Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple card playing Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

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So we have an economic data out as well, So the Conference Board consumer confidence of falling a little bit and coming in a one hundred point four present situation coming in a little light, Expectations a little light, but we want to get perspective on this, particularly as we head into the debate later on this week. Dani Peterson as chief economist at the Conference Board, and she joins us, now, can you tell me more about this data and what you kind of noticed from this survey.

So we have an economic data out as well, So the Conference Board consumer confidence of falling a little bit and coming in a one hundred point four present situation coming in a little light, Expectations a little light, but we want to get perspective on this, particularly as we head into the debate later on this week. Dani Peterson as chief economist at the Conference Board, and she joins us, now, can you tell me more about this data and what you kind of noticed from this survey.

Sure, consumers are still having mixed feelings. For the most part, they're optimistic about their current employment situation, and certainly that's why the present situation index continues.

Sure, consumers are still having mixed feelings. For the most part, they're optimistic about their current employment situation, and certainly that's why the present situation index continues.

To be buoyant.

To be buoyant.

But they're still very concerned about the future, especially with respect to business conditions and their incomes. And so when you net all that out, we're just seeing kind of treading water here with consumer confidence. It's not terribly different in terms of breaking out of the range we've seen over the last.

But they're still very concerned about the future, especially with respect to business conditions and their incomes. And so when you net all that out, we're just seeing kind of treading water here with consumer confidence. It's not terribly different in terms of breaking out of the range we've seen over the last.

Year and a half.

Year and a half.

But still in all, we're.

But still in all, we're.

Noticing that expectations are weakening and that could start really weighing on the overall index.

Noticing that expectations are weakening and that could start really weighing on the overall index.

Talk to us about that expectations again, it came in its seventy three and that's down from a revived seventy four point nine last period.

Talk to us about that expectations again, it came in its seventy three and that's down from a revived seventy four point nine last period.

Where do you want to see that number?

Where do you want to see that number?

Where does that number need to be to suggest a healthy economy?

Where does that number need to be to suggest a healthy economy?

Sure, so, anything below eighty usually signals that the consumer's thinking, well, maybe a recession is on the way. While it's not our expectation, we do think that consumer spending is going to slow over the course of the summer. Probably it already started in the earlier months of this year. It's going to continue. And also we ask consumers do you think a recession's going to happen? That kicked down in terms of the percentage saying yes, But still they're very worried about what's ahead. Again, it's focused on business conditions ahead and their incomes, but they're not complaining much about employment. But even still that employment gauge is below where we'd think it should be.

Sure, so, anything below eighty usually signals that the consumer's thinking, well, maybe a recession is on the way. While it's not our expectation, we do think that consumer spending is going to slow over the course of the summer. Probably it already started in the earlier months of this year. It's going to continue. And also we ask consumers do you think a recession's going to happen? That kicked down in terms of the percentage saying yes, But still they're very worried about what's ahead. Again, it's focused on business conditions ahead and their incomes, but they're not complaining much about employment. But even still that employment gauge is below where we'd think it should be.

It's interesting you say that because I feel like Michelle Bowman versus Mary Daily over the last twenty four hours told me something. And some are worried about infletion like Michelle Bowman, and some are worried more about growth and employment aka Mary Daily. In your survey, though, it seems like it's still just prices rather than jobs.

It's interesting you say that because I feel like Michelle Bowman versus Mary Daily over the last twenty four hours told me something. And some are worried about infletion like Michelle Bowman, and some are worried more about growth and employment aka Mary Daily. In your survey, though, it seems like it's still just prices rather than jobs.

Exactly. So when it comes to prices, consumers are continuing to complain about the level. They're saying the level of food and gasoline prices are still too expensive, and prices overall are still higher than what they'd like. They're complaining less about the rate of increase in prices, which is inflation, and indeed the inflation expectations gauge continues to take downward. But it's that concern about the fact that well, eggs are eight dollars, bread is ten dollars, and that's really disconcerting consumers.

Exactly. So when it comes to prices, consumers are continuing to complain about the level. They're saying the level of food and gasoline prices are still too expensive, and prices overall are still higher than what they'd like. They're complaining less about the rate of increase in prices, which is inflation, and indeed the inflation expectations gauge continues to take downward. But it's that concern about the fact that well, eggs are eight dollars, bread is ten dollars, and that's really disconcerting consumers.

All right, Dan, thank you so much for stepping in and chatting with the Stany Peterson is the chief economist at the Conference Board. On the latest consumer confidence data cap in a little bit weaker than the prior period.

All right, Dan, thank you so much for stepping in and chatting with the Stany Peterson is the chief economist at the Conference Board. On the latest consumer confidence data cap in a little bit weaker than the prior period.

Will keep an eye on that.

Will keep an eye on that.

You're listening to the Bloomberg Intelligence podcast Catch US live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.

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Carnival up over six percent. Here's what I don't understand. Carnival's doing really well. They're looking at good bookings, but then we got consumer confidence or at the top of the ten saying that people are worried and they're worried about rising prices.

Carnival up over six percent. Here's what I don't understand. Carnival's doing really well. They're looking at good bookings, but then we got consumer confidence or at the top of the ten saying that people are worried and they're worried about rising prices.

I don't know how to square these two things.

I don't know how to square these two things.

I don't know.

I don't know.

People are still spending on experiences. It appears like coming out of pandemic. I guess we kind of thought that would be a year or two. But yeah, they're took great bookings into next year.

People are still spending on experiences. It appears like coming out of pandemic. I guess we kind of thought that would be a year or two. But yeah, they're took great bookings into next year.

I know it's like forget eggs, but we're going to go buy a cruise. Brian Egger is Bloomberg Intelligence Senior Gaming and Launching analysts, and he joins us. Now, Brian, can you help me make sense of the strength and the likes of Carnival Carnival versus the overall feeling that consumers continue to say that they are stressed about sure.

I know it's like forget eggs, but we're going to go buy a cruise. Brian Egger is Bloomberg Intelligence Senior Gaming and Launching analysts, and he joins us. Now, Brian, can you help me make sense of the strength and the likes of Carnival Carnival versus the overall feeling that consumers continue to say that they are stressed about sure.

I think what Carnival is seeing is going beyond pent up demand from the pandemic to genuine, ongoing, sustainable, disposable spending on leisure travel. So if they're seeing it across the board, I mean it really is broad base. They're singing in Europe and North America. They're seeing it for both on board spending and ticket fare gains, and they're seeing it both on new hardware and you know, kind of legacy ships as well, So it is pretty broad based.

I think what Carnival is seeing is going beyond pent up demand from the pandemic to genuine, ongoing, sustainable, disposable spending on leisure travel. So if they're seeing it across the board, I mean it really is broad base. They're singing in Europe and North America. They're seeing it for both on board spending and ticket fare gains, and they're seeing it both on new hardware and you know, kind of legacy ships as well, So it is pretty broad based.

So is it the typical cruising customer? Is it new people coming into the industry?

So is it the typical cruising customer? Is it new people coming into the industry?

What are they seeing here?

What are they seeing here?

H I think it's both. There's always a focus on new cruise customers and marketing the value relative value of cruises compared to other forms of vacation. I think it's really both, And you know, different brands attract different demographics and age groups, but you know to the extent that it's broad based, and it seems to be happening not only in the first quarter but continuing to the second quarter, and as Alex mentioned next as well, you know, I think it's we're seeing it across the board.

H I think it's both. There's always a focus on new cruise customers and marketing the value relative value of cruises compared to other forms of vacation. I think it's really both, And you know, different brands attract different demographics and age groups, but you know to the extent that it's broad based, and it seems to be happening not only in the first quarter but continuing to the second quarter, and as Alex mentioned next as well, you know, I think it's we're seeing it across the board.

If we go into a real slump or if inflation stays sticky. Does that affect this sustainable leisure demand the Carnival and you were talking about, you.

If we go into a real slump or if inflation stays sticky. Does that affect this sustainable leisure demand the Carnival and you were talking about, you.

Know, it does. Certainly. Travel prices have increased, and we're seeing that dis manifested of the fact that Carnival raised its net revenue old growth outlook for twenty twenty four from nine point five percent to ten and a quarter percent, So they're partly benefiting from that price. But obviously, you know, inflation cost inflation does affect the disposition of consumers. But from now, at least, you know, the demand on the consumer discretionary side certainly seems to be there.

Know, it does. Certainly. Travel prices have increased, and we're seeing that dis manifested of the fact that Carnival raised its net revenue old growth outlook for twenty twenty four from nine point five percent to ten and a quarter percent, So they're partly benefiting from that price. But obviously, you know, inflation cost inflation does affect the disposition of consumers. But from now, at least, you know, the demand on the consumer discretionary side certainly seems to be there.

How About on the cost side, I'm thinking fuel, I'm thinking labor. What's going on on the cost side for a lot of these crews companies.

How About on the cost side, I'm thinking fuel, I'm thinking labor. What's going on on the cost side for a lot of these crews companies.

Yeah, it's a factor certainly in terms of cost positioning. They've maintained I guess i'd say kind of a stable full year unit cost growth outlook of about four and a half percent or so, excluding the increases in the fuel. There are some increases going on there, but they're also to some degree being offset where they can by operating efficiencies and you know, where they can refinancing of debt and interesting and They've also identified just operational cost savings throughout wherever possible. So it's a challenging cost environment generally for the economy, but they are I think, I think seeing pockets of opportunity to uh to manage and mitigate that cost growth.

Yeah, it's a factor certainly in terms of cost positioning. They've maintained I guess i'd say kind of a stable full year unit cost growth outlook of about four and a half percent or so, excluding the increases in the fuel. There are some increases going on there, but they're also to some degree being offset where they can by operating efficiencies and you know, where they can refinancing of debt and interesting and They've also identified just operational cost savings throughout wherever possible. So it's a challenging cost environment generally for the economy, but they are I think, I think seeing pockets of opportunity to uh to manage and mitigate that cost growth.

Is there a distinction between Disney Cruises and Norwegian Cruise, like the ones that take it to Iceland and the Paul would go on versus the ones that, like I would have to go on with my kid, Like, are there a distinction or is this like a broad stroke for the cruise like guys?

Is there a distinction between Disney Cruises and Norwegian Cruise, like the ones that take it to Iceland and the Paul would go on versus the ones that, like I would have to go on with my kid, Like, are there a distinction or is this like a broad stroke for the cruise like guys?

I mean, there are so many distinction across brands to give you some sense of it, you know, like domestically or in terms of US brands, they saw yields up in the quarter seven percent, European brands up twelve percent, So it's pretty broad based with some differences in comparisons. I will say that the level of yield growth expectation, it's ten percent ish as I mentioned for Carnival, you know, it's nine and a half percent for a while, and it's a touch above seven percent for Norwegian. And while there are differences across companies in terms of comparisons, I think you can say those are roughly the same ballpark in terms of the inertia momentum for bookings.

I mean, there are so many distinction across brands to give you some sense of it, you know, like domestically or in terms of US brands, they saw yields up in the quarter seven percent, European brands up twelve percent, So it's pretty broad based with some differences in comparisons. I will say that the level of yield growth expectation, it's ten percent ish as I mentioned for Carnival, you know, it's nine and a half percent for a while, and it's a touch above seven percent for Norwegian. And while there are differences across companies in terms of comparisons, I think you can say those are roughly the same ballpark in terms of the inertia momentum for bookings.

Is this an industry? Are they building new ships?

Is this an industry? Are they building new ships?

There are new ships in order, you know, the level of supply growth slows down a little bit going into next year. It's kind of like a kind of a mid single digit long term supply growth rate, which historically is actually a little bit more modern than what we've seen over some past decades. So they are building new hardware, but they're also I mean, this is kind of key for Carnival. They have been repositioning some ships and rebranding a lot of the former Costa and Piano Australia ships as Carnival brands. So in addition to some new shipbuilding, there's also some rebranding and brand positioning going on.

There are new ships in order, you know, the level of supply growth slows down a little bit going into next year. It's kind of like a kind of a mid single digit long term supply growth rate, which historically is actually a little bit more modern than what we've seen over some past decades. So they are building new hardware, but they're also I mean, this is kind of key for Carnival. They have been repositioning some ships and rebranding a lot of the former Costa and Piano Australia ships as Carnival brands. So in addition to some new shipbuilding, there's also some rebranding and brand positioning going on.

All right, Brian, we appreciate you. Thank you very much.

All right, Brian, we appreciate you. Thank you very much.

Brian Egger Bloomberg Intelligence in your gaming and launching analysts.

Brian Egger Bloomberg Intelligence in your gaming and launching analysts.

Paul, have you have you booked your cruise?

Paul, have you have you booked your cruise?

He's been talking about it.

He's been talking about it.

There's potential there for the fall of twenty five. Okay, So I'm so we're just we're still in the thinking stage.

There's potential there for the fall of twenty five. Okay, So I'm so we're just we're still in the thinking stage.

Okay, So this will be like a good indication. If this is kind of like spread outward.

Okay, So this will be like a good indication. If this is kind of like spread outward.

Then Charlie's all over the I mean, he's.

Then Charlie's all over the I mean, he's.

The guy who does the weird things and then also cruises. So there is that.

The guy who does the weird things and then also cruises. So there is that.

You're listening to the Bloomberg Intelligence podcast. Catch us luck, I have week days at ten am Eastern on Apple Car playing Android Otto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

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Alex Dee and Paul Sweeney were live here from the Bloomberg invest Conference in Lower Manhattan, the World Financial Center, bringing together leaders from asset management, banking, and the private markets. Say, the World Financial Center during the warm weather months is a magical part of Manhattan that I don't think a lot of people know about, right on the Hudson River. Lots of cool yachts, lots of great restaurants, open spaces for the kids to run around.

Alex Dee and Paul Sweeney were live here from the Bloomberg invest Conference in Lower Manhattan, the World Financial Center, bringing together leaders from asset management, banking, and the private markets. Say, the World Financial Center during the warm weather months is a magical part of Manhattan that I don't think a lot of people know about, right on the Hudson River. Lots of cool yachts, lots of great restaurants, open spaces for the kids to run around.

Yeah, it's good stuff down here.

Yeah, it's good stuff down here.

So if you haven't been down here at this World Financial Center Battery Park area in warm weather, it's really really a cool part of the city.

So if you haven't been down here at this World Financial Center Battery Park area in warm weather, it's really really a cool part of the city.

You Know.

You Know.

What I've noticed over the years is the University of Illinois cranks out a lot of math geeks. I mean, like really smart, mathy people. I didn't know that until I started seeing them all over the place. Daniel Marilla was one of them, co founder and head of quantitative Strategies at Freestone Group. Daniel, thanks so much for joining us live here at the Bloomberg invest Conference. Talk to us about your firm. This is a new firm for you, guys recently set it up. Tell us about your approach to investing.

What I've noticed over the years is the University of Illinois cranks out a lot of math geeks. I mean, like really smart, mathy people. I didn't know that until I started seeing them all over the place. Daniel Marilla was one of them, co founder and head of quantitative Strategies at Freestone Group. Daniel, thanks so much for joining us live here at the Bloomberg invest Conference. Talk to us about your firm. This is a new firm for you, guys recently set it up. Tell us about your approach to investing.

Yeah, I guess well, first of all, actually thank you for having met I do own the math geek thing.

Yeah, I guess well, first of all, actually thank you for having met I do own the math geek thing.

Yes, are you a math geek or did just put that on you?

Yes, are you a math geek or did just put that on you?

I am happy to own HD and I don't know what I'm happy to own it.

I am happy to own HD and I don't know what I'm happy to own it.

Yeah.

Yeah.

For Freestom Grove co founder Todd Parker and myself, we spent quite a long time et cetera. All And I guess the way you would want to think about our new firm, which we started about a year and a half ago, is we're looking to sort of evolve the integration of fundamental investing with quantitative process.

For Freestom Grove co founder Todd Parker and myself, we spent quite a long time et cetera. All And I guess the way you would want to think about our new firm, which we started about a year and a half ago, is we're looking to sort of evolve the integration of fundamental investing with quantitative process.

Does the math geek thing right?

Does the math geek thing right?

We believe that the way in which you managed to sustain alpha delivery from the fundamental process is to pair it with the disciplined understanding of what's happening in the market is via all those quantitative tools, right, and so we've made a very signifant investment on our platform, all the math EBITs that go with it, and Rod class fundamental team to sort of look to evolve that process.

We believe that the way in which you managed to sustain alpha delivery from the fundamental process is to pair it with the disciplined understanding of what's happening in the market is via all those quantitative tools, right, and so we've made a very signifant investment on our platform, all the math EBITs that go with it, and Rod class fundamental team to sort of look to evolve that process.

Right, So what is a quant strategy and then how does that mesh with fundamentals? So that the whole point of quants was because you didn't have to worry about the fundamentals.

Right, So what is a quant strategy and then how does that mesh with fundamentals? So that the whole point of quants was because you didn't have to worry about the fundamentals.

Yeah, So I think you want to think in alpha space if you're looking to deliver alpha as opposed to just take risk, right. I think the objective of the quantity side and the fundamental side is essentially the same, right, which is you're looking for a differentiated view about the prospects of a firm. And I think the difference tends to be that in quantitative land, you're looking to get that differentiative view via taking advantage of a very high breath, right, So you look for some subtle bit of data that tells you a very little bit about many firms, right, And so you essentially create what people would use a factor where a little bit of information helps you make a small bed across I don't know, a thousand stocks, right, Russell one thousand in the US or something right, Whereas on the fundamental side you're looking for the same thing at differentiative view, But there you're much more focused on the idea that a human has the ability to come to understand a level of subtle detail about an individual firm at real debt that you couldn't get if you tried to do it as sort of automatically across all the firms, right, So you focus on maybe twenty, maybe thirty firms, and you'd spend your life literally thinking about these firms, right, And so it's a breath versus depth thing, right. We think that in a sense, you could put the both of our worlds together.

Yeah, So I think you want to think in alpha space if you're looking to deliver alpha as opposed to just take risk, right. I think the objective of the quantity side and the fundamental side is essentially the same, right, which is you're looking for a differentiated view about the prospects of a firm. And I think the difference tends to be that in quantitative land, you're looking to get that differentiative view via taking advantage of a very high breath, right, So you look for some subtle bit of data that tells you a very little bit about many firms, right, And so you essentially create what people would use a factor where a little bit of information helps you make a small bed across I don't know, a thousand stocks, right, Russell one thousand in the US or something right, Whereas on the fundamental side you're looking for the same thing at differentiative view, But there you're much more focused on the idea that a human has the ability to come to understand a level of subtle detail about an individual firm at real debt that you couldn't get if you tried to do it as sort of automatically across all the firms, right, So you focus on maybe twenty, maybe thirty firms, and you'd spend your life literally thinking about these firms, right, And so it's a breath versus depth thing, right. We think that in a sense, you could put the both of our worlds together.

Right.

Right.

There many firms out there who do each of these well. We think that putting them together actually is sort of the right way of actually thinking about it. There's no reason why they can't be together other than it's hard.

There many firms out there who do each of these well. We think that putting them together actually is sort of the right way of actually thinking about it. There's no reason why they can't be together other than it's hard.

You need two types of expertise.

You need two types of expertise.

You need the management, you need the systems and all these things.

You need the management, you need the systems and all these things.

So it is hard to put them together.

So it is hard to put them together.

But we believe you can, and that that leads to sustainable alpha essentially.

But we believe you can, and that that leads to sustainable alpha essentially.

Quote from both sides.

Quote from both sides.

So I'm a former equity research analyst, so covering the media space. So let's say I come in one day and say, got to buy the walk this company here today, but the black box says sell it.

So I'm a former equity research analyst, so covering the media space. So let's say I come in one day and say, got to buy the walk this company here today, but the black box says sell it.

Do what happens?

Do what happens?

Then? I think in you would like to think that in most cases, that situation doesn't arise, right, And the reason why it shouldn't arise is because.

Then? I think in you would like to think that in most cases, that situation doesn't arise, right, And the reason why it shouldn't arise is because.

That last step that you talk about, right, which is I want.

That last step that you talk about, right, which is I want.

To buy the stock, should occur on the back of a traceable discipline investment process.

To buy the stock, should occur on the back of a traceable discipline investment process.

Right.

Right.

So by the time you come to me and say I want to buy the stock, presumably we would have had a conversation or in the tooling, you would have spent that whole bunch of time going to conferences, talking to firm management, you know, building a financial model and putting estimates out there such that your conclusion I want to buy the stock sort of naturally flows from all the notes that you've done, all the work that you've done. Let's say you're producing estimates for earnings, and earnings is next week. Let's say your estimates are higher than the street, right, I think the street is missing something, right, And here's all the work that backs that up.

So by the time you come to me and say I want to buy the stock, presumably we would have had a conversation or in the tooling, you would have spent that whole bunch of time going to conferences, talking to firm management, you know, building a financial model and putting estimates out there such that your conclusion I want to buy the stock sort of naturally flows from all the notes that you've done, all the work that you've done. Let's say you're producing estimates for earnings, and earnings is next week. Let's say your estimates are higher than the street, right, I think the street is missing something, right, And here's all the work that backs that up.

Therefore I want to buy it.

Therefore I want to buy it.

Right.

Right.

So in that context, the quote black box is essentially all the tooling that helps you do that, right, So all the signals, the data that informs all the modeling that you do. It could be everything from satellite data that tells you how many cars were parked in front of whatever the shops are. Essentially they work together, so by the time that decision happens, there's no sort of separation essentially, or there shouldn't be at least, right, So it's not something that we actually worry very much about because if you put them together properly in a sense, that conclusion falls out from sort of having that traceable work, if you will.

So in that context, the quote black box is essentially all the tooling that helps you do that, right, So all the signals, the data that informs all the modeling that you do. It could be everything from satellite data that tells you how many cars were parked in front of whatever the shops are. Essentially they work together, so by the time that decision happens, there's no sort of separation essentially, or there shouldn't be at least, right, So it's not something that we actually worry very much about because if you put them together properly in a sense, that conclusion falls out from sort of having that traceable work, if you will.

So you were here, you just did a panel and the panel name was the right mix of humans and machines. So it's going to be about using AI in this model. Correct, How have you found a good balance? How are you thinking about that balance?

So you were here, you just did a panel and the panel name was the right mix of humans and machines. So it's going to be about using AI in this model. Correct, How have you found a good balance? How are you thinking about that balance?

Yeah, I guess that sounds kind of a trite thing to say, but the answer is basically depends. It depends on the thing.

Yeah, I guess that sounds kind of a trite thing to say, but the answer is basically depends. It depends on the thing.

Right.

Right.

We like to make a distinction between automation questions, right, the technology AI now, but in the passive would have been machine learning, neural networks, you know, data signs of all kinds. It's evolved into being able to take on more of this kind of unstructured data stuff on the language side, but it's an evolution of the same, right, And we find that for automation tasks, the more you can push on things that are sort of not insight generation, right, not where the idea comes from, but just automating the tasks, it's quite effective. And we generally have been sort of big believers that you want to invest in your ability to do that.

We like to make a distinction between automation questions, right, the technology AI now, but in the passive would have been machine learning, neural networks, you know, data signs of all kinds. It's evolved into being able to take on more of this kind of unstructured data stuff on the language side, but it's an evolution of the same, right, And we find that for automation tasks, the more you can push on things that are sort of not insight generation, right, not where the idea comes from, but just automating the tasks, it's quite effective. And we generally have been sort of big believers that you want to invest in your ability to do that.

On the judgment side, which.

On the judgment side, which.

Is, will AI helped me produce better insight like actually a differentiated idea, we've been significantly more cautious on that end. And the reason for it is if you think about how AI is built out. You feeded all this augmentation and it produces essentially a probabilistic forecast or what is the next word in a sentence or people use the word token right, next sentence, next individual.

Is, will AI helped me produce better insight like actually a differentiated idea, we've been significantly more cautious on that end. And the reason for it is if you think about how AI is built out. You feeded all this augmentation and it produces essentially a probabilistic forecast or what is the next word in a sentence or people use the word token right, next sentence, next individual.

Word, et cetera.

Word, et cetera.

It is essentially built if in our parlance you would call it it's built to produce the consensus. Right, you ask it a question and the answer to that question comes from here's all the documents about this topic, and the average answer quote, the most likely answer is this.

It is essentially built if in our parlance you would call it it's built to produce the consensus. Right, you ask it a question and the answer to that question comes from here's all the documents about this topic, and the average answer quote, the most likely answer is this.

So that's differentiated.

So that's differentiated.

Correct.

Correct.

That's a problem, and so into asset management when you're interested in a differentiative view, AI is inherently not built.

That's a problem, and so into asset management when you're interested in a differentiative view, AI is inherently not built.

For that, or at least not quote out of the box.

For that, or at least not quote out of the box.

Right, So you need to think much more carefully about how do I use it as a starting point for thinking about summarization questions, directing and attention, detecting themes, measuring sentiment, all very useful things that might lead you to have a better insight. But it's not inside generation itself, right, And so then the topic really sort of matters, right is it writing code for the engineers? Maybe not so much, but is it The ability to summary is a huge amount of data. You know you were an equity analyst, right, part of the job is you show up in the morning.

Right, So you need to think much more carefully about how do I use it as a starting point for thinking about summarization questions, directing and attention, detecting themes, measuring sentiment, all very useful things that might lead you to have a better insight. But it's not inside generation itself, right, And so then the topic really sort of matters, right is it writing code for the engineers? Maybe not so much, but is it The ability to summary is a huge amount of data. You know you were an equity analyst, right, part of the job is you show up in the morning.

There's like a million things to read.

There's like a million things to read.

Right, There's all the cell side analyze, all the transcripts from conferences, all the news about the company.

Right, There's all the cell side analyze, all the transcripts from conferences, all the news about the company.

Right.

Right.

Just the act of reading is a big deal. Right, So you can imagine how I might be helpful in directing attention and highlighting new emerging themes.

Just the act of reading is a big deal. Right, So you can imagine how I might be helpful in directing attention and highlighting new emerging themes.

Et cetera.

Et cetera.

You probably still want to be reading at least some of the key pieces of it, because you'd worry about where the insight comes from as opposed to where the summarization comes from.

You probably still want to be reading at least some of the key pieces of it, because you'd worry about where the insight comes from as opposed to where the summarization comes from.

Does that sort of make sense?

Does that sort of make sense?

Yeah, real quickly, thirty seconds. How some of the early returns been for your firm?

Yeah, real quickly, thirty seconds. How some of the early returns been for your firm?

Give us we've been doing sort of about what we plan. We did you call me a math nerd. We did quite a We did quite a lot of simulation about how the thing should work when we started going, right, what sort of returns with what assumptions, and we're basically tracking to what we would.

Give us we've been doing sort of about what we plan. We did you call me a math nerd. We did quite a We did quite a lot of simulation about how the thing should work when we started going, right, what sort of returns with what assumptions, and we're basically tracking to what we would.

Have expected at this point.

Have expected at this point.

What's what's your benchmark?

What's what's your benchmark?

No benchmark? Right, we bark in neutral. We are perfectly hedged to in the S and P. Five hundred. We also take no factor risk, and so essentially the benchmark is our ability to deliver uncorrelated returns to the other benchmarks is essentially how you think?

No benchmark? Right, we bark in neutral. We are perfectly hedged to in the S and P. Five hundred. We also take no factor risk, and so essentially the benchmark is our ability to deliver uncorrelated returns to the other benchmarks is essentially how you think?

Does AI real quick for go? Does AI stress you out? In what way? Might AI stress you out?

Does AI real quick for go? Does AI stress you out? In what way? Might AI stress you out?

It doesn't test me out?

It doesn't test me out?

You know, it's kind of exciting, right, The new things are always exciting.

You know, it's kind of exciting, right, The new things are always exciting.

Huh.

Huh.

That's because he's a PhD in math, right, why they like this?

That's because he's a PhD in math, right, why they like this?

The math gee's like new nerdy thing.

The math gee's like new nerdy thing.

Yes, got it.

Yes, got it.

We definitely liked the cool stuffy.

We definitely liked the cool stuffy.

Thank you all right, Daniel Marillo, thank you so much. It was a pleasure to have you stopping by. Thank you very much. Co founder and head of Quantitative Strategies at Freestone Grove Partners. He coined himself a math geek, so we'll.

Thank you all right, Daniel Marillo, thank you so much. It was a pleasure to have you stopping by. Thank you very much. Co founder and head of Quantitative Strategies at Freestone Grove Partners. He coined himself a math geek, so we'll.

Just go with that.

Just go with that.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.

From Alexi alongside Paul Sweeney, we are live from the Bloomberg and Best Conference in Lower Manhattan, bringing together leaders from asset management, banking, and private markets to ask questions about what's going on. How do you think about AI, how do you think about cash? And luckily we have one with us right now. Ed Cass's chief investment Officer at CPP Investments, that's Canada Pension Plan Investment Board. Now, Ed, thanks for joining us. I'm asking for a friend. Say you have some money in a higheld savings account or in a money market fund, and you're sitting pretty right now. You're getting paid between four and five and a half percent, and you know that's fine, and you're young and all so nice, and I may be somewhere in the middle of young.

From Alexi alongside Paul Sweeney, we are live from the Bloomberg and Best Conference in Lower Manhattan, bringing together leaders from asset management, banking, and private markets to ask questions about what's going on. How do you think about AI, how do you think about cash? And luckily we have one with us right now. Ed Cass's chief investment Officer at CPP Investments, that's Canada Pension Plan Investment Board. Now, Ed, thanks for joining us. I'm asking for a friend. Say you have some money in a higheld savings account or in a money market fund, and you're sitting pretty right now. You're getting paid between four and five and a half percent, and you know that's fine, and you're young and all so nice, and I may be somewhere in the middle of young.

What do we do?

What do we do?

What does one do?

What does one do?

What does one do? If you're young, then you're The way we think about it is you have a longer investment horizon, You have a certain capacity to take risk. When I think about investing, the first thing I think about is what kind of risk should you be targeting in your in your account and your overall portfolio, and then trying to design a portfolio at that targeted level of risk that kind of maximizes returns. So if you're young, you probably have a pretty high risk tolerance.

What does one do? If you're young, then you're The way we think about it is you have a longer investment horizon, You have a certain capacity to take risk. When I think about investing, the first thing I think about is what kind of risk should you be targeting in your in your account and your overall portfolio, and then trying to design a portfolio at that targeted level of risk that kind of maximizes returns. So if you're young, you probably have a pretty high risk tolerance.

So we're defining younge. I've defined it because I have no risk tolerance.

So we're defining younge. I've defined it because I have no risk tolerance.

But does cash play a valid part in how you guys think about stuff right now?

But does cash play a valid part in how you guys think about stuff right now?

In allocation?

In allocation?

Not for us, because we think we think we're really really young. So if you think about an institutional investor, you try and transpose that in the years where we think like we're a teenager with a whole bunch of savings, which kind of an oxymoron, but that's where we start. And the way we think about risk, way we communicate risk is we put it in what we call equity debt risk equivalents, because that's kind of an easy way to explain or communicate risk tolerance to someone. So we target a portfolio that has the risk equivalence of eighty five percent equities fifteen percent debt. So if I'm explaining the that to my mother, she knows, hey, typical person's probably fifty to fifty. You're a little bit aggressive, you're sixty five thirty five. We're all the way up at eighty five fifteen. And then we try and maximize our return at that level. And that's where you start thinking about, hey, what are the relative returns of stocks and bonds and cash right now? And how do you construct a portfolio that, as I said, at that targeted level of risk, maximizes returns.

Not for us, because we think we think we're really really young. So if you think about an institutional investor, you try and transpose that in the years where we think like we're a teenager with a whole bunch of savings, which kind of an oxymoron, but that's where we start. And the way we think about risk, way we communicate risk is we put it in what we call equity debt risk equivalents, because that's kind of an easy way to explain or communicate risk tolerance to someone. So we target a portfolio that has the risk equivalence of eighty five percent equities fifteen percent debt. So if I'm explaining the that to my mother, she knows, hey, typical person's probably fifty to fifty. You're a little bit aggressive, you're sixty five thirty five. We're all the way up at eighty five fifteen. And then we try and maximize our return at that level. And that's where you start thinking about, hey, what are the relative returns of stocks and bonds and cash right now? And how do you construct a portfolio that, as I said, at that targeted level of risk, maximizes returns.

How about alternatives, how do they fit into your portfolios? When I think about some of these endowments, how aggressive they've become in alternatives, I aus the Yale model for lack of a better term, How do you guys think about alternatives.

How about alternatives, how do they fit into your portfolios? When I think about some of these endowments, how aggressive they've become in alternatives, I aus the Yale model for lack of a better term, How do you guys think about alternatives.

Well, there's a pretty big difference I think between the objective function that some people have and the one that we have. So I said, we're risk targeters, so we kind of set that level of risk, and then we try and maximize returns. A lot of people are return targeters and they're trying to maximize returns, so they don't mind increasing the risk profile of their portfolio to achieve those higher returns. For us, if we're targeting risk, then we have to say, do alternatives to private assets provide some measure of diversification and a portfolio context that is different than what we get in the public markets, And we don't think so. So we think at a very high level, if you invest in private equity that's like levered public equity, it's not really different in terms of the drivers of returns, So you don't get any diversification benefit per se. A bit of a generalization, but it's true. So then you're really into returns. And from a return perspective is can you pick up alpha by investing in private assets? And I think there's a lot of reasons why you can't, especially if you have some comparative advantages, whether you can do some direct investing yourself to lower the feedburden, or whether you can negotiate particularly good terms for going in a fund you can generate additional alpha, and that kind of that, more than anything, really drives a demand for private assets for us.

Well, there's a pretty big difference I think between the objective function that some people have and the one that we have. So I said, we're risk targeters, so we kind of set that level of risk, and then we try and maximize returns. A lot of people are return targeters and they're trying to maximize returns, so they don't mind increasing the risk profile of their portfolio to achieve those higher returns. For us, if we're targeting risk, then we have to say, do alternatives to private assets provide some measure of diversification and a portfolio context that is different than what we get in the public markets, And we don't think so. So we think at a very high level, if you invest in private equity that's like levered public equity, it's not really different in terms of the drivers of returns, So you don't get any diversification benefit per se. A bit of a generalization, but it's true. So then you're really into returns. And from a return perspective is can you pick up alpha by investing in private assets? And I think there's a lot of reasons why you can't, especially if you have some comparative advantages, whether you can do some direct investing yourself to lower the feedburden, or whether you can negotiate particularly good terms for going in a fund you can generate additional alpha, and that kind of that, more than anything, really drives a demand for private assets for us.

That's interesting.

That's interesting.

What do you make of things like crypto and like bitcoin where you can get.

What do you make of things like crypto and like bitcoin where you can get.

That don't understand in the public market, I.

That don't understand in the public market, I.

Mean, like, but you can invest in, say a micro strategy that's basically going to just invest in crypto, I mean in the public market, Like, is that anything interesting there?

Mean, like, but you can invest in, say a micro strategy that's basically going to just invest in crypto, I mean in the public market, Like, is that anything interesting there?

I think there's Let me start with your think. So crypto has an asset class, I don't understand what the drivers are in particular, so I don't understand what, in our parlance would say, what is it loaded on? Is it loaded on growth, is it loaded on inflation? Is it loaded on something else? Or is it just an instrument that kind of goes up and down with market sentiment? And I think the jury's still out there. I certainly don't have enough conviction as to the drivers of bit coin or some kind of crypto asset to build them into a portfolio design. I do think there's spaces within crypto where people can kind of get in the nooks and crannies and generate additional alpha. So can you give money or capital as someone that can take advantage of those and generate alpha and can use that in some kind of portfolio construct. Maybe, But so far we haven't gone into any of those assets or any of those funds that kind of try to take advantage of that feature.

I think there's Let me start with your think. So crypto has an asset class, I don't understand what the drivers are in particular, so I don't understand what, in our parlance would say, what is it loaded on? Is it loaded on growth, is it loaded on inflation? Is it loaded on something else? Or is it just an instrument that kind of goes up and down with market sentiment? And I think the jury's still out there. I certainly don't have enough conviction as to the drivers of bit coin or some kind of crypto asset to build them into a portfolio design. I do think there's spaces within crypto where people can kind of get in the nooks and crannies and generate additional alpha. So can you give money or capital as someone that can take advantage of those and generate alpha and can use that in some kind of portfolio construct. Maybe, But so far we haven't gone into any of those assets or any of those funds that kind of try to take advantage of that feature.

So where do you guys see opportunities now?

So where do you guys see opportunities now?

Lots of different opportunities in a lot of different spaces. I'd say the one that a lot of people are most excited about right now is private credit markets. Certainly, private credit is something that we've been involved with for a very long period of time. I think you're we're close to fifteen or twenty years in terms of it.

Lots of different opportunities in a lot of different spaces. I'd say the one that a lot of people are most excited about right now is private credit markets. Certainly, private credit is something that we've been involved with for a very long period of time. I think you're we're close to fifteen or twenty years in terms of it.

Really, we just started hearing about it in the news, I guess in the last three or four years.

Really, we just started hearing about it in the news, I guess in the last three or four years.

It seems like.

It seems like.

It's become a huge thing in the last three or four years because a lot of the traditional GPS general partners that were involved in private equity have kind of branched out and private data as an alternative asset class or an alternative way to gather aum. So that's really the big impetus, And of course you've got some big macro drivers behind it in terms of regulation and bank balance sheets and trying to to feeze risk through putting money into private hands as opposed to bank hands that have been supportive of the asset class. But we identified it as something that could be interesting, as I said a long time ago, and started kind of building out the internal capabilities to invest in it. So we're kind of lucky. I think we're we're in at the start, so we've got developed capabilities, and the rest of the market seems to be catching.

It's become a huge thing in the last three or four years because a lot of the traditional GPS general partners that were involved in private equity have kind of branched out and private data as an alternative asset class or an alternative way to gather aum. So that's really the big impetus, And of course you've got some big macro drivers behind it in terms of regulation and bank balance sheets and trying to to feeze risk through putting money into private hands as opposed to bank hands that have been supportive of the asset class. But we identified it as something that could be interesting, as I said a long time ago, and started kind of building out the internal capabilities to invest in it. So we're kind of lucky. I think we're we're in at the start, so we've got developed capabilities, and the rest of the market seems to be catching.

On right now.

On right now.

So if we just took a step back and look at maybe some of the risks, how much of what how much of the risk that you want to take is dependent or not on like geopolitics, on fiscal policy, on things you have a zero control over that definitely can affect how asset prices move.

So if we just took a step back and look at maybe some of the risks, how much of what how much of the risk that you want to take is dependent or not on like geopolitics, on fiscal policy, on things you have a zero control over that definitely can affect how asset prices move.

A super interesting question obviously these days. Again, if we're an eighteen year old investing money over a seventy five year time horizon, and we have a reasonable amount of money, which is I think the situation we're in right now, if we project out the size of our fund. Another ten years, we're up to a trillion dollars. I don't think at that level you can be as flexible or as reactive to say, what's going into the market, I'm going to change my asset mix, and I'm going to respond to it dynamically and take advantage of all these shifts. That's not the way we think about it. We think more, how can we build something that, irrespective of what happens in the market, irrespective of what geopolitical risks emerge, that we can survive that outcome and continue to invest over a seventy five year time horizon. So for us, you know, a lot of people use the analogy to like a supertanker, and how tough it is to turn a supertanker. I think the analogy that we're kind of landing on more internally these days is where, like an icebreaker, you got to be able to drive through a whole bunch of geopolitical risks. You have to be able to drive through a whole bunch of regulatory risks and be able to merge out the outside of the other side and still be in a position to invest money and take advantage of those longer term opportunities.

A super interesting question obviously these days. Again, if we're an eighteen year old investing money over a seventy five year time horizon, and we have a reasonable amount of money, which is I think the situation we're in right now, if we project out the size of our fund. Another ten years, we're up to a trillion dollars. I don't think at that level you can be as flexible or as reactive to say, what's going into the market, I'm going to change my asset mix, and I'm going to respond to it dynamically and take advantage of all these shifts. That's not the way we think about it. We think more, how can we build something that, irrespective of what happens in the market, irrespective of what geopolitical risks emerge, that we can survive that outcome and continue to invest over a seventy five year time horizon. So for us, you know, a lot of people use the analogy to like a supertanker, and how tough it is to turn a supertanker. I think the analogy that we're kind of landing on more internally these days is where, like an icebreaker, you got to be able to drive through a whole bunch of geopolitical risks. You have to be able to drive through a whole bunch of regulatory risks and be able to merge out the outside of the other side and still be in a position to invest money and take advantage of those longer term opportunities.

Hey, and we really appreciate it.

Hey, and we really appreciate it.

Those really interesting a cast Chief Investment Officer CPP investments. It's just always those black swans, right, Like what happens if there's another war somewhere, like no one expected, what would happen with Ukraine and Russia?

Those really interesting a cast Chief Investment Officer CPP investments. It's just always those black swans, right, Like what happens if there's another war somewhere, like no one expected, what would happen with Ukraine and Russia?

Like no one expected what's happening in Gaza.

Like no one expected what's happening in Gaza.

So it's like, how do you deal with those situations, particularly as we head towards a presidential election. I definitely do not end being a Chief Investment officer.

So it's like, how do you deal with those situations, particularly as we head towards a presidential election. I definitely do not end being a Chief Investment officer.

No, No, it's not all of that or to set allocator one of those folks. Yeah, so they get you, but you know, you have to deal with these things and you've got to try to price into some level of risk, and that's what those smart people do.

No, No, it's not all of that or to set allocator one of those folks. Yeah, so they get you, but you know, you have to deal with these things and you've got to try to price into some level of risk, and that's what those smart people do.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York State Just Say Alexa playing Bloomberg eleven.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York State Just Say Alexa playing Bloomberg eleven.

Paul Sweeney, Alex Deal.

Paul Sweeney, Alex Deal.

We are here at Bloomberg invest broadcasting to you live in Lorier, Manhattan, we're bringing together leaders from asset management, banking and private markets for over the next two days. Joining us on set is Kristin Roth de Clark. She is Global head of Technology Investment Banking over at Barclays. Kristin what is Global head of Technology Investment Banking.

We are here at Bloomberg invest broadcasting to you live in Lorier, Manhattan, we're bringing together leaders from asset management, banking and private markets for over the next two days. Joining us on set is Kristin Roth de Clark. She is Global head of Technology Investment Banking over at Barclays. Kristin what is Global head of Technology Investment Banking.

Yeah, So within Barclays, I run the team that helps advise companies board members in terms of on the technology side with things like fundraising in the capital markets IPOs, debt capital markets, leverage finance or on M and a advisory.

Yeah, So within Barclays, I run the team that helps advise companies board members in terms of on the technology side with things like fundraising in the capital markets IPOs, debt capital markets, leverage finance or on M and a advisory.

How does private credit?

How does private credit?

We talk a lot about private credit, private capital, I know in your business and technology Sandhill road is we're all the equity money talks about private equity and private credit and technology these days.

We talk a lot about private credit, private capital, I know in your business and technology Sandhill road is we're all the equity money talks about private equity and private credit and technology these days.

Yeah.

Yeah.

So on the then equity side, and if you look at the growth stage investing that's happening, you know, kind of late stage growth is where a lot of funds are focused kind of the pre IPO rounds. The earlier stage stuff is more some of the AI companies that are coming out. There's like the venture investing that's happening there, but it's a little bit more of a portfolio approach because it's too early to kind of tell who the winners are going to be. As you get to the growth stage investing, there's more focus on where the likely exits could happen. I think there's been a meaningful shift in focus on unit economics companies that have a path of profitability or are profitable, because those are the companies that have the most likely exit into the IPO market or joining a strategic For example, how.

So on the then equity side, and if you look at the growth stage investing that's happening, you know, kind of late stage growth is where a lot of funds are focused kind of the pre IPO rounds. The earlier stage stuff is more some of the AI companies that are coming out. There's like the venture investing that's happening there, but it's a little bit more of a portfolio approach because it's too early to kind of tell who the winners are going to be. As you get to the growth stage investing, there's more focus on where the likely exits could happen. I think there's been a meaningful shift in focus on unit economics companies that have a path of profitability or are profitable, because those are the companies that have the most likely exit into the IPO market or joining a strategic For example, how.

Is technological innovation going in a world where rates are higher?

Is technological innovation going in a world where rates are higher?

Right?

Right?

Policy in the US is questionable of where it's going to be in November. Where I'm thinking of energy right, Like a lot of the cool new stuff are coming out of these startups that you need in order to sort of the energy transition, but that's not as popular with certain folks in DC.

Policy in the US is questionable of where it's going to be in November. Where I'm thinking of energy right, Like a lot of the cool new stuff are coming out of these startups that you need in order to sort of the energy transition, but that's not as popular with certain folks in DC.

Where is the cool stuff happening?

Where is the cool stuff happening?

I would say a lot of it still is in software. The biggest area probably that's had the most investment dollars recently and more that's on the public side is on the chips in the because it's sort of an easy way for investors to get behind the boom in AI without picking which software winners are going you know which software companies are going to be the winners. The other area within tech that we're seeing a lot of investment is on payments fintech type businesses that that continues to be very popular.

I would say a lot of it still is in software. The biggest area probably that's had the most investment dollars recently and more that's on the public side is on the chips in the because it's sort of an easy way for investors to get behind the boom in AI without picking which software winners are going you know which software companies are going to be the winners. The other area within tech that we're seeing a lot of investment is on payments fintech type businesses that that continues to be very popular.

Where is the IPO market these days for technology companies.

Where is the IPO market these days for technology companies.

Yeah, so I'd like to see more.

Yeah, so I'd like to see more.

Quite frankly, I would tear back on my compital markets days. I can get a lot more deals done. I don't know what you guys are doing.

Quite frankly, I would tear back on my compital markets days. I can get a lot more deals done. I don't know what you guys are doing.

So what's happening out there?

So what's happening out there?

Well, A couple of things happened over the last couple of years. There have been there been two things. One a meaningful valuation reset where we had you know, companies coming public at two x, three x the you know, historical norms for on a multiple basis.

Well, A couple of things happened over the last couple of years. There have been there been two things. One a meaningful valuation reset where we had you know, companies coming public at two x, three x the you know, historical norms for on a multiple basis.

There's that resets happened.

There's that resets happened.

The other thing is there's been a much more meaningful focus on profitability, and so a lot of the private companies that were poised to hit the public market, say in twenty twenty three, twenty twenty four, have now had to come back and figure out, you know, how to accelerate their path. The profitability also get to bigger scale. I mean, one of the issues that we've seen from the class of twenty twenty and twenty twenty one IPOs. The ones that have massively underperformed have been the smaller scale, less liquid names, and so there's a focus on scale, profitability and growth and finding that balance. And then we're also at this very moment in a bit of a pocket of uncertainty leading into the election, leading into a seeing where where and when rates start coming down. So for that reason, we just haven't We've seen a handful of tech IPOs, but not a significant number.

The other thing is there's been a much more meaningful focus on profitability, and so a lot of the private companies that were poised to hit the public market, say in twenty twenty three, twenty twenty four, have now had to come back and figure out, you know, how to accelerate their path. The profitability also get to bigger scale. I mean, one of the issues that we've seen from the class of twenty twenty and twenty twenty one IPOs. The ones that have massively underperformed have been the smaller scale, less liquid names, and so there's a focus on scale, profitability and growth and finding that balance. And then we're also at this very moment in a bit of a pocket of uncertainty leading into the election, leading into a seeing where where and when rates start coming down. So for that reason, we just haven't We've seen a handful of tech IPOs, but not a significant number.

We clearly see a ton of public money going into like Nvidia and Peers and derivative plays. Right, is it the same kind in private capital like you were mentioning, it's still in software and the chips, right, Like that's where the money is flowing. Is it the same kind of ferocity when it comes to money blowing.

We clearly see a ton of public money going into like Nvidia and Peers and derivative plays. Right, is it the same kind in private capital like you were mentioning, it's still in software and the chips, right, Like that's where the money is flowing. Is it the same kind of ferocity when it comes to money blowing.

In les less in companies that haven't reached a significant scale. And part of that is because the obvious exit is an IPO or a sale, And we haven't seen a lot of strategic buying yet of late earlier stage AI type businesses, some aqua hiers like just buying you know, entrepreneurs, engineers, but not necessarily the kind of larger M and A. And so once you start feeling confident. Once investors can feel confident in the private world that they have a path to exit, whether it be IPO or sale, then you get more courage to invest in the growth stage companies.

In les less in companies that haven't reached a significant scale. And part of that is because the obvious exit is an IPO or a sale, And we haven't seen a lot of strategic buying yet of late earlier stage AI type businesses, some aqua hiers like just buying you know, entrepreneurs, engineers, but not necessarily the kind of larger M and A. And so once you start feeling confident. Once investors can feel confident in the private world that they have a path to exit, whether it be IPO or sale, then you get more courage to invest in the growth stage companies.

How frustrated are your private equity and your venture capital clients in the in the fact that the IPI market is not robust and maybe exits are not as fundamental, So they're holding onto these things much longer than they would typically like.

How frustrated are your private equity and your venture capital clients in the in the fact that the IPI market is not robust and maybe exits are not as fundamental, So they're holding onto these things much longer than they would typically like.

What are those conversations.

What are those conversations.

Yeah, look, there's a huge pent up.

Yeah, look, there's a huge pent up.

You know, number of companies that have stayed within venture or private equity for much longer than they'd anticipated. I think there's a difference though that the venture backed businesses, some of them haven't been able to figure out the path to profitability and actually get to a place where they could easily go public. So it's more about finding a strategic home on the private equity side. A lot of these companies that were LBOs or have gone typically sponsor to sponsor sales have now gotten so big inside private equity that.

You know, number of companies that have stayed within venture or private equity for much longer than they'd anticipated. I think there's a difference though that the venture backed businesses, some of them haven't been able to figure out the path to profitability and actually get to a place where they could easily go public. So it's more about finding a strategic home on the private equity side. A lot of these companies that were LBOs or have gone typically sponsor to sponsor sales have now gotten so big inside private equity that.

Really there are two options.

Really there are two options.

It's either sell to a very large strategic or or take the company's public And most of them have financial profiles that it would actually look good in the public market because they're profitable and have you know, maybe modest growth.

It's either sell to a very large strategic or or take the company's public And most of them have financial profiles that it would actually look good in the public market because they're profitable and have you know, maybe modest growth.

So if we get.

So if we get.

Clear, once we get clearity on the US election and we get clarity on FED rate cuts, what does that IPO market look like?

Clear, once we get clearity on the US election and we get clarity on FED rate cuts, what does that IPO market look like?

Is it like a flood like? How how do you think about that?

Is it like a flood like? How how do you think about that?

I think that there are I think we'll have a lot more companies that are willing to move forward with an IPO once we have that behind us, because there's not there aren't a lot of other alternatives at that point. It's like either you sell to a strategic or you take the company public and they've gotten to scale where actually the visibility of being public companies helpful sometimes with their customers, it's help helpful with employees. It helps provide you know, liquidity for companies that have been private for eight.

I think that there are I think we'll have a lot more companies that are willing to move forward with an IPO once we have that behind us, because there's not there aren't a lot of other alternatives at that point. It's like either you sell to a strategic or you take the company public and they've gotten to scale where actually the visibility of being public companies helpful sometimes with their customers, it's help helpful with employees. It helps provide you know, liquidity for companies that have been private for eight.

Ten millars floodpo, I hope.

Ten millars floodpo, I hope.

So, you know, are we going to have an AI IPO aha moment? Like Google was for search, Facebook was for social? Are there AI specific companies that are going to come out and boom that's going to be the IPO event of the year.

So, you know, are we going to have an AI IPO aha moment? Like Google was for search, Facebook was for social? Are there AI specific companies that are going to come out and boom that's going to be the IPO event of the year.

Well, the ones that have so far have been related chips related. Right in the last two years. I would say that there will be at some point, but it's just too early to tell who those winners are going to be.

Well, the ones that have so far have been related chips related. Right in the last two years. I would say that there will be at some point, but it's just too early to tell who those winners are going to be.

You talk about people in your world talk about digital infrastructure, like what is that? What is a digital infrastructure and how does that change and progress?

You talk about people in your world talk about digital infrastructure, like what is that? What is a digital infrastructure and how does that change and progress?

Yeah, so there's a massive transformation happening within a number of industries not that's being enabled by tech, and that's the transition from things like on premise to cloud based technologies and just changing the way that we've done things that you know is from historically to moving things from more to tech enabled. That's true in like healthcare sector, insurance, financial sectors, you know, banks for example.

Yeah, so there's a massive transformation happening within a number of industries not that's being enabled by tech, and that's the transition from things like on premise to cloud based technologies and just changing the way that we've done things that you know is from historically to moving things from more to tech enabled. That's true in like healthcare sector, insurance, financial sectors, you know, banks for example.

So for you guys at Barclays in your franchise these days, where's the most activity here?

So for you guys at Barclays in your franchise these days, where's the most activity here?

Where do they where? What do you guys really focus on here?

Where do they where? What do you guys really focus on here?

I think back to the question around private equity pressure. I think there's a lot of sponsor backed assets that are either you know, the private equity firms are under pressure to return capital to LP and so there will be more sales. I think there will be minority stake sales as well to get you know, some liquidity back, but also to provide a mark and then I think after that comes the kind of more large scale, large cat, larger cap larger scaled businesses that have profitability and so growth.

I think back to the question around private equity pressure. I think there's a lot of sponsor backed assets that are either you know, the private equity firms are under pressure to return capital to LP and so there will be more sales. I think there will be minority stake sales as well to get you know, some liquidity back, but also to provide a mark and then I think after that comes the kind of more large scale, large cat, larger cap larger scaled businesses that have profitability and so growth.

Paul's really into the msment banking part, and I'm into the tech part. Like he wants to be like, Okay, when did things open? What are your what are sponsors talking about? And I'm like, what's the disruptive cool technology? How does digital infrastructure wind up changing? Like what what's the cool thing that we totally don't know about? Oh god, we mean Paul, yeah a lot?