1 00:00:00,080 --> 00:00:02,200 Speaker 1: You know, the markets go up and down, markets move, 2 00:00:02,279 --> 00:00:06,680 Speaker 1: markets to respond, markets respond to political issues, political uncertainties. 3 00:00:07,680 --> 00:00:09,920 Speaker 1: But I would clearly say we are in a period 4 00:00:09,920 --> 00:00:13,800 Speaker 1: of time with these megacycles. We're in a period of 5 00:00:13,800 --> 00:00:18,880 Speaker 1: time with so many transitions, whether it's a transition from 6 00:00:18,920 --> 00:00:24,640 Speaker 1: deflation to inflation, a geopolitical transition, and how does that 7 00:00:24,840 --> 00:00:28,720 Speaker 1: where does that go? The fragmentation of supply chains is 8 00:00:28,960 --> 00:00:34,440 Speaker 1: just beginning. We have policies and so many democracies that 9 00:00:34,520 --> 00:00:38,120 Speaker 1: have moved from policies that I would say were embedded 10 00:00:38,320 --> 00:00:43,360 Speaker 1: for more deflation and now policies are more embedded in inflation. 11 00:00:43,479 --> 00:00:44,599 Speaker 2: Well as we adjust to that. 12 00:00:44,760 --> 00:00:47,159 Speaker 3: You have Jamie Diamond, for example, saying rates in the 13 00:00:47,280 --> 00:00:49,880 Speaker 3: US could go to seven percent and we're not ready 14 00:00:49,920 --> 00:00:52,440 Speaker 3: for it. Is he right? 15 00:00:52,880 --> 00:00:55,120 Speaker 1: Look, we all have opinions. I mean, I've been saying 16 00:00:55,160 --> 00:00:55,840 Speaker 1: for over. 17 00:00:55,640 --> 00:00:56,960 Speaker 2: A year, work, I want to know your opinion. 18 00:00:56,960 --> 00:00:58,800 Speaker 1: Make My opinion is we're going to have ten year 19 00:00:58,880 --> 00:01:03,480 Speaker 1: rates at least at five or higher because of this 20 00:01:03,600 --> 00:01:08,600 Speaker 1: embedded inflation. This structural inflation is unlike anything and I 21 00:01:08,640 --> 00:01:15,760 Speaker 1: think business leaders and politicians are not providing the foundation 22 00:01:15,880 --> 00:01:19,120 Speaker 1: to help explain this. We have not seen inflation like 23 00:01:19,160 --> 00:01:21,840 Speaker 1: this in over thirty years. Actually, I was a young 24 00:01:21,959 --> 00:01:26,399 Speaker 1: bond trader during the late seventies and where we had 25 00:01:26,480 --> 00:01:29,640 Speaker 1: hyper inflation. I don't think we're gonna have anything close 26 00:01:29,680 --> 00:01:32,760 Speaker 1: to this inflation of the seventies. But we have so 27 00:01:32,840 --> 00:01:41,120 Speaker 1: much deeper structural inflation, and we are underestimating what the 28 00:01:41,280 --> 00:01:48,680 Speaker 1: change in geopolitics is, so structurally inflationary. When I was 29 00:01:48,680 --> 00:01:54,160 Speaker 1: in Davos earlier this year, I heard the phrase national 30 00:01:54,320 --> 00:01:58,720 Speaker 1: security uttered everywhere, and quite factly, I never heard those 31 00:01:58,720 --> 00:02:03,040 Speaker 1: phrases uttered that often before that. And so national security 32 00:02:03,080 --> 00:02:07,040 Speaker 1: for chips or food or energy obviously energy and all 33 00:02:07,080 --> 00:02:10,080 Speaker 1: these issues, and the question is at what cost? And 34 00:02:10,120 --> 00:02:13,440 Speaker 1: nobody answers that question. At what costs? 35 00:02:13,480 --> 00:02:15,959 Speaker 3: Well, you said, politicians, governments, they need to do a 36 00:02:16,000 --> 00:02:18,679 Speaker 3: better job of explaining this, of talking what would that 37 00:02:18,720 --> 00:02:19,440 Speaker 3: actually look like. 38 00:02:19,560 --> 00:02:22,240 Speaker 1: Well, I mean they have to recognize if we are 39 00:02:22,280 --> 00:02:29,640 Speaker 1: going to focus on the whole idea about restricting immigration, 40 00:02:29,960 --> 00:02:33,960 Speaker 1: big topic here in Germany, big topic in the United States. 41 00:02:35,680 --> 00:02:38,800 Speaker 1: We are down in the United States close to three 42 00:02:38,919 --> 00:02:42,360 Speaker 1: million legal immigrants. We've changed the immigration policy. At the 43 00:02:42,360 --> 00:02:45,000 Speaker 1: same time, there's so many job needs and in the 44 00:02:45,080 --> 00:02:47,800 Speaker 1: United States we've had close to a trillion dollars of 45 00:02:47,840 --> 00:02:52,639 Speaker 1: fiscal stimulus just beginning. It's j curve and these are 46 00:02:52,720 --> 00:02:56,000 Speaker 1: huge job creators. And at the same time we have 47 00:02:56,240 --> 00:03:02,480 Speaker 1: restricted immigration and as a result of it, you know, 48 00:03:02,520 --> 00:03:05,680 Speaker 1: we see more wage pressure. So at what cost? We 49 00:03:05,840 --> 00:03:11,280 Speaker 1: have in the United States a very protracted U strike 50 00:03:11,360 --> 00:03:13,920 Speaker 1: between the auto workers and the auto companies. It has 51 00:03:13,960 --> 00:03:18,079 Speaker 1: been reported that the union is asking for a forty 52 00:03:18,280 --> 00:03:22,880 Speaker 1: percent increase, So at what cost? What you know in 53 00:03:22,919 --> 00:03:24,960 Speaker 1: the long law, does that mean for jobs? More and 54 00:03:24,960 --> 00:03:29,240 Speaker 1: more jobs move? This is the conversation we're having now. 55 00:03:30,200 --> 00:03:34,640 Speaker 1: We are you know, because of the invasion of Ukraine 56 00:03:35,520 --> 00:03:38,920 Speaker 1: and the realization in Europe, especially here in Germany, of 57 00:03:38,960 --> 00:03:44,720 Speaker 1: the dependency in Russian gas. Every board room is asking 58 00:03:44,760 --> 00:03:49,600 Speaker 1: themselves where are our other dependencies? Yes, but at the 59 00:03:49,640 --> 00:03:55,960 Speaker 1: dependency in China and in terms of manufacturing assembly is 60 00:03:56,000 --> 00:03:59,600 Speaker 1: something that many companies have said we cannot Does. 61 00:03:59,520 --> 00:04:04,320 Speaker 3: There need to be leadership though to reinvigorate multilateralism or 62 00:04:04,400 --> 00:04:08,000 Speaker 3: is that concept because in this era of French sharing reshoring, 63 00:04:08,440 --> 00:04:09,000 Speaker 3: is that over? 64 00:04:09,120 --> 00:04:12,680 Speaker 1: Do we need to rethink that globalization is still intact, 65 00:04:12,800 --> 00:04:18,000 Speaker 1: it's just being reimagined. So whether we have our supply 66 00:04:18,120 --> 00:04:21,320 Speaker 1: chains out of China. Now we're moving them to Vietnam, Philippines, 67 00:04:22,040 --> 00:04:27,880 Speaker 1: Eastern and Europe, Turkey, of India. Mexico is one of 68 00:04:27,920 --> 00:04:32,160 Speaker 1: the real destinations for North American demand. And so this 69 00:04:32,240 --> 00:04:35,760 Speaker 1: is not global by no means globalization is over. But 70 00:04:35,839 --> 00:04:39,080 Speaker 1: as we reimagine these supply chains, there's a reason why 71 00:04:39,279 --> 00:04:42,800 Speaker 1: somebody supply chains were so embedded in China because that, 72 00:04:42,920 --> 00:04:45,600 Speaker 1: for years and years and year was the cheapest, easiest 73 00:04:45,640 --> 00:04:48,040 Speaker 1: place to do it. And so in many cases we're 74 00:04:48,080 --> 00:04:50,680 Speaker 1: moving supply chains at higher costs. 75 00:04:50,040 --> 00:04:53,599 Speaker 3: Especially if you're on showing, on shoring to either Europe 76 00:04:53,680 --> 00:04:56,479 Speaker 3: or the US, where you're having these labor conversations you 77 00:04:56,520 --> 00:04:56,960 Speaker 3: may have. 78 00:04:57,920 --> 00:04:59,800 Speaker 1: All of this means is we're going to be more 79 00:05:00,040 --> 00:05:04,960 Speaker 1: aggressfully moving towards technology to add more productivity, whether it 80 00:05:05,080 --> 00:05:09,320 Speaker 1: is using more robotics AI. All of this is gonna 81 00:05:09,520 --> 00:05:11,479 Speaker 1: in the long run, That's what I'm saying. Markets go 82 00:05:11,560 --> 00:05:14,000 Speaker 1: up and down, we have big changes, we have big 83 00:05:14,080 --> 00:05:18,520 Speaker 1: changes in labor, uh we have higher wages. In the 84 00:05:18,560 --> 00:05:22,920 Speaker 1: long run, companies adapt, businesses adapt. But the biggest issue 85 00:05:22,920 --> 00:05:25,359 Speaker 1: for me, and I say this to every governmental leader 86 00:05:25,400 --> 00:05:30,039 Speaker 1: I see worldwide, what what the world is missing today? 87 00:05:30,320 --> 00:05:36,479 Speaker 1: Is hope. I see more fear than any time in 88 00:05:36,560 --> 00:05:37,280 Speaker 1: my business career. 89 00:05:37,320 --> 00:05:39,480 Speaker 2: But what are you hopeful about, Larry? What is that hotess? 90 00:05:39,560 --> 00:05:39,680 Speaker 3: Look? 91 00:05:39,680 --> 00:05:43,640 Speaker 1: And I'm a long term optimist and we build Blackrock 92 00:05:43,720 --> 00:05:47,440 Speaker 1: on optimism. We are the largest retirement manager in the world. Okay, 93 00:05:47,680 --> 00:05:51,000 Speaker 1: why on earth anybody would ever put a put their 94 00:05:51,040 --> 00:05:54,679 Speaker 1: savings into something that may have a thirty year outcome? 95 00:05:55,160 --> 00:05:58,919 Speaker 1: My gosh, that is optimism. Okay, if you're if you're not, 96 00:05:59,160 --> 00:06:01,719 Speaker 1: If you're not optim missing that thirty years hence is 97 00:06:01,760 --> 00:06:05,920 Speaker 1: a better outcome. You're you're gonna keep all your money 98 00:06:05,920 --> 00:06:09,440 Speaker 1: in a bank. And but Danny, what's going on in 99 00:06:09,520 --> 00:06:14,800 Speaker 1: China is a great example of fear. Before COVID. The 100 00:06:14,960 --> 00:06:19,880 Speaker 1: Chinese who are unbelievable savers. They save thirty five percent 101 00:06:19,920 --> 00:06:22,680 Speaker 1: of disposable income thirty five percent. Think of that? About 102 00:06:22,720 --> 00:06:25,800 Speaker 1: that now? They did it because there's no safety nets 103 00:06:25,839 --> 00:06:28,560 Speaker 1: of healthcare like we have here in Germany, no safety 104 00:06:28,560 --> 00:06:32,480 Speaker 1: nets of retirement, one child family, all these you know, 105 00:06:32,839 --> 00:06:38,360 Speaker 1: dynamic issues during COVID and the fear and the lockdowns 106 00:06:39,440 --> 00:06:43,200 Speaker 1: and the changes of policies. Savings riach in China right 107 00:06:43,240 --> 00:06:44,280 Speaker 1: now are fifty percent. 108 00:06:45,040 --> 00:06:49,200 Speaker 3: And that's fear and they're struggling to reinvigorate the economy at. 109 00:06:49,080 --> 00:06:50,760 Speaker 1: This sat because they're frightened. 110 00:06:50,800 --> 00:06:51,760 Speaker 2: But but what does. 111 00:06:51,640 --> 00:06:54,040 Speaker 3: That look like on the ground for the investors in 112 00:06:54,080 --> 00:06:55,800 Speaker 3: the Crown you at black Rock, how do. 113 00:06:55,720 --> 00:06:59,240 Speaker 2: You look at this? Is there a way to capitalize 114 00:06:59,279 --> 00:07:01,039 Speaker 2: on it? Do you pull back? What do you do 115 00:07:01,160 --> 00:07:02,360 Speaker 2: with a problem with right now now? 116 00:07:02,400 --> 00:07:04,480 Speaker 1: I think in our mega trends end right now, we 117 00:07:04,560 --> 00:07:08,839 Speaker 1: are we are underinvested in China, we believe structurally until 118 00:07:08,839 --> 00:07:12,200 Speaker 1: we see savings rates, which is in my mind, when 119 00:07:12,240 --> 00:07:17,000 Speaker 1: we see savings rates decline and they're consuming more, that's 120 00:07:17,000 --> 00:07:20,680 Speaker 1: an indication of more hope. That that that they don't 121 00:07:20,760 --> 00:07:23,000 Speaker 1: need to save as much that they can't consume, they 122 00:07:23,000 --> 00:07:26,679 Speaker 1: could do other things. To me, these are very big 123 00:07:26,840 --> 00:07:30,160 Speaker 1: macro trends, and but I just want to say the 124 00:07:30,200 --> 00:07:34,160 Speaker 1: biggest issue is we as business leaders, we as political leaders, 125 00:07:34,200 --> 00:07:39,040 Speaker 1: if we don't provide more certainty and more hope, this 126 00:07:39,120 --> 00:07:42,560 Speaker 1: is what causes recessions. This is what causes pullbacks. 127 00:07:42,760 --> 00:07:44,520 Speaker 3: That to be clear, because there are a lot of 128 00:07:44,680 --> 00:07:46,920 Speaker 3: calls of a recession hard landing, soft landing, no landing, 129 00:07:46,960 --> 00:07:48,840 Speaker 3: They've they've all lost their meeting at this point let's 130 00:07:48,880 --> 00:07:51,680 Speaker 3: let's be honest. So in this era of fear of 131 00:07:51,760 --> 00:07:53,360 Speaker 3: no hope, are we happy? 132 00:07:53,360 --> 00:07:55,800 Speaker 1: Well, no hope, it's all you know. 133 00:07:55,960 --> 00:07:59,240 Speaker 3: I'm hopeful, Larry's hopeful. We're happy about that. But does 134 00:07:59,320 --> 00:08:01,360 Speaker 3: that mean we are recession right now? 135 00:08:03,280 --> 00:08:06,720 Speaker 1: So I think we have to analyze that by each region. 136 00:08:06,880 --> 00:08:11,679 Speaker 1: Because the United States, our home mortgage market is based 137 00:08:11,720 --> 00:08:15,360 Speaker 1: on a thirty year mortgage. So anybody who has a 138 00:08:15,400 --> 00:08:18,960 Speaker 1: home mortgage, higher interest rates does not impact them, and 139 00:08:19,040 --> 00:08:22,360 Speaker 1: so the transmission of high elevated interest rates in the 140 00:08:22,480 --> 00:08:27,360 Speaker 1: US takes much longer to impact the economy. Where is 141 00:08:27,400 --> 00:08:30,800 Speaker 1: in other place where you have more floating rate or 142 00:08:30,920 --> 00:08:33,320 Speaker 1: like in the United Kingdom where you have generally a 143 00:08:33,400 --> 00:08:36,960 Speaker 1: five year fixed and then it resets. And so let's 144 00:08:36,960 --> 00:08:40,600 Speaker 1: assume twenty percent of the mortgages have to be you know, 145 00:08:41,920 --> 00:08:45,640 Speaker 1: reevaluated at a higher level. That creates more immediacy that 146 00:08:45,800 --> 00:08:48,080 Speaker 1: higher rates. So I think we're going to see some 147 00:08:48,160 --> 00:08:50,640 Speaker 1: economies enter recessions early. 148 00:08:50,720 --> 00:08:53,360 Speaker 3: Which ones would that be, Well, I think Europe anyone's 149 00:08:53,400 --> 00:08:54,800 Speaker 3: more sensitive to the ones that. 150 00:08:54,760 --> 00:08:57,439 Speaker 1: Are more sensitive this elevated interest rate. You're and you're 151 00:08:57,480 --> 00:09:01,280 Speaker 1: starting to see a real decline in GDP and other. 152 00:09:01,920 --> 00:09:04,400 Speaker 1: You know, they're they're basically flat now, but can they 153 00:09:04,400 --> 00:09:09,520 Speaker 1: go into a more protracted recession. Whatever the recessions we're 154 00:09:09,520 --> 00:09:11,280 Speaker 1: going to have, they're going to be quite modest. So 155 00:09:11,360 --> 00:09:15,160 Speaker 1: I'm not even that fearful. But then let me just 156 00:09:15,160 --> 00:09:18,520 Speaker 1: say what things they did. Think. Okay, but I believe 157 00:09:19,760 --> 00:09:22,960 Speaker 1: if we have labor shortages, if we're getting back to 158 00:09:22,960 --> 00:09:26,040 Speaker 1: this whole social issue of how are we going to 159 00:09:26,040 --> 00:09:28,880 Speaker 1: be doing this in many areas, you may need a 160 00:09:28,920 --> 00:09:32,560 Speaker 1: recession to bring down labor demand. And so I think 161 00:09:32,600 --> 00:09:34,640 Speaker 1: this is one of the things that's going to impact 162 00:09:34,640 --> 00:09:37,679 Speaker 1: in the United States. You still have a very vibrant 163 00:09:37,679 --> 00:09:41,160 Speaker 1: economy the United States, and as I said, the j 164 00:09:41,400 --> 00:09:44,280 Speaker 1: curve of the Infrastructure Act, the chips ack, the IRA, 165 00:09:44,440 --> 00:09:48,520 Speaker 1: which is huge implications that's going to be creating jobs. 166 00:09:48,559 --> 00:09:51,559 Speaker 1: And so it may require a more protracted federal reserve. 167 00:09:52,360 --> 00:09:55,560 Speaker 1: And it may mean by twenty twenty five the United 168 00:09:55,600 --> 00:09:58,199 Speaker 1: States economy may be entering a recession. But I don't 169 00:09:58,240 --> 00:10:00,120 Speaker 1: see at anytime in the near term. 170 00:10:00,679 --> 00:10:05,000 Speaker 3: So throughout history of US growth slowdowns, we have underestimated 171 00:10:05,360 --> 00:10:08,200 Speaker 3: every single one of them. Are you confident we're not 172 00:10:08,240 --> 00:10:09,600 Speaker 3: making that same mistake again? 173 00:10:11,000 --> 00:10:19,719 Speaker 1: Look, Central banks can overshoot. If fear becomes worse, then 174 00:10:19,920 --> 00:10:22,600 Speaker 1: consumers pull back and the recessions are going to become 175 00:10:22,600 --> 00:10:25,960 Speaker 1: more protracted. We have elections in so many places of 176 00:10:25,960 --> 00:10:27,880 Speaker 1: the world. We have an election in the United States, 177 00:10:27,920 --> 00:10:31,400 Speaker 1: we have all that stuff. You know, we are going 178 00:10:31,440 --> 00:10:35,280 Speaker 1: to have many political candidates. We're going to provide a 179 00:10:35,280 --> 00:10:38,680 Speaker 1: lot of fear. Yes, unfortunately, And I think the winner. 180 00:10:38,880 --> 00:10:40,840 Speaker 1: I think the political winner is the one who provides 181 00:10:40,840 --> 00:10:43,480 Speaker 1: the most hope for the future or what people believe 182 00:10:44,000 --> 00:10:44,360 Speaker 1: the hopes. 183 00:10:45,320 --> 00:10:49,559 Speaker 2: See that though anyone projecting hope. 184 00:10:48,760 --> 00:10:51,360 Speaker 1: I dearly hope. So I'm projecting. 185 00:10:50,960 --> 00:10:54,240 Speaker 2: Hope, Larry for presidents, I don't. 186 00:10:54,040 --> 00:10:56,560 Speaker 1: Know, I'm too young. That is. 187 00:11:01,280 --> 00:11:05,160 Speaker 2: Very true. Look, you make an excellent point. 188 00:11:05,240 --> 00:11:09,480 Speaker 3: I think half of the population is going to be 189 00:11:09,520 --> 00:11:13,560 Speaker 3: in an election next year. Could we then have a 190 00:11:13,600 --> 00:11:16,840 Speaker 3: recession based on what you're saying, not by a monetary accident, 191 00:11:17,320 --> 00:11:19,199 Speaker 3: but by a fiscal accident. 192 00:11:21,920 --> 00:11:28,400 Speaker 1: So in my travel seeing governmental leaders, I talk about 193 00:11:28,400 --> 00:11:33,240 Speaker 1: the need for more public private investing, whether it is 194 00:11:33,600 --> 00:11:40,880 Speaker 1: an infrastructure sustainability, whatever you want to say, power grids. 195 00:11:41,440 --> 00:11:49,199 Speaker 1: What I see is most democracies are having elevated fiscal deficits. 196 00:11:50,800 --> 00:11:52,640 Speaker 1: I worry about it. I think it's going to be 197 00:11:52,679 --> 00:11:56,400 Speaker 1: a crisis in the future. I believe we are hitting 198 00:11:56,520 --> 00:12:01,079 Speaker 1: hitting thresholds of just too much debt. The only solution 199 00:12:01,200 --> 00:12:05,840 Speaker 1: we have now is re orient and reimagining how we 200 00:12:06,720 --> 00:12:10,280 Speaker 1: finance growth. And I think the way we're going to 201 00:12:10,320 --> 00:12:13,520 Speaker 1: be able to finance growth is public private. There's so 202 00:12:13,640 --> 00:12:16,480 Speaker 1: much private money that is looking for great long term 203 00:12:16,520 --> 00:12:20,640 Speaker 1: investments to work, whether that it empower grids or infrastructure 204 00:12:22,440 --> 00:12:27,520 Speaker 1: and sustainability, charging stations, you name it, you know, and 205 00:12:27,720 --> 00:12:32,920 Speaker 1: and and so in all our conversations says how can 206 00:12:32,960 --> 00:12:37,400 Speaker 1: we reimagine finance, How can we find a better structure, 207 00:12:37,480 --> 00:12:42,240 Speaker 1: and how can we then leverage public finance with private 208 00:12:42,320 --> 00:12:45,960 Speaker 1: capital to augment growth? 209 00:12:46,520 --> 00:12:46,679 Speaker 2: Right? 210 00:12:46,840 --> 00:12:49,560 Speaker 1: And this is going to be the big key for 211 00:12:49,600 --> 00:12:51,320 Speaker 1: the next ten years. 212 00:12:51,360 --> 00:12:53,200 Speaker 3: Can I ask about how you're thinking about that at Blackrock, 213 00:12:53,200 --> 00:12:55,880 Speaker 3: because you're already you're already the world's largest asset manager. 214 00:12:55,960 --> 00:12:57,480 Speaker 2: So so what is your goal now? 215 00:12:59,160 --> 00:13:02,480 Speaker 1: Look at I had Our goal is to provide a 216 00:13:02,840 --> 00:13:07,320 Speaker 1: better financial future for more human beings. All our money 217 00:13:07,480 --> 00:13:13,040 Speaker 1: is not a single euro dollar is our money. One 218 00:13:13,080 --> 00:13:15,480 Speaker 1: hundred percent of our money is our clients money. We 219 00:13:15,480 --> 00:13:17,040 Speaker 1: have to do what our clients are looking to do. 220 00:13:17,400 --> 00:13:19,640 Speaker 1: And I think we are a really good fiduciary, that 221 00:13:19,679 --> 00:13:21,839 Speaker 1: we work really well with our clients. We give them 222 00:13:22,240 --> 00:13:24,760 Speaker 1: long term views. I really when they ask me what's 223 00:13:24,800 --> 00:13:26,800 Speaker 1: going on in the market, I really don't have a 224 00:13:26,840 --> 00:13:29,240 Speaker 1: good answer because I don't really care about the day 225 00:13:29,280 --> 00:13:31,679 Speaker 1: to day your business. You care about the day to 226 00:13:31,760 --> 00:13:35,160 Speaker 1: day business. I mean, our job is to is to 227 00:13:35,400 --> 00:13:39,600 Speaker 1: give opportunities for long term investors that they could earn 228 00:13:39,679 --> 00:13:43,240 Speaker 1: a return and that they could have a healthy life 229 00:13:43,240 --> 00:13:45,840 Speaker 1: in the future with dignity, right, And that's our job. 230 00:13:45,920 --> 00:13:50,360 Speaker 1: And so if we can provide that advice to give 231 00:13:50,440 --> 00:13:55,199 Speaker 1: more people hope with dignity and retirement, then I think 232 00:13:55,240 --> 00:13:56,720 Speaker 1: we're going to earn more share of wallet. 233 00:13:56,840 --> 00:13:58,400 Speaker 3: I do care about the day to day, Larry, But 234 00:13:58,400 --> 00:14:00,800 Speaker 3: I also I know that I know ow the history, 235 00:14:01,400 --> 00:14:03,840 Speaker 3: and one that stands out is two thousand and nine, 236 00:14:03,880 --> 00:14:06,880 Speaker 3: you buy BGI, you buy I Shares six point six billion. 237 00:14:06,920 --> 00:14:11,040 Speaker 3: It was the Louisiana purchase of asset management. And apologies 238 00:14:11,080 --> 00:14:13,280 Speaker 3: for all the non Frenchies and Americans in the audience, 239 00:14:13,280 --> 00:14:15,040 Speaker 3: you might have to explain to them what the Louisiana 240 00:14:15,080 --> 00:14:17,080 Speaker 3: purchase is. But in other words, it was big it 241 00:14:17,120 --> 00:14:20,880 Speaker 3: was transformative. Will you ever do a deal like that again? 242 00:14:20,920 --> 00:14:23,960 Speaker 3: You think something so transformative for Black Rock? 243 00:14:26,120 --> 00:14:30,600 Speaker 1: Well, I mean when we did that deal, many reporters 244 00:14:30,800 --> 00:14:33,760 Speaker 1: and the commentary said we're already too big, And we 245 00:14:33,760 --> 00:14:36,400 Speaker 1: were two point nine trillion then and now we're nine 246 00:14:36,400 --> 00:14:44,240 Speaker 1: point five trillion, And so the answer is, yes, we are. 247 00:14:45,200 --> 00:14:49,800 Speaker 1: We believe we have great opportunities to transform our company again. 248 00:14:50,600 --> 00:14:56,360 Speaker 1: I am very excited about change. Let me be clear, 249 00:14:56,520 --> 00:14:59,960 Speaker 1: we are as neurotic today as we were when we 250 00:15:00,080 --> 00:15:03,360 Speaker 1: started the company thirty five years ago. We're having a 251 00:15:03,400 --> 00:15:07,000 Speaker 1: great time working with our clients and we have I 252 00:15:07,040 --> 00:15:10,160 Speaker 1: do see some very large opportunities for inorgantic group. 253 00:15:10,080 --> 00:15:13,520 Speaker 3: Because what would be today's equivalent of ETS in two 254 00:15:13,520 --> 00:15:15,160 Speaker 3: thousand and nine that are on the verge of this 255 00:15:15,280 --> 00:15:16,720 Speaker 3: explosive growth. 256 00:15:17,520 --> 00:15:20,320 Speaker 1: Oh my gosh. I mean getting back to this whole 257 00:15:20,360 --> 00:15:22,960 Speaker 1: idea of working with governments public private. It may not 258 00:15:23,080 --> 00:15:27,960 Speaker 1: have that type of trillion dollars of explosive growth, but 259 00:15:28,120 --> 00:15:30,400 Speaker 1: I do believe we can help make a difference in 260 00:15:30,440 --> 00:15:35,600 Speaker 1: building better societies. We could prepare societies better working with 261 00:15:35,680 --> 00:15:40,840 Speaker 1: governments in terms of preparedness for elevated temperatures in the world. 262 00:15:42,600 --> 00:15:44,800 Speaker 1: You know, we believe we are going to have to 263 00:15:44,840 --> 00:15:49,840 Speaker 1: move more rapidly towards decarbonization. We believe that hydrocarbons, by 264 00:15:49,840 --> 00:15:51,440 Speaker 1: the way, are going to be with us for a 265 00:15:51,520 --> 00:15:54,800 Speaker 1: long long time. And that's why we're working with energy companies, 266 00:15:54,840 --> 00:15:57,760 Speaker 1: not against energy companies. That is why we said, do 267 00:15:57,840 --> 00:16:01,600 Speaker 1: not ever divestive hydrocarbons, which the far left doesn't agree 268 00:16:01,640 --> 00:16:04,479 Speaker 1: with me, but in many cases the far right disagrees 269 00:16:04,520 --> 00:16:07,040 Speaker 1: with me. And so I guess we're doing something right 270 00:16:07,080 --> 00:16:08,960 Speaker 1: when I'm getting attacked from both sides. 271 00:16:09,000 --> 00:16:11,520 Speaker 2: But that is the measure I think attacks everywhere. 272 00:16:11,520 --> 00:16:14,560 Speaker 3: Well, look, I mean these are massive global threats, right, 273 00:16:14,600 --> 00:16:17,520 Speaker 3: and they do require a level of trust. So how 274 00:16:17,560 --> 00:16:20,920 Speaker 3: do you gain trust from the skeptics, especially with some 275 00:16:20,960 --> 00:16:24,280 Speaker 3: of the political dialogue happening in America, By doing. 276 00:16:24,040 --> 00:16:27,080 Speaker 1: The right thing every day, by making sure that we 277 00:16:27,520 --> 00:16:30,880 Speaker 1: that the skeptic truly understand what we're doing. In many 278 00:16:30,920 --> 00:16:34,040 Speaker 1: cases they don't. Many people don't care what we're doing. 279 00:16:34,080 --> 00:16:36,720 Speaker 1: They just are using us as a vehicle. But the 280 00:16:36,760 --> 00:16:40,280 Speaker 1: most important thing, we provide choice for every client. We 281 00:16:40,320 --> 00:16:43,440 Speaker 1: work with every client. It is not our money, and 282 00:16:43,480 --> 00:16:46,200 Speaker 1: we work with them to try to have each and 283 00:16:46,360 --> 00:16:51,560 Speaker 1: every client have, you know, have options and choice and 284 00:16:51,840 --> 00:16:53,920 Speaker 1: it is their money and they have to direct the 285 00:16:53,920 --> 00:16:57,000 Speaker 1: money how it goes. But we just did a survey 286 00:16:57,080 --> 00:17:01,240 Speaker 1: that was part of that article that seven percent of 287 00:17:01,320 --> 00:17:04,399 Speaker 1: our global investors are going to put more money into 288 00:17:04,440 --> 00:17:08,840 Speaker 1: decarbonization technology. And let's let's be clear, we are not 289 00:17:08,880 --> 00:17:14,920 Speaker 1: going to have a transition unless we can find technologies 290 00:17:14,960 --> 00:17:21,360 Speaker 1: to bring down the competitive cost of renewables. We cannot 291 00:17:21,400 --> 00:17:24,280 Speaker 1: do that. And we saw what happens with elevated energy 292 00:17:24,280 --> 00:17:28,359 Speaker 1: prices just two years in Germany and in Europe. You 293 00:17:28,480 --> 00:17:32,280 Speaker 1: can't have a transition. And more importantly, if we don't 294 00:17:32,400 --> 00:17:38,960 Speaker 1: reorient and reimagine finance, we will never decarbonize the emerging world. 295 00:17:39,560 --> 00:17:42,360 Speaker 1: We see when energy prices go up, the emerging world 296 00:17:42,520 --> 00:17:47,320 Speaker 1: uses more coal because livelihood in life is more important 297 00:17:47,359 --> 00:17:52,320 Speaker 1: than the future. And so we need to reimagine finance. 298 00:17:52,560 --> 00:17:54,639 Speaker 1: We need to and finance is going to have to 299 00:17:54,680 --> 00:17:58,359 Speaker 1: find ways of bringing billions and billions and trillions to 300 00:17:58,520 --> 00:18:02,159 Speaker 1: help them decarbonize. We don't have the structure in the 301 00:18:02,160 --> 00:18:04,720 Speaker 1: world today. We have a World Bank and IMF that 302 00:18:04,840 --> 00:18:10,119 Speaker 1: was created after post World War two. They're organized that 303 00:18:10,760 --> 00:18:14,639 Speaker 1: when banking was a prominent lender, and they can't because 304 00:18:14,680 --> 00:18:19,000 Speaker 1: of the bossle capital standards, because of Dodd Frank in 305 00:18:19,040 --> 00:18:20,640 Speaker 1: the United States, banks can't lend. 306 00:18:20,680 --> 00:18:22,879 Speaker 2: And more of that, you know, the world doesn't want. 307 00:18:22,760 --> 00:18:27,800 Speaker 1: To developing countries they lend well. But well, I mean, the. 308 00:18:27,720 --> 00:18:30,520 Speaker 3: World's debt is moving more into private hands, three hundred 309 00:18:30,560 --> 00:18:33,600 Speaker 3: trillion dollars worth of debt. But when it moves into 310 00:18:33,640 --> 00:18:37,119 Speaker 3: private capital, into an asset management, are there risks in that? 311 00:18:38,080 --> 00:18:40,560 Speaker 1: Well, my gosh, I mean when I'm asked that question 312 00:18:40,640 --> 00:18:46,160 Speaker 1: by many central bankers and when you raise capital standards 313 00:18:46,640 --> 00:18:49,880 Speaker 1: for the banking system, and the banking system is very 314 00:18:49,920 --> 00:18:53,520 Speaker 1: important because that they're the only organizations that can provide 315 00:18:53,680 --> 00:18:57,840 Speaker 1: leveraged capital. But because of the leverage capital, there are risks. 316 00:18:58,480 --> 00:19:03,280 Speaker 1: When an acid manager provides alone, we have one liability, 317 00:19:03,280 --> 00:19:09,720 Speaker 1: we don't leverage and so the transmission is far safer. 318 00:19:10,080 --> 00:19:12,159 Speaker 1: But could there be risk. I'm not trying to suggest 319 00:19:12,160 --> 00:19:14,919 Speaker 1: they're not risk. One of the foundations of Blackrock. When 320 00:19:14,960 --> 00:19:19,080 Speaker 1: we began the organization, we had a strong belief that 321 00:19:19,119 --> 00:19:21,840 Speaker 1: the capital markets were going to become the engine to 322 00:19:21,960 --> 00:19:25,600 Speaker 1: finance the world. And if you look at the charts, 323 00:19:26,440 --> 00:19:30,119 Speaker 1: the role of banking balance sheets which is what society wanted, 324 00:19:30,200 --> 00:19:34,040 Speaker 1: has been reduced and the role of the capital markets 325 00:19:34,080 --> 00:19:38,240 Speaker 1: have grown. That's a good outcome because as society wanted 326 00:19:38,280 --> 00:19:43,560 Speaker 1: to reduce societal's risk in a banking system, we needed 327 00:19:43,600 --> 00:19:50,000 Speaker 1: another source of raising capital and this is a blessing. Now, 328 00:19:50,680 --> 00:19:53,240 Speaker 1: is there a new risk when you have these big 329 00:19:53,280 --> 00:19:57,720 Speaker 1: pools of money in capital markets? Unquestionably should there be. 330 00:20:00,119 --> 00:20:03,240 Speaker 1: Right now in the world, we're moving more and more 331 00:20:03,320 --> 00:20:07,040 Speaker 1: private credit from the banking system to the capital markets. 332 00:20:08,880 --> 00:20:11,880 Speaker 1: The one beauty of banking when they provided a loan 333 00:20:11,960 --> 00:20:14,280 Speaker 1: to a medium and small business, they generally have a 334 00:20:14,320 --> 00:20:18,720 Speaker 1: banking relationship, they generally have deposits, they're generally more patient. 335 00:20:19,359 --> 00:20:22,840 Speaker 1: The question will be when you're when you're in an 336 00:20:22,840 --> 00:20:25,879 Speaker 1: investment firm, are you going to provide that patience to 337 00:20:26,040 --> 00:20:30,360 Speaker 1: that small and medium company that may be struggling and 338 00:20:30,800 --> 00:20:34,440 Speaker 1: there lies attention, They're not going to be as patient 339 00:20:35,480 --> 00:20:39,080 Speaker 1: and that could create a real structural issue. And if 340 00:20:39,119 --> 00:20:42,520 Speaker 1: there was a deep recession where many small and medium 341 00:20:42,560 --> 00:20:45,600 Speaker 1: businesses are being threatened, we are going to see then 342 00:20:45,640 --> 00:20:49,879 Speaker 1: a more immediate reaction. The transmission is going to be 343 00:20:50,280 --> 00:20:54,359 Speaker 1: very quick, quicker than the banking system because the banks 344 00:20:54,400 --> 00:20:57,919 Speaker 1: have other businesses, and if somebody in the private market 345 00:20:57,960 --> 00:21:00,440 Speaker 1: is just providing a loan and there's no other inner connection, 346 00:21:01,680 --> 00:21:03,399 Speaker 1: then they're gonna have to do the right thing on 347 00:21:03,480 --> 00:21:05,600 Speaker 1: behalf of their owners a capital as a viducio, they're 348 00:21:05,600 --> 00:21:08,399 Speaker 1: gonna have to call alone, They're gonna have to repossess 349 00:21:08,600 --> 00:21:12,520 Speaker 1: property or whatever that may be. And so I just 350 00:21:12,920 --> 00:21:14,840 Speaker 1: I'm not saying that's a risk at all. What I'm 351 00:21:14,840 --> 00:21:18,000 Speaker 1: trying to say we need to talk about what are 352 00:21:18,040 --> 00:21:21,359 Speaker 1: the dynamics, what are the changes are when there is 353 00:21:21,400 --> 00:21:25,160 Speaker 1: a real ecosystem change, And so right now, I don't 354 00:21:25,200 --> 00:21:27,040 Speaker 1: see any risk. In fact, I think the fit of 355 00:21:27,080 --> 00:21:30,440 Speaker 1: Reserve came out with a position paper saying there's actually 356 00:21:30,520 --> 00:21:33,840 Speaker 1: less risk because there's less leverage in this system by 357 00:21:33,920 --> 00:21:36,919 Speaker 1: doing that. But let's be clear, when we're at a recession, 358 00:21:37,880 --> 00:21:40,719 Speaker 1: we need more leverage capital from the banking system. And 359 00:21:40,800 --> 00:21:44,520 Speaker 1: so what society needs is a very strong banking system 360 00:21:44,600 --> 00:21:46,520 Speaker 1: alongside a very strong capital market. Right. 361 00:21:46,560 --> 00:21:47,919 Speaker 3: I mean, a lot of these things are new, but 362 00:21:47,960 --> 00:21:50,240 Speaker 3: I think we can also learn a lot from the past. 363 00:21:50,280 --> 00:21:52,600 Speaker 3: I mean, we're an audience with a lot of young 364 00:21:52,640 --> 00:21:54,960 Speaker 3: business school students who and a lot of young investors 365 00:21:55,000 --> 00:21:57,520 Speaker 3: who haven't seen five and a half percent rates before. 366 00:21:57,560 --> 00:21:59,600 Speaker 3: You've seen it, you've lived through it, you've traded through 367 00:21:59,680 --> 00:22:03,240 Speaker 3: higher nineteen eighty six, a quite infamous story of yours 368 00:22:03,240 --> 00:22:06,040 Speaker 3: of making a wrong way bet on interest rates that 369 00:22:06,080 --> 00:22:08,800 Speaker 3: lost first boss in one hundred million dollars. With that 370 00:22:08,920 --> 00:22:12,840 Speaker 3: experience in hand, what is your advice to someone managing 371 00:22:12,960 --> 00:22:15,600 Speaker 3: risk right now to avoid the mistakes of the past. 372 00:22:15,960 --> 00:22:19,320 Speaker 1: Well, the probably that was probably my biggest learning experience 373 00:22:19,320 --> 00:22:22,960 Speaker 1: in my life. So let's start there. And I promised 374 00:22:22,960 --> 00:22:25,960 Speaker 1: myself when we lost money and we did not understand 375 00:22:25,960 --> 00:22:28,719 Speaker 1: the risks we were taking, and that was the foundation 376 00:22:28,840 --> 00:22:31,919 Speaker 1: of Aladdin, which is the largest risk system in the world. 377 00:22:33,200 --> 00:22:38,640 Speaker 1: And so you know, you can't avoid risk. In fact, 378 00:22:38,720 --> 00:22:43,199 Speaker 1: those who avoid risk make no returns. Okay, that's but 379 00:22:44,480 --> 00:22:46,800 Speaker 1: you have to be aware of the risk. You have 380 00:22:46,880 --> 00:22:49,359 Speaker 1: to study risk, you have to be self aware of 381 00:22:49,400 --> 00:22:52,760 Speaker 1: the risk you're taking. So I would just say it's 382 00:22:53,000 --> 00:22:56,040 Speaker 1: just as bad. And actually, the year before we lost 383 00:22:56,040 --> 00:22:58,199 Speaker 1: that money, we were the number one profit center for 384 00:22:58,200 --> 00:23:00,560 Speaker 1: a couple of years before we might I should have 385 00:23:00,680 --> 00:23:03,639 Speaker 1: and we might have been foolish, But everybody loved it 386 00:23:03,680 --> 00:23:05,359 Speaker 1: when you made a lot of money because we did 387 00:23:05,440 --> 00:23:08,640 Speaker 1: not understand why we were making so much money. Okay, 388 00:23:08,640 --> 00:23:13,240 Speaker 1: everybody understand when you lost money. So the biggest lesson 389 00:23:13,359 --> 00:23:16,480 Speaker 1: I ever had in my life was I want to 390 00:23:16,520 --> 00:23:19,840 Speaker 1: know every moment, every day as much as possible. The 391 00:23:20,040 --> 00:23:22,800 Speaker 1: tended risks were taken, and so the foundation when we 392 00:23:22,840 --> 00:23:26,000 Speaker 1: started black Rock thirty five years and twenty five percent 393 00:23:26,000 --> 00:23:28,280 Speaker 1: of our people were technology people, which was kind of 394 00:23:28,359 --> 00:23:31,800 Speaker 1: unheard of in the financial services area. And now we 395 00:23:31,840 --> 00:23:36,159 Speaker 1: have built the largest, most comprehensive risk system that is 396 00:23:36,280 --> 00:23:39,880 Speaker 1: utilized by governments, by central banks, by insurance companies, by 397 00:23:39,920 --> 00:23:43,800 Speaker 1: wealth managers, and by pension funds around the world. 398 00:23:44,359 --> 00:23:46,680 Speaker 3: When you look at the landscape now of global Wall Street, 399 00:23:46,720 --> 00:23:48,280 Speaker 3: and I know you have an excellent view of that, 400 00:23:49,520 --> 00:23:52,159 Speaker 3: do you see people taking undue risk, not applying that 401 00:23:52,240 --> 00:23:54,240 Speaker 3: lens that you're talking about that concerns you. 402 00:23:55,800 --> 00:23:59,480 Speaker 1: Every moment. There's some people taking undue risks. Some of 403 00:23:59,520 --> 00:24:05,080 Speaker 1: them are wildly successful. Okay, you know there's asymmetric risk everywhere. 404 00:24:05,960 --> 00:24:09,080 Speaker 1: And the people who were wildly successful, let's be clear, 405 00:24:09,119 --> 00:24:12,720 Speaker 1: it was probably an asymmetric bet and they won. The 406 00:24:12,800 --> 00:24:15,919 Speaker 1: problem is when you take an asymmetric bet, a lot 407 00:24:15,920 --> 00:24:19,159 Speaker 1: of people are going to lose, and so let's be 408 00:24:19,320 --> 00:24:23,480 Speaker 1: clear the beauty of markets, there are going to be 409 00:24:23,880 --> 00:24:29,840 Speaker 1: winners and losers. Unless you're in index funds and you're 410 00:24:29,840 --> 00:24:31,480 Speaker 1: doing a long thing and you're keeping it for the 411 00:24:31,520 --> 00:24:35,280 Speaker 1: long term, that is not a bad thing. The question is, 412 00:24:35,280 --> 00:24:38,639 Speaker 1: is a risk that is occurring within markets, within any individual, 413 00:24:38,920 --> 00:24:42,440 Speaker 1: does that create a systemic risk. It's not about risk, 414 00:24:42,560 --> 00:24:46,399 Speaker 1: it's about does it impinge on the economy? Does it 415 00:24:46,480 --> 00:24:50,640 Speaker 1: impinge on society? But we should not be running away 416 00:24:50,640 --> 00:24:54,479 Speaker 1: from risk. If we ran away from you know, when 417 00:24:54,520 --> 00:24:57,680 Speaker 1: I'm here in Berlin, I see cranes. Okay, that developer 418 00:24:57,720 --> 00:25:00,199 Speaker 1: is making a you know whatever, it's a five your 419 00:25:00,280 --> 00:25:03,439 Speaker 1: risk of planning maybe it's a seven year risk of 420 00:25:03,480 --> 00:25:06,520 Speaker 1: planning building. Is there going to be tenants in that building? 421 00:25:06,720 --> 00:25:12,920 Speaker 1: That's a risk today? Unfortunately, because permitting, I mean, when 422 00:25:13,200 --> 00:25:15,840 Speaker 1: you want to build a power grid, when you want 423 00:25:15,880 --> 00:25:21,080 Speaker 1: to build a pipeline, as we as you pare prepare 424 00:25:21,080 --> 00:25:23,040 Speaker 1: for a hydrogen or whatever they use may be in 425 00:25:23,080 --> 00:25:27,160 Speaker 1: a pipeline, what is that a fifteen year plan because 426 00:25:27,200 --> 00:25:31,080 Speaker 1: of permitting and getting this done? What that's the problem. 427 00:25:31,240 --> 00:25:34,840 Speaker 1: Why we're not moving fast enough? If we could shorten. 428 00:25:34,680 --> 00:25:37,400 Speaker 3: Is that just a regulation issue. There's too much regulation 429 00:25:37,440 --> 00:25:37,879 Speaker 3: in general? 430 00:25:37,920 --> 00:25:40,400 Speaker 2: Is that what you're saying, regula? 431 00:25:40,640 --> 00:25:43,720 Speaker 1: If we have regulation is fine. If it's can it 432 00:25:43,840 --> 00:25:48,440 Speaker 1: be more immediate? No one is questioning the review process, 433 00:25:48,840 --> 00:25:51,720 Speaker 1: But why can't we know with new technology with AI, 434 00:25:52,160 --> 00:25:55,080 Speaker 1: why can't we get the review process in weeks instead 435 00:25:55,080 --> 00:25:58,560 Speaker 1: of seven years? Why can't we move the you know, 436 00:25:58,920 --> 00:26:03,600 Speaker 1: society for word? Okay, that's what we need. And by 437 00:26:03,640 --> 00:26:05,280 Speaker 1: the way, if we need a review, if we can 438 00:26:05,359 --> 00:26:09,520 Speaker 1: move the review process down from years to weeks, I 439 00:26:09,680 --> 00:26:14,080 Speaker 1: promise you hope will be flourishing because we're gonna be 440 00:26:14,080 --> 00:26:16,919 Speaker 1: able to do things faster, the move society forward. 441 00:26:17,119 --> 00:26:19,919 Speaker 3: That sounds great, but we're forty four hours away right 442 00:26:19,920 --> 00:26:23,199 Speaker 3: now from a US government shutdown. They've been unable to 443 00:26:23,240 --> 00:26:26,600 Speaker 3: come together on that. I mean, they're. 444 00:26:26,520 --> 00:26:29,280 Speaker 1: Yes, what do you want me to say? I don't 445 00:26:29,320 --> 00:26:33,560 Speaker 1: know how you got in favor of a shutdown. They're 446 00:26:33,600 --> 00:26:37,600 Speaker 1: not listening to me. But no, that I think that 447 00:26:37,760 --> 00:26:43,720 Speaker 1: is I think a shutdown for a country that is 448 00:26:44,200 --> 00:26:49,199 Speaker 1: that has thirty three trillion dollars of debt, that is 449 00:26:49,240 --> 00:26:53,400 Speaker 1: not a good outcome when you have that type of debt. 450 00:26:53,640 --> 00:27:00,399 Speaker 1: What are we telling the lenders of the US Treasury market, 451 00:27:00,400 --> 00:27:05,159 Speaker 1: our own by non US entities, whether it's individuals and 452 00:27:05,200 --> 00:27:12,000 Speaker 1: a bond fund, corporations, pension funds, sovereign wealth funds, central banks. 453 00:27:13,000 --> 00:27:16,280 Speaker 1: That is not I mean, can you imagine you go 454 00:27:16,320 --> 00:27:18,640 Speaker 1: to your bank and say, I'm not paying my mortgage. 455 00:27:19,760 --> 00:27:23,560 Speaker 1: I mean, that's what we're doing. And it's not about creating. 456 00:27:23,600 --> 00:27:25,879 Speaker 1: It's not about the new debt. It's about what we 457 00:27:26,040 --> 00:27:30,440 Speaker 1: already what Congress has already approved. I mean, it's it's 458 00:27:30,480 --> 00:27:34,120 Speaker 1: irrational from my advantage white, it's wrong from my advantage point. 459 00:27:34,560 --> 00:27:37,919 Speaker 1: At the same time, it's political, and as we know 460 00:27:38,240 --> 00:27:43,720 Speaker 1: in politics today, it's that creates the fear and it's scary. 461 00:27:43,720 --> 00:27:46,800 Speaker 3: And we've seen reading agencies react. Moody's put out a 462 00:27:46,840 --> 00:27:49,240 Speaker 3: note basically saying a US government shutdown would be bad 463 00:27:49,240 --> 00:27:52,679 Speaker 3: for American credit. Are we Are we still in a 464 00:27:52,680 --> 00:27:54,760 Speaker 3: place where a default is likely? I know the shutdown 465 00:27:54,800 --> 00:27:56,560 Speaker 3: is separate from that, but if that's the track we're 466 00:27:56,600 --> 00:28:00,800 Speaker 3: headed on, is a default still possible for the American economy? 467 00:28:02,680 --> 00:28:03,320 Speaker 1: Let's hope not. 468 00:28:05,680 --> 00:28:11,520 Speaker 3: That is an excellent answer, isn't actually, you know, at 469 00:28:11,600 --> 00:28:16,040 Speaker 3: the same time, going back to this idea of decarbonization 470 00:28:16,160 --> 00:28:19,080 Speaker 3: in the world. We have had many funds have to 471 00:28:19,119 --> 00:28:21,680 Speaker 3: pull back from ESG funds. I know you felt under 472 00:28:21,680 --> 00:28:24,280 Speaker 3: pressure as well, and we talked about this. But in 473 00:28:24,320 --> 00:28:28,480 Speaker 3: an election cycle, do you fear those tacks, those very 474 00:28:28,520 --> 00:28:30,000 Speaker 3: specific attacks get worse. 475 00:28:31,960 --> 00:28:34,840 Speaker 1: As I said, we're hearing from more investors that are 476 00:28:34,880 --> 00:28:39,720 Speaker 1: looking to put more money in decarbonization. We believe that 477 00:28:39,760 --> 00:28:42,600 Speaker 1: we have to we as a world, have to rapidly 478 00:28:42,640 --> 00:28:47,600 Speaker 1: find the new technologies to bring down the competitive premium. 479 00:28:47,640 --> 00:28:50,200 Speaker 1: So yes, we are gonna have you know, and I said, 480 00:28:50,240 --> 00:28:53,480 Speaker 1: I'm not using the term ESG anymore. And the main 481 00:28:53,520 --> 00:28:56,560 Speaker 1: reason why you may have a different opinion what ESG does. 482 00:28:56,800 --> 00:28:59,760 Speaker 1: Everybody has a different opinion. It is. It is, But 483 00:29:01,080 --> 00:29:05,080 Speaker 1: we want to talk about, you know, sustainability and decarbonization. 484 00:29:06,840 --> 00:29:12,480 Speaker 1: I don't believe here's an amazing thing already. And so 485 00:29:13,160 --> 00:29:19,960 Speaker 1: much of the attack on sustainability and decarbonization comes from 486 00:29:20,000 --> 00:29:23,479 Speaker 1: what we call our Red states. If you look at 487 00:29:23,480 --> 00:29:27,920 Speaker 1: the most recent data where all the IRA money is going, 488 00:29:28,040 --> 00:29:32,560 Speaker 1: I think it's like sixty percent of the money are 489 00:29:32,600 --> 00:29:36,400 Speaker 1: going to the Red States. And so if you think 490 00:29:36,440 --> 00:29:40,120 Speaker 1: about Texas right now, and Texas is an amazing state, 491 00:29:40,880 --> 00:29:44,640 Speaker 1: it is a number one state, in hydrocarbons. Everybody knows that, 492 00:29:45,400 --> 00:29:47,800 Speaker 1: but it is the number one state in America for 493 00:29:47,880 --> 00:29:52,400 Speaker 1: wind and solar. It had fifty days of temperature around 494 00:29:52,440 --> 00:29:55,480 Speaker 1: forty degrees in a row this summer. Yeah, fifty straight 495 00:29:55,560 --> 00:29:58,560 Speaker 1: days in Austin, Texas. And for the first time they 496 00:29:58,600 --> 00:30:03,080 Speaker 1: had no black outs because of wind and solar this year. 497 00:30:03,440 --> 00:30:05,600 Speaker 3: So the other angle to this, also in the middle 498 00:30:05,640 --> 00:30:07,360 Speaker 3: of an election year, is this is kind of the 499 00:30:07,360 --> 00:30:13,000 Speaker 3: first AI election. When we have mass use of artificial intelligence, 500 00:30:13,880 --> 00:30:16,640 Speaker 3: the potential for misinformation to increase. 501 00:30:16,880 --> 00:30:18,360 Speaker 2: Yes, does that concern you? 502 00:30:20,960 --> 00:30:26,120 Speaker 1: I think AI has a tremendous potential. It's going to 503 00:30:26,240 --> 00:30:31,040 Speaker 1: change how we work, how we live. It also has 504 00:30:31,080 --> 00:30:37,320 Speaker 1: a potential ocreating real fears and problems. And so you know, 505 00:30:37,360 --> 00:30:40,800 Speaker 1: as we have heard from the men and women who 506 00:30:40,800 --> 00:30:43,520 Speaker 1: are deeply involved in it, there needs to be structure. 507 00:30:44,280 --> 00:30:47,520 Speaker 1: Governments worldwide need to get in front of this. This 508 00:30:47,600 --> 00:30:51,960 Speaker 1: is moving so rapidly, but let's be clear, every company, 509 00:30:52,040 --> 00:30:56,040 Speaker 1: every board we talk to is aggressively focusing on how 510 00:30:56,080 --> 00:31:04,080 Speaker 1: can we navigate if you overlay AI and robotics. This 511 00:31:04,160 --> 00:31:09,080 Speaker 1: is what is going to transform societies very rapidly. And 512 00:31:09,160 --> 00:31:13,960 Speaker 1: I think Europe because of the demographics of Europe, we 513 00:31:14,040 --> 00:31:17,880 Speaker 1: could use AI and robotics as a means to create 514 00:31:18,240 --> 00:31:23,760 Speaker 1: much more productivity. I'm worried about let me just say 515 00:31:23,760 --> 00:31:28,800 Speaker 1: one thing. I'm really worried about AI and robotics. You know, 516 00:31:29,040 --> 00:31:32,120 Speaker 1: historically over the last thirty forty years, the countries that 517 00:31:32,200 --> 00:31:36,320 Speaker 1: had great masses of people that were educated that we're aggressive, 518 00:31:36,760 --> 00:31:39,200 Speaker 1: who are willing to work hard. The Chinese is a 519 00:31:39,200 --> 00:31:43,960 Speaker 1: great example. They were able to build their economy. If 520 00:31:44,000 --> 00:31:48,480 Speaker 1: AI and robotics changes how we work and how we build, 521 00:31:52,400 --> 00:31:57,520 Speaker 1: the countries that have huge populations growing populations could be 522 00:31:57,560 --> 00:32:01,120 Speaker 1: the most suffering nations because we are not going to 523 00:32:01,280 --> 00:32:07,400 Speaker 1: have to build so many things offshore. Interesting And the 524 00:32:07,480 --> 00:32:12,720 Speaker 1: countries actually that have declining demographics and are worried about 525 00:32:12,760 --> 00:32:15,480 Speaker 1: it and the narrative, what do that means for growth? 526 00:32:16,680 --> 00:32:20,480 Speaker 1: It actually might be the true blessing. It may be 527 00:32:20,560 --> 00:32:23,840 Speaker 1: those countries that will have less social pressure. And the 528 00:32:24,720 --> 00:32:26,960 Speaker 1: great thing that I that I wanted to say, and 529 00:32:27,080 --> 00:32:29,320 Speaker 1: the best test to it will be very clear. For 530 00:32:29,320 --> 00:32:34,400 Speaker 1: here in Europe. In the world, each year there's one 531 00:32:34,480 --> 00:32:40,200 Speaker 1: point two million human beings die from automobiles, and every 532 00:32:40,280 --> 00:32:44,600 Speaker 1: one of us we're pretty immune to it. Unless we 533 00:32:44,680 --> 00:32:46,840 Speaker 1: have somebody we know or a family member we know 534 00:32:46,880 --> 00:32:50,280 Speaker 1: who have been harmed or died from an automobile accident. 535 00:32:51,800 --> 00:32:58,200 Speaker 1: We're just around the corner to have driverless cars. 536 00:32:58,400 --> 00:32:59,480 Speaker 2: Yeah, yeah, we're close. 537 00:33:00,000 --> 00:33:04,320 Speaker 1: But drive list cars will have less than a five thousand, 538 00:33:04,920 --> 00:33:08,240 Speaker 1: five thousand deaths a year, and it's going to save 539 00:33:08,880 --> 00:33:14,000 Speaker 1: so much fuel. People be using this so on sustainability issues, 540 00:33:14,080 --> 00:33:17,400 Speaker 1: But we have millions of jobs that will be lost, 541 00:33:17,960 --> 00:33:19,520 Speaker 1: and how do we navigate that? 542 00:33:19,720 --> 00:33:21,520 Speaker 3: Yes, okay, that's exactly where I wanted to go. I'm 543 00:33:21,520 --> 00:33:23,720 Speaker 3: glad you went there. We're I think we're running up 544 00:33:23,720 --> 00:33:25,440 Speaker 3: against a little bit of time, so we'll have to 545 00:33:25,440 --> 00:33:27,640 Speaker 3: be quick here. I've already accepted my jobs going to 546 00:33:27,680 --> 00:33:28,760 Speaker 3: the AI over lord's layer. 547 00:33:28,760 --> 00:33:30,959 Speaker 1: I already think where there is. I don't even think 548 00:33:31,000 --> 00:33:32,800 Speaker 1: they're gonna be a need for CEOs anymore. 549 00:33:33,800 --> 00:33:35,600 Speaker 2: But maybe that means we can all be on a 550 00:33:35,600 --> 00:33:38,400 Speaker 2: beach somewhere. But how do you think about that? At Blackrock? 551 00:33:38,440 --> 00:33:41,960 Speaker 3: You obviously have you know, a robust AI research department too. 552 00:33:42,680 --> 00:33:45,560 Speaker 3: Do you foresee a lot of Blackrock jobs going the 553 00:33:45,560 --> 00:33:46,120 Speaker 3: way of AI. 554 00:33:48,280 --> 00:33:49,920 Speaker 1: I think we have jobs that are going to be 555 00:33:50,000 --> 00:33:52,160 Speaker 1: evolving and changing and We're going to have even more 556 00:33:52,280 --> 00:33:55,320 Speaker 1: dynamic jobs from that. I mean every time you see 557 00:33:55,360 --> 00:33:58,520 Speaker 1: I mean the naysayers about technology job lost, job lost, 558 00:33:58,600 --> 00:34:00,880 Speaker 1: job loss, we have not seen that. We've seen actually 559 00:34:01,520 --> 00:34:05,200 Speaker 1: job creation. But there's a transition from the time when 560 00:34:05,200 --> 00:34:07,480 Speaker 1: there may be a media job loss to a transition 561 00:34:07,680 --> 00:34:11,000 Speaker 1: to a different type of job. All I could say 562 00:34:11,040 --> 00:34:14,719 Speaker 1: is this past year we added over a thousand employees 563 00:34:14,719 --> 00:34:18,759 Speaker 1: and a base of twenty thousand. We see more opportunity. 564 00:34:18,880 --> 00:34:21,840 Speaker 1: We're aggressively using AI. We have our AI labs with 565 00:34:21,880 --> 00:34:26,120 Speaker 1: different universities. We're deploying big data to get better insights 566 00:34:26,120 --> 00:34:29,360 Speaker 1: in how we invest in how we think. We're studying 567 00:34:29,360 --> 00:34:32,680 Speaker 1: more and more things. We're using AI to understand physical 568 00:34:32,719 --> 00:34:37,560 Speaker 1: climate risk. We have really advanced what we believe is 569 00:34:38,200 --> 00:34:41,480 Speaker 1: models that show where physical climate risk can have a 570 00:34:41,520 --> 00:34:45,200 Speaker 1: real impact and how should we invest in that, how 571 00:34:45,239 --> 00:34:48,759 Speaker 1: do we think about that. So we are spending most 572 00:34:48,800 --> 00:34:50,680 Speaker 1: of the time focused on how we can use this 573 00:34:50,800 --> 00:34:54,719 Speaker 1: to improve society, how we can improve black Rock, and 574 00:34:54,760 --> 00:34:58,200 Speaker 1: how can we improve our relationships with our clients and 575 00:34:58,280 --> 00:34:59,799 Speaker 1: in all the societies we work