WEBVTT - Jenny Johnson Talks Disruption, Navigating Change 0:00:02.440 --> 0:00:07.880 Bloomberg Audio Studios, podcasts, radio news. Jenny, wonderful to see 0:00:07.920 --> 0:00:08.360 you again. 0:00:08.520 --> 0:00:10.080 I mean, there's a lot going on in the market, 0:00:10.119 --> 0:00:12.640 just a couple of things here and there, I think, Yeah, So, 0:00:12.680 --> 0:00:14.520 how do you see the role of traditional money actually 0:00:14.560 --> 0:00:17.040 changing with alternatives and how do you see it evolving 0:00:17.040 --> 0:00:18.040 in the next couple of years. 0:00:18.440 --> 0:00:21.160 Well, look, I think there's some trends that are obviously 0:00:21.160 --> 0:00:25.680 going to just continue right. One is alternatives, and you know, 0:00:25.800 --> 0:00:30.760 you look at I think a lot of this the 0:00:30.800 --> 0:00:34.040 growth and alternatives actually comes from kind of the two 0:00:34.080 --> 0:00:36.839 thousand and eight financial crisis. So one, you know, with 0:00:37.000 --> 0:00:40.800 banks not changing the capital requirements around banks. Banks really 0:00:40.840 --> 0:00:43.320 want to preserve their capital for their biggest and best clients, 0:00:43.760 --> 0:00:46.680 and so it created this opportunity for private credit to 0:00:46.680 --> 0:00:50.479 step in. I think that honestly, low interest rates were 0:00:50.479 --> 0:00:52.960 probably one of the things that fueled private equity, but 0:00:53.040 --> 0:00:56.760 also a bit of the environment where I think less 0:00:56.760 --> 0:00:59.360 and less people will less and less companies want to 0:00:59.400 --> 0:01:02.200 go public. And I don't think that trend changes. I 0:01:02.200 --> 0:01:03.920 don't think I don't think there's a lot of people 0:01:03.920 --> 0:01:05.639 going Boy, I'd really like to be a public company 0:01:05.680 --> 0:01:09.080 CEO these days, and I think in a time where 0:01:09.160 --> 0:01:14.440 you have all these great technological advances like AI, where 0:01:14.480 --> 0:01:17.319 companies need to invest in the technology that may not 0:01:17.480 --> 0:01:20.600 pay off for years, it's really hard with the pressure 0:01:20.600 --> 0:01:23.800 of cordingly earnings, and so in some cases transforming a 0:01:23.880 --> 0:01:27.639 company ends up being better in the structure of private equity. 0:01:27.680 --> 0:01:31.320 So I think like that trend is here. I think 0:01:31.440 --> 0:01:34.000 I'm a big fan of blockchain. I think that's going 0:01:34.040 --> 0:01:38.080 to open up new investment opportunities and kind of interesting things. 0:01:38.080 --> 0:01:40.880 I always say that eventually your financial advisor is going 0:01:40.959 --> 0:01:43.440 to report your portfolio in three ways. 0:01:43.840 --> 0:01:45.600 They're going to say, here's your investment. 0:01:45.240 --> 0:01:48.520 Return, here's the impact you have, and by the way, 0:01:48.560 --> 0:01:52.160 here the loyalty programs that you've gotten from your tokenized 0:01:52.240 --> 0:01:55.440 equity ownership that have now tied loyalty programs to it. 0:01:55.720 --> 0:01:58.200 So that's where I think things ultimately evolve. 0:01:58.440 --> 0:02:02.080 So on blockchain and bitcoin does change significantly under a 0:02:02.120 --> 0:02:03.400 trumpet restoration. 0:02:03.120 --> 0:02:04.000 Oh for sure. 0:02:04.080 --> 0:02:08.440 And again I always make sure you separate bitcoin from blockchain. 0:02:08.600 --> 0:02:10.280 Okay, bitcoin different deal. 0:02:11.480 --> 0:02:14.400 And you know, I was a skeptic of it initially, 0:02:14.480 --> 0:02:18.680 but a couple of things people said to me. One 0:02:19.720 --> 0:02:22.519 somebody who lived in Israel, said, my parents and grandparents 0:02:22.520 --> 0:02:24.880 had their money taken away by the government. They will 0:02:24.919 --> 0:02:29.200 always keep a portion of their savings in bitcoin. And 0:02:29.240 --> 0:02:32.239 then I had actually an employee who lived in the 0:02:32.240 --> 0:02:33.919 Middle East and said, if I say the wrong thing, 0:02:33.960 --> 0:02:36.920 I can have my accounts frozen. So I always keep 0:02:36.960 --> 0:02:41.079 a percentage of my earnings in bitcoin, and obviously in 0:02:41.240 --> 0:02:43.359 the kind of key because they can keep it protected. 0:02:43.720 --> 0:02:46.760 So if you grow up in a society where you 0:02:46.800 --> 0:02:49.440 feel your money safe, you think that doesn't make any 0:02:49.480 --> 0:02:52.360 sense and why should this external currency come in. But 0:02:52.400 --> 0:02:53.840 if you actually think that there's a lot of the 0:02:53.880 --> 0:02:56.600 world that would like that safety and control, you can 0:02:56.639 --> 0:02:58.880 see where bitcoin has a lot of opportunities. And then 0:02:58.919 --> 0:03:01.840 blockchain is again, it's a technology. It's a technology. It's 0:03:01.840 --> 0:03:03.600 going to do a lot of really good things in 0:03:03.639 --> 0:03:07.600 financial services. A lot of toll takers take a piece 0:03:07.639 --> 0:03:10.320 of a transaction that can eliminate it and so it's 0:03:10.360 --> 0:03:11.519 going to create more efficiencies. 0:03:11.600 --> 0:03:13.359 It's going to open up investment opportunities. 0:03:13.919 --> 0:03:15.600 Jenny, do you think that there'll be a catalyst for 0:03:15.720 --> 0:03:17.680 companies to want to go public again or is it 0:03:17.720 --> 0:03:19.440 just private all the way? Is this, you know, the 0:03:19.600 --> 0:03:21.280 trend for the next five ten years. 0:03:21.560 --> 0:03:24.160 So I actually think it used to be you go venture, 0:03:24.280 --> 0:03:28.720 private equity, IPO, public markets, I actually think so I 0:03:28.720 --> 0:03:30.640 think that stays, and we see it where people are 0:03:30.680 --> 0:03:32.360 just waiting a lot longer going to go public. But 0:03:32.400 --> 0:03:35.200 at some point people want that liquidity and monetize it, 0:03:35.240 --> 0:03:38.520 and the private markets aren't yet that liquid there's some amount, 0:03:38.760 --> 0:03:40.680 But I actually think what you're starting to see is 0:03:40.800 --> 0:03:45.240 public companies being taken private because they we invest in 0:03:45.240 --> 0:03:48.960 a company, invest in it and they have three trillion 0:03:49.040 --> 0:03:52.840 dollars in assets by financial advisor platform. 0:03:52.440 --> 0:03:54.440 Right, they need to invest in it. 0:03:54.440 --> 0:03:57.200 It is hard as a public company to make those 0:03:57.240 --> 0:03:59.160 kind of investments and stay of the street. Hey, by 0:03:59.160 --> 0:04:00.640 the way, this is going to impact earnings for the 0:04:00.680 --> 0:04:04.480 next eighteen months. So they become private, right, And so 0:04:04.520 --> 0:04:07.240 they were taken private by bank capital, and then they'll 0:04:07.280 --> 0:04:09.120 go public, I think again, So I think there's going 0:04:09.200 --> 0:04:11.920 to be this new cycle of pulling people off, doing 0:04:11.920 --> 0:04:14.680 the investment that needs to happen, whether it's AI investments 0:04:14.760 --> 0:04:16.520 or whatever, and then going public again. 0:04:16.600 --> 0:04:18.880 But do you have a concern on valuations in private markets? 0:04:18.920 --> 0:04:20.680 I mean, this comes over and over again, but we 0:04:20.720 --> 0:04:23.440 haven't really seen anything. Maybe real estate wan a bit ugly, 0:04:23.480 --> 0:04:24.400 but there's nothing huge. 0:04:24.560 --> 0:04:26.719 Yeah, I mean I actually one of the concerns, you know, 0:04:27.120 --> 0:04:30.400 investment grade and even some non investment grade of private 0:04:30.400 --> 0:04:34.159 credit is trading at the same spreads as traditional fixed income, 0:04:34.240 --> 0:04:38.320 Like you get no premium for ill liquidity. That worries me, 0:04:38.400 --> 0:04:41.160 that kind of thing I think. I mean, fixed income 0:04:41.200 --> 0:04:45.120 markets are priced for perfection at the moment, so you know, 0:04:45.160 --> 0:04:48.359 you always have to pick your spots. There's we have 0:04:48.440 --> 0:04:52.200 a huge secondaries business. I think that they've deployed this 0:04:52.320 --> 0:04:55.320 current fund with about twenty six percent average discount. There's 0:04:55.320 --> 0:04:59.360 been seventy percent deployed. And you know what I say 0:04:59.400 --> 0:05:01.760 is it's not that the valuations are wrong of the 0:05:01.800 --> 0:05:04.719 private equity. It's that there's not a lot of supply 0:05:05.000 --> 0:05:07.080 to create liquidity in that market because there's not a 0:05:07.120 --> 0:05:09.240 lot of secondaries. But that gives you a little bit 0:05:09.279 --> 0:05:10.200 of a pricing element. 0:05:10.440 --> 0:05:12.559 So what does that mean that you'll do for actually 0:05:12.600 --> 0:05:16.800 Franklin Templeton in terms of risk taking and to take 0:05:16.800 --> 0:05:19.320 advantage of these new trends, do you change the company 0:05:19.360 --> 0:05:20.000 at the margins? 0:05:20.080 --> 0:05:22.520 Well, we had to, right, so we've done ten acquisitions 0:05:22.520 --> 0:05:24.480 in the last five years, and those acquisitions have been 0:05:24.520 --> 0:05:29.000 focused on really capabilities that we didn't have. I mean, 0:05:29.040 --> 0:05:32.520 our job is to provide our clients with choice across 0:05:32.560 --> 0:05:35.920 the full risk spectrum and then deliver it in different 0:05:36.040 --> 0:05:38.880 vehicles which are appropriate to whatever the client's looking for. 0:05:39.279 --> 0:05:42.680 And so we recognize that, Look, this alternatives trend isn't 0:05:42.720 --> 0:05:46.040 going away. You see more and more institutions and right 0:05:46.080 --> 0:05:48.400 now we're really nascent as far as the wealth channel 0:05:48.400 --> 0:05:51.160 the average person's access to that, but you could see 0:05:51.160 --> 0:05:53.400 that trend and you could see the excess returns in 0:05:53.440 --> 0:05:56.960 there by the better players. I mean, there's a big 0:05:57.000 --> 0:06:00.840 dispersion in the top performer and the bottom performers the alternatives, 0:06:00.920 --> 0:06:02.880 and so we recognize. So today we're a top ten 0:06:02.920 --> 0:06:05.240 alternatives manager. So that was most people think of us 0:06:05.279 --> 0:06:09.520 as really just traditional equity and fixed income, but we're 0:06:09.520 --> 0:06:11.200 actually quite large in the alternatives. 0:06:11.720 --> 0:06:14.159 So it's again about being creating choice. 0:06:14.320 --> 0:06:16.680 We also filled in some other product gaps that we had, 0:06:17.520 --> 0:06:20.240 and then now it's going to be about delivering those 0:06:20.279 --> 0:06:23.640 capabilities appropriately to clients. And so if you look at 0:06:23.640 --> 0:06:25.880 today with the wealth channel only having about five percent 0:06:25.880 --> 0:06:30.320 allocation alternatives, that number you talk to big distributors. 0:06:30.360 --> 0:06:31.560 I think that number is probably. 0:06:31.320 --> 0:06:34.000 Closer than fifteen percent, which will mean some clients will 0:06:34.000 --> 0:06:36.560 be zero and some will be thirty. But as it's 0:06:36.600 --> 0:06:39.200 fifteen percent, what's the best way to deliver it? Well, 0:06:39.440 --> 0:06:40.960 if you have a lot of money, if you're a 0:06:41.000 --> 0:06:44.400 high at worth, that might be in direct investments in 0:06:44.440 --> 0:06:47.039 those alternatives, but it also might be a managed to 0:06:47.120 --> 0:06:50.200 count with a sleeve or a portion of that mutual 0:06:50.240 --> 0:06:52.960 fund or use its fund that has an allocation of 0:06:52.960 --> 0:06:54.960 the alternatives, right, And that way it creates a certain 0:06:54.960 --> 0:06:57.280 amount of liquidity that's important for a lot of people. 0:06:57.360 --> 0:06:59.560 I mean, do all these changes change the fee structure? 0:07:01.120 --> 0:07:04.960 So look, the biggest probably pressure on the fee structure 0:07:05.000 --> 0:07:06.240 on the traditional markets. 0:07:05.960 --> 0:07:07.320 Was of course passive, right. 0:07:08.080 --> 0:07:10.120 I think in the alternatives, it's really important to understand 0:07:10.120 --> 0:07:14.520 the best top performing private equity manager's top quartel outperform 0:07:14.560 --> 0:07:18.680 bottom quartile by twenty percent a year. Okay, top quartile 0:07:19.360 --> 0:07:22.240 versus bottom in real estate was ten percent a year 0:07:22.280 --> 0:07:25.560 about and private credit was five percent a year. The 0:07:25.760 --> 0:07:29.200 top quartel performers are over subscribed and so they are 0:07:29.240 --> 0:07:32.360 not feeling any feed pressure. Right, It's about people continuing 0:07:32.600 --> 0:07:34.400 to make sure they can come up with liquidity. It's 0:07:34.400 --> 0:07:36.720 why there's a secondary business because if there's a call 0:07:36.800 --> 0:07:38.840 for that top manager to start a new fund, you 0:07:38.880 --> 0:07:42.000 don't want to be left out. My worry is who's 0:07:42.040 --> 0:07:44.600 on sale. It's the bottom who's going to have the 0:07:44.640 --> 0:07:47.640 feed pressure. It's the bottom quartile performing. And we have 0:07:47.880 --> 0:07:51.520 trained so many people to think only about fees that 0:07:51.680 --> 0:07:54.560 as we start to introduce alternatives and things like into 0:07:55.040 --> 0:07:59.320 retirement programs, and if it's just fees, the lower performing 0:07:59.360 --> 0:08:01.080 guys are going to be ones who cut their fees. 0:08:01.360 --> 0:08:03.240 And you're better off being in the public markets than 0:08:03.280 --> 0:08:06.200 you are to be in a poor performing alternative manager. 0:08:06.680 --> 0:08:08.920 And I also want to ask about outflows. So you 0:08:09.000 --> 0:08:10.600 have been a tough spot because of LEMCO. 0:08:11.720 --> 0:08:18.200 What happened, Well, it's there's never much upside to talking 0:08:18.200 --> 0:08:26.320 about government investigation publicly. So you know, look, you know 0:08:26.360 --> 0:08:27.400 it's a difficult situation. 0:08:27.480 --> 0:08:28.840 It's it's was. 0:08:29.040 --> 0:08:32.640 You know, one one person, uh, and you know we're 0:08:32.679 --> 0:08:34.840 cooperating with the government on it. I think the most 0:08:34.840 --> 0:08:36.640 important thing is we still have a lot of clients 0:08:36.720 --> 0:08:40.480 invested in Western asset management, and so we have been 0:08:41.320 --> 0:08:44.560 made sure that we insulated the investment team from a 0:08:44.600 --> 0:08:46.600 lot of what's going on with the investigation, so that 0:08:46.640 --> 0:08:49.400 we can ensure that they're managing clients money and staying 0:08:49.480 --> 0:08:51.800 focused on that. And so that's been you know what 0:08:52.200 --> 0:08:53.600 has been important for us to do. 0:08:53.840 --> 0:08:55.840 Will you fold it closer into the business. 0:08:56.000 --> 0:08:58.480 So our model has always been and it's and I 0:08:58.520 --> 0:09:01.160 think all the way back to when Franklin acquired Templeton 0:09:01.480 --> 0:09:03.720 was look at, if you're in the asset management business, 0:09:04.440 --> 0:09:06.440 what are you buying when you acquire a company. You're 0:09:06.440 --> 0:09:09.520 buying people in their investment process. So don't destroy value 0:09:09.960 --> 0:09:12.520 by suddenly going in and messing with it. So we 0:09:12.640 --> 0:09:15.200 leave the investment team to be very much independent, and 0:09:15.240 --> 0:09:17.560 then we take things like the fund administration, some of 0:09:17.559 --> 0:09:19.760 the client service and we tend to bring those things 0:09:19.800 --> 0:09:22.640 in technology and those things. In the case of Western 0:09:23.920 --> 0:09:26.000 the other thing you can't do in the asset management 0:09:26.120 --> 0:09:28.760 business is do a hostile takeover because people can walk 0:09:28.760 --> 0:09:30.360 out the door, right, It's not like a lot of 0:09:30.400 --> 0:09:33.560 other types of businesses. And so in that they negotiated 0:09:33.640 --> 0:09:37.119 a five year standalone so they really have run independently 0:09:37.160 --> 0:09:39.640 as a company. And so we are now in the 0:09:39.679 --> 0:09:42.080 process of looking what does it make sense to bring 0:09:42.120 --> 0:09:46.920 in We've hired compliance folks to take a look at 0:09:46.920 --> 0:09:50.760 and obviously continue to enhance the policies and procedures within there. 0:09:50.800 --> 0:09:53.200 We also, of course took a look more broadly at 0:09:53.840 --> 0:09:56.720 all the rest of the Franklin's investment teams to ensure 0:09:57.000 --> 0:10:00.160 that we're confident with all the policies and procedures. And 0:10:00.840 --> 0:10:04.480 you know, well, the answer is, we do what makes 0:10:05.080 --> 0:10:08.120 good common sense with each So they're all slightly different. 0:10:08.480 --> 0:10:10.600 We usually let the CIO define. 0:10:10.240 --> 0:10:11.960 A bit of what that is, and I go back 0:10:12.000 --> 0:10:16.000 to Mutual Series today has the traders sitting on the desk, 0:10:16.200 --> 0:10:19.280 Templeton says, I prefer to use the global trading platform. 0:10:19.400 --> 0:10:21.800 So it's what makes sense for that investment team. 0:10:22.400 --> 0:10:24.679 How do you find the right acquisition? Was it a 0:10:24.679 --> 0:10:26.840 tough I mean, you know, have been one of the 0:10:26.880 --> 0:10:27.640 most inquisitive. 0:10:27.960 --> 0:10:29.839 Yeah, yeah, So I always say it's kind of the 0:10:29.880 --> 0:10:32.160 three season look at investment. Bankers will tell you why 0:10:32.200 --> 0:10:34.000 it's a great price and a great strategic fit, but 0:10:34.040 --> 0:10:36.080 they'll never talk about the culture and the paper, and 0:10:36.120 --> 0:10:38.160 that is what determines whether a deal makes it or not. 0:10:38.559 --> 0:10:40.360 And so the thing that we look for culture I 0:10:40.360 --> 0:10:42.520 say it's the three seas. How quickly when you're talking 0:10:42.520 --> 0:10:45.079 to the team, do they talk about clients right? Pretty 0:10:45.080 --> 0:10:48.280 important clients, you know? Do they collaborate with each other? 0:10:48.360 --> 0:10:50.559 Do they actually seem to like each other? And you 0:10:50.600 --> 0:10:52.839 can see a lot of dynamics on that. And then 0:10:52.880 --> 0:10:57.360 the third do they have a mindset of continuous improvement? 0:10:57.440 --> 0:10:57.640 Right? 0:10:57.679 --> 0:11:00.920 And especially a time like now with all theechnological innovation 0:11:00.960 --> 0:11:03.600 that's going on, if you don't have a mindset of saying, 0:11:03.840 --> 0:11:04.680 how should we be thinking? 0:11:04.679 --> 0:11:06.960 I mean, how should investment team think about AI? 0:11:07.320 --> 0:11:09.240 I don't know that nobody knew it has the answer, 0:11:09.400 --> 0:11:10.960 but if you are not thinking about it, you're going 0:11:11.000 --> 0:11:11.720 to be left behind. 0:11:11.760 --> 0:11:13.120 And so did they have that mindset? 0:11:13.520 --> 0:11:15.440 How are you thinking about AI? So? 0:11:17.080 --> 0:11:21.040 I the type and I love perplexity and all the 0:11:21.320 --> 0:11:24.160 all the media guys hate it because it's Look, I 0:11:24.360 --> 0:11:26.520 can't remember last time I googled something. I go to 0:11:26.520 --> 0:11:31.240 to you know, the either Chatchipete claud or perplexity. I 0:11:31.720 --> 0:11:34.600 forced myself to use it because you have to use it. 0:11:34.840 --> 0:11:35.120 Usually. 0:11:35.160 --> 0:11:38.040 What happens with technological innovation is the first thing that 0:11:38.080 --> 0:11:41.160 people do is they make more efficient what they do 0:11:41.240 --> 0:11:42.920 today because that's all we can imagine is what we 0:11:42.960 --> 0:11:43.440 do today. 0:11:43.679 --> 0:11:45.240 But as you start to get better. 0:11:45.040 --> 0:11:48.760 At the tool, and so we rolled out Microsoft Copilot 0:11:48.880 --> 0:11:50.800 very broadly in the firm because we want people to 0:11:50.880 --> 0:11:53.200 use the tool, then they will start to come up 0:11:53.200 --> 0:11:56.199 with the next idea. You know, when when the iPhone 0:11:56.200 --> 0:11:58.560 came out, we said, oh, this is cool to it's 0:11:58.559 --> 0:12:03.320 a you know, a a phone, a media flashlight, a camera. 0:12:03.760 --> 0:12:07.000 But what Apple was doing was they were unleashing the 0:12:07.000 --> 0:12:07.960 innovation of people. 0:12:08.440 --> 0:12:10.319 That is what AI is going to do, and we 0:12:10.360 --> 0:12:13.160 won't see it and you know for a little while. 0:12:13.640 --> 0:12:16.640 Today from an investment standpoint, it's all the picks and shovels. 0:12:16.679 --> 0:12:20.160 It's the you know, the navidis and the cloud services. 0:12:20.360 --> 0:12:24.000 But the real investment opportunity is understanding which firms in 0:12:24.040 --> 0:12:28.800 each sector actually start to make it be a differentiator 0:12:28.840 --> 0:12:31.560 and it'll be very hard for the others in that 0:12:31.600 --> 0:12:33.880 sector to catch up. And so I think, you know, 0:12:34.000 --> 0:12:35.800 part of an investment process is asked, what are you 0:12:35.840 --> 0:12:36.199 doing now. 0:12:36.200 --> 0:12:38.280 We have a strategic. 0:12:37.760 --> 0:12:41.160 Partnership with Microsoft that we announced where Microsoft's actually made 0:12:41.240 --> 0:12:43.760 us a strategic partner because some of the things that 0:12:43.800 --> 0:12:46.800 we had laid out they said, are really challenging from 0:12:46.800 --> 0:12:48.920 a technical standpoint, and they wanted to be involved. They're 0:12:48.920 --> 0:12:51.080 actually providing US resources to build it. 0:12:51.640 --> 0:12:54.520 How do you think about trade and tariffs? So Donald 0:12:54.559 --> 0:12:58.160 Trump will be inaugurated January twentieth, I mean, are you 0:12:58.200 --> 0:13:00.840 expecting more deregulation? What does it mean for asset managers? 0:13:00.920 --> 0:13:03.680 Or is it inflationary because of the specter of terriffs. 0:13:03.720 --> 0:13:05.960 Well, so on the tariff front, I always say, you know, 0:13:06.040 --> 0:13:09.559 like remember Trump is a he's a deal maker, right, 0:13:09.600 --> 0:13:11.240 So if you're the deal maker, the first thing you 0:13:11.240 --> 0:13:13.760 want to do is express your position of power. So 0:13:13.800 --> 0:13:15.480 the greatest way to express how to say, I'm going 0:13:15.559 --> 0:13:18.320 to do all these trade tariffs on all these you 0:13:18.360 --> 0:13:20.520 know countries, and then you start there and then you 0:13:20.559 --> 0:13:22.520 negotiate what you want. So you think about it and say, 0:13:22.760 --> 0:13:25.960 what does he want? You know, in the case of Mexico, 0:13:26.000 --> 0:13:29.240 he'd like help on immigration. Actually, he probably really does 0:13:29.320 --> 0:13:31.559 want to reduce the amount of FDI investment. 0:13:31.160 --> 0:13:32.720 From China that's increased. 0:13:32.800 --> 0:13:34.600 I think in twenty eighteen it was like two hundred 0:13:34.600 --> 0:13:37.800 and seventy million. Now it's just under six billion. So 0:13:38.000 --> 0:13:39.800 you know, he'll probably want some help there. As they're 0:13:39.880 --> 0:13:43.240 re shuffling their supply chain Europe. You know, he'd probably 0:13:43.320 --> 0:13:46.800 like some help from a military investment on he'd probably 0:13:46.840 --> 0:13:49.960 like some help on you know, the attacks on some 0:13:50.000 --> 0:13:51.000 of the big tech companies. 0:13:51.000 --> 0:13:52.959 So he'll use that as his negotiation. 0:13:53.600 --> 0:13:56.280 Now, there are going to be tariffs, and with China, 0:13:56.440 --> 0:13:58.480 I think China's it's just going to be tough. But 0:13:59.320 --> 0:14:02.880 remember China has just responded with now saying they're not 0:14:02.880 --> 0:14:05.160 going to export a bunch of minerals that are critical 0:14:05.160 --> 0:14:07.520 to the US. We have to remember the US needs 0:14:07.559 --> 0:14:10.120 China and China needs the US. So there has to 0:14:10.160 --> 0:14:13.280 be a reasonable approach on both sides, and I think 0:14:13.320 --> 0:14:16.920 that will happen over time. But tariffs tend to be inflationary. 0:14:17.360 --> 0:14:20.320 Do you worry about emerging markets? You're very embedded in 0:14:20.320 --> 0:14:21.840 a lot of the emerging markets that could be the 0:14:21.840 --> 0:14:22.760 biggest losers in this. 0:14:23.160 --> 0:14:25.800 Yeah, they can't. I mean they've been pretty savvy. 0:14:25.880 --> 0:14:30.600 You figure out places where there's growth opportunity one either 0:14:31.240 --> 0:14:33.760 you know, China plus one supply chain. I know that 0:14:33.760 --> 0:14:35.720 Trump has said that he's going to go after and 0:14:35.720 --> 0:14:38.440 try to reduce some of that, but that's very real 0:14:38.720 --> 0:14:42.000 and it's helping different markets. You can look at some 0:14:42.120 --> 0:14:43.920 you know, take in India, look at India's going to 0:14:43.920 --> 0:14:46.560 grow just from domestic They could just get their domestic 0:14:46.600 --> 0:14:47.640 economy continue to go. 0:14:47.720 --> 0:14:49.040 It's going to be a great opportunity. 0:14:49.240 --> 0:14:52.000 Fifty six percent of the population under the age of 0:14:52.000 --> 0:14:55.360 twenty five. So you know, you have to pick your markets. 0:14:55.400 --> 0:15:00.160 We like Korea, Thailand in certain sectors the consumer or 0:15:00.160 --> 0:15:02.160 in Thailand we think is a good opportunity. So you know, 0:15:02.160 --> 0:15:03.880 it just depends and you have to figure those out. 0:15:03.880 --> 0:15:05.560 That's why I like active investing. 0:15:05.800 --> 0:15:11.200 There you go always a pitch. There's what about deregulation. 0:15:11.560 --> 0:15:12.880 Is it going to be good for. 0:15:12.960 --> 0:15:14.480 I think well, I think he's expressed. 0:15:14.480 --> 0:15:16.440 I mean, here's you know, it's only the last time 0:15:16.480 --> 0:15:19.600 we saw president that was already in power was Grover Cleveland. 0:15:19.640 --> 0:15:22.080 So Trump's been in power, We've seen what he's done. 0:15:22.200 --> 0:15:25.640 He has said that he wants less regulation. He did 0:15:25.680 --> 0:15:28.120 that his first term, so I think we would expect 0:15:28.120 --> 0:15:30.480 to see that and I think that tends to be 0:15:30.520 --> 0:15:32.680 good for businesses, good for equities. 0:15:33.000 --> 0:15:34.160 You have a lot of fixed income. 0:15:34.640 --> 0:15:36.560 I mean, I don't you know, there's talk about independence 0:15:36.560 --> 0:15:38.640 of the FED, which he's now walked back on. 0:15:38.720 --> 0:15:40.800 Well, it's interesting because if you actually do a bottoms 0:15:40.880 --> 0:15:43.680 up earnings projection for next year on the SMB five hundred, 0:15:43.680 --> 0:15:46.000 it's like fourteen and a half. It's slightly higher than that, 0:15:46.320 --> 0:15:49.120 so that these are companies who are projecting their earnings 0:15:49.160 --> 0:15:51.640 being up right. So they're looking at a lot of 0:15:51.680 --> 0:15:53.600 the tailwinds that are going on in the US economy. 0:15:54.480 --> 0:15:56.760 You know, whether they're over zealous about what interest rates 0:15:56.880 --> 0:15:59.920 ultimately do, who knows, But you know, I think there 0:16:00.240 --> 0:16:03.720 that it seems to be very positive for equities, and 0:16:03.760 --> 0:16:06.400 I think the good story in twenty twenty four is 0:16:06.440 --> 0:16:10.840 that the equity markets broadened out as far as the returns. 0:16:11.160 --> 0:16:13.360 So what's the best way if I gave you like 0:16:13.920 --> 0:16:16.800 a three million, how do you deploy those three millions? 0:16:16.800 --> 0:16:19.920 Well, if you could afford the illiquidity risk. Okay, So 0:16:19.960 --> 0:16:21.800 I'm just gonna tell you two that I love right now. 0:16:22.640 --> 0:16:25.400 One is secondaries. Just again, because you had six trillion 0:16:25.400 --> 0:16:29.480 deployed in private equity, and you've had about one hundred 0:16:29.480 --> 0:16:32.200 and fifty billion deployed secondaries and maybe another one hundred 0:16:32.200 --> 0:16:33.040 and fifty billion raised. 0:16:33.400 --> 0:16:35.880 And we thought that it would dry up once the 0:16:35.920 --> 0:16:36.840 equity markets came. 0:16:36.880 --> 0:16:39.960 But the reality is, you know, when the IPO market 0:16:40.000 --> 0:16:43.120 has slowed down, people need liquidity, and so they're going 0:16:43.160 --> 0:16:45.520 to secondary managers and the returns we're seeing some of 0:16:45.520 --> 0:16:48.080 the best discounts that we've seen in the history of it. 0:16:48.320 --> 0:16:51.960 And the second one is actually real estate debt. And 0:16:52.000 --> 0:16:56.280 here's why most of the regional banks were the big 0:16:56.360 --> 0:17:00.240 lenders in the real estate market. And the reality is 0:17:00.280 --> 0:17:04.159 the office. If you're not a great a office. I 0:17:04.200 --> 0:17:06.040 think a lot of the real estate people would say, 0:17:06.119 --> 0:17:09.159 we're still not sure we've seen the bottom yet. But 0:17:09.240 --> 0:17:11.680 what you see a lot of the bankers saying is, hey, 0:17:11.680 --> 0:17:14.159 don't hand me the keys back. I'll give you a 0:17:14.160 --> 0:17:17.280 good term rolling it forward. But that means that they're 0:17:17.320 --> 0:17:19.959 not lending to the new developers out there, and so 0:17:20.200 --> 0:17:23.000 we're seeing that there is a real opportunity so Benefits. 0:17:23.000 --> 0:17:26.080 Street Partners are a private credit manager actually has about 0:17:26.119 --> 0:17:29.040 nine billion in real estate debt that we're having conversations 0:17:29.080 --> 0:17:33.320 with Clarion Partners, our real estate team real estate manager saying, hey, 0:17:33.359 --> 0:17:35.040 if we end up taking over any of these properties, 0:17:35.040 --> 0:17:36.560 we'd love to talk to you about how to think 0:17:36.600 --> 0:17:39.840 about monetizing it and maximizing return, and in it they 0:17:39.840 --> 0:17:43.280 identified that there's this real opportunity because as these regional 0:17:43.359 --> 0:17:46.280 banks have stepped back, you can't just be a private 0:17:46.280 --> 0:17:48.480 credit manager and say, oh today I'm a real estate expert. 0:17:48.480 --> 0:17:50.840 You actually have to have that expertise. So we think 0:17:50.880 --> 0:17:53.000 that's another really interesting So those are two i'd say. 0:17:52.840 --> 0:17:54.879 Go for and Jenny. In terms of interest rates, are 0:17:54.880 --> 0:17:57.280 we higher for longer given all of the uncertainty out there? 0:17:57.359 --> 0:17:59.440 I'd say with the US deficit, I don't see how 0:17:59.440 --> 0:18:01.320 in the debt, I don't see how. 0:18:02.760 --> 0:18:04.679 That you you can't. 0:18:04.400 --> 0:18:07.800 You obviously have you know, a pretty robust economy, all 0:18:07.840 --> 0:18:09.600 those things. I mean, But I think most people think 0:18:09.840 --> 0:18:13.080 the federal cut in December, I think it's something like 0:18:13.119 --> 0:18:16.960 the eighty seven percent likelihood or something, But afterwards it's 0:18:16.960 --> 0:18:19.600 maybe two more. But then I don't think I think 0:18:19.640 --> 0:18:21.520 it's higher for longer. And again I think people are 0:18:21.600 --> 0:18:26.080 underestimating the risk of or not the risk because the 0:18:26.200 --> 0:18:28.000 US is still going to be the reserve currency and 0:18:28.040 --> 0:18:30.040 you're still going to be able to always finance it 0:18:30.800 --> 0:18:33.399 because there doesn't seem to be another, you know, option, 0:18:33.960 --> 0:18:37.160