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00:00You know, we were talking before this began just about doing business in Texas in general,
00:06and you're just such a proponent of being here.
00:09I love this place. I mean, I grew up in Texas. I was away for a little bit during college,
00:14but I have come back to relish what a great business environment this is. I mean, Texas is
00:20one of the places where you can kind of dream big and make things happen. And so I've always
00:25been a huge proponent of it. So now you have 12 independently managed subsidiaries in real
00:32estate, financial services, and health care. Talk about how each of these are doing in the
00:39current economy. Well, I mean, these are businesses that are very sort of fundamentally sound.
00:45They're essential services for people. So we operate in things like ophthalmology or dental
00:51services. We build housing. We build very, very essential, fundamentally needed
00:57services and assets that service the economy in a very robust way. So these are things that are
01:04sort of counter-cyclical, and they tend to be very stable and predictable businesses.
01:10I want to start with the real estate side of things. You spoke to us at one point, and you said
01:15you look at the map and brokers tell us, no, that land went to a data center. That one did too. And
01:20you're looking at it and saying, wow, that's 20 land parcels that are 1,000 acres that all went to
01:26data centers, and they're going to consume unimaginable swaths of energy. How do you feel
01:32about this now? Yeah. I mean, look, I think I've been pretty consistent on this. I would,
01:37on the data center question, one of the basic things that I try to understand is the question around
01:46these large infrastructure costs. You have a $10, $15 billion asset. And to me, the question is,
01:54why don't the hyperscalers, why don't the large technology companies want to own those buildings?
02:00They are asking financial companies to develop them for them and to finance them,
02:05and they don't want to own them. These are the largest companies in the world,
02:08like Google and Oracle and Facebook and Meta, that own these leases. They're 15, 20-year leases,
02:17but they don't want to encumber their balance sheet with these assets. And so I wonder why. I just,
02:24I'm curious and I'm skeptical about why these large companies don't want to own them. They'd rather
02:29lease them. I do want to talk to you about Alphabet Google. They recently announced a $40
02:33billion investment to build three new data centers in Texas, one near Abilene. That project will be
02:39co-located with a new solar and battery energy storage plant. That's to ease the impact on the
02:45grid. You know, you talked a little bit about your concerns with it taking up energy. Do you think you
02:51will see more of that moving forward, what Alphabet Google's doing here? I mean, it's obvious that
02:56Texas has plentiful energy. We have one of the largest reserves of energy known to man in the
03:02Permian Basin. And so it's no surprise that the hyperscalers want to locate near those energy
03:08sources. But I'm a little bit more worried about the business of data centers just because you have
03:15a lot of circular relationships. So you have businesses that are suppliers to the businesses
03:23and that's circularity. You know, OpenAI is buying cloud services from Amazon. Amazon is investing in
03:29OpenAI. NVIDIA is selling chips to OpenAI and then investing in OpenAI. These circular transactions,
03:37I've seen them before. I saw them in the early 2000s with the telecom industry where you had
03:43companies like Cisco and JDS Uniphase, companies like Lucent and WorldCom. Those companies, many of
03:49them don't exist anymore because they spent a lot of money in these relationships with their vendors
03:54and suppliers financing really expensive infrastructure that we thought was going to be
03:59great. And then those companies cease to exist. So I think we need to be a little bit skeptical about
04:05all of this investment that is happening. A lot of it is hard to keep up with, but it is a tremendous
04:11amount of dizzying transactions.
04:15But when you look at a company like Alphabet, Google or NVIDIA, those companies are going to be here.
04:20So what do you think is the correct business model when it comes to data centers?
04:24Well, I think, look, first of all, I think there's a question about obsolescence. These
04:28massive facilities, they have digital infrastructure inside that can become obsolete. The optimization of
04:36GPUs happens right now at like every six months you see a new advance in this technology infrastructure.
04:43So these facilities have that. Now, some of them are being accommodative to quantum computing and
04:48other capacity that's going to change over time. So I think they are sort of hedging that way.
04:52But I'm concerned if Google wants to open a facility and own it on their balance sheet, then great.
04:59But when you have financial intermediaries like BlackRock and others that are financing these on
05:04behalf of those companies that have giant balance sheets, I'm just asking the question, why?
05:09In the medical sector, however, you have talked about the use of AI. So while you have concerns about
05:15data centers, you have talked about the use of AI and how it can be helpful. So let's talk about
05:20how you're doing that in your business.
05:22Yeah, no, in the healthcare business, in insurance, in all of our businesses, AI has had a transformative
05:28effect on the way that we operate our businesses already. And we're just beginning to use it. So yeah,
05:33I mean, I think in the healthcare industry, we've seen tremendous innovation. For instance,
05:38there was a report recently on the connection between shingles vaccines and dementia. And the AI
05:49found this link. Scientists weren't even looking for that link, but the data showed it. And we found
05:57this linkage between shingles vaccines in adults and a decreased dementia propensity. So you have
06:04tremendous innovation happening through AI and the ingestion and aggregation of data. So I think it's
06:11a positive thing. On the real estate and data center side, I'm a little skeptical about the
06:17transaction sort of structure of these deals. Let's talk about the deals of tariffs and how
06:24they're affecting them. You know, you've spoken about tariffs before. In fact, on Bloomberg TV,
06:28you said there was a positive aspect of it. How do you feel about that now?
06:33Look, I think initially I thought tariffs were going to have a much more dilutive effect and
06:38inflationary effect. I think it's been relatively muted. I think you see consumers absorbing some
06:43portion of it, manufacturers, exporters, importers, all of the participants in the supply chain have
06:49figured out how to absorb some of this. Some of it has not come to be, right? You have some tariffs
06:57that have abated over time. And then when I mentioned the positivity of it is that in certain
07:02sectors, we've seen inventory build up and we've seen manufacturing and nearshoring improve on the
07:10job creation front. Uncertainty from tariffs, though. How has that affected you? I think, you know,
07:16the headlines have been on and off, right? So it's hard to kind of predict what's really going to get
07:21implemented. And I think for a while, business leaders, we were looking at the headlines and saying,
07:25OK, what is actually going to come to be? And it's been hard to predict it. But I think overall,
07:30the effect has been much more muted than I expected. I want to talk to you a little bit
07:34about your background. You're born in Texas, but yet spent a good portion of your childhood in Mexico
07:41and going back and forth, going to school. Then you obviously have built your life here in Texas.
07:47When you see what's happening with immigrations and deportations, I'd like your take on that.
07:52Yeah, I mean, look, the I think what I would say is that I grew up along the border in South Texas,
07:58and I had a sort of a bird's eye view of what happens along the border. And it's always been a
08:03cultural sort of symbiosis and synergy between the two countries. But I think what happened in the last
08:12administration was difficult. I mean, it was very dysfunctional and it was chaotic. And I think
08:18that created a very different environment that made it dysfunctional. So today, I think we have an
08:26environment that politically has said we need a secure border. And I think most people agree with
08:32that, that we needed to have the ability to control what happens at the border. I think on the immigration
08:37front, I think the administration has to find the right footing on making sure that the focus is on
08:45deporting criminals. And that should be the priority. I think, you know, you take a place like Texas,
08:50where in this environment, Texas had the greatest GDP growth in the country. It had the largest job
08:58creation growth and it had the greatest population growth in the country. And about 40 percent of the
09:04population in Texas is Hispanic. And they are building families and households at a greater pace.
09:11They're building businesses, a small and medium sized businesses at the greatest pace in the country.
09:17And so that that is part of the tailwinds that is propelling the Texas economy. So you have to find a right
09:23balance between legal immigration and then supporting the demographics of this state and of this country that
09:29make it that make it great.
09:31Do you want to make sure people, though, can live how you did going back and forth?
09:35Well, I think, look, every border in the world, whether it's Germany and France or any country
09:41in the world, there is always a border that moves and has to have some level of control.
09:47Right. Canada, the United States, Germany, France, you know, Spain and Portugal, every border in the
09:52world has to have some level of control. And I think we have to find the right the right balance for
09:57that.
09:57And you want to return to how we began, how you're such a proponent of Texas. Let's talk a little bit
10:02about the exchanges. Now you're seeing the Texas Stock Exchange begin, New York Stock Exchange,
10:07NASDAQ. They have larger presences here. What do you think this is saying about the future of
10:13finance in Texas?
10:15Yeah, well, first of all, I think there's two things that are happening. One is what has Texas
10:20become as an economy? Texas, you take a city like Houston, right? Houston is known as the energy
10:27capital of the world. But the greatest contributor to the GDP of the city of Houston and the
10:32Houston MSA is health care. It's the largest health care system in the world. It has the
10:37most advanced cancer research in the world. And there are hundreds of thousands of jobs,
10:42direct and indirect jobs from the health sciences and the biosciences and pharma and research
10:48that is happening in Houston. So you have this diversification in Houston. You have Dallas has
10:53become a counterweight to New York as a financial services hub. It has companies like Fidelity and
10:59Charles Schwab and Goldman Sachs that are all here. And this has become a financial services
11:05capital. So the diversification of the Texas economy means that the Texas Stock Exchange,
11:11for instance, will compete with the New York Stock Exchange. And the New York Stock Exchange
11:16will have a presence here. And so this is a place where business is welcome. Texas passed recently
11:22a constitutional ban on taxing financial transactions. So that is huge for signaling to the market that you
11:29do business here. And I think that's part of the ideology and the culture of the state.
11:34You know, you own residential housing. So this is something you are very familiar with. Here in Texas,
11:39we're seeing build out and build out and build out and build out. At some point, what's the bubble here?
11:46I don't think there is a bubble. It has the greatest job creation in the country. It has the fastest GDP
11:51growth. I mean, look, Texas has a $2.7 trillion GDP economy. That would make it one of the five,
11:57six largest countries in the world. It's a phenomenal story. So there is no bubble in housing
12:02in Texas. And I think it's also sort of an ethos, right? Texas is a can-do, stake-your-claim kind of
12:10place. We don't do things like, you know, elect socialist leaders in this state. We build,
12:17we have available land, we have available power, we have willing and hardworking people and a lot
12:27of business formation. So what's happening here is unprecedented. And it's an ideology,
12:32it's a culture of can-do and being able to stake your claim. I think that's something that nobody else
12:38can-can tout.
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