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- [00:00]
Barry Ritholtz
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- [00:29]
Harvey Schwartz
@Canva.Com when your company has a professional position to fill, are you really seeing the best candidates? You may be missing an untapped resource. Ideal candidates not currently job searching, people not actively looking, but who may be open to the right opportunity. It can be the difference between a good hire and a great hire. Specialized recruiting group is ready to find the top talent you need. Go to srgpros.com right now to get started.
- [01:01]
Barry Ritholtz
Bloomberg Audio Studios Podcasts Radio News.
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Unknown
This.
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Barry Ritholtz
Is Masters in Business with Barry Ritholtz on Bloomberg Radio.
- [01:15]
Unknown
I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. We have a bonus Masters in Business for you. Live from Future Proof citywide Miami, I sit down with Harvey Schwartz, the CEO of the Carlyle Group. He has a really fascinating and somewhat unconventional path to Wall Street. We talk about he's just a New Jersey kid who didn't know what he wanted to do and had a hard time figuring out his life goals. And you know, thanks to people who took an interest in him and a couple of good breaks, plus a whole lot of smarts and hard work, he ended up really creating a career for himself. Not only at firms like Goldman Sachs, but eventually getting tapped to become CEO at Carlisle. I find Harvey to be an absolutely fascinating guy. He is a no holds barred, blunt speaker, truth teller, really, really interesting person. I thought this conversation was great. You can tell I'm having a lot of fun. With no further ado, our special bonus Masters in Business Live with Harvey Schwartz, CEO of the Carlisle Group. I am just so thrilled to introduce you all to somebody that not only are you going to know more about in the coming years, but it's been my pleasure to get to know over the past couple of months. Harvey Schwartz is CEO of Carlyle. He comes to finance in a rather unusual way and I'm going to let Harvey tell his story. Let's start right there. You have a really unconventional well, before we go there, Carlisle Private Equity Private Credit. Been doing this for a long time. Chairman is David Rubenstein, tell us a little bit about Carlisle first. What do you guys do? How much do you manage? Just give us the 32nd version.
- [03:19]
Barry Ritholtz
Sure. Well, first of all, Barry, thanks for doing this. Great to see you again everyone. Fantastic to be here. This is such an amazing venue. So Carlyle today is about 450 billion of assets spread across private equity, real estate, infrastructure, credit insurance and secondaries and Co invest. For all of you in the audience, there are a number of solutions. You can show your clients ctac, which is the best of credit cap. I'm sure we'll get into some of this, which is our secondaries, Co invest business. And towards the end of the year we'll be launching our private equity solution. But I would say, you know, for me, I've been Carlyle for two years, been an incredible privilege. The firm was founded in 1987 by David, Bill and Dan, who really have created a culture which is extraordinary in terms of the people. We're 2300 people today. Zach Foreman, I don't know if Zach Forman's in the crowd anywhere. Zach, can you stand up? Zach leads our effort down here. So everybody should go to Zach afterwards. And then we have a booth. So hey, that's, I'm done with my advertising for the day, but I feel like I've accomplished.
- [04:32]
Unknown
So let's talk a little bit about your background. You know, when I look out at, at the world of finance and see who are CEOs of companies that are 200 billion, half a trillion, a trillion plus, I don't want to say they're all alike because they're not. But there's a certain background that you tend to see, a certain type of college and business school and career path. You're just a guy from Jersey. How did you sort of fall ass backwards into finance?
- [05:01]
Barry Ritholtz
Well, I mean there are other successful people from New Jersey. Barry, Jon Stewart, Bruce Springsteen, three. No, there's a couple. But what Barry's getting at is a little bit unconventional. I mean everybody has the complexity of their life story. But for me, I did grow up in New Jersey. I had two parents who were quite educated. But tragically they suffered from severe mental illness. My mother suffered from what we would call today bipolar disorder. And my father suffered really quite tragic schizophrenia which sort of over time really just completely consumed him. And this is, you know, many decades ago. And so treatment wasn't as good, an understanding wasn't as good. The stigma of mental health related issues and severe mental health is still an extraordinary problem everywhere in the world. Certainly in our country. But back then, it was even much worse. And so my mother passed when I was 14. I don't want you all to feel like you have to go to therapy with me and Barry, by the way, but my mother passed when I was 14, and then it was me and my father, and it wasn't a particularly healthy environment. And so I basically ended up doing really, really badly in high school. I didn't. I barely graduated by the time I was a senior. I think it was, like, right around Christmas when I was a senior in high school in New Jersey, I'd missed 27 days of school, which, by the way, if you actually do the math, is super hard to do. And so there was a good chance I wasn't going to graduate. I didn't apply to any colleges, but I got super fortunate. And, you know, Chris was really generous when she introduced me. She referred to you as a mentor. And I think you do have mentors for. Hopefully everyone here has mentors in your life. I had people that were more like angels that really, like, intervened for whatever reason they did to help me at certain crazy, pivotal times in my life. And one was a woman named Linda. I had. She encouraged me to apply to Rutgers. I wasn't going to college. I applied. I didn't get in. Linda, who's, like, not an influential person.
- [07:07]
Unknown
Let me stop you there. Wasn't there a brief sojourn to California post. Post high School? Yeah.
- [07:13]
Barry Ritholtz
Well, that was like, one of the earlier angels. So when I never really talked as much about this publicly, so I apologize if anybody finds it not interesting. But when I realized I had missed so many days of school, there was a chance I wasn't going to graduate. Certainly my grades were not doing well. My father and I were deteriorating pretty quickly. And when I turned 18 in March of that year, it was my birthday last week, by the way, in March of that year, I signed myself out of high school. And I had called some friends in California. I asked if they would let me come live with them. And so I moved to California. I actually graduated high school out there. Those are like. There were a lot of angels. But that family was an extraordinary angel. They took me in, but I didn't apply to any colleges. And then eventually Linda came along and encouraged me to apply to Rutgers. That was an extra.
- [08:03]
Unknown
That was back in New Jersey.
- [08:04]
Barry Ritholtz
Yeah. So I come back and by the.
- [08:06]
Unknown
Way, full disclosure, I mack on New Jersey. I grew up in Teaneck, New Jersey, so I feel like I'm allowed to.
- [08:13]
Barry Ritholtz
Make fun of the state yeah, no, of course. And yet another successful person from New Jersey right here live. So, no, it was a complicated, confusing time. I had to come back. I lived with my father. That wasn't great. I was working as for those of you who are old enough, a health instructor at a squash club in Chatham, New Jersey, for any of you know, New Jersey. And there was a thing called Nautilus. I was the person that trained people in the gym, which is sort of hard for you to imagine looking at me today. But I had hair thinner, better, more fit. But anyway, Linda and her husband used to come through and I just got to know them. And she said she was a Rutgers graduate, but she wasn't an influential person like you, Barry. And she encouraged me to apply. I didn't get in because of my track record in high school. And she was so incensed by this that she called the university and basically convinced them to interview me and write an essay about why I was such a screw up in high school. And Rutgers, which is an incredible institution, changed their selection, allowed me to go to school. And that's why, you know, Linda's an angel. And the more a family's an angel. And these people, like, really intervened in my life, I think, in ways that are kind of hard to conceive. And Rutgers today, I think the stats are well over half the students still get financial aid. Sort of one in three are first ever go to college and their family. It's an amazing institution and for someone like me, gave me all the opportunity in the world.
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Unknown
That's great. By the way, don't take the lesson that if your kid doesn't get into Princeton, call up and yell at the emissions department. That's not the lesson we want you to take from this. So you're now coming out of Rutgers. You don't have the traditional Ivy League business school background. How do you find your way into the world of finance?
- [10:15]
Barry Ritholtz
Very clumsily. I didn't know Rutgers, certainly back then, much better now. I didn't know there were JP Morgan's in the world or Morgan Stanley's or Goldman Sachs. I had. I didn't even know where Wall street was. I'd never been to Wall Street. First time I went, I was surprised. It was such a little street. I just pictured a much bigger street. So I was pretty naive. About as naive as you could get. And then through a friend, I took a job at a firm called J.B. hanauer. For those of you old enough. It was a municipal bond firm back in the day. This is 1987. And just show of hands, how many people know what it means to work on a draw? So I worked on a draw, which means you got paid $1,000 a month, but effectively it was a loan and you owed it back and you cold called and you tried to build your book of business. And I proved to be uniquely bad at this. Yeah.
- [11:13]
Unknown
Uniquely bad at this.
- [11:15]
Barry Ritholtz
Yeah, I maybe a little bit was timing. My first day coming out of the training program was the day the stock market fell 87. Yeah, October 19th, down 508 points there. I was like naively cold calling people by the way. Back then there were like real phones, you had to actually push buttons and stuff and they had this little cushion thing. You would keep your head like this and you were mostly crippled by the end of the day. But so yeah, it was a bad time to try and I didn't do very well at it. I had no money, I owed everybody in the world money. I borrowed a lot of money to go to school, friends, anyone I could find. And it was pretty stressful.
- [11:57]
Unknown
So how do you make your way from cold calling into either asset management or firm wide management? You've run your way through a lot of different departments. How do you go from just being a smiler and dialer to somebody large and in charge?
- [12:15]
Barry Ritholtz
Well, I got really fortunate. I was, I was at a tough point. My daughter was one year old and I was kind of really running out of money. At one point I thought, geez, I might have to file for personal bankruptcy. But I didn't really know what that meant. But I knew it was a thing you did when you ran out of money. And again, a friend did me a huge favor and got me a position in the, what they referred to as the back office at Citibank in 1989. And that was really the first time I'd say I was on a track that would begin to look more conventional. Although obviously starting as in the back office, I was hired as a temp. I eventually became a full time employee and then I went into the credit training program at Citibank. But I will say right around that period I asked someone, I worked with them at Citibank and I was so impressed with how intelligent they were. And this will give you a sense of how clumsy I was still. And we went out one night and I said something to the effect of geez, you're so smart. I would have thought you would have accomplished more by now in your life, which is so horrible, cringe worthy thing to say to someone. But he Was so gracious, taught me a lot in that moment. Because he was gracious about it, didn't get offended. And he said, you know, Harvey, you'll learn in your life. Careers are 50% luck, 50% skill. And that always stuck with me, Barry, because I don't know that it's 50% luck. But for me, I gotta say, like, there are days it feels mostly 90, 10 or 99 one that it's luck. And I think along the way people, every time you're given responsibility, somebody's making a leap of faith giving you that responsibility. And along the way people did, whether it was at Citibank, then I went to Goldman Sachs. I had some incredibly, some incredible experiences at Goldman Sachs. I moved around quite a bit after leaving Goldman Sachs in 2018. Ultimately, Carlisle called. Carlisle calling's luck. Right? It's just a random thing that I end up sitting here with you. And so I think that it's really hard to.
- [14:32]
Unknown
I'm going to pull out the yellow card and call on that because lots of luck up to this point. But you're a Goldman for a while and you're developing a reputation. You're improving what's already a very well oiled machine. When Carlisle called you, it wasn't let's randomly call somebody and see if we can find a new CEO. They knew who you were.
- [14:56]
Barry Ritholtz
Yeah, that's true. I don't want to overweight the luck thing. People would say to me when I say that, well, you can make your own luck. And that's true to some extent. You can influence your luck through hard work. But okay, everybody in this room, just by being here, you, everyone here, there's prerequisites, right? You, you're all smart. Everybody's hard working because that's like prerequisites. That's just table stake stuff. I do think luck and randomness play a lot in life. You know, I'm 61, I was born in 1964. In my life, that's a really good time to be born. Like, I don't think you can not acknowledge some of these things. And so. But I will say my early experiences, if anything, I would say I was so insecure because I didn't get into college and I barely got out of high school. I think it just motivated fear. I was scared, insecure. And I think all that kind of compounded into feeling like, wow, I am alongside all these people who went to these extraordinary schools. And then the only way I could compete, I kind of felt, was to just work a lot. I Always felt like that was my thing. And to this day that's kind of what I think. Although obviously I've had a set of experiences now which give me more confidence.
- [16:23]
Unknown
So. So Rutgers to Citi to Goldman. The next question is what draws you to the private side of the market? You could have done public fixed income, you could have done equities for the rest of the career, you made a hard pivot to private markets. Tell us about why and what that experience has been like.
- [16:44]
Barry Ritholtz
Well, after leaving Goldman, I was in a really unique position in my life because I was so fortunate that I didn't have to work right away, but because as you said, I had a nice resume. People knew of me, I got a lot of opportunities. None of them were compelling until Carlyle came. And Carlyle was compelling for very, very simple reasons. One, I knew the firm. They had been my client when I was at Goldman Sachs. We committed a lot of capital to all those big firms. So I knew the firm. I spent a lot of time with the founders. They're incredible people. David, Bill and Dan, both as professionals and as also just generous human beings and leaders. And then I knew the industry and the secular trends and cyclical trends in this industry, in private capital are extraordinary. And they've been this way for well over 20 years. And so I knew the industry, I knew Carlyle's role in it and it was really too much to pass up. Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same premium wireless for 15amonth plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to do@mintmobile.com.
- [18:02]
Unknown
Switch upfront payment of $45 for 3 month plan equivalent to $15 per month Required intro rate first 3 months only, then full price plan options available, taxes and fees, extra fee, full terms at.
- [18:13]
Harvey Schwartz
Mintmobile do When your company has a position to fill, are you really seeing the best professional candidates? Sure, you get plenty of resumes, but you may be missing an untapped resource. Ideal candidates not currently job searching, people not actively looking but who may be open to the right opportunity. It can be the difference between a good hire and a great hire. Specialized recruiting group is ready to find the talent you need. Go to srgpros.com and see how the recruiters with a deep understanding of the experience and expertise you need can find the right fit for Your business. After all, you deserve to see the best candidates, both active and passive. Whether you're looking for a long term or project based professional, Specialized Recruiting Group is ready to find the talent you need. Go to srgpros.com right now to get started. That's srgpros.com Specialized Recruiting Group, a tailored approach to professional hiring.
- [19:19]
Unknown
So I know David a little bit. I don't know the other co founders and he is legitimately one of the most amazing people I ever met in my entire life. And I've done, you know, 550 of these. But let's bring this back to the private equity side.
- [19:36]
Barry Ritholtz
So that would be your favorite. This would be your second.
- [19:39]
Unknown
I didn't say my favorite. I just remember leaving that conversation and saying, Jesus Christ, this guy, every space he's in, he moves the needle in Congress, in markets, in philanthropy, in sports. Like he doesn't touch something and not leave it better than how he found it. Yeah, he's really, it's inspirational and I don't want to be, I don't want to make this about David, it's about you. But you get to work with him.
- [20:07]
Barry Ritholtz
Yeah, every day.
- [20:08]
Unknown
So. So you mentioned the private market side. We have interest rates that crashed to zero in the early 2000s. Then following the financial crisis, we get zirp for almost 15 years. How does that environment lead to Carlyle, which hasn't always been almost half a trillion dollars. It started out at a much more modest size. How does the past 20 year market environment lead to Carlisle really becoming the 800 pound gorilla in the room?
- [20:44]
Barry Ritholtz
Yeah, so I think you mentioned some really key factors which I think are contributing. It's always going to be the case that whatever the market environment is, wherever interest rates are, it's going to be the case that that's a contributing factor to how markets evolve. I, I don't think that's the key driver. If you go back to 2000, I'll get these numbers slightly wrong. I think there was something like 6,200 public companies. Now that number is closer to 3,000. This trend of public companies shrinking and private companies staying private for longer, this has been in place for decades. If you think about the evolution of capital broadly and you go back to the fact that Carlisle was founded by David, Bill and Dan, they were literally driving past the Carlisle Hotel and decided to name it Carlisle. In 1987. There really was the birth of private equity, which they were part of. And you had venture capital, so you had buyouts and you had seed opportunities. What systematically has happened over the 30 plus year period and certainly from 2000 when you now have companies staying private, is the capital available has just continued to grow. So whether it's direct lending, asset based finance, integration with insurance, the opportunity set and the capital providers have just continued to expand. Whether it's pension funds, now all of you participating in wealth, it's the capital that is creating the opportunity for companies to stay private. It's not as though companies woke up one day and said, geez, I wish there was private capital, I'd like to stay private. And so this evolution of the capital markets I think is just part of a broader evolution. We didn't have ETFs back in the of such significance. If you went all the way back to 1987, I can remember prior to 2000, I think it costs you 5 cents or so to trade a share of stock. So this is all part of the evolution of the capital markets and the trend to staying private is substantial. Now having said that, we took at Carlyle in the past six months, we took three companies public. We took Standard Aeropublic in the United States, which is an aerospace defense mro. And that was the third largest IPO of the year. We did the largest private equity held IPO in India a few weeks ago, Hexaware. And then we did the largest ever privately held company IPO in Japan last year. We got. So the public markets are still a fantastic opportunity to provide capital, but the option to stay private for longer exists. But the capital that's coming in is creating the opportunity. And obviously then you get this flywheel effect.
- [23:24]
Unknown
Right. And to put some numbers on it, the famous Wilshire 5000 is about 3400 stocks.
- [23:30]
Barry Ritholtz
Correct? Yeah.
- [23:31]
Unknown
So, so let's talk about the different areas of opportunity you guys are active in growth equity and private credit and private debt, of which there is a slight difference. And of course private equity. Tell us about the big growth areas that Carlyle sees as an opportunity and tell the advisors sitting in the audience what the sort of outlook is for this space relative to what we've been seeing in certainly in public credit. And if you want to talk about public markets, that's the cherry on top.
- [24:05]
Barry Ritholtz
Yeah. So I think again for everybody here, for the wealth advisors here, I don't do what you do. And as I said earlier, I was kind of uniquely bad at it back in 1987. And not that that was the same thing, but if you can't sell tax free municipal bonds at 12% tax free, you're pretty uniquely bad. At something.
- [24:24]
Unknown
Let me, let me interrupt you. I have this vision of you cold calling people. Hey, it's Harvey Schwartz markets down 22% today. Great entry point. Can I buy you some stock?
- [24:34]
Barry Ritholtz
Yeah, you did what you had to do. I think the most, the most dials I ever made was 508 in a day with not a lot of yield. But I would say that just like certain stocks are not great for every client on the wealth side, and certain other forms of investment are not great for your, your wealth clients, I think you have to first make a determination about whether or not this is appropriate for your client and where does it fit into your toolkit. I think that there is a really unique role, whether it's in asset based finance, which is a very fast growing section of the marketplace. We did the largest transaction last year, Discover Card, which is an asset based finance transaction. Whether it's that part of the market or, or how insurance companies are coming into the marketplace, or whether your clients have an interest in getting access to Japan, where we raised a fund last year, or if your interest, for example, is shifting to defense. One of the first transactions Carla overdid in 1990 was in the defense sector. We've been doing this for over 30 years. You wouldn't have necessarily said 5 years ago this would be the topic around the world, given what's happening geopolitically. Europe now committing to spend a trillion dollars. What does this mean? The US has to replace their supplies, our supplies. And so I do think that the capital demand is so high. And while we tend to focus a lot on wealth in the United States, because I do think the United States has been the leader in terms of private market adoption. I can tell you, everywhere in the world I go, wealth is focused on this space. Half of all the assets in the world are controlled by wealth, the other half by institutions. Institutions have been participating in private capital for as long as we can remember. And so this shift feels quite natural. I just think as an industry, we have to be really, really thoughtful about making sure that your clients, in the end that we all on our side and are part of the industry. What we say we do, we deliver to you, so you deliver to your clients. Because I do think this is. We're in the early days of a transformative capital shift.
- [26:52]
Unknown
So. So let's talk a little bit about private credit, which has been one of the key growth drivers of Carlyle as well as the whole private side. What are you seeing there? What's the future look like in terms of the business I'm not asking you for a rate forecast. How do you see that, that business developing and what can our clients do to participate?
- [27:14]
Barry Ritholtz
So I would say, well, first of all, the Carlyle, Carlyle insurance credit platform is the largest part of the business today, which most people are surprised by because of the history in private equity. That's the largest portion of our business, almost 200 billion in assets. We're the largest CLO manager. Super proud of the team. They just were awarded solo manager of the year. It's about 50 billion of assets. So we've been in this business for quite a long time. I would say that first I think we should dismiss what I think are some misunderstandings about private credit. There's a lot of discussion about the growth of private credit being potentially systemically risky. I actually think the distribution of capital across private credit, banks and other providers of capital actually is systemically reducing that increase it. But I think that debate is kind of, that discussion has kind of been tested, right? We went through Silicon Valley bank, we went through nearly 500 basis points of increase, raises in interest rates and increases by the Fed. And private credit has been quite durable. I think when you have a lot of capital going into a space, you have to ask yourself, are the people who are stewarding that capital making the marginal capital commitment thoughtfully, or is there too much capital? But I think that's about a performance question, not a systemically risky question. And so I think that again, if you think about the trajectory of how capital evolves, it really evolves over decades. Barry. Now there's a lot of excitement in alternatives and particularly for the largest firms like ourselves, because it's a growth area. Having a global footprint allows you those opportunities. But our team is seeing opportunities all around the world to deploy credit. And actually, even before this sort of potential stimulus resurgence in Europe, we were already seeing, I would say at the margin, more opportunities to deploy credit in Europe than in the U.S. now, at Carlyle, you can all avail yourself of CTAC, which is basically the best of credit at Carlyle across the spectrum. And again, Zach can give you all the details after the show, but. But I'm a customer, I own ctech and I keep adding to it. And so I think the opportunities are extensive. I do think for, again, generically for the audience, I think picking vintages is not necessarily the smartest thing, just like I don't think actually picking highs and lows in the stock market is the easiest thing to do. And I think if you're going to be a participant, you want to be a participant over time.
- [29:51]
Unknown
So I'm glad you brought up the Fed. Raising interest rates 500 basis points in a year really being a disruption. You have a unique perch to look out over public equity, private equity, public credit, private credit. I got to ask, it seems like everybody misinterpreted what the Fed was doing, how they were going to do. There was just an endless parade of forecasts. One of them was 100% chance of recession in 2023. Why do you think so many people got what the Fed did wrong? And how much or how little do you care about short term shifts in, in Federal Reserve rates?
- [30:36]
Barry Ritholtz
Okay, so a lot in that question. So let me unpack it a bit. So first, for those who don't know, there's some incredible content that comes out of Carlyle based on our unique portfolio. So up until recently, we just sold a couple of companies, we had close to a million employees in our portfolio companies around the world. And we roll up all that data. So it gives us a very, very unique perch into looking at what is happening in the economy. And this is across all industries globally. So I'm going to come back to that in a second. But as a result, we're able to put out some amazing content. You know, you mentioned David, for those of you on or on it, David puts out something called from David's desk. He wrote this amazing document recently about pandas. I know that seems a little far afield, but all your clients would love it. It's extraordinary. Did you know that a panda is like the size when it's born, is the size of a stick of butter? If you read David's piece on pandas, by the way, he's sponsored all the pandas to your point, that have come in from China over the past, I think, decade. He pays for the, he pays the fees for the pandas to come to America. Jason Thomas is our lead economist and strategist. Jason puts out Carlyle Compass. And I'm going to come back to Jason in a second. And then we have Admiral Staff Reeds who does all the geopolitical work and has a leadership series that he puts out and he's a partner at the firm. Why do I mention Jason? Jason rolls up all these KPIs and if you've been reading Jason's material since I showed up at Carlyle two years ago, he was one of the few, if not the only one, Barry, that was saying the Fed is going to keep rates where they are. And he has nailed it. Now he's nailed it because he's brilliant. I'm honored that he's my partner. But he also has all this data. And so when we roll up the data, we get the look inside what's happening in terms of portfolio company behavior, what's happening with input prices. So we could see months in advance if there was like a $1 input item when there was the supply chain problem, if that went to like $2, in many cases it did. Right. So we all see headline inflation when it was 7, 8, 9%, but there were input prices that were going up 50, 60, 80%. And then we could see that come off. So now, to cut to your question, coming into the beginning of this year, all the signals were quite positive. We had EBITDA growth across all the portfolio companies. In the US it was up something like 15%. Last year, our portfolio values went up by billions because the global economy and the economy in the US Was so strong. And we were still saying rates wouldn't come down. Now the markets caught up to that. Okay. I would say now it's a question of, with the new administration, how do the policies ultimately take effect? I think it's more difficult to say at this exact stage what Fed behavior will mean. I also would say, like, for example, in the January February data, what we're seeing is what you'd expect we would see. We saw, for example, a lot of immediate purchasing in advance of potential tariffs. If you look at the purchasing managers index, I think the component of inventories was up 4%. That's all managers doing, all businesses doing what you would think they would do. They're basically saying, hey, if prices are going to go up in the future, I'm going to buy now. Which of course brings price acceleration into the present. But right now we're not seeing any marginal demand destruction. The data still looks quite positive. And so we would believe that rate should stay stable, higher. But we really have to see ultimately how the combination of tax policy, deregulation, tariffs, how all this comes together. And I would say we're just in an environment now with much more increased uncertainty. And I think when we came in the new administration, I think there was this real sense of, hey, we have certainty. We got to an election with certainty. Then we had, okay, we're going to get tax policy deregulation, very pro business agenda. And now it's been sort of the conversation has been consumed by tariffs, uncertainty and obviously a lot of geopolitical uncertainty still. And so I just think uncertainty is dominating the dialogue right now. But we're not Seeing it in the.
- [34:43]
Unknown
Portfolio companies make makes a lot of sense. Last question. On the private side, the expectations are that private equity, private credit as an asset class, end of the decade, you can choose your preferred estimate. 2.75 trillion, 3 trillion. I've even seen above that. How do you see the space that the waters that you guys ply in, how do you see the growth continuing? Are we getting close to topping out or is this still early innings?
- [35:16]
Barry Ritholtz
No. Well, I think for the industry, again, we're talking about an industry that's been around for 40 years. So in the scheme of economic history and business development, it's quite short. And of course private credit, that's a 15, 18, 20 year phenomenon. Even a shorter period, asset based finance becoming a big part of the industry is an even more, you know, a newer phenomenon. I think a lot of it will depend on really what does happen with wealth. That is the pool of capital that's now coming in. And I think it will continue to drive opportunities. It will be super efficient. The more capital is available to the market and companies will continue to take, take advantage of it. So again, companies don't decide to stay private because they just love being private. They decide to stay private because they may like being private, but also because it's the most efficient way for them to grow and the most efficient way for them to source capital. This audience, if any of these numbers come true, I've seen numbers as big as 10 trillion over the next 10 years. 10% come. If any of those numbers even remotely accurate, the space will continue to grow. Now you're going to need scale sourcing opportunity, reputation. We have to deliver on what we say. We're going to do technology we haven't even talked about. We could do a whole session on that technology. You have to be able to deploy technology in very unique ways, especially with AI. So I think this is going to continue to grow. It won't always be perfect, but I do think again, this audience at the margin will shape the nature of private capital for the next decade.
- [36:52]
Unknown
That was my conversation with Harvey Schwartz, CEO of the Carlyle Group. We're going to bring him into the studio for a full treatment. For the full Masters in Business conversation where we're not fighting the sun and the wind. It was really fun chatting with him. I learned a lot about him and about Carlisle. There are a whole bunch more questions I'm really excited to ask him. Special thanks to Matt Middleton of Advisor Circle for helping put this together. It really was a blast. If you enjoy this conversation well be sure and check out any of the previous 500 or so we've done over the past 10 years. You can find those at Bloomberg, iTunes, Spotify, YouTube, wherever you get your favorite podcasts. Be sure and check out my new book, how not to Invest the Ideas, Numbers and Behaviors that Destroy wealth and how to Avoid Them. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.
- [37:56]
Barry Ritholtz
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