This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio. Let's get too if you had a great guest, uh, and we're gonna get a great perspective and what investors who have lots of money to put to work are most interested. Let's get right to it with Julian Salisbury, global head of Goldman Sacks Asset Management, with us on site at the Milk and Global Conference. How are you great? Thank you? So the environment people are eager to put money up.
A lot of things going on. Look, we are in a record fundraising environment, a record capital deployment environment, and a record environment for monetizations from the same portfolios. So it's overwhelming the amount of money that is coming into the investment space at large. If you look at alternatives, just the top five listed alternative managers raised I believe a hundred and fifty three billion last quarter billion of dry powder. That's two x the amount of dry powder
that existed five years ago. That being said, well, that may seem overwhelming and concerning to some extent, the magnitude the opportunity has also grown substantially. If you look at explain that in terms of the options that are out there. So, first of all, if you just look at M and A activity, we just had a one point six trillion dollar quarter of em ANDY, the biggest quart of ever.
That's five consecutive quarters of north of a trillion. I just did a panel with global co heads of City in Deutsche and they said we're on track for like four point one globally, and they think it could be five trillion. I mean, it's it's on it's a And if you look at the share of that that's being prosecuted by sponsors, I mean last year was a record year for the share of em ANDY activity prosecuted through the private equity community. This year it's running at thirty
six percent. So it's a higher percentage of a higher volume, and I think a greater opportunity set is a function of a number of things. First, well, we had a pretty big pause last year, when there's a dearth of activity for a really six month plus hiatus of activity.
And now off the back of that, if you look at the accelerating trends that were already taking place in the global economy, many of those trends were just ccelerated by COVID, and now I think there's in addition to the pause and the catch up, there's a greater sense of urgency too. Um transform your business, whether it be through M and A, through investment through um UH, through through digital transformation of the business, and all of these
things are leading to people wanting to raise capital. But Julian, are you finding effective places to deploy all of that capital? We you know, we spoke to Scott Minor. We're gonna air the interview in just a few minutes. He said, this is a period of time where he looks across set classes and things are so expensive, with the exception of residential real estate. Yeah, I was talking to somebody about this earlier today. UM, I can remember back as
far as twenty years doing business planning. I've been at for twenty three years. I don't quite remember the first three years. Maybe I wasn't invited to business planning the first three years. But each and every year that I can remember, we sit every year, including you know, the end of oh nine, you know, when things were still pretty just like every year you sit there, how are you going to make money last year? Because when you look back, it always seems it was so obvious with
hindsight how you made money. It was never that easy. It was never that obvious, and I think it's true today. I would that being said, it is, you know, valuations are particularly high on many metrics, growth in particular relative to value is expensive on many metrics, but it's it's always more complicated than that. I look at our take
our Growth Equity Investment Committee. Every week, two or three companies comes through that committee that are capable of being multi bill in dollar companies that didn't exist to three or four years ago, um and something that they won't all win, some will not succeed, some will go on to be worth tens of billions of dollars. And by most valuation metrics, traditional valuation metrics frankly don't really work when you're looking at these businesses any kind of near
term revenue multiple earnings monopole. You really have to look at what's this company capable of becoming over the next five to ten years and taking a more forward looking view. And I think that's another reason why more of this is being conducted in the private markets, where people are able to take a longer term view focus on things
like unit economics UM. You know, does it create healthier companies that ultimately do go public, whether it's through direct listing, whether it's an IPO or spack because they're able to kind of incubate for longer periods. Yeah, I think that UM. Look, private markets are are a great way for companies to scale and grow. The public market route is also a very valuable tool for capital raising for companies money when companies that including raising money through traditional IPOs or spoke
there's no UM, there's a root. There's room for all of these things. But I would say, UM that the patients required to scale some of these businesses, the capital that's required to scale some of these businesses, and the allienstances, it probably is easier to prosecute that in in private markets. And also, look, some of these companies are just this are often quite small. Ye. They have a a few senior entrepreneurs at the top of the They need real
kind of help and guidance and governance growing the businesses. Angeliane, I'm wondering what the questions that the clients have Goldman Success that management are coming to you with right now? What did I buy dose coin? Is that what they're asking you, Jillian, I'm not I'm not surely going to comment on the value of any individual. What do you mean there's like, there's some interesting trends out there. Yeah, I think that everybody's struggling with this question of where
the deploy capital. They can't make the returns that they need through traditional fixed income product they look at equity markets, which have been and will continue to be a great source of return of the right time horizon. Um. I always think there's a very large room in your portfolio for public equities. It's not all about private markets, but what they're looking for is ways to pivot into private markets. Is an alternative source to the lack of return that's
really available in fixed income. Just got about twenty five seconds leftter, What do you think is the investment people? Maybe it is not on everybody's radar, but they should be watching closely, just quickly. I know, don't say rowing, don't say canoeing, kayaking, claus keep okay, Um, I think the the transformation that's going to happen in real estate over the next um five years is on the appreciated residential, commercial,
old forms of those things. Nicely done. Yeah, I gotta get you back Julian Salsbury Global ahead of Global of Goldman Sachs Asset Management. Right here on Bloomberg. You are listening to Bloomberg Business Week Carl Master along with Tim Stanovic here at the Milk and Conference. Well, earlier today we spoke with Guggenheim Global CEE I O. Scott Minor here at the Milk and Institute Global Conference. It was a great conversation and in this excerpt Scott discusses market
headwinds and bubbles. Check it out. I have never seen a time like this where there is nothing that I can point to that I can call cheap. You know, historically, I remember being interviewed on Bloomberg in two thousand and six and telling uh, the interviewer that the cheap thing was ten year Treasury notes at five and a quarter, And I said, want who would want ten year tread three notes? Well, you know, I was concerned about the
housing crisis. Today, I can't point to anything that I think that if we got ourselves into trouble that would actually be cheap to buy today that has value. So you're left in this world, which I'm not real comfortable in, where you have to find things that are expensive that are probably going to become more expensive, and so you know, you know, well, I mean cryptocurrency, right, you know, I
mean Sheba. If you'd invested in sheba coin back in the first quarter of this year, a thousand dollars today would be worth two point one million, right, I mean, can I find another Sheba coin? I don't know, But okay, but we're talking about something that a lot of people think it's a joke. Well, sheba coin was a joke created to mimic doge coin, which was a joke, right, So I mean cancel each other out. Yeah, well, I
don't know it's it's a second derivative joke cryptocurrency. But you know, it just shows you how much cash is out there, how it's lifting asset prices. Like I was asked that the Federal Reserve to do a thing on bubbles and what markets did I think we're in bubbles? And I went through every market I could think of, and the one I said, Um, sports memorabilia isn't a bubble. Baseball cards are clearly in a bubble, right, Um. But you know you look at stocks, right, are they in
a bubble? Well? Not with interest rates where they're at. It isn't it and isn't it so much of it's got kind of bounced back from falling off a cliff and things recovering or do you think you know we've done that and then we've gone a little bit more Well, I think, you know, normally at this point in a recovery, I would say, oh, you know, we're kind of in the second or third ending, right like when the Dodgers
are winning the World Series. But uh that you know, this is like we went right to the fifth ending, you know, the immediately the incredible rally that we've got coming out of the pandemic and the amount of stimulus. You know, people compare this to uh, a war, right,
the pandemic was a war. And so I've gone back and I've studied wars and when you get what's there is an interesting coroll area is when you you you have a major war like the First World War the Second World War, right after the war is over and there's been all this stimulus from defense spending and money printing, you get a spike in inflation, which is transitory. So when people talk to me about is this transitory? Which
I'm always like everything's transitory. Life is transitory. But but you know, is you know, is this something that is permanent and should we be worried about it in the long run? And I think today the answer is no. Well, well, if you look at all the things that have gone up in price that have that are in the CPI components, You've got hospitality industry stuff, hotels, arab lines, automobiles, right,
which are due to the supply chain interruption. Uh, you know it's really a bounce back from what we had in the decline. Now you can say, well, wait a minute's got autos. Well, the supply chain interruption to me looks like the retooling that occurred at the end of the Second World War. Right, all of every all output
auto plants, everything had been converted to wartime production. There was a transition period in the in the earl in the mid forties, and during that transition period, people who had saved all this money from the stimulus from the war wanted to spend it, and so auto prices went up. But you know it's interesting is there was one one period in there, I think it was in forty six or forty seven where inflation actually was at but bond yields never went above two and a quarter, which doesn't
quite make sense, does it. Well, I think we're living in it today. What a great way to wrap up that interview. Google Time Global Chief Investment Officer Scott Minored, well known to the Bloomberg audience. He caught up on a great panel with our own Scarlet Food here at Milkin, and he joined us earlier today to sit down. But I love how he looks at history and likens after the World World War two to where we are today.
And I was I have to say sometimes, you know, if you were watching on YouTube, you probably saw my jaw dropped when he mentioned dojcoin. I couldn't believe that word came out of his mouth. But he's someone who you know, he looks at all the different nasset classes, tries to understand the relationships and you know, why is something you know, going up, something going down? What's going on? More broadly, I think also he used it as a point to illustrate the exuberance that we're seeing in many
from parts of the market right now. Yeah, I'm not going to ask our own Charlie V about dogecoin. He's on set with us helping us make sure that this broadcast is working. Thumbs up to Doscoin, Charlie, thumbs up, comes up. All right, check out that full interview. You can find that online and on the Bloomberg. All right, Well, she has been a longtime pup look service. We servant, excuse me, we've been having a good conversation behind the scene.
Former Labor and Transportation secretary worked in several administrations, the Reagan administration, President George W. Bush, President Trump. We welcome the honorable Lange out. So nice to have you here with us. Thanks so much. Great to be here. Well, it's interesting, you know, labor transportation. I feel like these are the two hot topics right now we're looking at. Are their changes going on in the labor force? Will we never go back to levels in terms of the
potential workforce that we saw pre pandemic. Let's start there. What do you think? What are your observations of it? Well, it's great to be here at the Milligan Institute because these issues are being discussed, and I just came home a panel discussion with five large employers who are talking about what will be the work patterns of their employees in the future. They're taking polling more, they're asking their employees more, and clearly some kind of hybrid working environment
arrangement will be much more accepting two employees. And I think employers are trying to work this out right. And you know, at first they we're going to come back to work. The workforce is going to come back to work Glass of ten. Then it was lost December, then it was the spring, then it was gonna be September, and now people are talking about spring of So clearly we're all feeling our way as to how to come back at that. But it's changed. It has changed, at
least very much. In the short term. It's greater flexibility. And this is going to present challenges to the labor laws because so much of the labor laws are over seventy years old, and they think about a workplace that is you know, fixed and that has uh forty hour work week people come to work, and so all of that is going to change, and that's gonna put tremendous impetus on changing the labor laws, which are traditionally very very very very difficult to change because you know, they're
so fought with politics. There is this imbalance happening though right now, when we look at the labor market, there is an oversupply of workers, and but they are not actually returning to the workforce. Do you think we ever get back to a workforce that looks like it looked before the pandemic? Like, is it realistic? Those Yeah, it's even more before the pandemic. When I was Labor secretary, the labor participation ray was about sixty with the workforce
of about a hundred and fifty seven million people. And then we have a great recession and then the labor participation ray dropped to about sixty three and it kind of never recovered. And with the COVID then it went from sixty three point you know, three or four down to sixty one point seven, sixty one point one. So we're continuing to see declines in labor participation, which is terrible because we need these workers to come back to
fuel a full recovery. But there's also another factor, another dynamic at play here, and that is the skills gap. Well, we've got tired of this for years, a lame just like and I'm gonna throw in another problem. We've been talking about infrastructure for years, how many administrations, right, and this is something that has had bipartisan support. What ultimately, from your perspective, do we have to start spending on when it comes to infrastructure, Well, look at the supply
chains for obviously, you know, investing in transportation infrastructure. The reason that the Trump administration was never able to succeed in the infrastructure proposal was because there was a big debate about whether there should be one dollar or for
one dollar of investment spending. And the Republicans believe that there can be leverage, that we can use public private partnerships and leverage you know, existing government dollars, and the Democrats felt that they wanted one dollar for one dollar deficits spending, which obviously the pros and const to both. So we were never able to galvanize enough consensus around public private partnerships this time around. You know, I think there could be there. I think there's an infrastructure bill,
a transportation infrastructure bill to be had. Unfortunately now it's being held hostage to the Budget Reconciliation Bill. If it were to be standard alone, there is a deal to be made and passed on the infrastructure bill, and I'm hopeful that it would be passed before your end I feel like politics. I mean, I want to ask you because you've been in politics or I'm not a politics. I am a public servant. I've always viewed myself as being in public servant. Did say you are? We're a
long time public servant. Um the Republican Party that you know, if I think about the January six Capital riot, you resigned after that? Yes, I left the Trump administration. You were there, you know, almost to the to the to the end. Um, do you regret being part of that administration. I'm very grateful for the opportunity to serve my country. I'm an immigrant to this country. I came when I was eight years old. I didn't get my citizenship until nineteen.
And it used to be that if the president asked, the only answer you can give is yes. I didn't know the president very well. But I also believe that the American people deserve to have a functioning government. But going back to the infrastructure bill, the real drama is on the Democrats side, because, as I mentioned, there's a bill to be had. There was bipartisan support. Republicans signed on to this infrastructure bill. But the Speaker, and you know,
she and I share birthday. By the way. Uh, she's in a tough Yes, she's in a tough spot because she's got moderates who want to hold back on the spending. Well, she's got progressives that want to spend more. So she's trying to balance that. But if left alone, that infrastructure bill can move on its own. Many all the drama is on the Democrats side. And you know this, you know,
you follow what's been going on. The economy is certainly in the pandemic milk and covers this left and right, the inequities that we have seen and it's not new, and there are people who have not shared in the wealth creation, and so that softer infrastructure that the presidents team are trying to get through. I mean, this is part of the battle. And I think for those people that are questioned that they're not saying that these social
infrastructure proposals are unworthy. What they're saying basically is should they be included. You know, what was originally going to be called a transportation infrastructure politics works that, you know, but they like instructure done. We're done. So it was originally the original infrastructure bill had only six percent of what is traditionally defined as transportation infrastructure. If you expand the explanation and the description a bit more generously, you
get up to thirty of the dollars. But clearly there's a need for transportation infrastructure, Rhodes bridges, transports, airports, drive around New York. Absolutely. I mean the governor got elected on this. We've got her slogan. We have to ask because we have about a minute. I know you consider yourself a public servant, but we got to ask more politics. Oh shoot, why are you talking? I heard from Donald Trump at all. Uh, we have not spoken, not at all. So but I'm not you know, like I'm out of
politics the public policy. You served in three administrations. Do you consider President Trump is the leader right now of the Republican Party? Well, I think that is in the process of being decided and sorted out. There's still some time to go. There's two coming up, and then there's should he be the leader of the Republican Party. That's up to the people. You know. I think for those who wonder about his appeal, they should be asking what is it that prompts so many Americans to support him?
And I think that's a very the answer will be very, very revealing and you, and it's a teaching you know, It's it's something that I think, um, you know, the leadership should understand. But as someone who's who came to this country as an immigrant, um and became a citizen, do you think a voting citizen that he should be president or should leader of the Republic. I will support the nominee. I'm a Republican, so I will support whoever the nominee is. Okay, Oh my gosh, I wish we
had more time. You have such great energy. Thank you, Thank you for having me and come at things from so many different perspectives. Elane to how of course former Secretary of Transportation, former Secretary of Labor. I remember talking to you years ago in the monthly jobs reports came out, Um say some great history. We've had another great day at Milkin and it's only too I know. We have one more day and I'm gonna talk to Kathy Wood in a few minutes. Are you go get ready for that?
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