00:00Number one, coming into the year, we were coming off of three years of strong equity returns, over 50 percent
00:06over three years.
00:07That hasn't happened very much in history. And typically the fourth year has more challenges.
00:12You're later in the cycle. You're later in the credit cycle. So coming into the year, we knew there would
00:16be more volatility.
00:17So you add on to that. The second thing I'd say here is an oil shock, which has obvious implications
00:24for inflation.
00:25But it also has implications for demand, particularly in parts of the world. You just mentioned Asia.
00:29There are certainly economies there that are really going to struggle if this holds in there longer.
00:36But the third point I'd make, which I think is the countervailing point, particularly in the American markets, but maybe
00:42more broadly, is AI,
00:44which remains a major theme and for good reason, because the speed with which the technology is being deployed
00:52and the breadth of companies that are now either directly or working in partnership with some of the big providers,
00:57like Anthropic and OpenAI, to implement the tools and begin to show productivity improvements, is quite high.
01:05So I think, you know, when you piece all of those things together, there's a lot of uncertainty.
01:09Nobody, in fact, really knows where it's going to go because of the interplay of the different parts of this.
01:15But it's not as clear cut as people might have thought when the war started that you're going to have
01:20an oil shock.
01:21Markets will be down and down for an extended period of time. That's clearly not the way the markets are
01:28reacting.
01:28And I wonder, Greg, so are you finding space then in conversations with clients to talk about AI?
01:33Are clients wanting to discuss this as a theme that they really want to get back to investing behind?
01:38A hundred percent. Now, remember, and our clients are high net worth and ultra high net worth, so we have
01:43long-term plans in place with them.
01:45They typically stick with these plans even through times like what we're dealing with now.
01:50We're not looking to make major shifts with them. Our private advisors work with them on these plans and they
01:55stick to them.
01:55You might make pivots and adjustments based upon what happens in markets, but clients are pretty steady in our client
02:01base.
02:01But they are very focused on AI. They're very focused on AI in many ways. From an investment standpoint, you
02:07know, there's obviously shifts there.
02:09I mean, you look at what's happened in the software industry over the last 12 or 18 months, and that
02:12was significant and rapid.
02:15What are other industries that are going to be affected by AI in a way that you need to think
02:19about investments there, you know, from an investment standpoint,
02:22but also industries that are going to be able to create a lot more productivity?
02:26And then our clients are focused on AI and how we're implementing it at Rockefeller Capital Management.
02:31How are we going to use the tools to make our interface with them more efficient and better for the
02:36client?
02:36Okay. You mentioned there that, you know, high net worth individuals is the focus and they make adjustments based on
02:42the news flow,
02:43but broadly they follow the plans. I mean, I wonder if for some clients, depending on their geography,
02:48whether the events in the Middle East have been a time for a big rethink about where the money is
02:52and in how many locations and in what currency and all of those associated conversations.
02:58What do those conversations look like? Well, you know, for most of our clients are American clients,
03:02and I think for them, not major pivots, but it does highlight the need for a diversified strategy
03:08and a long-term strategy. So I think that that just reminds people that it is a volatile world.
03:13You know, the things that people think aren't going to happen or shouldn't happen do happen.
03:18So I think that does affect investors in the United States, but, you know, around the world, clearly.
03:23I mean, there are many companies, you know, a lot of them in Asia, that were performing quite well
03:29that the shock from oil prices creates an immediate issue there.
03:33So that highlights the fact that things can change quickly, and it comes back to the long-term plan
03:38and the diversification.
03:39Yes. And I wonder how much the thinking around private credit is evolving.
03:43So in those long-term plans that those high-net-worth individuals have, I mean, we've seen some high-net
03:49-worth individuals
03:49wanting to get reduced exposure to private credit as a result of some things that have happened
03:54and software and AI threats to software is part of that conversation, of course.
03:59And how is that evolving, the private credit narrative?
04:01Well, you know, more broadly, alternatives in private markets is such a big slice of the investing pie.
04:07$20 trillion of assets in not just private credit, but infrastructure, private equity across the landscape.
04:12And our clients, because they're high-net-worth and ultra-high-net-worth, they can withstand the illiquidity of those
04:18investments.
04:18So our clients are still broadly invested across alternatives and across private markets, including in private credit.
04:24You know, when we look at private credit from most...
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