Private Credit Storm Lashes Father-Son Duo at Helm of Cliffwater

Summary

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Bloomberg Businessweek Podcast Summary

Episode: Private Credit Storm Lashes Father-Son Duo at Helm of Cliffwater
Date: March 24, 2026
Hosts: Carol Massar, Tim Stanwick
Featured Guests: Ellen De Morrow, Olivia Fishlow (Bloomberg News), Ray Takeyh (Council on Foreign Relations), Wilbur Ross (Ross Acquisition Corp.), Emily Greene (Ellevest)

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Episode Overview

This episode delivers in-depth reporting and interviews on two main themes:

1. The unfolding crisis in the private credit sector, focusing on Cliffwater—a major player led by a father-son team—amid mounting investor redemptions and broader concerns about contagion in private credit.
2. Analysis of global geopolitical tremors, focusing on the US-Israel-Iran conflict, ripple effects in the Middle East, and broader implications for markets and the global order, featuring expert commentary.

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Segment 1: "Cliffwater and the Private Credit Crunch"

[01:47–09:56]

Key Discussion Points

Cliffwater’s Rise and Unique Model

• Cliffwater is a pioneer in private credit, originally a consultant to pension funds, later transitioning into asset management.
• Its distinctive "fund of funds" approach involves partnering with over 50 direct lenders (such as Barings, Ares, Blackstone, KKR) and taking diversified stakes across multiple platforms.
  • Tim Stanwick: "They started out as a consultant to allocators like pension funds. And then they created their own asset management business which has grown exponentially over the last 10 or so years." [02:48]

Record Redemptions

• Amid stress in private credit, Cliffwater’s model became a focal point for investors seeking to redeem funds, leading to record withdrawals.
  • Olivia Fishlow: "When stress started to come to private credit and investors started to want out, Cliffwater was a big place where... decided to pull capital." [03:43]
• Visual data highlighted massive exposure—e.g., Cliffwater reportedly owned about a third of Barings Private Credit Corp. at end-2025.

Contagion Fears & Systemic Risk

• The panel discusses whether Cliffwater’s troubles are idiosyncratic or a symptom of systemic issues in private credit, given its size ($33 billion, second-largest in sector) and cross-platform exposure, especially in software loans (~20% sector exposure).
  • Tim Stanwick: "People are pointing to Cliffwater... because of this fund of private credit funds aspect... and they're just really big." [06:04]

Underlying Causes

• Software sector exposure and growing investor worry, particularly about software’s volatility and AI disruption, spurred a wave of redemption requests; some funds have started gating withdrawals.
  • Tim Stanwick: "A lot of this comes down to sentiment around software personally... software is the single largest sector exposure in private credit." [06:43]

Retail Investor Risks

• Conversation extends to other major private credit managers (Ares, Apollo) capping withdrawals as retail investors seek liquidity in a NOT-so-liquidity-friendly space. There is inconsistency between managers’ redemption policies, adding to investor confusion.
  • Olivia Fishlow: "They went really aggressive into the retail space... Maybe they weren't prepared for that retail space to sort of turn." [07:52]
  • Olivia Fishlow: "We've seen some lenders... take special measures to return all of investors capital... Maybe some investors felt like, wait, I thought I could get all my money back." [08:32]

What to Watch Going Forward

• Monitoring continued redemption pressure, Cliffwater’s liquidity, and its ability to withstand “max redemptions” for up to a year without forced asset sales. Rate environment also flagged as a compounding challenge for all of private credit.
  • Tim Stanwick: "If they stay elevated... well be waiting to see if they can maintain that liquidity and maybe investors will get more comfortable again..." [09:03]

Notable Quotes

• "Cliffwater is a sort of pioneer in private credit, really... that's allowed them to grow very quickly and become hyper diversified..."
  – Tim Stanwick [02:48]

• "Maybe they weren't prepared for that retail space to sort of turn. And now we're sort of dealing with the first wave of all of these funds having to cap redemptions."
  – Olivia Fishlow [07:52]

Key Timestamps

• [02:48] Cliffwater’s history and approach
• [03:43] On investor redemptions
• [06:04] Cliffwater’s systemic relevance
• [06:43] Sector exposure concerns
• [07:52] Retail risk and redemption policies
• [09:03] What to watch: redemptions and liquidity

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Segment 2: "Global Geopolitics—US, Iran, and Market Risks"

[12:16–21:43]

Key Discussion Points

Ongoing US–Iran–Israel Conflict

• Axios and WSJ report possible US-Iran high-level talks, alongside news of US deploying 82nd Airborne troops to the region.
• Iran's implementation of a $2 million transit fee through the Strait of Hormuz adds new stress to global oil supply chains.
• Gulf Arab states are reportedly considering joining US-Israeli action if Iran threatens their infrastructure.

Expert Analysis: Ray Takeyh

• Both sides (US and Iran) may be looking for an “off ramp,” but military build-ups and prior patterns suggest negotiations may be preludes to escalations, not de-escalations.
  • Ray Takeyh: "With President Trump, there's always a large number of options that he can consider... what the president is saying about discussions doesn't meet the manpower that he's deploying." [14:55]
• Gulf Arab states likely to revert to a balancing act post-conflict—aligning with the US while avoiding lasting antagonism with Iran.
  • Ray Takeyh: "I suspect at the end of this war... they will return to their practice of trying to balance the two sides." [16:58]
• Postwar Iran expected to be more radical but also more brittle, with a rising generation of officials forged during the Syrian Civil War.
  • "A large number of highly senior officials [in Iran] have been decapitated... beginning to see a generational shift..." [18:09]
• Nuclear weapons now seen as even more central to Iranian strategy.
  • Ray Takeyh: "The value of nuclear weapons has never been greater for this regime with everything that has happened." [20:14]
• US faces a "more radicalized enemy, but... weaker in terms of its capabilities." [21:32]

Notable Quotes

• "He may be looking for off ramp from a war that is proving more complex than he thought... Iranians... are also looking for a way out..."
  – Ray Takeyh [14:55]
• "The Islamic Republic that comes out of this war, should it survive... is likely to be more militant, but also more brittle..."
  – Ray Takeyh [18:09]
• "Its entire strategic doctrine may change. The value of nuclear weapons has never been greater for this regime with everything that has happened."
  – Ray Takeyh [20:14]
• "It has a more radicalized enemy, but in terms of its intent, but at least for now, weaker in terms of its capabilities."
  – Ray Takeyh [21:32]

Key Timestamps

• [14:55] On possible off ramps and negotiation dynamics
• [16:58] Regional politics and Gulf state positioning
• [18:09] Postwar Iran’s generational and doctrinal shift
• [20:14] Nuclear strategy and regime transformation
• [21:32] US–Iran relationship: Radicalization and weakness

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Segment 3: "Wilbur Ross on Markets, Geopolitics, and Manufacturing"

[22:00–31:11]

Key Discussion Points

Global Order and US Military Resolve

• Ross argues the US show of force under President Trump is deterring adversaries worldwide and reducing the likelihood of future armed conflicts.
  • "People have now seen that, at least Under President Trump, U.S. is willing to use its enormous military wealth and strength to deal with threats..." [22:55]
• Russia, China, and others have been “put on notice” by recent US actions in Iran, Venezuela, and Cuba.
• Russia’s struggle in Ukraine is a lesson for would-be adversaries—prolonged wars are not what major powers expect.

Economic and Industrial Policy

• Semiconductors and high-tech manufacturing are singled out as central to national security; Ross supports “re-shoring” of key industries.
  • "Any future war is going to be fought in space and in cyber... he [President Trump] could not be more correct than what he's doing." [29:39]
• AI seen as an engine for productivity and economic defense—emphasizes need for education to match tech economy demands.
• Strong economic power equated to defense strategy; references historic examples (WWII, Reagan’s Cold War policy).

Notable Quotes

• "The sleeping dragon is perfectly ready to put its fangs wherever they're needed. So I think the old saying holds true. The best way to avoid a war is if everybody knows you're fully prepared not only to pursue it, but to win it."
  – Wilbur Ross [22:55]
• "Any future war is going to be fought in space and in cyber. So I think directionally he [Trump] could not be more correct..."
  – Wilbur Ross [29:39]

Key Timestamps

• [22:55] Wilbur Ross on US deterrence and global order
• [25:16] Russia's war in Ukraine as a cautionary tale
• [29:39] US reindustrialization, AI, and economic security

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Segment 4: "AI, Investing, and the Market Outlook"

[35:32–40:09]

Key Discussion Points

OpenAI and the “SORA” Pivot

• News breaks that OpenAI plans to discontinue its Sora video app to focus on business and coding functions in preparation for a likely IPO.
  • Discussion on strategic importance of focusing on commercial, enterprise solutions (competition with Anthropic/Claude).

Investor Perspective: Emily Greene (Ellevest)

• AI as both an efficiency tool and a way to improve client experience; increased relevance in wealth management and investment analysis.
• Recent market turbulence (Iran conflict) underscores the need to avoid short-term, reactionary trades and to prioritize long-term, diversified strategies.
  • "Trading on things that we don't know, I find to be really hard... so when I think about it, how do we think long term and what does this mean?" [36:51]
• Gold’s recent correction and implications for broader asset classes discussed.
• Higher rates and fewer expected global rate cuts raise questions about equity valuations and possible corrections.

Software/AI Disruption and Workforce Risk

• "SaaS Apocalypse": Broad-based software sector under pressure, especially from rapid technological shifts.
• AI's effect on workforce: Women and certain professions especially vulnerable unless reskilling programs are implemented.
  • Emily Greene: "86% of the workers that are going to have be affected by AI and not or don't have adaptable jobs are women." [39:31]
• Policy recommendations include government incentives for business-led retraining.

Notable Quotes

• "86% of the workers that are going to have be affected by AI and not or don't have adaptable jobs are women."
  – Emily Greene [39:31]
• “Trading on things that we don't know, I find to be really hard... so when I think about it, how do we think long term and what does this mean?”
  – Emily Greene [36:51]

Key Timestamps

• [35:32] OpenAI refocus news, tech competition
• [36:05] Emily Greene on AI’s role in finance and client experience
• [36:51] Investing amid unpredictable geopolitics
• [38:22] Gold and market correction discussion
• [39:31] "SaaS apocalypse," AI and workforce inequality

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Memorable Moments

• Private Credit in Crisis: The candid discussion about Cliffwater’s unique exposure and the potential systemic impact marks a rare moment of transparency in a usually opaque area of finance.
  • "It worked until it didn't work." [06:34]
• Middle East Analysis: Ray Takeyh’s nuanced views on Iran’s internal transformation, including generational change and nuclear calculus, provide rare depth:
  • "The Islamic Republic... is likely to be more militant, but also more brittle..." [18:09]
• Wilbur Ross's “Sleeping Dragon” Line:
  • "The sleeping dragon is perfectly ready to put its fangs wherever they're needed." [22:55]
• AI’s Gendered Impact:
  • "86% of the workers... affected by AI... are women." [39:31]

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Summary Table of Timestamps for Key Segments

| Timestamp | Segment | Topics | |------------|----------------------------------------------------|-----------------------------------------------------------------| | 01:47–09:56| Private Credit: Cliffwater Deep Dive | Structure, contagion, redemptions, sector risks | | 12:16–21:43| Geopolitics: US, Iran, Middle East with Ray Takeyh | War impacts, regional politics, nuclear strategy, Iran analysis | | 22:00–31:11| Wilbur Ross: Markets and Security | US deterrence, global policy, economic strategy, AI/tech | | 34:39–40:09| AI & Investing Outlook with Emily Greene | OpenAI, Ellevest, market strategy, tech workforce risks |

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Tone & Style

The tone remains analytical, conversational, and accessible, rich with expert opinion. The hosts encourage probing questions, practical investment advice, and deeper policy considerations, staying true to Bloomberg’s business-news style.

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Note:
This summary has focused exclusively on the episode’s content sections and excluded all advertising, intros, outros, and sponsor messages.

Transcript

[Carol Massar]

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[Tim Stanwick]

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[Carol Massar]

Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Business

[Podcast Host / Bloomberg Narrator]

Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's comple economy. Plus global business, finance and tech news as it happens. The Bloomberg businessweek Daily Podcast with Carol Massar and Tim Stanweck on Bloomberg Radio. Let's get to the father and son team who rode private credit on the way up and who risk falling hard on the way down. It's an exclusive. It's Bloomberg's big take today. You can read the story and more from Bloomberg. The big take on the Bloomberg terminal and at bloomberg.com/big take.

[Carol Massar]

Yeah, it's a great story. Two reporters among the team reporting it out. Bloomberg News Leverage Finance reporter Ellen De Morrow and Olivia Fishlow. They are both here in studio. It is a great story as we continue to kind of track the concerns when it comes to private credit. And I want to start with you Ellen. Talk to us about Cliffwater, who they are, what's been their approach and why we're talking about them. Why you guys did a deep Dive. Yeah.

[Tim Stanwick]

So Cliffwater is a sort of pioneer in private credit, really. They started out as a consultant to allocators like pension funds. And then they created their own asset management business which has grown exponentially over the last 10 or so years. What they do is essentially partner with other direct lenders and take a slice of each of those loans and that's allowed them to grow very quickly and become hyper diversified compared to other platforms that are just single manager.

[Podcast Host / Bloomberg Narrator]

It worked out for a while and it made the founders incredibly wealthy. Olivia, come on in here. Because then redemptions started. What can you tell us about why the redemption started and what investors wanted?

[Olivia Fishlow]

Yeah, definitely. So like Ellen saying, the Cliffwater model is sort of a fund that allows investors to access private credit writ large.

[Carol Massar]

So they're not actually doing loans, they are investing in other funds that are.

[Olivia Fishlow]

They're buying loans from other managers. So it's like a multi lender model. So when stress started to come to private credit and investors started to want out, Cliffwater was a big place where now anyone worried about private credit that's invested in the fund maybe decided to pull capital. And that's why we saw record redemptions from the fund this quarter.

[Carol Massar]

We have a great chart and I want to bring it up. It's in the story and Tim and I were kind of blown away about some of the graphics that really helped tell the story because we talk about this kind of fund of funds approach, if you will. It's a circular chart, but what it basically is showing and it's hard for those folks. Obviously if you're listening on radio, you can't see it, but difficult to on tv. But what it's basically showing is, is that they owned what, about a third of Barings Private Credit Corp. At the end of 2025. But they also were involved with Aries. Right. Blackstone. I mean, walk us through that circle and what it tells us.

[Wilbur Ross]

Sure.

[Tim Stanwick]

So the way that they've been able to partner with so many managers is by investing directly in the funds and then they set up agreements to be able to be in the underlying loans as well. So they are invested in, I think more than 50 direct lenders. They, they're invested in many. This is one chunk of SOR types of fund investments. This is the non traded BDCs and the investment partnerships and specifically. But they have a large holding in Barings, Aries, kkr, you name it. Like all the big Blackstone. Blackstone kind of a who's who.

[Carol Massar]

Right? It really is.

[Tim Stanwick]

Yeah.

[Podcast Host / Bloomberg Narrator]

I think the question that a lot of people have and we're going to be speaking about this a little later in our program to Olivia, Is this, this question of to what extent is the, are the challenges at Cliffwater or a single firm contained versus are they part of a bigger picture when it comes to private credit and this idea of so called contagion. What did you in your reporting?

[Olivia Fishlow]

So I think that we've seen recently that firms are expecting this concern among investors to continue. We saw some lenders that, that capped redemptions signal that they're going to do the same thing next quarter. So I think we've definitely seen any stress at one fund managers are expecting it to kind of spill over to their fund as well.

[Carol Massar]

That's what I was curious about. When you know the story's kind of pitches. One of the biggest question marks in the private credit industry, is it because they are so vulnerable or that if, if they start to come undone then you've got to assume that there is that contagion or systemic impact?

[Tim Stanwick]

I think people are pointing to Cliffwater in particular because of this fund of private credit funds aspect that's very unique to them. And then also I mean they're just really big. It's how big? 33 billion, which is quite large. I think they're second only to B cred. So that's, that's pretty large in this market. They're touching a lot of different direct lenders. They're in a lot of loans. Everybody's worried about software and AI disruption. They're in a lot of software. So there's a couple of reasons people are focused.

[Podcast Host / Bloomberg Narrator]

So is that why Ellen? It did, it didn't work. It worked until it didn't work. Was it, was it software? What was sort of the, the, the straw that broke the camel's back with this?

[Tim Stanwick]

I think a lot of this comes down to sentiment around software personally. You know, we saw people start to get nervous and we've reported previously that software is the single largest sector exposure in private credit. It's about 20% which is sizable. So we're starting to see people get their money out or try to and we're starting to see gating happen. So a lot of this stems from that.

[Podcast Host / Bloomberg Narrator]

I will point out, Carol, software companies taking a hit today. The latest example of volatility in the sector. The information reporting that Amazon Web Services is developing AI tools designed to automate functions and sales and biz dev.

[Carol Massar]

Yeah, like we continue to see this on a daily basis kind of questioning some of the existing models or companies. And whether or not, you know, we're going to see more problems going forward, I guess time will tell. Olivia, I want to bring you back in because you've got another story in the Bloomberg that's about Ares management and Apollo Global capping private credit fund withdrawals as clients want to redeem more. We kind of remind everybody private credit, not so liquid folks. You're going to have to park your money for a while. But that's not so, you know, investors are pushing back. So tell us a bit more about this.

[Olivia Fishlow]

Right? Yeah. So I think like we're saying there's all these fears around private credit, around software. Right. But I think a big issue for these lenders is that they went really aggressive into the retail space and that helped grow their firms a lot. It let them bring in a lot of money. But maybe they weren't prepared for that retail space to sort of turn. And now we're sort of dealing with the first wave of all of these funds having to cap redemptions.

[Carol Massar]

Who's at fault though? Like when you think about that and we've had folks on around this table who said read the fine print. And sometimes that fine print is pretty early, early in.

[Podcast Host / Bloomberg Narrator]

Yeah, James Crombie talks about that all the time. You know, your colleague on the team, he says this is like literally what it says in the prospectuses. So you know, read the fine print here.

[Olivia Fishlow]

I think that is true. But what is hard is that we've seen some lenders actually decide not to cap redemptions and they took special measures to return all of investors capital. So it sort of set this not uniform pace where maybe some investors felt like, wait, I thought I could get all my money back.

[Carol Massar]

Yeah, I mean, okay, so what are we watching? Let's go back to Cliffwater. So what do we need to watch? What are you guys watching? That is an indication that all right, this storm, it's not just a short storm, it's something much bigger.

[Tim Stanwick]

Yeah, I think we're going to continue to watch for redemptions. You know, if they stay elevated. We're going to watch Cliff Waters liquidity levels. We reported that they'll be able to manage this like max redemptions for at least a year without having to sell any assets or sell any fund stakes or anything like that, any extreme measures. So we'll be waiting to see if they can maintain that liquidity and maybe investors will get more comfortable again and stop redeeming. Maybe they won't. Time will tell.

[Carol Massar]

And I also think about the rate environment, whether we start to see rates go up. We know that higher rates have been problematic for all of the private credit world. Thank you guys so much. Important story among the most read on the Bloomberg Terminal Bloomberg News Leverage finance reporter Ellen De Morrow and Olivia Fishlow. You can read their story and more from the Bloomberg Big Take. It's on the Bloomberg [e-mail] BigTake.

[Podcast Host / Bloomberg Narrator]

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

[Carol Massar]

They told us to expect change.

[Tim Stanwick]

They warned us about the transition, but honestly, they forgot the best part.

[Carol Massar]

This is the chapter where we finally focus on us.

[Tim Stanwick]

LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD

[Carol Massar]

helps you feel your best for the best years of your life.

[Tim Stanwick]

LifeMD it's just getting good. Visit LifeMD.com GoodLife support for the show

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[Carol Massar]

There are so many conflicting headlines coming at us. I'm just taking a look at our live blog. When it comes to the US and Israeli war and Iran, what are the latest headlines that we are focusing on. You mentioned Axios reporting potential talks between the US And Iran, that they may hold some high level talks as soon as Thursday. US Waiting for response from Iran on those possible talks. And the US Claims Iran had agreed to many of its plans. Point Axios, citing two sources with knowledge on the potential of these talks. So I don't know, this is something that I feel like we've been floating around certainly yesterday again, we're just trying to figure it out.

[Podcast Host / Bloomberg Narrator]

Yeah. I mean it runs counter to what we've heard from several Iranian officials who've pushed back on the idea that there is any sort of negotiating going on. It follows a report that we got earlier today too from the Wall Street Journal that the Pentagon is planning to deploy a brigade combat team from the Army's elite 82nd Airborne Division to the Middle east to support operations against Iran. This according to the Wall Street Journal, citing two officials written order to deploy the unit. Carol, made up of roughly 3,000 soldiers, is expected in the coming hours. The official said the decision though, to put boots on the ground in Iran hasn't been made yet, according to the officials.

[Carol Massar]

Yeah, and I think what's interesting, you know, one of the things you and I were just talking before we came on air, Iran setting a transit fee of as much as $2 million per trip through the Strait of Hormuz. So basically setting up a bit of a toll there and just wondering how much oil. But it is a lot of oil that these T, you know, carry. We think about any of these ships that go through these major straits or ports, if you will. I think about the Panama Canal. I've been down there seeing lots of things, but this is what they're doing. I guess it's just kind of part of our macro setup. The other thing we also want to get to and it's one of our most read stories on the Bloomberg today on the US War in Iran, Iran's biggest Gulf Arab neighbors considering joining the US Israeli war against Iran could be pushed to if Tehran attacks their critical infrastructure. And this is according to several people with knowledge of the situation. So this is kind of where we are.

[Podcast Host / Bloomberg Narrator]

Well, with a view and an understanding on what's happening in the region. We welcome back Ray Takei, senior fellow for Middle East Studies at the Council on Foreign Relations. He's the author of several books including most recently the Last Shah, America, Iran and the Fall of the Pavlovi Dynasty and Guardians of the Revolution, Iran and the World in the Age of the Ayatollahs he joins us from Washington. Ray, always good to check in with you. We just want to start with the back and forth what Axios is reporting. The idea of Iran agreeing to some sort of multi pronged plan to end the war, the pushback that we got earlier this week, the comments from the President that sent markets soaring yesterday. What's your view on the end of this conflict?

[Ray Takeyh]

Well, on the American side, the president may be looking for an off ramp with everything that has happened in the markets and so on. However, with President Trump, there's always a large number of options that he can consider. There's a lot of military deployments taking place in the region. And so what we have seen in previous rounds of negotiations in June and in March, in February, they were usually preludes to war. So this may be another one. What the president is saying about discussions doesn't meet the manpower that he's deploying. He may be looking for off ramp from a war that is proving more complex than he thought. I suspect that Iranians, despite their narrative of success and triumph, are also looking for a way out of this. They have suffered a great deal and they may be essentially trying to figure out how to extricate themselves from this conflict as well. So we'll see if this mediation is real and we see if it can produce some sort of agreement not to settle the conflict between the two nations, but at least some sort of an armistice for now that allows everybody to return to their corners.

[Carol Massar]

All right, so let's throw on top of that, Ray, one of our stories. It is our most read on the Bloomberg or one of our most read about Iran's, you know, most powerful or biggest Gulf Arab neighbors. Iran's biggest Gulf Arab neighbors considering joining the U. S. Israeli war. I'm trying to understand that and you and help me out here in your understanding or thinking and your knowledge of this region. Did the region know, did Saudi Arabia know that Donald Trump was going to do this, was willing to go along and maybe this is part of a bigger strategy, a plan, or are they just looking at it and saying, wait, this could actually be an opportunity for us to change the direction of the Middle east going forward? I'm just trying to understand the steps here. Or is it all just kind of happening in real time with no big strategy?

[Ray Takeyh]

I suspect the latter. I'm not quite sure if this is a very synchronized, thought out plan. And in terms of the Gulf states before the war, they were essentially having a policy of detente with Iran and actually pressuring the administration not to engage in the conflict because the Iranians were quite clear about what they would do should there be an attack on them. They said they would regionalize the war and they would also target energy supplies as well as the passage to the Gulf of, to the Persian Gulf. So there was nothing surprising about what the Iranians did. There are some reports that the Gulf states are becoming more aggressive, but honestly, I suspect at the end of this war, whatever it is, they will return to their practice of trying to balance the two sides, having a relationship with the United States as close, but also not necessarily being antagonistic to the neighbor in the north, which would be aggrieved, injured and quite angered.

[Podcast Host / Bloomberg Narrator]

Well, the implication of what you just said, Ray, is that we don't see a very changed Iran following the end of this conflict.

[Ray Takeyh]

Oh no, Iran will certainly change after this conflict. The Islamic Republic that survives this war is going to be very different than the one that went in before. For one thing, a large number of highly senior officials have been decapitated. And one of the things that has happened with this large scale decapitation is you're beginning to finally see a generational shift where you begin to see a new group of people gradually coming to power in terms of the military services, the Revolutionary Guards and others. You begin to see these second tier officials coming to power. And for them, their formative experience was not the 1979 revolution. They were too young for that. It wasn't even Iran, Iraq war. They may have participated in this latter stages. For a lot of them, their most formative experience was a Syrian civil war. A large number of the Iranian military officials rotated through that Syrian civil war. About a thousand died. And the lesson they drawn from the Syrian conflict, that what was built for a long period of time collapsed in a matter of three weeks. So they're likely to be more vicious in protection of their patrimony at home. The Islamic Republic that comes out of this war, should it survive, which I suspect it will, is likely to be more militant, but also more brittle in a sense that the elite that's coming to power are less competent in statecraft and management and so forth than the ones that was decapitated. Not that the ones that were killed were exactly managers of competence and so forth. So Islamic Republic is going to be very different going forward. Its entire strategic doctrine may change. The value of nuclear weapons has never been greater for this regime with everything that has happened. No, we're going to come out of this with a very different regime whose ramifications were all fold over time.

[Carol Massar]

Well, so a different regime that comes out. But if I heard you correctly, that nuclear power is still very important and maybe more important than ever before.

[Ray Takeyh]

Is that more important than ever? Yes, absolutely. And it was actually one of the tensions between the late Supreme Leader Ali Khamenei and some within the security services. The perception was that the Israelis after October 7, Prime Minister Netanyahu certainly said that the rules of the game have changed. And he certainly has proven that Israel became much more preemptive in dismantling strikes and dealing with threats before they metastasized. And there were a lot of voices within the security services in Iran that were saying if the Israelis change the rules of the game, we should do so as well and actually cross the nuclear threshold. And we're very public about that.

[Carol Massar]

Yeah.

[Ray Takeyh]

Hey, and for whatever set of reasons, Ali Khamenei didn't do it. As a result, he lost his nuclear program in June and his Life in February.

[Carol Massar]

20 seconds. I just got to ask you, does the US have a bigger enemy now in Iran or it's a better relationship? Very quickly, if you could.

[Ray Takeyh]

It has a more radicalized enemy, but in terms of its intent, but at least for now, weaker in terms of its capabilities.

[Carol Massar]

Okay. Always appreciate your insight. Rita K. He is senior fellow for Middle East Studies at the Council on Foreign Relations, of course, understands this region. Former at the State Department. And so that's really the latest on the war in Iran. But we continue to track some of the headlines because they continue to come.

[Podcast Host / Bloomberg Narrator]

I also want to bring on former U.S. secretary of Commerce Wilbur Ross. He's well known to the Bloomberg audience and to Wall Street. A longtime distressed investor, he has restructured over $400 billion of assets, everything ranging, Carol, from airline apparel to auto parts, homebuilding, insurance, marine, transport, oil, gas, shipyard, steel, textile, trucking industries and more.

[Carol Massar]

Yeah, certainly understands a global market and certainly geopolitics and more and politics here in the U.S. yes. Wilbur, so good to have you. He is chairman, president and CEO of Ross Acquisition Corporation. He joins us from Florida. Great to have you back on Bloomberg and to be talking with you again. Big picture. You told our Scarlet Fu. Wilbur, the action in Iran is long overdue. You're not alone in that thinking. We've heard other people on Bloomberg say that you also believe that this war is temporary in nature, even if we don't exactly know when it ends. What do you believe is the long term impact of this war when it comes to geopolitics, when it comes to to global markets, how do you think

[Wilbur Ross]

about it, I think this war will make less likely armed conflict elsewhere, because people have now seen that, at least Under President Trump, U.S. is willing to use its enormous military wealth and strength to deal with threats. That was not at all clear under the Biden administration nor under the Obama. So I think part of the reason so much trouble boiled up was that they viewed us as a paper tiger. But with what happened in Venezuela, what's happening now in Iran, and what's probably going to happen very quickly in Cuba, I think people have seen the sleeping dragon is no longer sleeping. Sleeping dragon is perfectly ready to put its fangs wherever they're needed. So I think the old saying holds true. The best way to avoid a war is if everybody knows you're fully prepared not only to pursue it, but to win it.

[Podcast Host / Bloomberg Narrator]

You mentioned Venezuela, you mentioned Cuba, you mentioned Iran. At this point, Secretary, who else has been put on notice?

[Wilbur Ross]

Well, everybody has been put on notice. I think ultimately China and Russia are unnoticed. Well, we haven't done much about invading Russia, probably won't initiate anything like that. We have provided support of one kind or another to Ukraine, and we certainly have been arming Taiwan. And even more importantly, we've been moving a lot of the semiconductor technology from Taiwan to the United States. So we're becoming both less vulnerable in the event something happens on tag one, and yet also showing that we're very interested in it.

[Carol Massar]

You know, I find it interesting, Wilbur, that you went to Russia, and I just think, you know, and maybe even give some insight into President Trump, because I think there are things that are said that seem to indicate a friendship, a camaraderie, lottery with a certain leader, be it President Putin. And yet it sounds like, from what you said, that Russia needs to be kind of on guard when it comes to the United States. Help us understand President Trump and who he sees as true allies and who he sees as foes.

[Wilbur Ross]

Well, in terms of Russia, my point is a very simple one. Russia has had a terrible struggle with Ukraine, a much smaller, much weaker country. And in fact, lately, the last report I've seen, The Ukrainians regained 125 square miles of territory that Russia had previously occupied there. So clearly, the Russian war, after all these years, all these vast numbers of debt, all this destruction, both to Russia and Ukraine, they haven't really gotten as far as they thought. I think if Russia had had any idea that the Ukrainian war would go the way it has, I don't think they would have gone in. They thought it would be an easy cakewalk, and they were wrong. Now roll that forward.

[Carol Massar]

Well, is that the same with how you see the. Maybe the US Approach on Iran? Forgive me for interrupting, but I'm just. I think there was a thinking that this was going to be a lot easier. Do you agree?

[Wilbur Ross]

No, I don't think so.

[Carol Massar]

Okay.

[Wilbur Ross]

I think, in fact, it has gone better than our. Any expectation we could have had. Who would have thought that within the first couple of weeks we would get total air superiority? Who would have thought we could have knocked out 100 and some odd vessels, virtually the whole series of vessels that Iran has? Who would have thought we could have done as much damage to the missile site and to the nuclear facilities as we have? So I think the war has gone much more rapidly than we could have thought. And I think the most remarkable and fortunate part is that there have been so few American casualties in the war. Now, even one casualty is a horrible thing. And I would have felt a heck of a lot better without it. But when you consider everything, it's been very, very small. My big fear had been American soldiers coming home in body bags week after week after week. I think that would have caused a lot of unrest within our population. But the other big strategic message, we knocked out their air defense mechanism pretty quickly. Iran is essentially defenseless against our attack. And if you roll back to Venezuela, they knock that out within a few minutes. And guess whose defense system that was? That was the Russian defense system. So you ask, why would Russia give second thoughts? I think they would give second thoughts because they've just seen what it means to have the US Pushed too far.

[Podcast Host / Bloomberg Narrator]

Right. We're speaking with Wilbur Ross, chairman, president, CEO of Ross Acquisition Corp. Also former U.S. secretary of Commerce. Mr. Secretary, you mentioned the movement of chip production from Taiwan to the United States. That's happening very slowly, and analysts don't know if it can ever happen completely. But you are known for your investments in industries that were once thought long gone, especially in the US Steel plants, textile mills. The President certainly wants to bring back that type of manufacturing to the United States and build it up here. I'm curious on your view about how national security concerns are changing that globally. Apart from semiconductors, how are you thinking about some of these other industries that the President is supporting?

[Wilbur Ross]

Well, he's supporting all technology, and I think that's the right direction to go, because any future war is going to be fought in space and in cyber. So I think directionally he could not be more correct than what he's doing. I also think that he's correct in fostering AI because AI is what will produce more productivity and therefore more economic growth. Every big technological innovation has always had the longer term effect of adding jobs, but it redefines them. So we need to be sure that our educational system can keep up with the needs for an increasingly technical economy. And as long as it does, I think we'll be there. Now why is that important? The way we won World War II and the way I believe Reagan won the Cold War was the Russian military and the Russian civilian economy could not keep up with him. And therefore, at the end of the day, a very, very key component of defense strategy is economic power.

[Carol Massar]

We have to leave it there. Wilbur, we appreciate your time so much. Wilbur Ross, he's chairman, President, CEO of Ross Acquisition Corporation, of course, former US Commerce Secretary during President Trump's first term.

[Podcast Host / Bloomberg Narrator]

Stay with us. More from Bloomberg Businessweek Daily Coming up after this,

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[Carol Massar]

All right, everybody, we are just about 17 minutes away from the closing bell on this Tuesday. Carol Massar along with Tim Stanwick live in our Bloomberg Interactive Broker studio. Let's bring up shares of Open Air. Oh, we cannot do that. We might soon, but there is a story crossing from the Wall street journal.

[Podcast Host / Bloomberg Narrator]

Yeah, OpenAI is planning to discontinue the app for its Sora video platform. This is a product that released to great fanfare last year that has since fallen from public view. This according to the company I'm reading right from from the Wall Street Journal story here. The move is one of a number of steps OpenAI has taken to refocus on business and coding functions ahead of a potential IPO as soon as the fourth quarter of this year.

[Carol Massar]

You know, you have to think about these are companies, a ton of money going into it, a lot of relationships. But at some point you have to think about, okay, what's the path to profitability?

[Podcast Host / Bloomberg Narrator]

I mean, but SORA is pretty cool and it shows the capabilities of this stuff. I mean, when this came out last year, you could type in, you know, make me a superhero flying around a city and it would make a video.

[Carol Massar]

Is this what you do in your spare time?

[Podcast Host / Bloomberg Narrator]

I did this at soccer practice, actually.

[Carol Massar]

I knew it.

[Podcast Host / Bloomberg Narrator]

Yeah. But it said it couldn't do it because of concerns about copyright.

[Carol Massar]

Yeah.

[Podcast Host / Bloomberg Narrator]

So, yeah, but it can do, it can do cool stuff like that. Look, to me, this, you know, at first blush I only have these two sentences from the Wall Street Journal. But to me, this is about anthropic and about Claude and understanding that Claude is making such inroads when it comes to coding. And when it comes to reaching those Fortune 500, Fortune 1000 companies, open air,

[Carol Massar]

doubling down and like focusing on what

[Podcast Host / Bloomberg Narrator]

it needs to be because then they get more money from these companies rather than from people telling it to make weird videos to share on social media.

[Carol Massar]

All right, let's not forget Open AI back big time by Microsoft. So interesting. Hey, let's get to it. As we drive to the close, Emily Greene is with us. Head of private wealth management at Elle Vest firm has more than 1.1 billion in assets under management. She joins us right here in our Bloomberg Interactive broker studio. Good to have you back. How are you?

[Emily Greene]

Thanks, I'm good.

[Podcast Host / Bloomberg Narrator]

So are you using AI?

[Emily Greene]

I do. I pay for all of them.

[Podcast Host / Bloomberg Narrator]

You do.

[Emily Greene]

I am like one of those people who pay for all the. We use Gemini.

[Carol Massar]

So how do you think about it and how as an investment play the money, the investments, the building out?

[Emily Greene]

I mean, as a user, I do think, I think a lot of people think about it as efficiency.

[Carol Massar]

Yeah.

[Emily Greene]

I think a lot more firms need to think about it as how does that make your client experience better as an investor? I think it's super interesting. You know, I think that we've certainly seen that that's the trade to make over the past year and a half. Yeah, but you've seen that also that that trade has gotten wider. And I bet, you know, when you look at 2025, when we're thinking about which is everything going on right now, I bet if you were thinking about our policies in the US And America first, you wouldn't have bet that international emerging markets are going to be what dominated the market. So I wouldn't always think about what, what to expect. And, and you got to think long term.

[Podcast Host / Bloomberg Narrator]

How are you thinking long term about this year and especially in the wake of the conflict in Iran and how that has changed your investment thesis or has it not?

[Emily Greene]

Yeah, I think it's interesting. The market clearly wants the conflict to be over. You see that, you know, Trump tweets yesterday and the market pops up, it's ready for the conflict to be over. And I do think, you know, I tell all of our clients that if there's anything to expect, it's that Trump is going to do something unexpected. And so trading on things that we don't know, I find to be really hard. And so when I think about it, it is, how do we think long term and what does this mean? And we saw Jamie Dimon talking earlier today about how actually the conflict right now could lead to longer long term peace in the Middle east, that's a good thing if we're thinking about long term investing. And so when we look at it, it's, it's, I still look at it is diversification is key right now. You look at what's happened to gold over the past week, who would have expected that? And so when you're taking these bets, you need to be thinking long term.

[Carol Massar]

Well, I'm glad you went there because we had a conversation, something we've been scratching our head about. And the thinking, our own Ed Harrison saying, listen, gold had such a tremendous run up. We saw a lot of retail investor involvement and that you kind of got a correction that was needed. And so that's kind of why you didn't necessarily seeing it as a safe haven run amid this, the war and the volatility. Having. Having said that, his thinking and his view, and we'll see what happens when earnings pan out, is that you're going to start to see more corrections in other asset classes, including stocks. I mean, I look at the treasury trade, we've got a higher rate environment and people saying not so many rate cuts globally because they're worried about global inflation. What kind of environment is that for the equity play?

[Emily Greene]

You know, I think it is you have to look underneath the indexes and so and think about what, what's going up and what's going down. And so it's a very different story when we actually think about it. And so there's some companies that have still done, I mean, look at small caps like relatively flat. And so we look at where we really are and what companies are doing well, we look at the halo trade that became really hot. We look at all these types of things. And so I think that you're going to see companies that are going to do poorly in this environment for sure. And there are things that are overvalued but when you look at valuations right now, they're not that high. When we look historically and so when we think about, you know, where we were a few years ago compared to now, like we've certainly come down and we look at some of these tech

[Carol Massar]

companies, but that's an assumption that the macro environment is not so bad. Right. Going forward and that there's growth and you know, here we are. If you think about this year, the military involvement, stagflation. We've even talked about SASS apocalypse. Yeah, complicates things.

[Emily Greene]

Yeah.

[Podcast Host / Bloomberg Narrator]

So let's just end with the SAS apocalypse in the last 30 seconds that we have because software stocks are under pressure or Today after the information reported that Amazon is working on a new AI product. The effect on AI, on of AI on productivity. I mean, I know you can't talk specific stocks here, but how do you view that on the economy?

[Emily Greene]

I mean, I look at it, you know, at Ella Vest we, we always look for as a women's lens and it's really interesting. And so you look at 86% of the workers that are going to have be affected by AI and not or don't have adaptable jobs are women. And so that is an enormous amount. You compare that to like a financial analyst, that's just a 99% chance of being affected by AI. But those workers are very adaptable. Yeah. And so the, you saw Jamie Dimon talking about this again today and that you need. There's the. The government is going to have to give incentives to the business community in order to create adaptability and training for these workers because we cannot be in a world of this unemployment.

[Carol Massar]

Well, listen, we've had conversations about a universal income. That's going to be.

[Emily Greene]

I think that's crazy.

[Carol Massar]

Okay, come back soon.

[Emily Greene]

Yes, yes.

[Carol Massar]

Emily Greece is head of private wealth management at Elvis.

[Podcast Host / Bloomberg Narrator]

This is the Bloomberg Business Week daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on bloomberg.com, the iHeartRadio app, tune in and the Bloomberg Business Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg terminal.

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