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<v Speaker 2>does Brookfield two point oh look like?

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<v Speaker 1>I think it's Brookfield five point zero.

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<v Speaker 3>But look, I would just say that the world is

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<v Speaker 3>always evolving, and we're always just trying to figure out

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<v Speaker 3>how do we fit, how do we take enough risk

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<v Speaker 3>to expand the business to grow it over time and

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<v Speaker 3>not take any undo risk for shareholders. So we continually

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<v Speaker 3>try to do that in the business. And the thing

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<v Speaker 3>that has what we been doing is taking our own

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<v Speaker 3>capital outside of our investment management business, taking our own

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<v Speaker 3>capital and putting it into back insurance annuities and continuing

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<v Speaker 3>to push that business out there and really just doing

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<v Speaker 3>the same thing that we do in our have always

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<v Speaker 3>done in our investment business. Just do it in the

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<v Speaker 3>insurance company because the things that we invest into are

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<v Speaker 3>ideally suited to back long tailed liabilities in an insurance business.

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<v Speaker 1>And so it's just traditional insurance.

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<v Speaker 3>You make money out of insurance and you try to

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<v Speaker 3>not lose money in investing.

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<v Speaker 1>And if you flip that on its head.

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<v Speaker 3>We're trying to not lose money insurance and make our

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<v Speaker 3>money in investing. And it's just a different way of

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<v Speaker 3>looking at insurance. And there's been some obviously that have

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<v Speaker 3>successfully deployed that methodology for years.

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<v Speaker 2>Oh not because you have Apollo your Berkshire Halfaway. To

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<v Speaker 2>what degree do you look like your rivals or not look.

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<v Speaker 1>Like your rivals? I'd say we're probably somewhere in the

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<v Speaker 1>middle of those two.

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<v Speaker 3>Apollo is a credit led insurance business and Berkshire Hathaway

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<v Speaker 3>is an investment led insurance business, and we're probably somewhere

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<v Speaker 3>between the two, but probably closer to Berkshire Hathaway than Apollo.

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<v Speaker 2>So it is this moment where more capital is coming

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<v Speaker 2>into this industry, be it from insurance or retail money.

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<v Speaker 2>I know that this is something that a lot of

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<v Speaker 2>people want to get their hands on, and Bank of

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<v Speaker 2>America recently put out a note saying Brookfield is maybe

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<v Speaker 2>behind some of its peers. Do you feel like this

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<v Speaker 2>is a moment of catch up for Brookfield? No.

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<v Speaker 3>I would say, Look, we're in the we're in the

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<v Speaker 3>first inning. We're not even in the first inning of

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<v Speaker 3>retail wealth like this. There's a there's a twenty trillion

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<v Speaker 3>dollar market out there. We spent twenty five years on

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<v Speaker 3>the first twenty trillion, which is in institutional management, and

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<v Speaker 3>now allocations to alternatives are twenty thirty forty fifty percent

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<v Speaker 3>in institutions, they are zero in retail. And we have

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<v Speaker 3>a twenty year runway. What's going to going to lead

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<v Speaker 3>to six is those that have experience and products that

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<v Speaker 3>can fit into retail accounts. And we have a twenty

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<v Speaker 3>five year track record in the exact products that should

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<v Speaker 3>be in retail wealth.

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<v Speaker 2>So if we're not even in the first innings yet,

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<v Speaker 2>what does this industry look like in five ten years

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<v Speaker 2>from now when you have unlocked this retail capital, when

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<v Speaker 2>retail becomes one of the bigger investor bases. What happens

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<v Speaker 2>to you in your peers? What does that look like?

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<v Speaker 3>I think private markets for the last twenty years have

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<v Speaker 3>just been increasing increasing because you just own businesses and

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<v Speaker 3>you don't have the distractions of the public markets. Public

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<v Speaker 3>markets are going to if you need liquidity, be in

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<v Speaker 3>the public markets and generally be in ETFs, and that

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<v Speaker 3>allows us as private market investors to use the capital

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<v Speaker 3>markets actually to buy things because the people that get

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<v Speaker 3>left aside from the ETF market, you can take them private.

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<v Speaker 3>But increasingly, just more and more money is going into

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<v Speaker 3>privates and that's exciting for all of us, and it'll

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<v Speaker 3>it's going to grow continue to grow, both in institutional

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<v Speaker 3>management as these sovereign institutional pension funds in the world

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<v Speaker 3>just get bigger and bigger as they keep compounding returns.

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<v Speaker 3>But in retail, you're starting at zero and if we

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<v Speaker 3>end up at twenty thirty percent in retirement accounts, that's

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<v Speaker 3>an enormous amount of money to deliver to an industry

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<v Speaker 3>of alternatives, and there's just not that many people that

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<v Speaker 3>can do what we do.

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<v Speaker 2>I know another area that you've identified as a really

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<v Speaker 2>big opportunity, and I speaking with Connor about this earlier

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<v Speaker 2>is AI infrastructure, and Brookfield is so uniquely placed because

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<v Speaker 2>not only are you in the infrastructure side, but you're

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<v Speaker 2>on the energy side as well. It's an industry AI

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<v Speaker 2>infrastructure that takes a lot of resources, be it human resources,

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<v Speaker 2>be it capital, be it that energy. Is there a

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<v Speaker 2>risk that it's crowding out that so many resources are

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<v Speaker 2>being plowed into AI infrastructure, sure that other private investment,

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<v Speaker 2>other public investment as well doesn't get the attention it needs.

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<v Speaker 3>So I would say we're at the early early again,

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<v Speaker 3>we're at the early early stages of this, and the

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<v Speaker 3>buildout of artificial intelligence globally is going to be very,

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<v Speaker 3>very It is very large, but it is getting bigger

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<v Speaker 3>every single year. And you've seen some of the big

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<v Speaker 3>technology companies what they've been doing of late.

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<v Speaker 1>But this is going to be It starts in the

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<v Speaker 1>United States, but.

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<v Speaker 3>It's going global, and it's really just the next backbone

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<v Speaker 3>of the global economy. And we've been building out the

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<v Speaker 3>backbone of the global economy.

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<v Speaker 1>For decades and decades.

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<v Speaker 3>The artificial intelligence is going to be just really the

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<v Speaker 3>table stakes that you must build in a country to

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<v Speaker 3>deploy your businesses and for your businesses to get better,

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<v Speaker 3>because what this is going to lead to is productivity

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<v Speaker 3>advances in businesses and those that don't have it will lose,

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<v Speaker 3>and those that have it were going to win. So

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<v Speaker 3>it's going to be built out around the world, and

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<v Speaker 3>the amount of capital that's getting put into into data centers,

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<v Speaker 3>into power for this, and really the compute capacity buildout

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<v Speaker 3>is very, very large.

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<v Speaker 1>Fact. I've never we've.

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<v Speaker 3>Actually never seen anything like this, and that probably says

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<v Speaker 3>a lot from one of the largest backbone investors out there.

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<v Speaker 2>For sure, Well, you're talking about that there are going

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<v Speaker 2>to be a lot of winners from this, but Bruce,

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<v Speaker 2>it also sounds like there's going to be some real losers,

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<v Speaker 2>some real people who are left out in this transition.

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<v Speaker 3>You know, I actually think that these transformations. Of course,

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<v Speaker 3>there's always on the edges, there's always things that happen

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<v Speaker 3>that aren't what you would want, but generally transformation think

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<v Speaker 3>of the computer when it came out, everyone thought that

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<v Speaker 3>people were going to lose, and your iPhone, people thought

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<v Speaker 3>people were going to lose. What happens is we are

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<v Speaker 3>we're a shrinking population generally in the world, and robotics

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<v Speaker 3>and advanced productivity is just helping us do things better

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<v Speaker 3>and we're all going to be more productive. It means

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<v Speaker 3>there's going to be greater wealth to spread around, and

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<v Speaker 3>if we do it right, I think it's going to

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<v Speaker 3>be great for the world.

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<v Speaker 2>But what about the Sam Altman comment a couple of

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<v Speaker 2>weeks ago, basically saying we're in the phase right now

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<v Speaker 2>where investors are over excited about AI. Do you think

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<v Speaker 2>there is some overexcitement, especially when it comes to pricing

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<v Speaker 2>and things.

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<v Speaker 3>So remember, what we do is build the backbone of

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<v Speaker 3>the global economy.

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<v Speaker 1>So we are.

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<v Speaker 3>Building power, data centers, compute capacity for the best of

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<v Speaker 3>the world and for sovereign countries, and all of those

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<v Speaker 3>have long term contracts in place, and we're behind the

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<v Speaker 3>scenes providing them enormous amounts of money like this is

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<v Speaker 3>we're talking per center twenty five to fifty one hundred

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<v Speaker 3>billion dollars.

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<v Speaker 1>This is enormous capital.

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<v Speaker 3>Of course, when people, when excitement happens and everyone wants

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<v Speaker 3>to get in on something, there are mistakes made by people.

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<v Speaker 3>I'm I'm not saying there will not be mistakes, but

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<v Speaker 3>I'd say for us, we're.

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<v Speaker 1>Behind the scenes.

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<v Speaker 3>We've been around this doing it a long time, and

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<v Speaker 3>I think for it's a great investment area for a

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<v Speaker 3>long period of time.

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<v Speaker 2>You've again been part of this for a while. Remember

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<v Speaker 2>in twenty twenty two you had that partnership with Intel

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<v Speaker 2>building out some infrastructure there. One of the things that's

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<v Speaker 2>changed in this is you have, just taking Intel as

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<v Speaker 2>an example, more involvement from the government, a ten percent

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<v Speaker 2>stake the US government looking at taking Does it change

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<v Speaker 2>the calculus for investing in these types of things if

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<v Speaker 2>you have governments more involved.

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<v Speaker 3>No, I look, I think they did that for specific reasons,

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<v Speaker 3>which I don't need to comment on. I just think

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<v Speaker 3>the business world evolves. There's a lot of money out there,

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<v Speaker 3>and businesses continue to grow and build out, and we're

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<v Speaker 3>going to see we are going to see governments are

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<v Speaker 3>going to have to facilitate the AI build out because

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<v Speaker 3>they need a lot of sovereign capacity themselves, like they

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<v Speaker 3>need government government's to your passport, driver's license, and everything else.

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<v Speaker 3>When you come into the when you come into the

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<v Speaker 3>United States, you go to the border now and it

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<v Speaker 3>reads your picture on the screen and let you in

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<v Speaker 3>the country. And that's data center capacity. And when you

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<v Speaker 3>get down to it, like to take it really simple,

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<v Speaker 3>that's what it is. And every day those kind of

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<v Speaker 3>things are going to artificial intelligence. You just thought that

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<v Speaker 3>they saw your picture and let you in the country.

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<v Speaker 3>But it's checked as you come to the border, it's

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<v Speaker 3>checked your face, it's checked everything going on with you,

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<v Speaker 3>and it lets you in. And what happens is it

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<v Speaker 3>just seeps into your life and people don't recognize it's happening.

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<v Speaker 3>But what's behind that is trillions and trillions and trillionstead

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<v Speaker 3>of dollars.

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<v Speaker 2>Of in I don't know whether to be excited or

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<v Speaker 2>terrified about what you just said to me, Bruce, But

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<v Speaker 2>if we are in this and governments need to be

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<v Speaker 2>more involved, I mean the US measures. Again, some have

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<v Speaker 2>kind of criticized it, being like, oh, this is central

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<v Speaker 2>planning taking stakes and companies and at the same time

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<v Speaker 2>trying to get revenue share from the likes of Nvidia

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<v Speaker 2>and AMD. Do those kinds of moves concern you or again,

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<v Speaker 2>do you just see them as necessary in this new

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<v Speaker 2>world we're in.

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<v Speaker 3>Look, I just think the United States government has a strategy,

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<v Speaker 3>they're deploying it. They've done an excellent job and many

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<v Speaker 3>of the things they're doing, and they're supporting American business

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<v Speaker 3>and they're going to build out American enterprise the way

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<v Speaker 3>they best see fit and they're doing a great job.

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<v Speaker 2>Just to that point, Bruce, because you were just so

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<v Speaker 2>uniquely positioned not only to see all the investment going

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<v Speaker 2>into AI infrastructure, but just on the large swath of

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<v Speaker 2>this economy that Brookfield touches between AI build out and

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<v Speaker 2>at the same time a labor market slowing, maybe corporations

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<v Speaker 2>that are a little less certain. How do you feel

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<v Speaker 2>about this American economy? Is it a moment of weakness,

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<v Speaker 2>is it a moment of slowing, or is this still

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<v Speaker 2>a very strong economy.

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<v Speaker 3>I'm a long term thinker, and I would say what

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<v Speaker 3>happens in the short term is not really relevant.

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<v Speaker 1>We don't pay too much attention to it.

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<v Speaker 3>Remember, we're building AI instructure for the next forty or

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<v Speaker 3>fifty years. That's what we're thinking about. The United States

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<v Speaker 3>today has energy dominance, technology dominance, one of the largest

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<v Speaker 3>economies in the world, one of the richest economy of

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<v Speaker 3>the world, and a very entrepreneurial working class. It is

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<v Speaker 3>going to win, and we continue to put a.

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<v Speaker 1>Lot of money behind that.

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<v Speaker 3>I think we've probably invested thirty forty fifty billion dollars

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<v Speaker 3>in the US this year. The United State is going

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<v Speaker 3>to be a great place to invest for a long

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<v Speaker 3>period of time.

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<v Speaker 2>Bruce. I think that's the perfect note to end it on.

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<v Speaker 2>Thank you so much for joining really really fastining to get.

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<v Speaker 1>Thanks you for being the warm up act of our

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<v Speaker 1>investor day.

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<v Speaker 2>I was going to say best of luck for everything else.

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<v Speaker 2>Hopefully you're feeling warm and ready to address the crowd, Bruce.

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<v Speaker 2>Thanks again, Bruce Flatt of Brookfield,