♪ >> this month's meeting is going to be about the market did all that work. >> we have a perception issue with main street vs. wall street. >> the market has a decent chance of slowing down next year. does that mean that is a massive crass? not necessarily. >> that is the challenge for equity assets in particular. >> it's not going to be all goldilocks, it's not going to be easy, but there is a path for inflation to continue to come down. announcer: this is "bloomberg surveillance" with tom keene,

jonathan ferro and lisa abramowicz. jonathan: live at the apollo -- i just wanted to say that. live from new york city this morning, good morning. this is bloomberg surveillance on tv and radio at apollo global management headquarters here in new york city alongside tom that start with this market, equity features slightly negative on the s&p 500, the s&p down yesterday as well. double basis point moves, yields lower. tk seemingly on absolutely nothing. tom: i think the zeitgeist out there particularly for the fancy people is all that money that's piled in from alternative investments. cta, as they are called. but what does it mean long-term with the fed shift and the importance of the friday jobs

report? lisa: it is starting to feel like another narrative shift. the fed is going to cut rates aggressively next year, the market is pricing that in, it is feeling a little uncomfortable. that was how i viewed the price action. jonathan: you look at job openings. i'm wondering just how relevant job openings now are, given the labor market is still pretty decent and yet inflation keeps coming down. tom: what i'm wondering that, is this coffee simply? i have proof. i think the job survey is less important than normal, boy is claims important and under the jobs report and the wage dynamic giving the disinflationary tendency. lisa: i love how we are like every morning, this isn't going to be important. it's not any deal, and then it is. and then we get a number that he's into a new narrative that

is already taking lace and all of a sudden we have something new. tom: china services was actually pretty good against all the balance sheet challenges that they have. jonathan: we got to talk about the cycle and the industry. in a phrase you will hear repeatedly this morning, d banking, the opportunities it creates for places like this one. lisa: the fact that a lot of think air banks are getting out of consumer lending, out of direct ending to a lot of the companies, particularly smaller ones. increasingly, private credit, private equity firms have no that role and it now takes on a new kind of evidence that a lot of banks say they don't even want to be in the business. tom: this goes to all the management come all the talent here.

this entire industry was birthed out of the debris of 2008 and 2009. jonathan: let's start with the scores and financial markets. futures pulling back just a touch. negative one third of 1% on the s&p 500. into the bond market, yields lower by a single basis point. can we call that stability? i think for now we can. going absolutely nowhere and to wrap it up, crude 73.40, posited by 0.5%. lisa: we do get the survey which tom just said is not going to be important at all. i'm actually watching this. the data matters when this taken the wrong direction. job openings have been coming down. what if they go the opposite way, going again in the opposite direction? we will hear from wells fargo ceo, all of the goldman sachs

risk financial services conference. i care about this because i want to hear any commentary similar to walmart. i think starting to deteriorate at a rapid pace or do they still see that same stability? there are earnings from a number of smaller companies today. autozone, dave and buster's, mcdonald's has investors today. i can tell you are laughing at me. this is actually the bread and butter, forgive me, so we are dealing with a russell 2000. russell 2000 and underperforming. we see a different signal from smaller companies? that is something that is taking on more important than a lot of other economic data coming up. jonathan: shall we the program? jim, good morning to you. >> good morning and welcome to apollo. the coffee is good, the price even better.

jonathan: we like that. you're making the showed today from our contrarian cafe, so we welcome you. excited to have you here to tell you more about our story. jonathan: i mentioned earlier there is a call on the cycle that we can talk about, also a call on the industry. that phrase i mentioned moments ago, a perfect place to start. what does it mean for you and the team? >> i don't use that term, i really is the evolution of finance. in the last 40 years we had amazing tailwinds with globalization and technology in lower rates. banks were advisors for decades. 2008-2009 happens and there is a tremendous amount of legislation to change the business model but at the same time, rates were

lower. and in the last 15 years, the ceos you're going to have on today, they are focused on r.o.e. and shareholder return. and if they are focused on shareholder return, there is a massive gap where companies need to find capital. and firms like apollo, we've been at the front of the parade in terms of providing capital across our business. and when you put that together with our funding model of lp capital from around the globe plus our retirement services, we are just a very unique player in that going on. jonathan: we've got to get into how big the market is and what our private markets. typically we think of leverage finance. your colic talks about basically everything on the bank balance sheet. how big is this going to be? >> when most people talk about doing a great job talking about private capital in private markets, most people today talk about direct origination, about

one third of the high-yield in markets. we think the definition of private capital and private credit is around $40 trillion number and that would consist of solar finance, inventory finance, trade finance, franchise finance along with a lot of corporate lending and investment grade privates that a lot of banks use to hold large chunks on their balance sheet but again, and the search for appropriate returns, they are not the right place to hold that. they might be the right place to originate it, but certainly not the right place to hold long-term. tom: i want to get out of the way right away the stereotype that it is fancy derivatives, fancy structures. everybody walks around and says mezzanine. but the reality is on the website you lean retirement services. how conservative, how measured, have prudent is apollo?

>> we do not like to lose money, and that means even a penny. you look at our firm today, $630 billion, about $100 billion in private equity, real estate infrastructure $400 billion plus in credit. a vast majority of that is investment grade and this year alone whether it is air france, at&t, we are loaning money to great companies, a lot of them investment grade, and it's interesting. you talk around the globe right now, trying investment grade debt of companies, even making it double-digit return between the compression red and otherwise. that is in the public markets. to your point, we lend large companies, mostly investment rate and for our perspective, it is not a 1.5 trillion opportunity, it is a $40 trillion opportunity. lisa: you say you don't like to lose a penny and yet you've been

focused on investment grade. risk has done a lot better than lower risks 30's. where are we in terms of where you can make the most money? is it still investment great despite where we are right now? >> the reality is there is still this debate, soft landing, hard landing. the reality is the economy, we are sort of in this interesting goldilocks time right now. concerned about a slowdown has been on everybody's mind. the fed has actually done a really nice job maintaining higher rates, so i would argue that the fed put it back in the market right now and the reality is if people are worrying about soft and hard landing, he credit you for making double-digit returns. lisa: so the fed put us back, does that mean we are not going down the same credit cycles? >> i think what you're going to see is an economy that this going to be winners and losers.

you're seeing it right now in the goods area where goods prices are the fed has maintained fairly high rates. the market has gone the head of it, and if there were any kind of challenging economic backdrop, the fed does have a loaded gun that they can use as needed and is appropriate. i'm not assuming it's going to happen. what we are all expecting as students of history, we expect what happened in 2008 to happen again. i think the reality is the banking system in the u.s., the envy of the world and what robust, there are signs of the economy that are a bit more challenging. a lot of buyouts have been done about a challenging time but you're going to have to navigate it with the broad toolbox. tom: the bottom line is then we

hit 77, the leg of a grateful market starting into the expansion. is that the analog right now, that after the gloom of the pandemic that there is something new here constructive for mark --? . >> if you saw those cointreau tailwinds i talked about, the fourth this technology. there are those who know a lot more about it that idea but they would argue we are on the precipice of what is going on ai, cost structure, education. that could have a huge impact. the reality is the cost of capital is going to be higher for the next five to seven years. we are in a higher cost of capital environment and is how you navigate the reality is the banking system around the globe is evolving, the u.s. is in front of that. and as you will hear about this morning, we think we are the player at that industry continues to evolve. jonathan: we've got you set it out for the rest of this morning.

help us answer. are we not just transferring the risk from banks and the risk they pose to the economy to places like this? >> we are taking the risk it was consolidated on a bunch of financial and touche shins and bringing it to a much, much broader system where we are diversifying that risk. at the end of the day, our investors are either sovereign or other pension funds that don't own these assets of leverage, or their other retirement services. we are going higher quality assets and we are diversifying the system. it is actually making the system less risky. jonathan: this was awesome, thanks for having us. it's going to be fantastic. mark roman coming up in i think about an hour from now. -- joining us in about 15 minutes. a lot to get into this morning. tom: and particularly from where we are to get into 2024.

he's a couple floors about this. couldn't believe it. lisa is on like every third episode. lisa: you look at me like i'm supposed to say something with that, like you believe want me to comment. let's move on. jonathan: you talk, you engage the camera and you make something up. we will figure it out. equities negative on the s&p 500. coming up very shortly in the next hour. this is bloomberg.

♪ >> these policy gaps with central bank is going to cut first, and which one is going to lag?

in the way we are being set up for next year is that the ecb is most likely to go first. if you look at the most recent inflation data, i would argue the ecb should actually be cutting next week. calvin: should, not will. the global head of fx research, he believes this ecb should be cutting interest rates next week. thanks the ecb will go before the federal reserve. we heard that in the last week. he read apollo already this morning, here in new york city, we've got a headline for you that these as follows. the fed cut his back. lisa: the fact that jim seltzer was a real skeptic of goldilocks and all of a sudden the saying that got a loaded gun and they can deploy it if there is any kind of economic weakness, this is exactly what we heard earlier and you and i both laughed. we said no way, this is absolute highfalutin wishful thinking. he basically came out and said

the fed was back and you and i were so skeptical. now we hear jim basically saying the same thing and frankly that is what we seem price into the market. >> you mentioned yesterday the importance of what we heard, and you wonder what the modeled nominal gdp is her in europe. if you get those sub 2% gdp now and add on some form of disinflation, do we have u.s. gdp for percent or lower? and what is it in europe as well? jonathan: i think that is the key distinction. the profile in europe has been absolutely dreadful. if already had a recession in certain countries in europe. in the united states if they sit on this a little bit longer, we are having a conversation about the prospect of recession next year after a order of 5% real gdp growth. unemployment still south of 4%. tom: unemployment is u.s. metric. we finally see the labor market cracked again on friday?

i would just go to the combined spirit of two moving parts. one is real gdp clearly coming down, and the other is what level of disinflation will receive and i hate the phrase soft landing, but is that something we can live with? i thought he had a pretty optimistic tone. jonathan: futures coming in just a touch. negative on the s&p, down about one third of 1%. jonathan: -- tom: we are at apollo global management. ari jacobs is global head of investment for part of what they do here at apollo, and that is about institutional money and particularly the forefront of their retirement. thank you so much for joining us today, for having this year as well. there's a 5% money market fund out there. you are the wise one. what is going to happen with a

percent breaks? >> from an investor standpoint we are looking at at some points being agnostic about rates. when we work with our defined benefit clients and institutional clients, they are on a glide path to help them consider what should be going on with rates. tom: are you going to change the assumption? this is the money issue for institutions. you have to adjust over the next three years your core assumption coming out of the pandemic. >> i would say two things about it. the first thing would be that you're always looking to hedge those risks in our pension plan liabilities without clients. an understanding that, going to be coming out and looking at that hedge or not the rates are at 2%, 5%, 8%. but at that same time, the equity risk premium as we are evaluating the jury is probably narrowing a bit, going to allow our clients to move down from

that investing standpoint. allow them to work through that as the funded statuses is have been improving. the rate part of it is relevant to us but it is just allowing them to do more with their improved funded status. jonathan: do you see the approaches to retirement savings changing? are we shifting more into private marketing in years to come? >> in certain parts of the market, yes. at the same time, there's a lot of discussion around the need for liquidity. as these organizations have their pension plans continue to evolve over time and get smaller, they need that liquidity. there is this constant balance between the look for liquidity and pension plans with the need for yields to match liability growth. we see a continued move toward private markets.

jonathan: i think it is worth addressing with you first. why do i need, as an individual, daily liquidity when i'm making it your trade? >> city need daily liquidity for a few reasons. number one, organizations at times decide to go out and settle a large percentage of the print liabilities with insurance companies. and when they are working through that, that liquidity becomes critical in that exercise. insurance companies are seeking some of that liquidity and we need that to make those transactions happen. the second part is that organizations at times payout lump sums where they are paying individuals single amounts based upon the way the rules are written they are going to need to liquidity for those transactions. lisa: 8.5% used to be the bogey. then people were like, that's not realistic. we are back up to 8.5% in this higher rate world. >> no, i think we will see a

continued effort toward ensuring that you are putting that risk ahead of the return to balance out what still needs to be done with the continued effort of de-risking pension plans. organizations are not going back to the traditional 70-30 or 60-40 type of court leo. they still are working toward managing their risks and therefore grabbing fixed income securities over equity-producing securities. we are not seeing that yet. lisa: what proportion of pensions are not really managing the money themselves at all? that have really just shifted to insurance companies? >> on the year-by-year basis we've seen out of the $2 trillion market somewhere in the neighborhood of $40 billion to $50 billion each year is going backwards, go to the insurance companies.

we see that trend continuing for a while. there is a different trend out there were organizations are outsourcing positions were fitted to defined benefit plans and pension plans. that continues as well. that is a separate trend from know that are transferring insurance companies. >> i got to ask you this question. i want you to use your mathematics right now and tell me, should i be able to buy bitcoin off the etf in my retirement plan institutional retail? where are you on bitcoin, the whole world is watching. >> why no way? >> i technical answer to that question would be sure, have an open brokerage. >> i don't know if i can compete

with that statement. that was better than bobby axelrod. >> these the questions, what do you want to ask him? tom: bitcoin. jonathan: straight to bitcoin. tom: bitcoin in your retirement plan? jonathan: i wanted to ask about ozempic. we've run out of time. good to see you. ari jacobs. turning this in at five minutes time, we need to talk it the federal reserve. we are in the quiet period, no fed speak for the rest of this week.

can we all agree claims as a surveyed number? what if we did a sub 100 jobs? that makes the put to the moon. lisa: i miss the fed speak, i wish that we had fed speak this week. jonathan: no you don't. lisa: it would be really nice to have them in the other direction trying to weigh-in or give nuances that people can blame them for. jonathan: what happened to lisa? lisa: she will be back later on. jonathan: it is that camera right there. we will try to find bramo. from new york city, this is bloomberg.

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♪ jonathan: good morning to you, it's check out the price action from new york city. just a touch on the s&p 500, down about 0.5 on the nasdaq. the nasdaq has been a bit of a struggle over the last few weeks. talk about that interesting moment. yesterday, a gain, a double-digit basis move on a two-year deal. i wish i could tell you why. i wish i could tell you why. maybe it was friday just moving aggressively lower for no real reason.

chairman powell getting absolutely steamrolled. on a ten-year down a single basis point, jim of apollo, the fed put is back. tom: that is what has been missing the last two days. i get there is a lot out there of a of down we go, some of the s&p statistics looking a little shaky, but what we are the doing is waiting for your reaffirmation of the news flow that put the put back in place last week. jonathan: a bit of a tug-of-war going here. who cuts first? the overwhelming consensus suggesting that will be the ecb. the euro against the dollar shaping up as follows. almost totally unchanged, nothing new about that. happens almost every single morning that we have seen some price action here. yesterday and we saw over the last week. last week really, the euro

weakness in the face of a monster move up the front end. the treasury curve because it is not just about the fed in isolation. the ecb, he agreed that he sees parity between the euro and the dollar. in addition, a greater number of rate cuts and the u.s. jonathan: sticky some of the top stories. china's credit outlook from negative to stable, exciting deep concerns about the level of debt. china's usage of fiscal stimulus to support local governments and aspiring property downturn is posing risk to the nation's economy. the government pushing back saying it is disappointed with the decision and that the economy will be highly resilient and has large potential. lisa: no kidding, of course they are going to say that.

what was interesting to me about the decision with that they said part of the decision came from china's likelihood of offering of stimulus, and that this would erode their resilience in the face of further crises. lisa: but it hasn't come into play at the rate that they thought it would. this is a deeply unsettling time and the answer is they are not playing by any known will book, just beginning that they complete change they seen in hong kong. conventional analysis here doesn't work. jonathan: i don't think i can emphasize enough just how wrong the consensus has been on china this year. the u.s. faced the prospect of recession and china was going to boom as they reopened the economy.

flip that upside down, china struggled big-time. the economy has been a problem and the market has really underperformed relative to the united states. that makes you wonder what we are getting so wrong right now about the consensus going into 2024. lisa: it has gotten beaten up so much. at this point heading into next year, do you start to see china outperform and the u.s. underperformed? test it out, put it back out for 2024. the market is pricing ineffectively some sort of soft landing and any are calling for goldilocks. in the view of the investment

banker j.p. morgan, that is unrealistic. >> it is a sum total and even more confusing from the big bank. in apollo global management, everyone is on the same page. i'm kidding. no division at all. but at these banks you got fractious views. this is one of you out there. i wonder were mr. dimon fits into the 4600 for 5000 view. lisa: if anyone disagrees they send them to the contrarian bar. honestly to me this is a question. we can agree with the idea that goldilocks is a pretty narrow slot that you got to fit through, and a lot of people are pushing back against the scenario the people are looking at. however, what is that mean terms of stocks which have been divorced from the economic fundamentals? tom: i'm completely divorced from paying attention to outlooks. i get it, it is a marketing thing.

so distracted by the smell of bacon. let's get you a mover. sheriff dropping after at&t taps rival for $14 billion deal. a significant win over nokia which accounts for --. lisa: which has hit me kind of interesting because we see more deals recently. more deals have been getting done. i understand that a sort of a generalization from one particular deal. it seems like companies are --

the prospect of another -- in the basin. maybe some ipo next year and investment bankers might be happy. lisa: they may be happier at least. jonathan: relatively speaking. tom: we are here at apollo global management and joining us, some when are very familiar with. dragged over to apollo to provide economic wisdom and we are thrilled that he would host us here today. nice coffee, we are coming next week. you have one single sentence in your report. it is the thursday-friday jobs report because the optimists are hanging on how important our claims. >> that's really a critical question when it comes to this. it's beginning to look a lot more like --.

the lowdown side, jobs data has been -- the work we cabin coming down. bargaining time to change jobs. combined with other people changing jobs. we still have more and more evidence pointing in the direction of the labor market. basically everything else is pointing the direction of what you would expect, namely a weaker labor market. tom: they won't serve me the bacon john was talking about, so let me go to this. is the whisper number finally turning toward the looked down?

the fed hike to rates in march of 2022 and your textbook will tell you when you raise interest rates you should expect to see consumption begin to slow down, credit growth on the banking sector begin to slow down. and although things are happening and all things should also be expected to hit smaller companies, middle-market companies. that's exactly where you see signs of weaker label demand -- labor demand. less of a reason to be hawkish at the federal reserve, even if we are printing $200,000 on payroll. >> think about it, we have now a situation with the market is spending so much time on the fed changes in their communication and if the fed is now beginning to say well, the subtle thing

that we are there yet, the markets as we are there and you come to that conclusion. but it remains to be seen whether that is right. but the way i think we should be looking at is the dual mandate, should we be focusing on inflation or employment? employment is moving gradually in the right direction. lisa: i never thought i would get to a place where you agree. i think of you as a perennial pessimist and they always open your emails and kind of enjoy it. worrying about risks, pointing to all these risks, and then you say there is a fed put. does that mean goldilocks is back on the table? ? issue here is that the market has been interpreting the fed in so many different ways throughout the yet -- last year and the fed pivot has come seven out of the last nine times. how many times can you come with the same story? now with the time for the fed to

turn dovish but they haven't turned of this. that is why we will have rates higher for longer. this means that the curve should be still cutting coupons in terms of thinking about what is the overall? is going to take time to get inflation under control. for us into next year that means the downside risk the outlook continue. tom: thanks so much for watching. i'm going to cut to the chase. along the curve that chairman powell looks at, where is the biggest potential? is it wicked short like apollo short-term paper, is a 10, 20 year french paper? is that the austrian piece? where is the stress? >> i would look at this from a macro perspective. default rates going up on high-yield loans, quite quickly in the last six months.

who are also seeing credit growth slowed down substantially. taking those things together, all that so far looks like a soft landing but the bottom line still is through your question, if people wake up suddenly in the next few quarters and say wow, maybe it is more downside risk to consumption, if people also start losing their jobs in the labor market softens, we get the aa and the of foot-high interest rates paying and at the same time while the labor market finally softens which is what the fed has been waiting for for so long. jonathan: in the last week we had a record spending black friday online, cyber monday. busiest day on record in u.s. imports. by now, pay later underpinning. tom: do you want to go sit by -- >> roughly half the population has used by now, pay later. you think about is that a sign that they can't get credit elsewhere, even on the credit

cards? >> you are probably part of that half that has used it but we are getting to the bottom line is that the leading stress more on the household side. savings are for the middle and high-income households. low-income households are getting more pressure. that is implying see more downside pressure on consumers of the next several. jonathan why isn't it back? >> the backdrop here is that the fed is not going to cut rates anytime soon. we will have restricted monetary policy. that means that consumers will be under pressure potentially for a few more years.

>> back i said yesterday that the ecb is going to go first. the ecb will go first but it is very clear that different members are showing up at the meeting and have different wish lists. thank you. tk has a question about retiring on bitcoin. we are going to catch up with the former chairman at apollo independent share. from new york city this morning, good morning to you all. live from apollo global management, this is bloomberg. you can't buy great conversations or moments that matter, but you can invest in them. at t. rowe price our strategic investing approach can help you build the future you imagine. t. rowe price, invest with confidence.

>> their reality is we are sort of in this interesting goldilocks period right now.

concerned about a slowdown has been on everyone's mind. the fed has done a really nice job maintaining higher rates, so i would argue that the fed -- back in the market right now. jonathan: that's the call from the copresident of apollo asset management. we are going to catch up with apollo global management. look out for that conversation just around the corner. we need to start with the price action for you, the scores look like this on the s&p 500. negative, a softer start of the week. yields coming in a couple of basis points. 56, about where we are this morning. the euro slightly negative. negative on the currency by 0.2%. i'm not sure this is the headline that apollo want is morning, but it appears the fed work has returned. >> that has been the theme here.

holding it up as a constructive view on claims slip or add, we get some of his data which is a lesser payroll. jonathan: those estimates keep pouring in. looking at the survey right now, you have to vacate the uaw. still, basically in line with what we got in the previous. >> the heart and soul of this is somehow disinflation clicks in and even wages back to something more reasonable. all of a sudden, you've got real income growth. income is up with disinflation, lesser wage inflation. that is a virtuous cycle. jonathan: would you like a bitcoin check? 40 right now.

that is your bitcoin check. that is likely the extent of her frequent checks on this program. each move. tom: you look like a genius. jonathan: all this excitement about this etf that may be right around the owner. time now for three hour interview, he's dreading it. if you grew up in a certain of the appalachian mountains, if your father worked at hershey's chocolate you had the coolest father within 500 miles. that would be mr. clayton who had lots of her teeth in the kitchen at home and went on to a sterling career in law with a modest new york city law firm. chosen as chairman, eventful but less so than the pain and agony going through as independent share of apollo. how tough is it right now? the battle that are going on, do you look at it and go that is worse than i had?

>> those jobs are tough. no matter what decisions you make, you are going to make somebody unhappy, and people who are happy never tell you thank you but people who are unhappy say u doing? they are not easy jobs. >> i'm going to get us out of the way right now. dealing with this alert for some people of etf's with bitcoin. retail's ability to put bitcoin in these funds, retirement plans, whatever. it has captured the imagination at our audience. what is your thought on this? is it a legitimate asset? >> i'm not going to give you investment advice on this but i think we are at wentworth the market is going to decide over time whether bitcoin is a legitimate asset or not. it is really not for regulators to say that is not an asset that you should be invested in or it is an asset you should be invested in.

my view is is already in the ecosystem, but spring in the ecosystem. in to your point about retirement funds, should you be putting retirement funds we should have fiduciaries advising people around that, but it is there, it is something people want. let's get it inside the regulated system as much as we can and have the market decide. tom: i remember one day on set, commissions are free, turn the page of the wall street journal, commissions are free. turn the page, commissions are free. those kind of shocks where it is chief commissions, that is going to bring up trading of things like bitcoin, isn't it? you can't tell me that bitcoin is the same as an open net investment company. >> it's not, but there already are product is for bitcoin. so why don't we at least give people the most efficient

product. some people here can have these kinds of discussions. if you asked me five years ago would bitcoin be where it is today, i would have said that is a tale but i don't think we are going to see, but we are there. pretty remarkable. jonathan: let's talk about what is happening here. what we are seeing take place at the process of de-banking. as places like this take on more of that business at what point does a place like this pose the same risk as a bank and need to be regulated as such? how close are we to that moment? >> i don't think we are very close at all. thanks are and will remain at the center of our financial system. there is no doubt about it. have the customers, they provide the vast majority of the credit. but what do place like this do? at the margins, they provide a

great deal of credit. that additional credit source that places like apollo and others have provided has been a great stabilizing effect on the economy has begun through this transition. when you have more nibble credit, you have a better-functioning economy. lisa: so how many calls do you get from current regulators saying you still feel that way? we have a credit-based global economy, there is no way around it. we said coming out of dodd-frank globally we are going to take the portion of that that is banking. a lot of private investment firms and staffing and they took on portfolios of loans to help

some banks avoid defaulting. we haven't been through another cycle where private credit has taken on this much of the banking sector. so there is a question, either stress tests, either thing that you see developing to avoid bad actors, that some people say could be out there. >> this plenty of stress testing going on. if you look at the portfolio, it is transparent to jonathan's question, it is not banking. we are not engaged in liquidity transformation. we are not borrowing short and lending long. regulators should ask that. they should say what is going on in this ecosystem, it is not highly leveraged and it is not liquidity transformation. this is kind of an odd cycle where it seems like the only place that i could think of is the u.s. government. where has the leverage been building elsewhere?

>> i asked myself that question all the time. where you have hidden leverage, equity transformation, and where are you going to have a real problem? governments have really taken on the increase leverage resulting from the fiscal business. >> way back at the beginning he said that is where we are going to see it in 2023. commercial real estate, commercial real estate. commercial real estate. >> one of the interesting things about commercial real estate over time, and i don't want to be too bullish, people have managed to work out price dislocation in commercial real estate time and time again without a cascading effect.

in the last 24 hours down madison avenue. we make the mistake of we have recency bias, equating the home mortgage market to other markets. it is a market that is very difficult to clear. >> good to see you. it's more painful with the sec chair. >> you have no idea how we were in all of people like jay clayton. he opened up the covered when he was a kid and it was full of her she's kisses. just pouring out. >> i'm still recovering from it. independent share. coming up shortly, a conversation you don't want to miss. it's the apollo ceo.

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>> last month's fed meeting was really about the market had done the work the fed. this month is going to be the market has undone all that work. >> they have a perception issue with main street and wall street and making sure that nation expectations are anchored. >> the market has a decent chance of slowing down. >> our view is still for a soft landing and that is a challenge for equity asset in particular.

>> it's not going to be all goldilocks or all yeezy but there is a path for inflation to continue to come down. announcer: this is bloomberg surveillance with tom keene, jonathan arrow and lisa abramowicz. jonathan: live from new york city this morning, good morning, good morning. the audience worldwide, this is bloomberg surveillance on tv and radio. i'm jonathan ferro. equity market on the s&p 500 slightly softer this morning, down by zero point percent. no fed speak this week, we save that for next week. the federal reserve chair and that decision is just around the corner. before we get there, tons of economic data to talk about. pushing forward to payrolls on friday. headline the previous hour, this house think the fed put his back. >> part of that is a more quiet job market and what is important is thursday into friday and it

is asymmetric. he sees a lot of data out there that shows finally a job slowdown. lisa: that that put his back, talk about what that means. that could mean the fed will rescue any potential debt but then we heard that we don't need a put, that there isn't enough weakness to get the fed engaged, and that is why you get higher rates for longer, which raises this real question, when does it start to bite more? if we are on a 10 year lag, in two years are we going to feel the effects of these higher rates a more significant way? dark it we give them a couple of stance, we talked about the record black friday shopping. online come of course. busiest day on record and u.s. airport and then we go straight to the big issues underpinning it all by now, pay later booming over the last 12 months, and the pushback is what is more important to you right now? how much the consumers spending or what they are spending? >>

how long are we going to see the same thing again, maybe in a lower set where people are going 1.8, 1.9. whatever it could be. >> 5% gdp in the third quarter. here are the scores this morning starting with the s&p 500 pulling that yesterday just a touch, down about 0.3% on the s&p. the yield on a 10 year maturity. lisa: in about two hours or three hours time, u.s. october report. it will be interesting to see whether we job openings continue to increase. services for november also coming out again. do we start to see some of the weakness we are seeing in manufacturing? today we're going to hear from wells fargo, bank of america as well as goldman-s cfo. do they echo what we heard from

walmart? when we started here about a slowdown that we are not seeing in the sales data for a lot of the customer activity? and we get earnings today from a host of smaller companies that i think might be more of an indication of the feeling on main street, whatever that may be. how american can you get? autozone, dave and busters which unfortunately i've had to host birthdays at and toll brothers. >> you didn't have fun at dave and busters? >> the kids had such a good time. but have you ever been there? they have a bar for the parents to sit at just sort of to offset the experience of the screaming, loud flashing lights. >> all of earnings still coming up. we are at apollo hq. joining us right now is mark robin, the ceo. good morning to you. great to have you with us. let's just go straight to the top of this conversation.

private markets versus public markets and why you believe the big opportunity right now is in the former and not the latter. >> we had a change not just over a year, but over 15 years. so much of our public markets are indexed and correlated. 80% of volume s&p 500. 60% etf's. 100% of returns this year are from 10 stocks which constitute the 5% of the s&p trading at an average pdf 50. how many of us come in every day looking to buy 50 p stocks? not many. but i'm suggesting to you is that public markets are so correlated and indexed, that if you actually want outperformance, you need to step away from public markets. and i think that is happening because we are also revisiting the notion of public being safe and private being risky. this is the framework we used to be in. private meant venture capital, hedge funds, private equity.

now it just means less liquid. jonathan: is that not inherently a risk in your mind? >> if you are a retirement system, you know for the next 10 years. if you can get paid, why not get paid? if you are a wealthy individual, how many of them need 100% on tuesday? we are seeing that in the performance data. if you look at the active management, active management has failed to meet the index for 20 years and that think it's going to be harder, not easier. very little money is left to actually make up what needs to be done in active management. tom: what is the single operational distinction? what is the idea you can give

us? >> financial institutions tend to die of heart attack or cancer. heart attack is funding risk. they borrow short and they lend long. cancer is the slow addition of poor quality assets which over time undermine the system. so you look at all of those firms. all of those had an element of of heart attack and cancer. funding risk as well as asset risk. there is no liquid money at apollo. we are situated to take advantage of less liquid assets. and then you look at the totality of what we do. and the credit business about a smidgen -- majority of what we

do is private equity. tom: when you look at all of the risk out there in their work you did with black swan, what are the risks you see out there for private equity? are you hedged or are there tail reps at apollo? >> i don't think there are risks in private equity. over time, private equity has proven to be a good asset class you will lose money. tom: you have a four, 5, 6 deviation shot. the glide path of that, how us out along the line.

marc: single best year at apollo. we are around 650 billion in our asset management business and 500 billion his credit. we generally benefit from rising rates. on the equity side, some will be worthless but as a general rule, credit rates going up is very strong. on the retirement services side it has gone through the roof, adina has gone year-over-year. lisa: i think it's important for us to talk about it. marc: what are you suggesting? lisa: no one here is on the subject site. not that there's anything wrong with it. but how does that transforms life expectancy?

marc: you would hope improvements in health care to improve life expectancy but not by that much. we tend to find other things that are bad for the human body as one thing does not kill us another does. i would expect the trend to continue. we are not in the insurance business. we are an insurance company in the retirement business. we earn money by earning more on our assets than we pay on liabilities with very little exposure to typical insurance risks. lisa: there is a risk and equity , not necessarily the same risk as credit and credit are performed private credit and equity. are you going to shift away from

private equity and focus purely on the credit business? marc: we have to go back to what our business is. we are not in the asset management business we are in the ss return business. and where can we get access return? i think the nature of the business of were true to ourselves and just focus on access return we will grow. the credit business is 500 billion, we are not relevant. in the scale of these markets 500 is not irrelevant number. ceos are not thinking about what the mighty apollo is doing. jonathan: in the past 40 minutes, d banking and every time i use it i get pushback. why do we not like that phrase?

marc: i like that phrase. it will cost me $20 just by saying it but i think the world's to banking. every economy, credit is tied to gdp and regulators have two choices to where credit comes from. it can come from the banking system or the investment marketplace. there is no third choice. everyone has made a different decision but if you look at the trend with the exception of china, everywhere in the world regulators are favoring investors over banks. that does not mean the banking business is going out of business but on the margin the growth is going to take place in the investor marketplace rather than in the banking system for good and valid reasons and for regulatory choice not because it's unsafe. lisa: you say you don't see a lot of upside and growth.

you said you were irrelevant with 500 million, how relevant could you become? marc: i sat next to a blackrock executive and they had food and i had no food and i said how big do you have to be to get food? and he said 10 trillion. for us, this is about access return to unit of risk. at the end liking who we are as a culture, our limiter is not capital raising our limiter is making sure we get access return to premium risk. finding assets and making sure we like our culture. jonathan: this is great, you will stay with us. marc rowan with apollo. equities are shaping up all their worth pulling back on the s&p with the else coming in 4.2

three. the conversation will continue in the next hour. the apollo ceo of credit john zito. there are tons of themes to think about. the next theme we need to talk about cosby is work that has been done with antisemitism. jonathan: that conversation will continue right here in new york city at apollo, had corridors. equities are pulling back just a touch on the s&p 500. from new york city, good morning. ♪ ♪ (sfx: stone wheel crafting) ♪

the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

>> to us, the jewish people the rise in anti-semitism is a crisis.

five-alarm fire that must be extinguished. no matter what our beliefs, no matter where we stand on the war in gaza. we must all condemn anti-semitism with full throated clarity before it metastasize as into something worse. because right now, that is what jewish americans fear most. jonathan: that was senate majority leader chuck schumer the nation's highest elected jewish officials speaking from the floor. before we get to that delicate conversation the price action. s&p is pulling back by .3%. on a 10 year at 4.2337. tom: we welcome all of you for a

delicate conversation. marc rowan and we all bring to this our childhood. mine was a white anglo-saxon protestant grandmother who would talk about how jews could not go to certain schools in massachusetts. most of though ended up at university of chicago. now there is a new battle with marc rowan.. i am stunned at what i see at the schools. you have been vocal, what is the dialogue you've had with the leadership as they deal with this new anti-semitism? marc: there is no dialogue with leadership. at the moment they are in d.c. for a series of congressional hearings. the underlying culture that permitted this to happen is so strong and until there is a moment of self reflection where

we are not just dealing with antisemitism but the culture that allow this to happen, there will be no progress. lisa: what is progress? this is a real question around free speech and something else? what is this something else university should target? marc: this is a question of favorite speech and disfavored speech and institutional psychology and culture. there are places where this is modeled. university of chicago is getting it right. they are kicking u penn's bud. they've decided they are institutionally neutral and that everyone is allowed to speak their opinions with in respectful ways. that is a culture of free speech. a culture where you shout people

down and have 95% of the professor or academia speaking one way or permit violent protests where students are unable to go to class because boy cats. that's not a culture of free speech. lisa: how do you understand the increase of anti-semitism on the left which has polarized the democratic party? marc: the definition of into semitism, includes anti-zionism as a form of anti-semitism. this got through the senate with many of the current senators there including the most progressive senators. we have seen a shift in the mood of the populace on university campuses. we live in a culture of simplicity. you are oppressed or an oppressor. if you are oppressed you can do no wrong.

if you are an oppressor you can do no right. in that mindset it does not surprise me that nt semitism and anti-zionism has taken hold. in the holocaust you have dehumanization, d station and then genocide. with anti-zionism you have delegitimizing jews. and then you will have killing. jonathan: i have been surprised that people of been so surprised by where these campuses are at. i think about the philanthropy from people on these campuses and i wonder why we allowed it to come to this. why it got this far when we have

seen this building for years through an entire generation? marc: it comes back to the governance of leadership. if i speak just about university of pennsylvania. the faculty in trustees, only one of those two groups have been doing their job and i put myself in the camp that did not do their job. i was a trustee. they have a role to play. where do we want to go? it's not a governing body. 47 trustees can agree on anything. it's not set up to govern and in the absence of leadership faculty and administration has taken these universities that the alumni do not recognize. when you have a jon huntsman and 7000 alumni who for their own reasons, don't recognize the

university that they loved. you have a problem. jonathan: the first move is to stop donating? you seem to be more constructive about change? you think there's a better path ahead? marc: the worst thing that could happen is apathy. right now, the donors are engaged. they love the place. if this goes on much longer we will get to apathy and once we get there i don't think universities can recovery. all universities seek to wake this out. maybe this will go away. that is a loss. jonathan: there is an understanding there is a welcome adjustment. they have messages that aren't selling to the public. they have adjusted the "wo

keness" of these universities. marc: these universities are out of balance and i believe the trustees, alumni and faculty if we read bill ackman's letter in the experience at university of pennsylvania's word for word the experience they are having at harvard. professors don't want to be muscled anymore. they feel that they can't speak out unless they conform to the narrative of the university. all we have done is give people an opportunity to speak their minds and they have a lot to say. jonathan: there is a big election next year will this change how you address u.s. politics? marc: no, it's not going to change.

jonathan: do you have a favorite candidate? marc: it's hard to believe out of 350 million we are down to two. jonathan: are you disappointed in these two? marc: we have the single best hand of cards anywhere in the world. we played the sand poorly. jonathan: what does that mean? marc: people want to come here. we have an incredible knowledge base, abundant energy, leaders in technology, and enormous domestic market and yet we have challenges that we have not been able to as result of leadership, political consensus to address. we have a retirement crisis, health care crisis, budgetary crisis, inconsistent allies around the world. we have important decisions to make without waiting in on ukraine in the middle east.

all of it seems to be caught in a morass. tom: is the united nations experience important for a candidate? marc: the united nations? no. jonathan: that was delicate. marc: i thought my response was delicate. lisa: i thought it was delicate. marc: thank you. jonathan: mike roman, the ceo of apollo. equities are slightly negative by 0.4. live from new york city, good morning. ♪ (sfx: stone wheel crafting) ♪

the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ dear moms and dads,

what you have achieved here today is going to help us and our futures. it is why we're coming up on stage to collect your diplomas. mom, love you always. vo: when you graduate, they graduate. visit finishyourdiploma.org to find free and supportive adult education centers near you. (aidyl) hi, i'm aidyl, and i lost 90 pounds on golo.

i struggled with weight loss and weight gain my entire life. with all the yo-yo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again. thanks to golo, i've been able to steadily go down the sizes in my closet and keep the weight off. for the first time in forever, i feel in control. (announcer) change your life at golo.com. that's golo.com. it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. we have been able to reach over 100 million people impacted and affected, and at risk of hiv. the rocket fund takes all of the work that we're doing, all over the world,

and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. jonathan: let's get straight to it here is the price action. slightly negative on the s&p 500, likely on the nasdaq as well. tons of economic data coming up. job openings and the ism as well as jobs numbers by the end of the week. the number has drifted higher with the yield something 10 year

down to basis points. on the two-year 4.62. down .01. apart from the move on friday which was in the opposite direction. lisa: it was in response to people getting sober and saying we priced into many rate cuts. it seems like there was a reset bouncing around the traders market because there's no fed speak to guide us. jonathan: the federal reserve us next week. that decision a week away. the euro against the dollar looks like this. under surveillance this morning israel making arrangements in southern gaza. finding is now house to house

and tunnel to huddle -- tunnel. the u.s. has laid out expectations until remaining hostages are released by hamas. lisa: we heard part of the reason why there wasn't an ongoing hostage release was partly because according to the state department, hamas did not want some of the hostages to tell their stories and they want to limit civilian casualties. horrific pictures are coming out of gaza. what will be the pressure to prolong a cease-fire? who steps into creative solution to a difficult conflict? tom: what i find fascinating just looking at the footage that was shown.

you look at anzio during world war ii. this is a new war and we are living it day by day. jonathan: two-year point, it's a brand-new war and that is why we start focusing on a different war. the white house administration focusing there. usaid to ukraine will end by the end of this year. they say they are out of money and time. the house speaker saying the biden administration has failed to address any of my conference concerns about the lack of strategy ukraine. any national security package

must begin with our own border. so we know where we are on this? on the one side we have israel in a division in the democratic party and on the others there is a division in the republican on how to go forward. on top of potential biggest spending cuts. you can see a collision course? lisa: so maybe this is the calm before of potential government shutdown. there is this question around if there is more coalescing when it comes to the border issues given the fact there has been a pressure on democratic governors. tom: how much of this from iraq and afghanistan and the american public is finding isolationism going forward?

jonathan: the surprise of this war's side has not spread yet and we hope it won't. saturday's energy minister warning that cuts can continue through the first quarter of next year. after a delayed meeting last week, the prince says the cuts will be delivered and no concerns about demand. >> i beg to differ with the pundits or saudi experts saying there is no growth in demand. we see things improving. even where the economy storyline is it's not as bad as people are saying it is. but this cautionary approach, i

am not a gambler. jonathan: i am not a gambler is the message coming out of saudi arabia. from cup 28 in dubai. tom: it is a climate conference in the united arab emirates on the persian gulf. this is different than having a climate conference, pick your city. she is in dubai, olivia washington joins us now. sustainable investing for apollo from cup 28. thank you for joining us. they really go after esg and say is this going to work out and part of it and this goes to the investment of apollo is that you can make money at esg.

you can profit with sustainable investing? is that what apollo has witnessed with your investments? have you seen money being made by being sustainable and doing the things cop 28 is talking about? olivia: first of all, thank you for having me and having me and from dubai and cup 28. i am thrilled to be here. that is what we are seeing with our investments. if we look at the capital we have but to work over the past five years into sustainable investing, the firm has put around 31 billion and that was across the entire platform. that was in real estate, infrastructure, credit, private equity. all of these deals were done in regular funds. funds that had returned targets,

great opportunities to make returns for our investors while also investing in businesses and products and projects that are very much contributing to the clean transition, the energy transition and how we think about sustainable resources going forward. tom: if you look at cup 28 and onto 29, 30, are there financial discussions of apollo being overwhelmed by major polluters, the united states, china on coal? olivia: one of my biggest surprises of caulk 28 is that it is not all doom and gloom. there is good news coming out of comp. you had 120 countries commit to

tripling the amount of renewable generation. that's massive. we have so many positive announcements going into the transition from all different areas of the world. one of the thing struck me as the amount of capital being mobilized in the commitment that people are sending here. if you look at historical cops, the makeup of who is here has really changed. when i was walking around inside of seeing just nonprofits you see people from law firms, investment banks, asset allocators, asset managers. it's amazing how many people are here and how many people are thinking about how does finance affect what they do, their

businesses, the opportunities coming out of this. lisa: i have to be honest. i was surprised by the degree of optimism considering how much pessimism there is around the ability to reduce the degrees of rise in the planet. what about carbon capture and other methods like go after reducing emissions? olivia: we have a big challenge ahead of us and if you look at the amount of capital that needs to be spent over the next 30 years, is passive. were looking at somewhere between 5, 6 trillion of capital that needs to be spent. apollo is looking at what we want to do on our end and lean into financing this transition. we set a few targets for ourselves.

50 billion by the end of 2027 and 100 billion by the end of 2030. for us we are looking at big numbers in the space and if you look historically over the past five years, i've talked to my peers and what you are really seeing is so much capital really being mobilized here at the corporate level. i think the world has realized we need to be carbonized and now we are looking at the way to do it. lisa: do you feel people are losing enthusiasm? have you seen any backlash in terms of halting institutional enthusiasm? olivia: i haven't really. you read the papers and there is

certainly some backlash but on the whole, if you look at the paperwork at the number of businesses and corporate's, there is so much energy around this event. folks are looking at what they can do and how they can do it and where are the gaps? how do we get to the scaling up part? there's a lot of capital that is common to venture capital part of the value chain and with the capital going into infrastructures and de-risked investments, how do we fund the part in the middle where you have technology in companies that are proven working but need a little bit of help to get to the next level. we see that in individual companies as well as corporate carveouts of larger companies.

there are so many opportunities here for how to fill that gap and i'm excited about what apollo is doing here. jonathan: we have to leave it there but thank you for jumping in for us. that's the head of environmental investing over at apollo. 2022, 2023, to wake up calls into different spaces. there are huge investment opportunities but in 2022 we highlighted how fragile energy supplies were in parts of the world and how we have neglected to invest in fossil fuels and the prospect of moving away from these things too quickly. in 2023, we are going to see

more of the ev cars. will we hit reverse or slow things down? some people feel you need to move more quickly. lisa: especially given the fact that the u.s. is producing a record amount of oil which raises the question, with ev, and taking the high ground. employer adjusted earnings per share came in below expectations. jonathan: that is not the headline. lisa: i know, i know. ♪ ♪

the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

>> we still have more and more evidence, jobless claims are still good but everything else

is pointing in the direction you would expect. in long-term banking we are waiting for any evidence of an acceleration. jonathan: estado soft landing, it's not a hard landing. we are at apollo headquarters. let's start with the price action, equities pulling back just a touch. a little softer to start the week. down three basis points on the u.s. 10 year. lots of data this morning, job openings. jobless claims by the end of the week and payroll since friday. tom: what does the tenure do? a real stasis there. a real instability. jonathan: if you look at the

interim moves. tom: given which way we can go on a job report with revisions, do we start talking 3.99? jonathan: because of uaw, when they denied is the estimate. let's just say it's 150, that's pretty solid isn't it? unemployment of 4%. lisa: what would be the bigger surprise for markets, and of size or downsize surprised? we heard it can be disruptive to equities because we are in this narrow goldilocks. it's beginning to look a lot like warm landings. jonathan: i next year you hope you get the soft landing and growth decelerates and

disinflationary trends continue and the federal reserve will cut. the only thing that will spook this is bad data. bad data changes the game. not all rate because are created equally. if you cut because inflation is coming down that's great. but if you cut because interest rates are getting hammered. that's a different deal. tom: it's a bad day to calculate gdp and then also at the same time, the calculation of inflation with the oddities in real estate, goods deflation. lisa: going forward this will be the key question. if we get data, is that good news? if bad data is bad news is good data still bad news?

tom: retirement in america has been a train wreck. at apollo global management they are trying to fix that and stuff and i apologizes to wealth management if it doesn't work under traditional means. you have a joy enormous challenge which is active management has failed, 493 passive stocks have failed so there has to be an alternative. if your audit table in hong kong with the high net worth individual, what's the alternative to failure? stephanie: it is great to see all of you. i was in hong kong last week and

speaking to several clients and stepping back, there are only about 10 companies in the s&p 500 that have generated 90% of the return. in contrast, when you look at the number of companies globally , 90% are private. to your point of altering -- offering alternatives the classic 60/40 model has not served the retiree, to generate the long-term financial goals that an individual is looking for. when we think about alternatives, we talk about fixed income replacement and how real assets can offer that return in an environment that is challenging to meet those returns. lisa: in hong kong, is there a

lot of money from china coming into u.s. markets as a way to diversify out of the market? stephanie: we see our inflows coming in globally. asia represents a meaningful share of the global flows in addition to what we are seeing from the u.s., individuals. there has been a big push at some private investment firms to create instruments to give access to retail investors. is that something you think is a good call given a lot of the investments are long-term and retail investments are short-term? stephanie: absolutely. you need to trust managers who can manage cycles and they are underwriting protection. the benefits to be able to complement a portfolio that has

historically been very liquid or long-term in terms of private markets. right now they can access semiliquid markets that allows excess return which is critical to buying diversification and allowing them to generate returns that have been in the hands of institutions. the individual is under allocated to bolts in contrast to institutions and they have benefited from those returns and their ability to generate what retirees need in their plans. jonathan: let's talk about products. can you talk to our audience about what that is? stephanie: it is approaching 15 billion. it allows us a strategy to

access diversify private markets exposure. when we think about the volatility and concentration we spoke about. the ability to produce -- reproduce equity exposure to some strategy that provides broad market exposure is very attractive given the challenges we see going forward. jonathan: institutional retail, what is the makeup of it? lisa: what we did early on when we went to develop the global wealth business. stephanie: we had to find the challenges investors to add alts. we wanted to create an efficient access point, one that

aspiration only makes sense from a tax and regulatory perspective. in each instance, we listen to the needs of the individual and tailored it in a bespoke way for them. tom: when you listen to them, internationally, how much do they want to participate in american technology? can you also buy microsoft? stephanie: for us it is diversified across sectors. they look to our investment capability and ultimately, they are looking across asset classes and looking in their portfolios to use alternatives as a tool to determine what they are doing by asset classes, vixen income and real asset exposure. jonathan: thank you for having us.

stephanie drescher there. you guys are going to continue on for half an hour and i have to run back to the studio. tom: you get close to 7th avenue , they have a big breakfast is not just egg mcmuffin's. jonathan: on central park south, west. i go there for breakfast. tom: i don't know that area. jonathan: of course you don't. up next, mike downing the coo. and then we'll have coverage from whaley from blackrock. from bloomberg hq, good morning.

♪ ♪ a few years ago, i came to saona, they told me there's no electricity on the island. we always thought that whatever we did here would be an emblem of what small communities can achieve. trying to give a better life to people that don't have the means to do it. si mi papá estuviera vivo, sé que él tuviera orgulloso también de vivir de esta viviendo una vida como la que estamos viviendo ahora. es electricidad aquí es salud.

>> as last months fed meeting, the market thought they had done the work for the fed. >> we have a perception issue

with main street versus wall street and making sure -- >> it doesn't mean it's a massive crash. >> the argument is still for a soft landing. that's the challenge for equity assets in particular braden >> it's not to be easy but we think there is a path for inflation to continue to come down. >> this is bloomberg surveillance with tom keene and lisa abramowicz. tom: jonathan ferro, lisa abramowicz and tom keene on the right side of the tracks. for the first time this year. here at apollo global management. this has been a joy so far. lisa: it's been really illuminating. there are these macro trends going on within the industry of shifting but also the question of where we are at a moment that

is pretty uncertain. tom: jim talking about -- goes for the data here. it's an economics week with huge data on friday. >> we will get the drumbeat to it with initial jobless claims. i know you follow that closely. the jolts figure which you started the show. i care, i think it's industry -- interesting braden fewer people are quitting their jobs. does this mean we are heading towards a downturn or just something that can leave rates where they are. tom: lisa has 14 questions for john zito here. right now let me do the data for you and what's great with the distraction is you got very

quiet markets. enjoying a friday. 10 year yield, 4.2%. crude is of interest but with incredible -- that's my surprise of 2023. >> especially given the fact saudi arabia is pledging additional cuts going forward. it raises this question is this because we are seeing demand drop off. or is this something else. it may be trading volumes. something else going forward. >> one more thing to talk about china and this is almost the bipolar nature of it. the service statistic which i don't understand was actually pretty constructive but grim news on their balance sheet on the property side. >> this has been a consistent

story. how much will that force their hand to initiate some sort of stimulus. they are going to have to step in and that will affect their fiscal backdrop. >> apollo global management buys shanghai. lisa: someone is going to do damage control shortly. joining us now is the interview lisa has been most waiting for prayed deputy cio of credit at apollo. the vignette here of taking the loyalty program of air france klm and saying we can make this like united. they just close that deal. lisa: how brave do you have to be. thank you for being with us. deputy cio of credit at apollo. the idea of big investments.

how hard that's getting to do with a questionable outlook going forward. john: i don't think many thought it would be private loans. it is happening pretty quickly. what's happening in the market is companies are trying to diversify their funding away from traditional sources. you don't want all of that to just be -- maybe wants sums restructured solutions. when things get volatile these businesses are under very small percentage of the balance sheet. >> there's a most $2 trillion of investment grade debt coming through. in the next four years, one point $5 trillion of investment breaking down. how much do you think will get

refinanced in the private world. >> very small percentages. we all have to start defining the private markets in a broader way. we have all defined it as middle-market lending a $1 trillion marketplace. we define it as a $40 trillion marketplace which really exists predominantly in investment grade and anything that's not traded that sits on a bank or insurance company balance sheet. when you use that definition and talk about 3 trillion in new financings it is a very small component of the overall capital units and again we are $500 billion, we tend to get a lot of attention. in the context of the balance sheet it's a relatively normal course. >> we've seen this so many times in the cycle. is there a brain drain going on right now in your world for conventional banks over the apollo type institutions?

and because of that brain drain do you have a negotiated lead -- leg up in looking at the transaction? john: most of our investors are retirees or pensions. they have -- so when we are talking to a company and trying to provide capital to them it is matched so it is all about balancing for our investors, retirees. when you have that leg up relative to someone who has to provide capital on a short database we are just going to be able to create much more unique solutions that fit the company. tom: i know you have decent discounted hotel rooms in paris. let me tell you right now. is that a duration transaction when you have a leg up because you're looking at 10 years versus a conventional bank. john: with that it was taking a

specific asset and structuring it in a way that would tie to a specific flow of capital not logical for the market. it's very specific and each company, each situation is a little different. you have to have the flexibility of capital to provide that to make it work. lisa: have you been surprise we have not seen a big catastrophic credit event after decades of zero rates that have spiked up. is everyone warning of armageddon? are you surprised, will there be a bill to be paid at some point or was this the right approach? john: regulation worked in a lot of ways. the banks deleveraged. some sort of overleveraged balance sheet or some sort of credit crisis. where there's actual true losses. the system has actually been de-levered generally speaking

and the capitol and assets are finding their ways onto the right capital which is really less levered investor capital, clearly we are concerned about certain parts of the economy but probably over earned during covid. there are very big changes in patterns going on in the u.s. where parts of the economy will do much worse. lisa: like what? john: south florida is doing well. but miami where you have millions of people moving down there you look at commercial real estate rates and building occupancies. other places where you've seen migration you have people leaving in really droves. you will see a total different media economy. we look at economic data at the u.s. level. we never break down the data on specific microclimates. and then you will see microclimates pop up as you of

structural changes from the post-covid world. lisa: most companies are not paying this. we keep talking about this, the idea the headline number is 8.5%. in reality people are still paying four to 5%. when does it become punitive. what is the rate at which you start to wonder if it's worth charging a company based on their viability going forward. their ability to keep existing and paying back. >> we've raised 100 -- we went from 100 to 5 trillion total debt to 250 trillion of total debt over the last 15 years. clearly interest rates will impact some companies. they took on too much leverage or the business is more cyclical. they end up having too much debt so they need either equity capital or they will need some sort of structured solution to make their balance sheet worth it. i suspect the full tool will go up. i suspect there will be losses in certain sectors just like any

other cycle. i think the common lens is to look at the last cycle and say that's where all the problems are which is housing or banks. i think both of those asset classes are in pretty good form. there's other things that really assumed interest rates will be zero forever. and now they will have to live with those capital structures and i suspect that's where you will see that. tom: the answer is which is the shadow you are looking at? john: i think there were certain parts of infrastructure that assumed rates would be zero forever. laguardia is definitely not. there are certain parts of the capital structure we have too much debt. tom: nobody is watching. lisa: the car companies, tech companies. tom: we need to bury somebody here. john: i would say generally

speaking anybody who assumed that interest rates would be zero. tom: i got nothing out of this. lisa: specific names that will end up. thank you so much. really appreciate it. john: how about those dolphins. tom: don't leave now we are still on air. [laughter] lisa: this is really the key question right. how do you pinpoint who is going to have a hard time and who isn't. right now it's not a default cycle we got use to. tom: i am in the camp -- you can think as hard as you can with the smart people here and you always get wrong what the surprise is down the road. >> we did not get the recession as everyone thought. tom: we are here right now with the standard & poor's 500 down 3/10 of 1%. lisa: i'm interested in

smuckers. i am really curious about all of these smaller companies and what they are actually saying. seeing a significant impact from ozempic. but the fact that they cnet sales coming down. the fact that they see full-year adjusted eps, the fact they are free cash flow. tom: mark rowen called me up and said look because we are doing this the same day as these earnings we are having twinkies here at apollo global management. it's as dodgy as they come and the answer is they do a bald on transaction financed by apollo global management. so you have a bolt on now. zito's entourage is hoping -- you've got twinkies and orange marmalade. lisa: tang, orange marmalade.

literally the worst thing prayed what are you trying to do in the morning for people at breakfast. talking about twinkies and orange marmalade. 3.2%. these are some of the interesting. >> these stocks have not been participating. you just wonder seriously what they are going to be. we will talk equity at apollo. we will see how that goes. coming up as well annmarie hordern in washington. jonathan ferro and lisa abramowicz and tom keene from the offices of apollo global management. good morning. ♪

what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. >> is this going to change how you approach u.s. politics, you -- who you would endorse for 2024? >> it's not going to change.

>> do you have a favorite candidate? >> it's hard to believe or 350 million people we are down to two. >> are you disappointed? >> personally i'm disappointed. >> mark rowen, apollo ceo with a non-answer joining on the presidential election coming up. a really important conversation not only on the work here, his vision for apollo global management but also a very delegate conversation on the antisemitism we are seeing at the university of pennsylvania. lisa: what he did say about the backdrop next year, the disappointment he feels about the two candidates who will be in the running saying can we do better. i think it's really interesting to hear calls for chris christie and even ron desantis to drop out and coalesce around nikki haley as people are saying who can possibly run against the former president trump and likewise on the democratic side

this is really an interesting moment where everyone assumes this will be the race and yet people are trying to chip away around the edge. tom: the calendar into this wonderful building there's an iconic christmas decoration they have here and if it falls over it will kill you. it's a candy cane kind of thing. on the bank of america building and the answer is lisa the calendars moving and the calendar for chris christie and others like mr. desantis is moving. >> this is going to be obviously an evolution and the big existential question hanging over it is will we still end up with a trump versus biden kind of race? tom: 10 year yield at three basis points. futures a little saudi. economics, finance investment guess what it's all about the economics. lisa: can we continue with the

goldilocks discussion evan how far we've gone. it's kind of the hangover after last month. last month was really amazing as far as overturns for a month. this is the hangover. >> joining us now with the hangover. bloomberg christmas party correspondent annmarie hordern braided looking at what's going on here. i look at where we are now and it is completely clouded by a war that has become on the edge of chaos and as i mentioned earlier on a 12 hour basis we really don't know what's going on. describe in washington the frantic nature of the study of the war in the eastern mediterranean. anne-marie: it is changing rapidly. we thought that pause that we

had, the truce at the moment to exchange hostages and prisoners and get humanitarian aid could potentially be elongated and more hostages would come out. we heard talk about the fact this cratered because of hamas saying hamas did not want to have up the remaining women. is israel going into the south and the debate taking place in washington dc and there will be an intelligence briefing on capitol hill today in the senate not just to discuss but also zooming in will be volodymyr zelenskyy ukrainian president so ukraine will be top of the agenda as well. surrounding all of this aid is really two things. is there going to be strings attached. we talked about this time and again, this pushback from some progressives about how israel

conducts this war in gaza and of course when it comes to ukraine for republicans to sign up and not filibuster or vote this down they want to see stricter laws and stricter asylum laws, parole laws and more funding for the u.s. southern border. >> when the administration speaks to israel, who do they speak to? is it just to netanyahu or is it more complex than that. >> i think it is more complex than that. we have had bill burns in qatar for days or weeks. he's been of course the u.s. top diplomat but really invoking himself into this crisis because his counterpart is the head of masada and we've also seen that individual go in and out of qatar. so there are different individuals depending on what's happening on the ground, what the u.s. wants to see done that they will reach out and talk to.

it's really been counterpart to counterpart. i think when we had the secretary of state there for his third trip to the region since october 7 he spoke to the entire israeli war cabinet. it's not just the prime minister of course. the president remains in touch with and there's been a number of phone calls throughout the week spot it is a larger apparatus with all of these individuals. whether it's ahead of the idf or mossad or the government. >> we talked about ukraine aid and how the president has pushed forward this idea we are running out of time and money will run out for that effort by the end of the year. how closely tied is it being paired with the idea of border security, securing the border for the united states and how much democratic support is there at a time when states like new york and connecticut have increasingly felt that pressure. annmarie: i think these things are definitely linked.

the president when he talked about this package and asked for this package had all of these priorities linked. u.s. southern border, ukraine, israel and strategic partners in the indo pacific. for republicans to be able to sign up for it because we've seen divisions in the republican party on ukraine and even those defense hawks that want to see money recognize that they will have to make sure they are going back to their constituents and also bring in other members of the republican party with not just funding on the southern border but a lot of this is coming down to policy and that's why the talks broke down. chris murphy who is really part of these negotiations and integral to them said there are some things that no democrat would vote for. they need to get that language correct but to your point there is pressure on democrats to make sure that they are delivering something tough and substantial when it comes to the southern border because we have seen the

letters from the likes of governor pritzker. we've seen the outrage from mayor eric adams and governor hafey -- kathy hochul who said they need more support if they're taking in more of these migrants. >> how much do you see this taking the lead from the house when it comes to this border debates given the fact that there have been questions about leadership and how strong it is in the house and if the senate has been so quiet amid all of that turmoil. >> all of these conversations at the moment are happening on both sides of the capital and both chambers but you are right, the senate is taking the lead on this. this is where the deal will be done. you see the senate has strong support and republican leaders for the likes of aid to ukraine which she said time is running out there is no extra pot at the end of the year we can draw down from and we will kneecap our partner in ukraine at the hands of food and if we do not send them funds. the likes of senator mitch mcconnell went on a tour talking

to the press about how this builds up u.s. industrial base and means jobs in alabama trying to explain what this money means. that deal will be cut in the senate and this is why you see a lot of republican senators talking about tougher asylum provisions because they want to make sure the republican colleagues in the house can pass it and get it through. when it comes to the house, it's one of the top priorities making sure they do not shut the government down. that will be the next debate january for the first part of that approach to the continuing resolution. but it is messy to say the least in the house. they ousted a member of their own party and have a slimmer majority now. >> thank you so much. our bloomberg correspondent here coloring all of the discussion in washington. >> right now there's also the

geopolitics that have overshadowed the domestic haggling. i think about what's going on with the two wars we were just touching on but also the oil backdrop. >> the oil backdrop is there in recent minutes. mr. putin will meet with leadership of saudi arabia. but that just shows you the world goes on and travel goes on away from war. >> this will be vladimir putin's first foray outside of his country. set to be meeting with the saudi crown prince. >> did you notice people here at apollo global management get into the crack of 830. >> ongoing private equity. good morning from apollo global management. managem(car engine revs)

(engine accelerating) (texting clicks) (tires squeal) (glass shattering) (loose gravel clanking)

it's an amazing thing when you show generosity

of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. tom: bloomberg surveillance, good morning everyone. we are here at apollo investment management. a wonderful visit here. right now, we're looking at some economic data. forget about all this finance talk, friday matters.

lisa: we will get ism services, we continue to see the decline in manufacturing offset by services. cannot continue? tom: i agree that it's a huge mystery. there is a bloomberg chart showing goods deflation. but the mystery of services in the united states has to be front and center to q4 estimates. lisa: we get initial jobless claims. tom: the markets are open. let's get a data check. yields are in a little bit. we will go to mike mckee. we are at apollo global management and is clear that this is a dual jobs report in

the importance of the claims report rolling into the jobs report on friday. are they linked in any way? mike: one measures job losses in the other measures job claims but if we are seeing more losses than job gains or continuing claims have been the focus in recent weeks as they have been higher suggesting is been harder to get a job in the jewel report saying that there are fewer job openings. the jolt number is expected to show that we are still well over 9 million job openings. the labor market, is it tight or not? we will know by the end of the week if it is changed over the past month. lisa: we've talked about the labor market but we haven't talked about services but it's impertinence given that we see

record amounts of travel over thanksgiving. how much are you expecting that to continue versus signs of weakening? mike: it appears there is a mixed picture coming for ism to go up and show strength which would be interesting given what you are saying about manufacturing staying in recessionary territory. but new orders are supposed to come down. they all remain high, still in the 50's and showing expansion. it's hard to tell exactly what it will tell us. but it will be interesting with what we see with prices. if service industries are expanding and prices are not going up that's good news for the fed. tom: michael mckee, thank you so much. the joe report is coming up and then on we go to the labor

economy on 8:32 on friday. jonathan came to talk to others but i don't care about anyone except for our next guest. there was an album out that jimmy page produced in you are a board member of the rock and roll hall of fame. and there was a zeppelin inventing it in 1969. >> we like to have fun at apollo. tom: when you look at that, that is subprime year and the prime of private equity is happening

in real time and rapidly. where is private equity and apollo in five years? >> i'm excited about the private equity business. he continues to be an important part of our business. if you look at what we were able to do we closed 20 million and commitments and that's appreciated over 10%. tom: how did you make 16% without apple or microsoft? matt: we try to find the best risk/reward on any market. depending on what we see. and we put management teams in a position to be successful.

this is meant to work across all marketing environments. lisa: are you loosing company -- customers to private credit? matt: coming out of the environment we have been in, everyone made money. in this environment do you have the tools to generate returns with uncertainty? because we've been together for such a long time, 30 years, we have the ability to pivot and receive good support from our investors. lisa: what kind of return are people looking for to justify the wrist? matt: we try to figure out what is the excess versus risk. with the outcome of the economy you need mid-20's rate of returns and do it with

conservative assumptions. tom: could it be triple leveraged? what kind of leverage do you have to have to make those returns were? matt: typically we are buying assets at six or seven times, when you are buying well you are using less leveraging. tom: what are you gonna do about the mess, what's the benefit of american entertainment? matt: were not targeting a specific industry we want to be bottom-up looking for the best return. tom: transaction on transaction? matt: if you look at fund 10 we

did aluminum, univar, these are sectors that we have followed for years. our partners cover sectors and private transactions. ceos have woken up to the fact that private equity is long-term money. there was the perception to buy up that short-term money. lisa: how much is the idea of not having to sell, fortifying this idea that you will not have to price in real time when there is price destruction? matt: it's more of an issue for the industry and not for us. i think a lot of sponsors overpaid for assets in the air

is coming out of the balloon. i think you can question some of the private market valuations. we tend to see multiple expansion when we sell so i don't have a concern. tom: and balance street construction, at what level of ebita, are you going six to nine? matt: we have conservative assumptions. we want to return capital along the way. this is one of the biggest issues for the industry is how much capital has been returned. for those who have overpaid for assets and overleveraged it's

hard to generate returns. we have already returned 10 billion worth of capital about half of our cost basis which is best of class. we take companies public, we have sold assets. there's a lot more flexibility. tom: we were studying charles monger and you are getting a preferred cash flow along the way. over conventional buyback dividends they will be picking up another 300 basis points? matt: we have 25 best case returns, we have cash on cash yield in the first year and then earnings growth and the term -- team of operating operators. tom: i can't tell you the last

time who said we could do 25% a year? lisa: what about compression? matt: we haven't seen it in our flagship business but when you have a platform such as ours with sophisticated investors makes for a dynamic relationship where we can have platform to platform relationships. lisa: how much are you counting on marcus opening up and able to return capital in the same way? matt: we have lots of flexibility. marcus will be a little more diverse than in 2023 but were not counting on that. we are gauging interest in selling assets. tom: i would love to know what you think about this duration and patient's and ctas running

around trying to make swings that the market. we have hedge fund managers that are day traders. matt: for us, it's about long-term value. we are not market timers. this team has worked together for a long time. my partner david sandberg and i have been here for 20 years. it's focused on discipline, downside protection, strong returns in all environments. tom: we are out of time but thank you so much. and thank you for collecting one of the greatest albums of all time. and apollo global management. lisa: if you're just joining us let's take a look at the scores. we haven't seen much in terms of market action.

s&p lower to 4563. tom: at the bottom line it is an economic week. it is fascinating to me, is this the jobs reports where we have a negative whisper number or until below whatever the number is? lisa: it doesn't sound like it. to me we keep talking about the micro industries, different sectors have different pressures and they are working like different cylinders of a car. do you like that? tom: oh it's all about timing, car talk. we were talking about q3 gdp. are we going to do this ballet again? lisa: the gdp is looking at 1.4%

which is the lowest growth going back to last year. it's not that bad considering were cutting off 5%? it's deceleration but what from what? tom: were talking about credit here. lisa: i think it will be a balance between turning out the existing structure in the idea of what kind of bogey is necessary? how do you achieve that in this world? tom: we will continue here at apollo global management. we will finish your strong with mike downing. we are in new york from below 59th street, this is bloomberg surveillance. ♪ ♪

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>> i think the world is de-

banking. everywhere in the world regulators are favoring people over banks. but on the margin, the growth is going to take place in the investor marketplace rather than in the banking system for good and valid reasons. lisa: marc rowen talking about opportunities going forward for private investors and we are here at apollo headquarters in new york. tom keene and lisa abramowicz is down there getting breakfast. tom: he said he was going to get sausage in a biscuit. lisa: we will catch up with him in a little bit. a little bit of softness in the markets but no big drama after last week. we can see just a bit of a decline in the s&p yields are continuing to go down at 4.20.

that snuck up on me. tom: i missed this on the desk here. i am looking at a 4.2069. it brings in an important point. what's the chances of getting to 3.9 nine given the economic data? lisa: no one wants to come up with viability to match them up perfectly after years of zero rates. one focus has been focused on this in the sleeper star, mike downing, chief operating officer . thank you for being with us. why are you so popular? >> i would say the reason we are popular i have been a retirement

for 30 years. the first 15 of those years was looking at the landscape explode under regulation. what you have now is legacy obligations. the risks are still there. it is a great place for insurance companies to step in take over the landscape, de-risk the assets and back going with capital. lisa: what is the bogey you are looking for? there used to be an 8.5 bogey. a lot of investment firms locked investments in at those rates and now were looking at real, actual income. what is the bogey you are targeting? >> in terms of asset yield?

we are regulated pretty heavily in types of the terms of assets we can invest in. so we will have corporate bond, high structured assets and looking for our performance to provide a good value proposition. tom: for those of you scared stiff about retirement. this is the most important conversation of the day. in illinois and west des moines, iowa, this goes back to sunamerica 14% annuities and the it is see if 30 years ago and then we had zero interest rates. and now you are back to a normal rate environment and our

listeners recovered their retirement plans now that were in a normal rate environment? mark: i think we are reawakening annuities. tom: what kind of annuities? variable annuities? i remember a headline in ft where fixed annuities was a 3.9% . that doesn't get it done. mark: we need simple retirement guaranteed income. not fancy incomes. a lot of complex liabilities out there. guaranteed income, looking for some outperformance. annuities are a viable alternative.

tom: do we need further emergency legislation in washington to allow people to put more in because they will not catch up after the last 15, 20 years? mark: i think we are seeing more than a curve, steps on the right direction. a lot of it is mindset. the annuity market is huge. it's 2 billion a year. that's in large part due to the fact that they've been part of secret insurance and investments -- investor advisors need to look at portfolios. lisa: that led back to where we are going to go. what is the appropriate age for people to retire given how much money they need to build up? tom: i'm thinking 90.

mark: 55-70. lisa: still? mark: people that are saving, they have big piles of assets that they been accumulating. that gets you to retirement but how does it get you through? an annuity can stabilize your principal and guarantee return and create payout so you don't outlive your a says. -- assets. lisa: when life expectancy should be expanding. people are living longer. what if ozempic makes us live forever? at what point does this not become feasible mathematically? mark: lifespan is walled off at

age 120. what will happen is, people are living incrementally longer and that is where production fits in well. it protects against the individual who may live until 120. some people die at 60, some 120. tom: i have an acquaintance with the triple leveraged cash fund. as the solution to take the conservative structure of annuities and provide leverage into them to get a better return for conservative types? mark: and not even conservative types. annuities will not deliver a home run. but at 70 you don't want a home

run you when the out live your fund. lisa: we have this pool of capital not being spent and there is this pool of cash sitting in assets that never come out for a long. of time -- period of time. how does that add to savings? mark: as rates have gone from zero to three, 4%. a lot of cash has flooded into the insurance market. we have seen volumes in deferred annuity markets almost double overnight because were finally getting yields again. the money that was sitting in money markets, cds, that has

migrated to annuities because the returns have real terminal rates. tom: this has been a wonderful three hours. i think we have learned a lot. and the coffee is nice, can we come back? have you been to des moines, iowa, and february, that's a treat. lisa: right now and marcus you are seeing a softening. you talked about 10-year gilts, yesterday it was unclear what was driving at 4.20. grinding lower, the lowest we've seen since august. coming up, talk about twinkies and peanut butter.

mark smucker ceo of j.m. smucker company. ♪ (car engine revs)

(engine accelerating) (texting clicks) (tires squeal) (glass shattering) (loose gravel clanking)

it's an amazing thing when you show generosity

of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. jonathan: good morning. equity futures down by .4% on the s&p. countdown to the open starts now. announcer: everything you need to get set for the start of u.s. trading, this is "bloomberg the open" with jonathan ferro. ♪ jonathan: live from new york, coming up, the team at apollo says the fed put his back. the recent mark