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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Blue Owl reported results this week after joining courses with

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Speaker 2: Meta on Ai Data Centers. The firm reported a twenty

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Speaker 2: one percent year over your jump in AUM as it

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Speaker 2: continues to reinforce its long term growth pipeline joining us

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Speaker 2: for mores. Mark Lipschual's Blue Owl Capital COCEEO Mark, wonderful

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Speaker 2: to have you on this morning. And look, I know

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Speaker 2: whenever anyone asks about the equity price, you very soonly

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Speaker 2: are like, we don't concentrate on the short term, but

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Speaker 2: there was a decline after earning, so we have to

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Speaker 2: address it. You had record fundraising, maybe a concentration on

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Speaker 2: some of the flat fees. Why the disconnect between the two.

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Speaker 3: Yeah, the look, we had a great quarter.

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Speaker 1: We had continued extraordinary growth, twenty plus percent growth on

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Speaker 1: the top line. I think there is there is, as

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Speaker 1: you just noted, this disconnect, which is having acquired very

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Speaker 1: successfully and very fortunately businesses like our digital infrastructure business IPI,

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Speaker 1: you issue shares, but then you don't have a full

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Speaker 1: year of their results.

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Speaker 3: So it's actually just math.

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Speaker 1: As you look at our run rate growth per share,

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Speaker 1: it is continuing to accelerate and it continues to be

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Speaker 1: incredibly robust. So yeah, there's a little bit of math,

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Speaker 1: but it really is just simple math.

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Speaker 3: Businesses is really thriving.

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Speaker 4: I learned so much from watching Danny's interviews with people

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Speaker 4: like you, So she.

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Speaker 2: Had to be clear, you're learning more from Mark than

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Speaker 2: you are from Yes, I'm just.

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Speaker 4: Happy to be there, and from you know, z and

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Speaker 4: from Henry McVay, and from John Gray. You were talking

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Speaker 4: with him, Danny, and he was saying something about easing

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Speaker 4: excess returns in private capital, and there's a market saturation,

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Speaker 4: we see various tight spreads and generally lower yields or

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Speaker 4: headed lower.

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Speaker 3: What do you think about that? What do you think

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Speaker 3: about that idea?

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Speaker 1: So I would decompose the question of kind of yields

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Speaker 1: returns into three components, right, one, of course is credit

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Speaker 1: quality first and foremost. Look, at the end of the day,

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Speaker 1: the most important thing is that you're making good loans

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Speaker 1: and getting paid.

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Speaker 3: Back, no cockyages.

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Speaker 1: So we want a very healthy ecosystem, and we have

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Speaker 1: a very healthy ecosystem, we really do, and we can

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Speaker 1: certainly come back to that. So credit quality is excellent

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Speaker 1: in our book, and that doesn't mean no defaults everyone's

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Speaker 1: going to have defaults now. And then we all we said,

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Speaker 1: multi trillion dollar industry, that's okay. You just can't have

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Speaker 1: many and you have to get good recoveries. And that's

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Speaker 1: exactly what we do. It blow out by the way,

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Speaker 1: so to our peers.

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Speaker 3: And so to the banks. So the system is in

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Speaker 3: a strong place.

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Speaker 1: Then of course there's base rates, and of course the

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Speaker 1: direction of base rate travel.

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Speaker 3: Everyone obviously sees it having east from the peak.

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Speaker 1: But again, every time consensus bills to oh, it's obvious,

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Speaker 1: you look at the FED commentary. Now it's not quite

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Speaker 1: so obvious how fast rates are going.

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Speaker 3: To go down.

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Speaker 1: And then last is spread. And spreads are on the

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Speaker 1: kinds of the lower side of where we operate, but

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Speaker 1: over a ten year window, they ebb and they flow.

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Speaker 1: And remember we're building portfolios have hundreds of names in them.

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Speaker 1: Some are from a couple of years ago, some are current,

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Speaker 1: and most importantly, our overall spread, the premium that we

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Speaker 1: offer to the alternative the traditional marketplace has actually been

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Speaker 1: stunningly steady and close to a couple hundred basis points.

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Speaker 1: So yeah, we don't live in a vacuum, and so

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Speaker 1: spreads in the whole world are tight.

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Speaker 3: Of course ours are tighter. Equity markets are at all

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Speaker 3: time highs.

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Speaker 1: Like we don't live in isolation, and in that world,

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Speaker 1: spreads are a little bit tighter, But in total it

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Speaker 1: continues to do. We continue to deliver really outstanding investor results,

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Speaker 1: and that's why we had record fundraising results.

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Speaker 2: I'd say, I really like that point you made about Okay,

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Speaker 2: if we're concerned about private credit, shouldn't we be concerned

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Speaker 2: about equity markets too. They both are trading and reflect

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Speaker 2: a large part of this economy. I would then love

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Speaker 2: to get your take on Meta yesterday. I know you're

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Speaker 2: not a public stock GUYE, but when they issued more debt,

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Speaker 2: Meta shares fell, do you think that there are starting

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Speaker 2: to creep into the market. Some concern with metav of

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Speaker 2: course is one of your partner. But the large hyperscale

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Speaker 2: spending and the amount of financing and debt that they're

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Speaker 2: taking on, is there any reason to be concerned because

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Speaker 2: clearly the equity market is starting to show at least

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Speaker 2: a little bit of nerves about it.

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Speaker 1: Well, there's been several earning reports this year this week

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Speaker 1: from tech companies, and actually some of them performed extraordinarily

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Speaker 1: well announcing big capital programs, right Amazon, and so I don't.

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Speaker 1: I think it's hard to attribute it to one specific action.

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Speaker 1: In fact, the collective result is, of course tech is

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Speaker 1: touching all time highs at the moment, where as of

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Speaker 1: this week, people announced, you know what, We're actually going

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Speaker 1: to spend a lot more on AI infrastructure than we thought,

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Speaker 1: much more actually, right, this continuing curve, every time we look,

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Speaker 1: it just keeps going up. And you listen to the commentary,

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Speaker 1: and the commentary is we don't think we're spending enough.

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Speaker 1: Microsoft says we don't have actually enough capacity to even

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Speaker 1: fuel both AI and kind of our core business.

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Speaker 3: So that gap, well, very expensive to cross.

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Speaker 1: That rubicon, of course, is what creates the opportunity for

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Speaker 1: great partnerships, for us to bring that kind of capital

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Speaker 1: in conjunction with these spectacular companies to build the backbone,

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Speaker 1: which for us is the very safe way to participate

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Speaker 1: build the backbone for this infrastructure, for the infrastructure for

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Speaker 1: this AI future.

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Speaker 4: I was talking with z about the intel he gathers

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Speaker 4: and you obviously are in the same sort of privileged position, right,

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Speaker 4: You're talking to so many portfolio companies and CEOs and

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Speaker 4: you have an incredible view of, for example, the labor market.

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Speaker 4: So what are you seeing in your portfolio companies or

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Speaker 4: what are you hearing people say about the economy in

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Speaker 4: regards to the labor market. Are they going to be

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Speaker 4: slowing hiring or even reducing jobs as they replace some

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Speaker 4: of that productivity with AI.

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Speaker 1: So portfolio companies are let's start with very strong and healthy.

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Speaker 1: We have four hundred or so in our portfolio and

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Speaker 1: on average growth remains both revenue and earnings in the

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Speaker 1: high single digit.

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Speaker 3: So it's a very healthy place now when.

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Speaker 4: Strong companies can strong companies can reduce head count absolutely so.

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Speaker 3: Now we have not seen any meaningful change in.

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Speaker 1: Labor practices, but it is certainly the case that technology

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Speaker 1: itself is making a lot of activity already more productive,

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Speaker 1: and we're at the very front edge so this all.

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Speaker 1: It is certainly the case that when you build and

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Speaker 1: invest this kind of capital, you do ultimately have to

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Speaker 1: get a return on it, and some of that will

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Speaker 1: disrupt the traditional labor market. We are not hearing anything

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Speaker 1: I would call systemic or traumatic at this point within

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Speaker 1: the portfolio, and to the degree it's happening, it's really

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Speaker 1: more about efficiency technology, it's not about concern about the

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Speaker 1: economy today.

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Speaker 2: Blue Owl has also been on the forefront in moving

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Speaker 2: into retail and offering wealth products to a wider swath

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Speaker 2: of investors than traditionally had been. I just wonder mark

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Speaker 2: because this has been appeared where it feels like people

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Speaker 2: are laser focused with the magnifying glass. If I can

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Speaker 2: mix all my metaphors on private credit with Jamie diamond

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Speaker 2: saying cockroach here a concern about fraud there, has it

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Speaker 2: changed it all retail sentiment? Has it been harder to

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Speaker 2: reach those people just in the volatility of headlines that

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Speaker 2: have been come out.

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Speaker 1: So here's the really encouraging part about the wisdom of

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Speaker 1: what you call retail investors individuals taken together. You know,

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Speaker 1: I think there's a propensity to want to either sort

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Speaker 1: of people say, oh, they don't understand. I actually think

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Speaker 1: there's incredible wisdom in the individual investor world. And by

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Speaker 1: the way, they're advised by really strong people, right the

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Speaker 1: financial advisors at the Merrills and the Morgan Stanley's and

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Speaker 1: the JP.

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Speaker 3: Morgans, the Goldmansacts.

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Speaker 1: I mean, all these Wells, Fargo, all these fabulous places

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Speaker 1: are advising people on making these choices.

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Speaker 3: So here's what we're seeing.

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Speaker 1: Wealth flows are accelerating even now this month over last.

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Speaker 1: We see this every day, so very data driven business

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Speaker 1: for us. We are accelerating in wealth this month over last.

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Speaker 1: So actually people are seeing through this noise, and it

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Speaker 1: is a lot of noise. And to your point about

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Speaker 1: you know, sort of an item here, an item there,

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Speaker 1: you know, I would suggest taking when we take a

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Speaker 1: step back, because there's almost this kind of this mass

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Speaker 1: hysteria taking hold about credit in general, private credit in particular,

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Speaker 1: and it's just not anchored in any facts.

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Speaker 3: It's anchored by repeating.

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Speaker 1: A few anecdotes and then kind of just creating the well, hey,

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Speaker 1: you never know. And some of that is intentional, some

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Speaker 1: of it, I'm sure is quite sincere by people that

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Speaker 1: just don't just aren't sure. But the truth is that

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Speaker 1: our system, the private credits, not just bluall our peers

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Speaker 1: are very good at what they do, the banks are

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Speaker 1: very good at what they do, and in total, fortunately

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Speaker 1: for the economy, we have a very healthy credit ecosystem.

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Speaker 1: And to the earlier point, Danny, you repeat it, which

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Speaker 1: something is really important. Remember, you cannot believe that we

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Speaker 1: have an unhealthy credit ecosystem and a healthy stock market.

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Speaker 3: Those are not compatible.

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Speaker 4: Ideas well, and I mean, as you point out, the

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Speaker 4: concerns are belied by the fact that investors are still

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Speaker 4: falling all over themselves to get access to funds like yours.

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Speaker 3: Mark great having on the program, Thank

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Speaker 4: You so much for joining US Market Schultz there of

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Speaker 4: Blue Owl Capital,