Podcast Summary: Bloomberg Talks – Blackstone President Jonathan Gray Talks Q3 Earnings (October 23, 2025)

Episode Overview

In this Bloomberg Talks episode, Jonathan Gray, President of Blackstone, sits down with Bloomberg’s Danny (interviewer) to discuss Blackstone’s robust third-quarter earnings, trends in deal activity, private credit market scrutiny, the company’s organic growth strategy, and the evolving role of generative AI in finance. The conversation dives into the cyclical nature of M&A/IPOs, macroeconomic headwinds, misconceptions about private credit, and the future of talent in the industry.

Key Discussion Points & Insights

1. Blackstone’s Strong Q3 Performance and Market Optimism

• Surging Profits and Inflows:

  • Blackstone delivered significant returns to clients, with distributable earnings up 50% year-on-year, bolstered by $50+ billion in inflows.
  • “We really leaned into digital and energy infrastructure. We also saw big inflows as well, 50 plus billion dollars… distributable earnings up 50%.” – Jonathan Gray [00:44]

• Deal Activity Recovery:

  • There’s a “cyclical uplift” with M&A and IPO activity climbing but not yet at record highs.
  • “IPOs were up 100%. M&A activity was up 64% in the U.S. We did three IPOs globally in the quarter, which is the first time in four years that’s occurred.” [01:49]
  • Lower costs of capital, market calm, and all-time highs in stocks are creating a positive environment for deals.

2. Macroeconomic and Policy Headwinds

• Trade Policy and Tariffs:

  • Gray is optimistic, believing tariff “noise” will subside and not be a long-term concern.
  • “I do believe this will settle. And I don’t think 6-12 months from now, this will be on the front page.” [03:22]

• Inflation and Fed Rates:

  • Blackstone’s portfolio data suggests rental inflation is lower than official CPI, aiding the case for Fed rate cuts.
  • “Our data says [rental inflation] is running about half of the 3.6%… And that should be helpful for the Fed.” [03:22]
  • Labor market cooling is also seen as positive for further rate reductions.

• External Risks:

  • Government shutdowns can cause short-term delays (like IPOs), but Gray feels optimistic about the deal outlook.

3. Private Capital Valuations and Market Sentiment

• Stock Underperformance:

  • Despite strong performance metrics, Blackstone and its peers’ share prices have lagged the wider market.
  • Gray attributes this to market nervousness, government issues, and negative stories around private credit.

• Long-Term Focus:

  • “I think our total return is something like three and a half times over the last five years, double the stock market.” – Jonathan Gray [05:11]
  • Maintaining focus on customer returns and business execution is key.

4. Private Credit: Health, Perceptions, and Returns

• Addressing the “Troubled Child” Narrative:

  • Gray sees recent high-profile credit troubles as isolated banking stories, not indictments of the private credit sector.
  • “These credits were bank led, they were bank originated… can’t really understand why there’s a referendum on private credit.” [06:29]

• Risk Management:

  • Frauds are difficult to detect and not unique to private markets.
  • “Fraud, not disclosing liabilities, double pledging collateral… those are hard things to catch.” [07:49]

• Golden Era of Private Credit:

  • Even as rates fall, the appeal of private credit endures due to premium returns over liquid markets and direct lending efficiencies.
  • “You have this farm-to-table model… knocking out a bunch of origination and securitization costs.” – Jonathan Gray [09:04]

• Strong Flows from Insurance and Institutional Investors:

  • Insurers are actively seeking premium returns from private credit as rate environments normalize.

5. Industry Fragmentation and Blackstone’s Growth Strategy

• M&A Among Private Managers:

  • Industry is seeing consolidation, but Blackstone continues to focus on organic growth.
  • “We’re an organically focused business… The exception is if we found something very special that we could add.” [10:48]

• Selective Acquisitions:

  • Acquisitions are rare, tactical, and only when a new, highly specialized capability is needed.

6. Talent, Technology, and Generative AI's Impact

• AI in Finance:

  • Blackstone is actively adopting AI to improve productivity within legal, engineering, and marketing teams.
  • “I think you will be able to interface with an AI agent to say, hey, I’m looking in this industry, can you give me the relevant comparables, the risk factors? That’s already starting to happen…” [12:25]

• Job Enhancement, Not Replacement:

  • Gray is positive on AI’s role in making jobs more productive—not redundant.
  • “We’re definitely going to be able to help our analysts and associates… make the job even more enjoyable.” [13:36]

Memorable Quotes

• On the Recovery in Deals:

  • “It does feel like things are coming together… with this kind of backdrop, I would expect next year will be an even better year for M&A and IPOs.” – Jonathan Gray [01:49]

• On Private Credit Troubles:

  • “We can’t really understand why there’s a referendum on private credit… it appears, based on the reporting, that there was fraud involved in these three situations. That’s something that’s not so common.” – Jonathan Gray [06:29]

• On AI’s Future in Finance:

  • “I think you will be able to interface with an AI agent… Our legal teams are using AI to start doing things like marketing compliance.” – Jonathan Gray [12:25]

• On Blackstone’s Approach to Growth:

  • “We’re an organically focused business… we found we can continue to grow this business organically.” – Jonathan Gray [10:48]

Timestamps for Key Segments

• Q3 Earnings, Deal Uplift, and Market Backdrop: [00:34] – [03:05]
• Tariffs, Inflation Data & Fed Outlook: [03:05] – [04:51]
• Private Capital Market Underperformance: [04:51] – [06:10]
• Private Credit Health & Media Narratives: [06:10] – [08:53]
• Returns in Private Credit & Industry Flows: [08:53] – [10:15]
• Private Equity Industry Fragmentation & Blackstone’s Growth Path: [10:15] – [12:03]
• Talent, Technology, and AI’s Role in Finance: [12:03] – [13:36]

Podcast Tone

The discussion is upbeat, data-driven, and pragmatic. Gray is optimistic but measured, emphasizing Blackstone’s long-term strategies, the resilience of private capital, and pragmatic openness to technological advancements without resorting to hype or doom.

This summary covers all substantive discussion and omits sponsor messages, intros, and outros.