Global Capital Markets

--- recording 1 (15:13-15:19 UTC) ---
29 is a value Milken Institute Global Conference. We are delighted to have you here with us as we explore this year's theme, leading in a new era. To begin, please welcome to the stage CEO of the Milken Institute, Rich De Tizia. Good morning, good morning, and welcome to the twenty ninth annual Milgan Institute Global Conference. Thank you for joining us. It's an honor to have you here with us in person, and a warm welcome to those viewing the conference online. Behind me is a photo taken by the astronauts who recently voyaged to the dark side of the moon. Traveling further from our planet than anyone in history, an amazing scientific achievement and a living testimony to what is possible. On technological advancement, huge ingenuity, and spirited teamwork conversion. This photo is also remarkable for all the things we can't see in looking back at Earth from a distance. No violence, hatred, No people fighting a rare disease or struggling with poverty. No wars. Unfortunately, that peacefully changes dramatically once you soon in. And the cohesion of our social fabric can be quite The whole purpose of this conference the more than 1,000 speakers across nearly 200 sessions, is Zoom in. And as we explore, leaning in a new era as this year's team, I invite you to bring your best thinking to resolving these challenges. And the challenges are both acute and many. Economic headwinds and market disruptions create a difficult backlog to address growing inequality in a rapidly aging population. Advances in health turbocharged by the advent of new technologies. Often face anaphymistic regulatory frameworks and funding gaps which star information. We barely have clinched when yet another mass shooting unfolds in The United States. We don't register the attendant death and destruction as conflict after conflict unfolds around the float. People are placing bets to make money on the I fear we're becoming immune to the wrong things. And the twenty seven percent of our youth struggle with and depression, tells me they are watching and troubled by the world we are meeting with. But what if we could change that trajectory? If we could bring new ways of thinking? To address the most vexing issues of our time, What would that look like? Over the next three days, I invite you to be part of the solution. You'll hear creative ideas from those working on economic mobility, creating pathways to opportunity and access to capital, and new ways. In medicine, reciprocity access to research, lean into the promise of technologies or referring throughs, and finally address the decades of chronic underfunding in women's health. And philanthropy, where a new generation of change makers is on the cusp of entering some $90,000,000,000,000. And rethinking how to activate that capital in innovative ways beyond traditional check rights. These are the work streams we champion at the institute. Through more than 300 convenience people each year. And it makes me hopeful that we are making some In a world seemingly adrift in debt and chaos, the promise of the better is in front of us, If only we guard the will to resolve the many deficits we face Addressing those deficits was fundamental to our thinking of opening of Milton Center for Advancing the American after more than ten years of renovation and destruction. While work in the institute takes us to far flung places all over the globe, these gaps are fairly consistent across the world. Fiscal deficits, health deficits, deficits of opportunity, But the most prevalent deficit I see especially in is a deficit of Fulton. The point of the center which I invite all of to provide a medium optimism to cite the agreement. And defining the negative from a vegan's tries to evidence us otherwise that optimism and hope are, in fact, strengths for our future not point reminders of our past. Despite all that ails us as a society, who is contagious? And far too many people are not exposed. Over the next few days, you will encounter thousands of people nearly 100 countries. Dozens of languages spoken and hate's Every technique of person imagined The richness of that diversity offers you endless opportunities for you learning. And I encourage you to embrace those varied experiences and reflections as you think about you in the way when our time complete. Very much appreciate you taking the time to join us this week and it is now my great pleasure to open the twenty twenty six global conference in our first panel on Global Capital Markets. Thank you.

--- recording 2 (15:20-16:19 UTC) ---
Previous interview two of my panelists just in the last hour as well. Looking forward to our conversation overall. On the global capital markets and allocation of capital and everything we're seeing. So much to discuss. Not just because you're sitting next to me, but because you probably have a unique perspective in terms of where you live. And what you're seeing. I am curious sort of begin on what and how you're changing anything you're doing in terms of of the war and the externalities that have been created as a result of hostility going on right now. Anybody's called them externalities, at least not not to my face. I was searching for a word. I know. Focused thank you thank you so much for for having me here. I think I wanna start first with the word of thanks. And the word of thanks is not just my shoulder pedals. Every single one of them. But to most of the folks sitting in the room, the number of phone calls statements of support, encouraging emails, video conferences, whatever it might be that we have received just during, you know, the last eight weeks or so has been nothing short and overwhelming. And I think that leads to a pretty important point. And that point is about partnership. Let's take a step back. Think the the last eight weeks have been difficult. There's no other there's no more way to describe it. It's been it's been life changing. But at the end of the day, you know, a couple of things, especially for those those of us that believed it, and for those of us that obviously stayed while that was happened. Come to mind. I think number one, resilience. So us, we were just so proud not just of our armed forces, who intersected 94% of all the projectiles, cruise missiles, ballistic missiles, drones. That you know, came came our direction. We were unbelievably proud of the ordinary men and women who obviously make up society. The folks that we work with. Parents, of young kids, the parents of old kids, like like me. Whatever whatever it might be, society came together. And that's something that's really magical. And it's something that I think, you know, greatly affected all of us. But in it wasn't surprising. It wasn't surprising because during times of stress, communities come together. And that's what The UAE and Olivia built. And I think many of my colleagues will attest to that because they've all been there. The last twelve months or so. We have a community came together that is resilient, But at the end of the day, you know, when I think about what the next steps are, when I think about what the future could look like, as we think about not just the rest of this year, maybe the next couple of years to come, The one thing that you see is a common theme talking to every CEO, every channel, every ministry, every leader in a lobby in The UAE. Ministry, So we're looking past all the stuff that blows down. And we're looking at ways to do what we do best. Just a couple of things to know. You know, when I think about it, the GFC, when I think back to COVID, In both instances, bounced back stronger, I mean, it was like a v shaped recovery. Fact, we had two of our best years. Immediately after the GFC. And immediately after COVID, speaking to the mother here. And I have every reason to believe that over the next couple of years, we're gonna see something very, very similar. I mean, when I think about our investment strategy, it's built on resilience. It's built on the inbuilt diversification that we have but also the ability to look for themes that are timely and topical and give us the alphabet we need That's what makes Mubadra the best performing sovereign law firm with 100,000,000,000 assets over the last five to ten years. So when when I hear you say themes, I am curious, though. Have any of those themes changed, or are they largely what we're gonna be discussing for the remainder of of our of our time? Our strategy hasn't changed. It's only accelerating. And, in fact, you know, if I'm gonna leave you with one thing, we at The UAE and as a whole on the end of Slovakia were to use and will not be defined by a few weeks of disruption and volatility, but rather what be defined, and we are defined, by the decades of stability that we have shown as a country and as institutions that's underpinned by a clearer John, I'm just I'm not gonna go down the line here, but I'm gonna cuss your eye. You know what I'm sort of, again, broadly you know, The US interesting seems I don't wanna say insulated, but I guess that's barkered or sitting here talking about earnings. We're talking about capital flows the way we're talking about AI. Kind of a different experience to a certain extent. Can that continue? Well, I think, yes, it can. I mean, interestingly, to your point, obviously, The Middle East near term has been impacted. Europe more than The US because the hit in natural gas energy prices has been quite significant. The US, because of energy independence, can be trying to our economy, has been powering through. What I do think and it goes to Waleigh's point, taking a longer term perspective with all this is really important. And if you think back to star of '20 with COVID, a couple years later, we had a rush in Ukraine. Made Silicon Valley Bank, made Liberation Day last year. Now we have this war. Which The UAE is an extraordinary job navigating. Through each of those crises, the people in this room, all of us, who would have said, oh, I'm nervous. What's gonna happen? Yet US economy, global economy powered through, the market's powered through. And my expectation is that will continue. When we look at our companies today, the we see very strong revenue growth. Double digits in the first quarter in our private equity companies. Europe is certainly slower We continue to see a pretty good picture on inflation away from oil prices? And we have this massive CapEx boom that's underway You know, a handful of companies announced in the last week that gonna spend $750,000,000,000 Companies like ourselves and others are spending enormous amounts of money And then we're gonna have what we believe is a huge productivity step function increase. And that is a pretty good combination. Now disruption, which we talked about in the context of investing, is the hard part. But the overall picture if you take this longer term view and assume at some point this conflict will be resolved, I think that's amazing. The huge investment then the productivity that's what gives us a lot of optimism despite the near term challenges. No doubt I I agree with what John was saying, but what was really different today post post GFC and post COVID, that there's there's an evolution in the marketplace, and this is a a global capital markets panel. And a few things you're seeing. You're seeing this this focus on you know, not only mass of CapEx, but these companies were the seven best of all time. And a huge CapEx in terms of the overall you know, assets and in our view, this will be one where open architecture has been a a big part of the the capital formation of these companies in terms of just doing the IG marketplace, but a variety of marketplaces. And I I think that that theme of of collaboration, open architecture, and ask heavy from an asset light business model to an asset heavy business model. These are all the ways that you need to navigate the capital markets and the CapEx and the evolution that's happening in these areas. Jim, we had a bit of this discussion. I want to go to our panelists involved as well. But it's not just $750,000,000,000 from a handful of companies this year. This going to deceivably go on for years to come. Into many, many trillions of dollars. And so I would all markets are gonna be need to need to be called on, so to speak, to provide the capital. I mean, I'm curious as to how you see it playing out, not just in twenty six to twenty seven, but the Well, it looks I I I I the surprise I'm in the room is this year, the the investment grade marketplace, net issuance, north of a trillion 1, will exceed net issuance in the U. S. Treasury market. That's a tremendous comment, and that really impacts market structure And to your point, the the 800,000,000,000 that John referred to it can't just be funded out of one structure or marketplace. It's gonna be their access cash flow. Gonna be the public IT market. It's gonna be the infrastructure market. It's going to be a provider and private credit conversation. And so for a few of us on the stage who have been asked about private credit issues the last six to eight months, last eight weeks or whatever. It's such a small area of the BDCs. It's really missing the big plot. Big plot is the ocean of of private capital in aggregate. And if we ask ourselves as a massive IPO pipeline, how fast you went public because you needed access to capital. Well, the last four or five years have shown us that that's not the case anymore now. There will be some of that, certainly, I I think we're all the the great many probably in the audience is we all do a tremendous amount of work with each other in a variety of factors. Lender, borrower, financer, whatever it may be. And I I think that's the way of the world today, which is very different than it was at the GSE. The GSE you owe really cool competitors, great competitors. But I think that's what's about different. I think that the scale of what we need to solve has changed so dramatically that the open architecture is gonna be that's that's aspect of the future. Yeah. Jenny, I I just get your perspective. Particularly from a public equity perspective as well, but just how you're viewing, you know, this it is an unprecedented time in terms of the spending we're seeing. Obviously, all around a AI, whether it be for the chips, for the data centers, for the power, and on and off from there. So a couple of things. So one, we we have about a 100,000,000 private credit too. Right. But we have a appointment of privates as well as the public. I wanna get back to something Waleed said, which she said, you know what? What? We're gonna see through this. And continue with kind of our longer term plans. And what do you see is countries and markets where they get monetary fiscal policy. Right? Where they get the regulatory environment. Right? Or they get industrial policy, trade policy. Writing. Gets capital. Capital goes where it's treated well, I always remind people, Singapore should be an irrelevant island. When it's significant, what we list is one of the most innovative progressive countries is because Singapore for so long has gotten those policies right. And if you look at I should say it's the numbers on Europe. So in 1990, China was 2% of world GDP. It's now 17. Europe was, 28, and it's now down to 18%. Right? It it has seeded it to the markets that are actually getting all those policies right. So from an investment standpoint, you're gonna always want the tailwind instead of going to go where there's that kind of innovation. Now back to The US, we've gotten those policies right. You know, we we we constantly lament of the problems in The US but the reality is we're still probably the best dirty shirt in the laundry. And that's why capital is really you come up here and you look at it, you say, we still have a a huge consumer driven economy Right? The consumer is still positive. The consumer is still spending. Have the best, most great capital markets in the world. And all those things attract capital. And so and then from an innovation you know, why why is it that we can't replicate Silicon Valley in very many places? You just some of that in China. But there's something kinda special by the mix. And then the final thing is because the you know, income in The US Germany, for example, energy is 7% of your income, whereas in The US, it's, 2.7%. So it's just we're much more insulated from what's going on with the rest of the world. Right. Maybe I could just step back to something and just You're just hearing the optimism around what's going on in The US talking about the huge CapEx spend that John and Jim just and Jenny just mentioned. But why is the CapEx is also an important point because this is a CapEx that's essentially creating jobs creating manufacturing, Remember the full stack of the AI build out. It's not just power. It's power. It's real estate. It's cooling. It's chips. There's a whole bunch of stuff that goes into that and then those are gonna be incredibly productive assets. Into the knowledge of when we think about the results of that AI, creating the efficiency the capacity for knowledge based work that's actually gonna create positive operating leverage for all the companies that are involved in actually deploying AR we just have this remarkable thing which is The US economy is doing pretty well. The consumer was actually continuing to perform we're now layering on this huge CapEx investment quite full stack, able to wait for machines to make holes in the ground, to the most advanced semiconductors And then all of that's going to be put to work to create more efficiency, more capacity elsewhere in corporate America and, frankly, around the world, And then come together with all of those things, you don't have to to not think that that's gonna have a positive tailwind over the Well, I I hate to say quite negative, but I would offer that do wonder what that looks like for any twins. And, obviously, this one of the key concerns None of us really have the answer at this point, but we mentioned all those efficiencies. When many people hear that, and it's one reason why there was so much negativity overall in terms of AI, they hear that, they hear job losses. And and the other way we led me to talk about David was capacity talk because that's how we think about it in our company. And we're of small and medium companies, the ones that are growing the fastest, they're employing more people, are the ones that are actually deploying AI because it's creating capacity for them to be able to go after new markets, to be able to do new things. I don't think it's just words. I think when you can save in one place, it allows you to be able to go do a rule real world people, real world finite expense budgets. And so to be able to have a tool that allows us to do more without massively growing expenses. Is the way that we think about the deployment they offer. Just wanna add one thing. Look. Every time there's a great new technology, the And for some reason, we always figure out something that people say, well, this time it's That's just I know. Interviewed and authorized. Said they said, you know, it's we'll break my offer. And he's just starting a new The real Since there's 500 biographies written in here, about And his new company, he takes graduate students in AI history, and journalism. And you can basically have authorizing sins for something like $200,000 write your biography. He says, why shouldn't there be 50,000 biographies? Like, the the problem is we don't know because none of us are that good at using these tools yet. Which is why there's always a lag, and there's a lack of of creativity around figuring those out. Why don't you get the tools in people's hands, I think we're gonna again, I think we're gonna find that there's massive more things that we never understood we needed that we're suddenly not gonna be able to live it out. Can I add a little more? I love this, John and Jeff. I I also think this is a huge boom in blue collar employment. Certainly over the next five years I mean, our company, QTS and data centers, a year ago had something like 10,000 people working at job sites. By the end of this year, would be 40,000 There is between the energy the physical infrastructure, the data centers, the reindustrialization, being very powerful at now where these jobs are, they change because middle of the country is where the bulk of this physical investments happen. And the other optimistic thing to me about the AI is what it'll do for health care. I was in Boston last week at MIT with a researcher who's focusing on screening fallopian tubes. And then using the AI to identify the sticks that are the precursor to ovarian cancer. To have that kind of technology, advances what it's gonna mean for human beings is incredibly positive. We tend to just focus on the negative, the last half empty, I'm also in the camp that there are gonna be some amazing things that come out of this. But I'll I'll I'll add. And and I I agree with negative to say? You just go ahead. I think I think I think there was a bit I I think it's a question mark. Certainly, there's going to be a lot of silo impact, there's some employment and health care that we see There's lots of questions. I I think the bigger question, you you have talked about this morning, David, is in the past, along this innovation, especially in this room, with Milken, the levered finance market, they were non investment grade companies. There's no doubt that this expansion of these investment grade companies really in The U. Globally the real question will be the real return on economic capital for the equity And if we're sitting here in twenty eight, twenty nine, thirty, the consumer broadly speaking, because of science, and other attributes are gonna be the big winner, but are we going to find that the economic equation didn't really follow through to the economic model for that massive act that and that's and you know, I'd also say the consumer right now is Europe. You know, we we see what's going on in the vibrant US economy. We're all global businesses. But I do worry about some of the reasons why it's AI sovereignty fragmentation, and the impact of that around the globe, we all have to manage as investors. So I think there is again, I go back We're we're all practitioners. I know we're put up in the panel to be predictors, but we really are practitioners. I think there's humility in us I was at the front of the table, and when SPD went down saying it was gonna be a mass credit crisis. I missed it. I was only been in the market thirty seven years. But my point is sometimes we can be a little bit too too close to it. And I think there are a lot of challenges that we're confronting. I'm not sure that the challenge to be identified today. Yeah. I'm gonna have a panel later, by the way, as well. There's gonna be focus on this topic. I'm sure we're gonna circle back to it. But, Ole, I wanna come to you actually because Europe was mentioned a couple of times. So or Europe, I mean, it just gets much reach. But as somebody who's a global investor, I am curious as to how you're seeing the world right now. If you wanna spend a little time on Europe, I mean, sometimes they're can be an opportunity when something's been as beaten down as Jenny just did again. There's no question there's no opportunity there. Share all your sort of breakdowns? Yeah. I think you And and there's a reason for that. So so just just to orient everybody Today, we're at 375, $380,000,000,000. From a day one perspective. 44% is here in The United States. And and, you know, I've said this in every milk concession that I attend year in and year out. That's what a few know. And for that amount of time, The US still remains and has been the best for score that we see from a global perspective. It just hasn't changed for all the reasons that Jenny mentioned. And that Jim referenced. Know, it's it's it's very, very clear to us. Now, there's no question that things are changing. Sectors are changing. They're not they're not static. But at the end of the day, look, it's still the best the best risk order. Where do we see opportunity? AI infrastructure? Energy? Both renewable, clean, and otherwise. Conventional is having a day as well. Strength. I think number two, health care, as everybody mentioned. So very, very interesting things. Physical AI, so the translation of you know, AI to robotics, which I'm gonna be able talk about, make sure that some of the other panels, But, again, don't know what Jim said. Private credit is still interesting. Mhmm. Private credit is really interesting for the real message in the Indian market. Need Now we need to that this asset class is gonna grow. And So I think I think Europe for us is interesting from a renewable energy perspective. Interesting countries LK. So there are some white And, again, this builds on the AI point. So ALA is a force multiplier. You are seeing really quick startups that are coming up when you have access to compute. When you have access to really good basic science. Which still exists. In places like France and The United Kingdom. So I do see Europe as still an interesting place. It is tactical. So it's not a kind of strategic, like, programmatic of destination of capital for us. Looking to performance of the Korean starter. Has benefited enormously from this incredible move up we've So so we are continuing to invest in time. Understood. Same thing with Korea, India, Japan. Those to us are the four really important. The colonies in Asia, But, again, fourth which means that's a constant for many years, or has it moved up? So in a state constant, we did probably you know, a few or 400 basis points. So, yeah, more or less. So it'll hover anywhere for 40 to 44, 45%. Private public split there and there. Private public everywhere. That that changes much longer than time. As you can imagine, Robin, when we talk about The US, and obviously, the video seems to be quite positive, I wonder from a broader perspective. I think our national debt finally worth of $3,000,000,000,000. We do have panel after panel for year after year we can talk about business being the next essential crisis that never comes. But I am curious, You know, sometimes these things eventually do come. Yeah. So it's interesting. We actually, as a company, made the first ever launch in The United States. We have a US warrant on number one in our archives with the oldest bank in The United States. And so that is truly document. It's the original story. Of the 40,000,000,000,000. But Yeah. Think that one back. So, look, it it it is it is an incredibly important issue, all all joking aside. Jim said something important earlier on as well. Which is significantly. And it's just here in The United States. It is all around the world. It's being driven by a bunch of different topics. And so in Europe, defense is a big driver. Obviously, you've got energy build out and you've got AI build out. And so across public and private, seeing a growth a growth in that outstanding. But what's the secret Ultimately, it is gonna be about growth. Because growth in economies is the same pace for everything else. If we can have economies that are prospering and growing, and actually creating jobs, creating real success for people prosperity for the nation, prosperity for the individuals, then that debt to be repaid. If we have debt growth, but we don't have productive use spread in the same way that we do in private markets, if if ultimately it's not gonna get repaid, that would be the risk in The US. And around the world. I think I don't want to be too optimistic about this topic because at some point, there is going to be a reckoning for that. The US is really gonna have to some of the entitlement related challenges that exist in in The US. By the way, the same thing is true elsewhere in the year in in the world. If you don't have the necessary growth, if you don't have the income to be able to do it, you have to really tackle your spending have to make tough choices. The choices get less tough. If you have growth and if you have prosperity. So I think we're at this moment a little bit of question about what do we be able to pull out and grow if necessary to be able to take care of this debt. What we see we're reaching for it, but I think we want to make this in the next three, four, five, six to ten years gonna have to confront this question of employment service of traveling the world right now, started a little late. I'm just curious as to how you're seeing things as well. It comes to how you're allocating capital and, you know, you obviously you're a bumper to bus earlier, but I mean, the numbers are staggering when we think about what's happened there and why it's It's true. But I have a feeling. It's a pretty major city in Europe should ask themselves why they're not financial capital of Europe after the Brexit. Right? Like, that was such an opportunity. Which I'll I'll answer in a second. Just one point on Robin. Like, one thing is when you spend on debt and you're making investment, You're making investment in human talent, with education, you're making investment in the infrastructure. That's very different debt than than that you're just getting out in entitlements that doesn't pay off in the future. And think we have to add that to you're not gonna get the growth story unless the investment are made are investments in type growth types of opportunities. Look, we, you know, we The US, we've all talked about we think that's terrific. Asia you know, parts of Asia, you look at well, he mentioned Korea, Singapore, Vietnam, China, You know, we've we've been in China for I think our first investment made there was in, like, 1985. And I I think that oftentimes folks so Valley don't fully appreciate the innovation that's happening there. And you'll get US pension funds and others who say, I don't wanna invest in in China. We have clients in a 160 countries, so our job is to find opportunity all over the world. And I'm telling you the innovation in arguably ahead of The US. So I think, again, if you get the the policies right, you also in Asia, you have this massive demographic telling. You have a billion people enter the middle class. They've got more force in in a place like India where 56% of population is 25. Those are tremendous tailwinds. Again, you know, in the case of India, there's there's always a saying, you know, the India grows at night while the government sleeps. I think the current government has done done a lot to improve it, but India with some of the best education system the world. People people will come to high at DNLD Harvard as an as a safety school. Right? I mean, they they have tremendous opportunities in the our engineers and everything, and yet they're comfortable really as fast possible. As they as they should. But there's certainly opportunity in all this work. Latin America, overhead as well, is a great opportunity. You know, I'll add, David. About a month ago, I happened to be in for the China Development Forum. And mostly industrial CEOs from around the globe. There was a handful of financial investors. I was there you, Jim. Are you with Jim and I were together? Thank you. And we were four and four or five. And what I was surprised that I think the market's completely raised. Some degree is I think the name of the thought that there's an evolution of the economy that they could believe bring the consumer along and the consumer vote into a larger number. They made no loans about their fifteen to five year plan of doubling down in their manufacturing prowess. To dominate not only in scale manufacturing but higher men manufacturing. And they made no thoughts about that, and and hearing that, I got much more negative cannolium Europe. They talked about trying to being the fitness center of the world. And many CEOs were very saying, you have to be there because if you can compete there, can get into it. But it's brutal competition. And so tying this back, I I I I think I'll take it a little bit of your side. I'm we're all worried about The US deficit. Like to see less debt But I will tell you, US comes to hold network. From GFC has gone from 60,000,000,000 60,000,000,000,000 to 230,000,000,000,000. And the wealth has been created, obviously, because of lower rates, but it's still a little bit like Italy ten, fifteen years ago. Italy, who would have thought Italy would have been most stable economy in your upper leadership? And your debt to GDP would fall in the right direction, which it actually did. So I'm with Rob. I I think the chances of coming on DC make some changes in the federalments we got to grow out of this. And I think the things that we're doing is the right path. So that that's that's one comment I would make. The second is if you're looking for challenges, you know, we we try to ourselves as being a value investor. In our front. The world we live right now buying value sometimes is challenging you to it from scratch a much better opportunity set. So I do think as as we do on capital markets, and how to invest in big trends, you you really have to ask yourself, how do you think about this asset heavy incumbency versus starting something from scratch? And that's what we're all focused on and concerned about. But those are other things that we think about at our Right. Well, and and certainly with AI and what that's going to mean in the next year or two, agents and the ability to actually very quickly start something. I think that that is that business Rob, you know, we're talking about The US economy. Affordability continues to be an issue. Regardless of whether the president doesn't like the word. And I think you guys have sort of been focused on it back in New York. So I just wanna give you a moment to discuss that. Sure. Thank you, David. Well, look, first of all, we're here at the Milken Institute. And just hearing Rich talk about the new Milken Center for the American Dream in DC, which is with the MMP absolutely terrific. Terrific space. And I think what that is designed to be is a reminder to all of us that here in The United States, there is this dream of bettering oneself and being able to participate and being able to have a piece of the American dream. And I think in reality, we have all sorts of statistics around how not everybody gets to be able to participate fully now. Course, not everybody associates, rightly so, the American dream with financial prosperity. There are many other aspects we dream including freedom and really the ability to be able to live one's life as one wishes to do so. But being able to participate in the economy is incredibly important. 40% of Americans don't have a real direct economic state because they're not participants in the equity markets. And even in the remaining 60% who do, probably about a third of them are active, about a third of them are And so we are very proud to be associated with the National Infrastructure Manager of the Trump Accounts, which is the child savings initiative in The United States. Which was born out of a a a variety of people coming together around the steam of having more participation, let more people in The United States have a possible wealth benefit from compounding get the thousand dollar match with them be able to add to it. And using the power of compounding, take a thousand dollars, $5,000 philanthropists giving additional money to be able to grow that into something that's meaningful, borrowing a little bit from Australian superannuation scheme concepts and building a $100,000, $200,000 $500,000 mistakes over a period of time, which is very realistic if he was assume the prior performance in equity markets could continue into the future. The other thing that we've been focused on specifically to affordability, because that's about the first thing is about building a state and and sort of a nest state of prosperity over time. Another thing that's important is is housing affordability, which is obviously something that many folks on this panel are very involved in. And John Jim involved in creating more housing and the actual investment in more availability For our part, we also think helping people to be able to get that first run and allow Medium house price in The United States is about $400,000 average down payment, about $30,000. If you're a first time homebuyer, you can get some grants to bridge some of that gap about half a bit on average. These about 15,000 down payment. That's still a big gap for a lot of people starting off on their journey. Gift scheme to our employees, even $5,000, so they're about social cash. Help bridge about a third or so of that gap. If collectively a cost office child savings accounts and then through students to be able to have other people build wealth retention and then give people more pathways to the ownership. You can really see how we can pull more people into reality I don't know if you guys know this, but John Brady knows a little bit about real estate. You know, it's listening to to Robin talk about homeownership, obviously, has been involved there. Commercial and certainly data centers right now is a lot of the focus of Blackstone. But you have some visibility into that world. I'm just curious to get your thoughts. Well, a couple things. One is on the affordability front. I think for many western democracies, we we've lost sight of you know, what's the goal? And the goal is for people to be able to afford homes and for new homes to be built. And it doesn't matter if you're in Australia, The UK, Canada, many cities in The United States made it through our permitting approval process so difficult. And it's definitely something we've got to look at. Otherwise, people are gonna be angrier and angrier, and we need the solidness. We need to make the American dream more accessible. Need to create more housing. On real estate generally, the time is out coming with this asset class, which has been out of favor for four years, he's gonna start to get a real deal. And it's gonna happen for a couple of reasons. One is new supply of buildings warehouses, hotels, housing is down. 50, 75% from where it was is tight. Four years ago. Second thing is cost of capital. Come down. You know, base rates have come down, and people come down further after the war. Spreads have tightened. And other thing that's happened is investors, because they're concerned about what gonna happen because of the technology we're talking about, in professional services, in software, They're gonna say, I want some terraferma. And so real estate, which is probably the least bubbly asset class, out there, where most of the investors in the audience are saying, ugh, I don't want any more of that. It's gonna start to get, I think, a real pickup. It's a is improved and the cost of capital in the sector changes. The public REIT market has underperformed the and P for nine of the last ten years. In the previous seven years before that, it outperformed for six zero seven? My guess is that's not gonna continue. The problem is as it's very hard to go into something that hasn't been doing great. But you can see the foundation of this recovery coming in place. Lower cost of capital, less new supply and now investors interest in moving to hard assets I would guess over the next couple of years, this will be a part of people's portfolio. They'll be surprised by I agree with I'm sorry. Sure. Can I help you? Done for that. So I agree completely with what Jones said. Saying. But I would also Very similar obviously to real estate, but for exactly the same sets of reasons, I think infrastructure will have its heyday as well. And and that's gonna be great from a capacity for the most developed economies around the world. And some are working from the students. Infrastructure. What what do you mean? That can be so broad. Yeah. But it's everything. Right? It says everything in digital infrastructure. Data centers, that you were talking about, to the power infrastructure, the infrastructure, how it gets transmitted to roads and bridges, to everything in between. So I think infrastructure, whether it's as an investor looking at the common equity or even more interestingly, looking at credit I think is gonna do reasonably well over the next few years. I would use that. It's not a great inflation I mean, for if you want income you know, real estate has always been you're worried about inflation. Real estate is always gonna be investment there. And as people are concerned about private credit on them because of the software side, which I totally think is the way we're done. But they're now starting to look at know, to get that income from real estate. And if you're concerned about the fleet, But I would add, David. I think that's about probably each point. And you know, I think that many of us think about these asset classes delivered in the same mechanism or structure that they have over the last twenty to thirty years. For the most part, institutions access through these drawdown vehicles get it as either sides and trust one another or The way the way to think about infrastructure is not buying it 11 times, levering it eight times, and having a lever. You gotta sell in three years. The real way to own these assets is own a matter of much equity with a much greater degree of equity a smaller degree of debt, and on and on vehicles that can be evergreen and perpetual. The compounding nature That that's so that's so much more consistent with the challenges that many investors around the globe, institutions endowments you've got aging populations living longer because of the science John talked about. And we're still looking a little bit in the rearview about how we deliver these solutions. And I do believe that what you're gonna see in next week or five years is the asset classes will still operate and execute in them. The way that we actually deliver the the return of the asset class And I'm not talking about, like, non traded BDCs per se, but I just I think the whole mechanism of how our industry as much as there's massive innovation in technology and AI, there's gonna be massive advancement in how we partner. I used Chrome Open Architecture earlier. You know, I know our firm and have been leading on a variety of ventures, really, Capital Markets, partnerships and how we think about balance sheet. That that's where the world is going. And I think that's the takeaway from these asset classes, not just looking at them the same delivery mechanisms of the past. Interesting. I want to move on. Actually, I want to move on to sort of public and private. Before I do that, John, it's funny because we just had a conversation on CNC. We didn't talk about working real estate. Office buildings at all. There was a time when we would have talked a lot about that. I had somebody recently on a meeting with fairly notable not a Dario or Sam, but in that world, looked out at the New York landscape and said, all these buildings because all the employees are in your place. Very different from what we've heard on this panel, by the way, and certainly none of us have that happens. But I am curious as to how you're sort of viewing that in Blackstone, given your long experience in that sector, even with the idea, of course, the data centers is sort of Yeah. One of the key folks sort of Yeah. One of the key focuses. Yeah. Well, look, I I think if the power of this technology will mean that a number of collar related jobs can be done you know, with the assistance or in lieu of, you know, having the same sort of labor intensity. So there's no question about it. As a result, I think you wanna be as an office building investor, still think you know, better poly buildings and better cities plenty of technology finance I do agree that there'll be new industries created. But but I think you have to acknowledge that there will be a shift. It goes back to my earlier comments that I do see in this reindustrial huge demand for blue collar workers. Could be in a number of industries based around transaction processing, legal service less the need for early labor. I think that's part of that. I would mention one other industry we talked too much about, but energy and electricity powering all this is so important. And so it'll be natural gas. It'll be renewables. It be nuclear. It'll obviously be power plants and pipelines. Today, it's what goes into the electrical equipment. That is an area where if you believe in the data centers, you believe in robotics, you believe in the autonomous vehicles, which are definitely coming because they have a 95% lower serious accident in Rio. This is going to mean a huge demand for power and energy. So I think it will be back to your question opportunities think right now, we actually have a shortage of office buildings beginning to develop, we York City. San Francisco is coming back London's coming back. But I do think a scenario where there won't be problems same growth and white collar headcount over time. Yeah. On 20 listening, you talk about that. It takes me back to China, though, where building electricity generation at a rate that we can only aspire to in perhaps will never meet? It any another area that they can see they're gonna be able to exceed us and therefore add to what what Jim was talking about in terms of loan manufacturing. Well, I think they they have different I mean, I think every well, if you you look at from COVID, to the Russian, Ukraine, what's going on in The Middle East, you know, countries have realized they need to be more resilient. Right? To the extent that they can be energy independent, food security, defense security. Right? So these are now on everybody's mind. And in the case of China, they recognize that they very vulnerable when it comes to energy, and they have the method of a real top down strategy. They can say, you know what? We're gonna cut through regulation. We need these things done, and and we gonna build it. So, yeah, I think they're very focused on them because they don't wanna be vulnerable. Anybody. Are we gonna John, we can be able to focus on? She's building all the electricity supply we need for everything you just talked about? I think I think we will. I mean, I I I think the ability to move capital markets towards opportunity in The United States And we do have parts of the country that are open to new things getting built. It tends to be I said earlier, warning red states. But we are seeing some purple states. You'll see place like Pennsylvania with Josh Campero that's open to see this kind of construction I think we will see very large scale projects heading built. I do think new color, if you're thinking about long term, the environment and the scale of energy needs we have, we've got to do a better job in that area. I think The US can do it. It's not gonna be easy. I think it's gonna be much harder in Europe. And the other thing is we assume today, these are twenty year projects, based on a lot of today's technology, what we can see. I mean, there's things like photonic computing and other things which are way above my pay grade. But are completely different as far as what they're in. It is. And so not only do we have to come up with that energy, but we also can't underestimate the innovation that in computing that actually will reduce how much energy is needed. In the time we have left, perhaps, we'll see. But did wanna talk about the private and public Well, then I can start with you. If you don't mind. But, you know, something's covered this for so long. I mean, the fact that OpenAI granted it was from a lot of very large companies to a certain extent, raised a $122,000,000,000 right away. Those numbers never have conceived of news just a few years ago. Not to mention anthropic So many of these companies as well have so much of their growth for a while they're private. Robin was talking about trying to empower people before the American dream by having in the equity markets. But we've got these private markets that have grown enormously. There are vehicles as well now available. That allow retail investors conceivably to participate, these may be quite high. And, you know, there may be a lack of liquidity to some extent. But how do you view that? The growth of both of these markets private becoming so much bigger more accessible, and rivaling the public markets to a certain extent in certain areas. Well, I think it's been a trend that you've seen, at least over the last So it it it Jim Sullivan said, Apollo, you know, one of the really interesting things we did together was in response to figuring out that there was this shift, this need from a traditional form of doing something in one particular way into the private markets because we felt that they'd be a little bit more efficient. Let me take my So we're not great at naming things. But we have a joint company together. We call it FinanceCo. Very original. Okay. Well, that's very original. Thank you. Kudos. But I think the point is is that we identified it and and since history has proven this think, generally right, that there was this massive opportunity to just to mediate the banks from a lending perspective. In hindsight, this is now an obvious statement. But back then, when we were looking at it, especially the sizes that we're talking about, it wasn't And so this is this is just one form that we're trying to be indescribing. Where the private markets in whatever shape, way, form they be. In this case, I'm talking about debt. The same thing can be said. An equity perspective. Is growing over time, it's filling different types of gaps. Now it doesn't mean that exits are gonna get any less. Doesn't mean that, you know, the the the capital markets are gonna suffer as a result of it. I think it's actually additive You do? Oh, I do. Why? Oh, because, ultimately, you're not gonna stop. At the end of the day, even though you're And I and I would add, Dave, I mean, please. I think when you go back you know, post GFC, we sit here today, the bank we have the most robust banking system in the world. We have the most robust banks in the world. And this idea that securitization, there's parts of the globe that are still fighting the securitization regulatory conflicts of o eight, o '9 they missed fifteen, eighteen years of growth. I don't think it's any coincidence that the largest marketplace in the world, The US, who's really in base private capital. Broadly speaking, investment grade, non investment investment grade, DC technology, the robust economy. And I I just I think you think about we're all investors. They don't come in every day. Saying public or private And as the as the marketplace has changed in terms of how capital comes together, how it's all of the new talk about I talked about that. The bank loan market, you know, thirty five years ago. Evolution happened in these markets, and you and you really have to be at the cutting edge about solving solutions for companies. And members public private these assets have worked for institutions for fifteen, twenty years. And and in wealth and retail, that's interesting now. these companies and and who stays public, who stays private, And I and I certainly think some of them will go from private to public. Some may be private for a long The access to capital now as a private company is beyond anything you could have imagined fifteen or twenty years. No doubt about it. No doubt about it. And and I but I also think that as, you know, we've talked a lot about I I think a lot of things we think are disruptive. Three years ago, a company like Intel that was not really looked at. No one would have wanted to have the asset heavy foundry. The only is it's very valuable today. The market's responding to that. So I just think we gotta be very thoughtful about getting two drachomian review But I I do think the whole public private convergence is only to get more accelerated as the focus is more on the investment grade market. Those investors demand transparency. And So agree, except that it's not fair when not everybody has the access to to being able to invest in those companies, in those areas. So we started to do a stage venture in our growth equity funds, which you have up to 15% of the mutual fund or ETF in private. Because they if we looked at it and said, boy, those IP figures we used to get that help to returns, we don't have access to anymore. We need to do that. But even that is still you can only do, like, 6% Right? So it's still sort of dipping your toe into it. And with 87% of the butt companies in The US are still private, they make over 100,000,000 more in revenue, like, you have to figure out ways think we're doing a lot to and you touched on Jim to improve the vehicle because they're you know, whether it's a traditional mutual fund ETF having some exposure for somebody who absolutely always needs liquidity. To perpetuals, to you know, kind of close them on their blended, like, we're we're building some some access to it. I do think the problem and I know that chairman Ackes is trying to address this, is also need more companies to be excited about going. Public. I mean, the fact is I don't know if public company CEOs of those love being a public company CEO. It's so great. No. They would much rather be a company CEO. Right? And the cost of dragging on some of the issues, the the scrutiny on it, those those the the the portal we're reporting those are all drags protection on public companies. And so I do think we have to one, we have to improve access. We're doing a lot of I think we're getting better and better. We need to make sure the story is clear, Private markets are illiquent. That's just it. You invest in private credit. Right. It is delinquent. And so having an adviser who understands their client be able to put him in from a suitability is really important. And we need make it more attractive for companies to go public too. But there is an effort being made right now to allow for one k's, for example, to be able to access the private markets prior credit, certainly. I don't know how you view that. As well. It's first of all, formal cases is the best way to do it because you have one, it's intended to be long term capital. Two is you have hard money in you if you were desperate, you couldn't borrow against it. Problem is it's probably the most strategic space in asset management. Or distribution. It is gonna be we we so focus everybody on fees there. They end up in a lawsuit that I actually think it's gonna be slow because of that. And I think that that's really unfortunate. Rob, I think you had a comment. Yeah. If we just step back for a second, the reason why The US had a scope of price in the economy of world was at a is because we just have this rich diverse ecosystem of all the pieces that here's been talking about. So what do we what does a company need? What do we we what do country need? We need fiber capital markets in order to be able to create that formation so companies that have ambition can raise equity, can raise debt to be able to go forward. That sounds really obvious, but there are a lot of countries in the world that don't have that basic ecosystem that actually enable the growth of individual companies. And I say ecosystem, everything from Angel, from VC, from growth equity, from private equity, You have the same essential ecosystem on the debt side And these nurture companies through different stages of their growth. Because these be very different things at the beginning. They need super patient equity. They need super high risk tolerance because when you're going in, to there's a there's a super early VC. May come to absolutely nothing. That's terribly inappropriate investment for a retail account. But then as they nurture and as they grow, wanna be able to have broad participation because that's when you wanna have more people be able to enjoy and participate in potentially the growth of the company. Yeah. When they get to the point But I'm not sure it's when they get to be a trillion or a trillion and a half dollars. 10 margin cap on day one. And I think that's that's that's which is, unfortunately, some of the burdens of bureaucracy around a public company have private companies from accessing public markets more early. Now, thankfully, who are an issue, but it hasn't ultimately stopped them from growing. But I think we'd all be better off companies have that sort of mid stage of their growth able to tap into public markets a little bit earlier. And this is where I chair Well, yeah, I have a I mean Yeah. John has a bunch of I mean, look, I I agree with everyone said here. Having both a huge competitive advantage, particularly in The United States. It started becoming more and more the rest of the world. Ultimately, in private markets, because somebody's getting something up, you've gotta give something back in the Could be access to faster growing companies. It could be in the case of credit, you're bringing the investor right up to the enable to deliver them a high return. It could be diversification, exposure to lots of infrastructure they couldn't otherwise touch. But, ultimately, we have to deliver performance, and that's what the focus for our firm, for everybody out there, that's what matters. I think these private markets, they've done in the right way with the right disclosure. It doesn't matter if it's individuals, institutions, insurance companies. If we deliver them with a better experience, which is why the whole discussion on redemptions and all this be it going back to theory or now with the or anything else? Credit We never talk about the main thing. Have you delivered a premium return? The customers in these vehicles earned a meaningful premium return they traded away some bit of liquidity. And that, to me, is the essence of what we do as a firm is what we've been doing for forty years. If we deliver that premium, then it's a good trade. Nobody's advocating customers do a 100% of their investing in their liquids. But for a portion. And you're beginning to now see insurance companies with their private investment grade and then individual investors migrate this still has a long way to go. But You have parts of serve. Well, one thing I would say is there's sort of different the great advantage of the public markets and don't know if you quit, is your ability to really concentrate your views on things. Because you can change your mind. And I think that's one of the greatest way. We look at how the outperformers right now in the active acronym market is because they can concentrate If you're in private markets, you have to be a lot more diversified. But it's a longer conversation. But I I think that if you were if I was trying to tell a company why you should go public, is because if you have a view if you have investors who wanna be exposed to your asset class, do it in a very concentrated way, and they decide to change their mind, can do so. Panelists, thank you all for a great conversation. Certainly very much appreciate it. Thank you to the audience.