May 5, 2025 • 11 mins
Apollo Global Management CEO/Co-Founder Marc Rowan says that the Trump Administration is not wrong for enacting tariffs. He speaks at the Milken Conference with Bloomberg's Sonali Basak.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news, and we welcome our
TV and radio audiences.
Speaker 2 (00:10):
I'm Shinali Bassik at the Milken Institute Global Conference in
Beverly Hills and joining me now Apollo CEO and co
founder Mark Rowan.
Speaker 1 (00:18):
And what a time to be speaking with you.
Speaker 3 (00:21):
Just a few things going on, A few.
Speaker 1 (00:23):
Things going on, but a lot today alone.
Speaker 2 (00:26):
We have the Treasury Secretary speaking at eight o'clock here
Pacific time. We had Elon Musk speaking last night, and
the President of the United States changing his tune on tariffs.
Speaker 1 (00:36):
Where do you think the endgame is.
Speaker 2 (00:38):
Given that tariff the tariff talk is taking up so
much of the discussion here.
Speaker 4 (00:42):
Look, what the administration wants to do, in my opinion,
is not wrong. We are the freest trading country in
the world and have been since the end of World
War Two.
Speaker 3 (00:52):
It is not clear to me that we have to be.
Speaker 4 (00:55):
Or that we should allow allies and strategic competitors to
phibit our access to their markets. We can take issue
with how it's being done and the uncertainty it's creating,
but the President and the administration start with a really
strong hand. Low unemployment, good job growth, massive capital investment
over the last four years and continuing in the US,
(01:16):
So now is actually a good time. But we have uncertainty,
and in the face of uncertainty, people do not make
new investments, they do not hire, they do not make moves.
We likely will cause two quarters of negative growth if we,
in fact don't resolve the uncertainty. So until we have
resolution of what the rules of the game are, it's
(01:36):
going to be slow.
Speaker 2 (01:37):
A lot of people talk about the potential for a recession,
but little are people talking about the severity that could
exist in the potential for a recession.
Speaker 4 (01:46):
Look now we're talking about forecasts and projections in our firm.
When we were raising rates three to four hundred basis points,
we talked about a non recession recession, which is a
correction and asset prices, but not necessarily in labor. We
kind of see the same thing happening again. It's not
to say we won't have some fallout in some adjustment,
(02:07):
but we're starting from a place of four percent unemployment,
good job growth. We are building infrastructure, we're building semiconductor plants.
We're absorbing massive amounts of foreign direct investment. Like it
or not, We're building Inflation Reduction Act factories, and now
the president is channeling capital from around the world to
come back here.
Speaker 3 (02:27):
Some days I wake up and worry about capital.
Speaker 4 (02:30):
Most days I wake up and worry about where will
we get all the people to do this?
Speaker 2 (02:34):
Now, you mentioned that you agree with what he's doing,
but maybe not how in all the ways. To the
extent that you think that this should be done differently
to the extent that you don't like the method of
the change.
Speaker 1 (02:47):
What needs to change.
Speaker 4 (02:48):
Look, this is now the toughest job in the world,
or is now? Scott besant As I said, we want
this administration to succeed. Every American should want this administration
to succeed. So how I would do it is not
really relevant. I will point out the following. US and
Mexico together should be the driving economic force in the
world for the next fifty years. We have not been
(03:10):
able to get there, despite two or three rounds of
massive free trade agreements. The issues that separate US from
Mexico are not existential to Mexico. As one leading Mexican
industrialists said to me, if it takes tariffs to make
Mexico great again, so be it.
Speaker 3 (03:26):
Inside of Mexico, there's a need for change.
Speaker 4 (03:28):
Imagine coming to the world with Mexico and Canada resolve
first and then taking people piece by piece or country
by country. We would just be in a much stronger
position to do what we need to do to reset
the terms of trade.
Speaker 2 (03:42):
But in the meantime you had mentioned it as well
that people are on hold, businesses are on hold. A
lot of businesses are at risk of layoffs if this continues.
How long can this uncertainty continue without causing much greater damage.
Speaker 4 (03:54):
Look, we're going to have uncertainty. We have uncertainty already.
Until we see critical mass of trading partners agree to
ongoing new economic relationships, we're going to have uncertainty.
Speaker 1 (04:06):
But if that could take years, couldn't it?
Speaker 3 (04:09):
That could take years.
Speaker 4 (04:10):
I don't think the administration will allow it to take years. Clearly,
what they are trying to do is to create positive
momentum by getting country after country to agree to new
terms of trade.
Speaker 3 (04:22):
If that happens, this could be very short lived.
Speaker 4 (04:25):
If it doesn't happen, uncertainty could continue for a period
of time. But we also have to take into account
short term and long term uncertainty will eventually resolve itself
longer term. The way we've done this, we have done
damage to the US brand, the brand for stability, for predictability,
for regularity, that will eventually have some cost to us.
Speaker 3 (04:48):
Right now, it does not.
Speaker 4 (04:49):
What I've said is I've see US moving from what
was hyper exceptionalism to merely exceptional because I don't think
there are good alternatives to the US today.
Speaker 3 (04:59):
But that can change overtime.
Speaker 2 (05:01):
Let's talk more about the US brand for a moment,
because you have businesses across the globe, from Europe to Japan.
Speaker 1 (05:06):
Now, what are they saying?
Speaker 2 (05:07):
What are your investors in different regents saying about their
willingness to put money into US capital markets. Your deputy
John Zido had written a letter to investors talking about
the risks to the US brand as well, the risk
to US capital markets. Right are you seeing any of that?
Speaker 4 (05:24):
We will see it, but we're not seeing it yet.
But think about that, the US is still sixty plus
percent of all the capital raised in the world. We
are in the absolute best position from a capital.
Speaker 3 (05:34):
Formation point of view. No one has what we have.
That does not mean they will not want it over time.
Speaker 4 (05:39):
Everything that we want to do here, build infrastructure, next
generation manufacturing, add energy, defense, next generation data and power.
Europe wants to do exactly the same thing, but lacks
any real source of long term capital. In the Drahi Report,
Mario Drahi lays out what Europe needs to do to
be competitive, and most of the board is focused on
(06:01):
revisions to capital formation.
Speaker 3 (06:03):
Will euro up do that? I don't know.
Speaker 4 (06:05):
I think what John Zieto points out in his letter
that they have the best chance relative to the US
to create this kind of positive momentum.
Speaker 2 (06:14):
So then there's a question of what you do in
this uncertainty. Now, recently, you told investors just last week
that you're willing to sit things out, You're willing to
reduce leverage.
Speaker 1 (06:25):
However, you believe that you were one of.
Speaker 2 (06:27):
The largest active buyers of assets post Liberation Day, that
is twenty five billion in April alone alone.
Speaker 1 (06:34):
What are you buying?
Speaker 3 (06:35):
So let's start. Let I talked to investors and I
asked three questions.
Speaker 4 (06:40):
Our price is low. No, I do not believe prices
are low. They are lower, But we're still talking about
an average Pe as a reference in the mid twenties
versus sixteen over time. Are rates likely to plummet. I
don't think so. On our firm does not think so.
Most of what we're doing is inflationary. Third, do we
(07:01):
have heightened geopolitical risk? Listen to our conversation. There's heightened
geopolitical risk. What do you want to do if those
three things are true? I think you want to reduce risk.
In credit, we're going up the capital structure senior secured,
investment grade, trying to reduce risk. We're not trying to
make money by being a good credit selector in a
(07:21):
volatle market. And in the equity market, moving from things
that are growthy and things that are venturing to things
that are cash flow based and more hybrid in their outcome.
Speaker 3 (07:31):
So what did we do in April? We bought mostly
investment grade.
Speaker 4 (07:34):
Ironically, mostly in the public markets, I think we will
see this interesting dynamic take place. We have a perception
that what's public is safe and what's private is risky.
Speaker 3 (07:46):
But what if we're wrong?
Speaker 4 (07:48):
What if public is safe and risky and private is
safe and risky. In private, most people are set up
to hold things for the long term. In public, we
have this belief that we can sell something every day.
In equities that is true in fixed income, It is
not true in the best of times. It is certainly
not true under stress. Takes five days today to sell
(08:08):
an investment grade corporate bond. We should expect in every
risk off moment public credit to trade poorly.
Speaker 1 (08:17):
So what about the future.
Speaker 2 (08:19):
If you think that we saw some moments of market let's.
Speaker 1 (08:23):
Say seizure, right, you did see full moments where there
were weeks at a.
Speaker 2 (08:28):
Time where the new issuance market was closed. Do you
worry about liquidity into the year given the way things
are going, and do you think that the FED would
need to step in?
Speaker 4 (08:37):
So I worry about liquidity, but in a different way
than you're asking asking. I think there's plenty of money
in the world. If we use that as a proxy
for liquidity, could we have tough treasury auctions around political events? Absolutely,
I don't think that is actually fundamental. What I worry about,
and the biggest build up of risk I see in
the world is we are brought up with an expectation
(08:59):
of being able to trade everything every day. Everything is
daily liquid, your ETFs, you're open ended mutual funds, and
so on and so on. In the equity markets, it's
actually liquid in the credit markets.
Speaker 3 (09:09):
It's not actually liquid. We just don't know that yet.
Speaker 4 (09:13):
We've seen it in the UK and something called LDI,
where people thought they could sell something and it turned
out they couldn't.
Speaker 3 (09:21):
We're going to see that. We saw it in the
run up to COVID.
Speaker 4 (09:24):
We saw a little blip in the market over the
past few weeks, which is why we ended up buying.
But again, this notion that everything that's daily liquid is
somehow safe is just a notion. It's just not true.
Speaker 2 (09:38):
So I want to go back to something you were
saying before that this environment that we're facing could be
very inflationary.
Speaker 4 (09:44):
Right.
Speaker 2 (09:44):
If you believe that we are facing an inflationary environment,
what do you make of President Trump's bid to try
to get the Fed to lower.
Speaker 1 (09:51):
Interest rates at this juncture? Do you think it's possible?
Speaker 3 (09:55):
Good news. I don't have that job.
Speaker 4 (09:57):
It's not not even in the realm of possible ability
for me to do. Look, we are moving things from
low cost labor countries to higher cost labor countries, particularly
to the US.
Speaker 3 (10:08):
There are strategic reasons.
Speaker 4 (10:09):
To want to do that, but we can't deny that
that is an inflationary In some ways, we are not
relying on a global trading system to the extent we
have previously that is inflationary.
Speaker 3 (10:20):
In some ways.
Speaker 4 (10:22):
We are a tight labor supply, four percent unemployment, We
have good job numbers.
Speaker 3 (10:26):
We have no legal or legal immigration.
Speaker 4 (10:28):
That is inflationary in some ways, Yes, are there countervailing measures.
Energy prices are lower at the moment. Technology will eventually
introduce savings, the keyword being eventually. At the moment, the
policies we're following have a risk of being more inflationary
than otherwise, which generally will lead to higher long term
rates even if short term rates come down.
Speaker 1 (10:50):
Mark get macro.
Speaker 2 (10:52):
I know it's the macro world that we're living in,
and we will be watching you closely because we are
waiting for that that pitch investment. Mark Growan of a
of course, joining us here at the Milken Institute,
Bloomberg Audio Studios, podcasts, radio news, and we welcome our
TV and radio audiences.
Speaker 2 (00:10):
I'm Shinali Bassik at the Milken Institute Global Conference in
Beverly Hills and joining me now Apollo CEO and co
founder Mark Rowan.
Speaker 1 (00:18):
And what a time to be speaking with you.
Speaker 3 (00:21):
Just a few things going on, A few.
Speaker 1 (00:23):
Things going on, but a lot today alone.
Speaker 2 (00:26):
We have the Treasury Secretary speaking at eight o'clock here
Pacific time. We had Elon Musk speaking last night, and
the President of the United States changing his tune on tariffs.
Speaker 1 (00:36):
Where do you think the endgame is.
Speaker 2 (00:38):
Given that tariff the tariff talk is taking up so
much of the discussion here.
Speaker 4 (00:42):
Look, what the administration wants to do, in my opinion,
is not wrong. We are the freest trading country in
the world and have been since the end of World
War Two.
Speaker 3 (00:52):
It is not clear to me that we have to be.
Speaker 4 (00:55):
Or that we should allow allies and strategic competitors to
phibit our access to their markets. We can take issue
with how it's being done and the uncertainty it's creating,
but the President and the administration start with a really
strong hand. Low unemployment, good job growth, massive capital investment
over the last four years and continuing in the US,
(01:16):
So now is actually a good time. But we have uncertainty,
and in the face of uncertainty, people do not make
new investments, they do not hire, they do not make moves.
We likely will cause two quarters of negative growth if we,
in fact don't resolve the uncertainty. So until we have
resolution of what the rules of the game are, it's
(01:36):
going to be slow.
Speaker 2 (01:37):
A lot of people talk about the potential for a recession,
but little are people talking about the severity that could
exist in the potential for a recession.
Speaker 4 (01:46):
Look now we're talking about forecasts and projections in our firm.
When we were raising rates three to four hundred basis points,
we talked about a non recession recession, which is a
correction and asset prices, but not necessarily in labor. We
kind of see the same thing happening again. It's not
to say we won't have some fallout in some adjustment,
(02:07):
but we're starting from a place of four percent unemployment,
good job growth. We are building infrastructure, we're building semiconductor plants.
We're absorbing massive amounts of foreign direct investment. Like it
or not, We're building Inflation Reduction Act factories, and now
the president is channeling capital from around the world to
come back here.
Speaker 3 (02:27):
Some days I wake up and worry about capital.
Speaker 4 (02:30):
Most days I wake up and worry about where will
we get all the people to do this?
Speaker 2 (02:34):
Now, you mentioned that you agree with what he's doing,
but maybe not how in all the ways. To the
extent that you think that this should be done differently
to the extent that you don't like the method of
the change.
Speaker 1 (02:47):
What needs to change.
Speaker 4 (02:48):
Look, this is now the toughest job in the world,
or is now? Scott besant As I said, we want
this administration to succeed. Every American should want this administration
to succeed. So how I would do it is not
really relevant. I will point out the following. US and
Mexico together should be the driving economic force in the
world for the next fifty years. We have not been
(03:10):
able to get there, despite two or three rounds of
massive free trade agreements. The issues that separate US from
Mexico are not existential to Mexico. As one leading Mexican
industrialists said to me, if it takes tariffs to make
Mexico great again, so be it.
Speaker 3 (03:26):
Inside of Mexico, there's a need for change.
Speaker 4 (03:28):
Imagine coming to the world with Mexico and Canada resolve
first and then taking people piece by piece or country
by country. We would just be in a much stronger
position to do what we need to do to reset
the terms of trade.
Speaker 2 (03:42):
But in the meantime you had mentioned it as well
that people are on hold, businesses are on hold. A
lot of businesses are at risk of layoffs if this continues.
How long can this uncertainty continue without causing much greater damage.
Speaker 4 (03:54):
Look, we're going to have uncertainty. We have uncertainty already.
Until we see critical mass of trading partners agree to
ongoing new economic relationships, we're going to have uncertainty.
Speaker 1 (04:06):
But if that could take years, couldn't it?
Speaker 3 (04:09):
That could take years.
Speaker 4 (04:10):
I don't think the administration will allow it to take years. Clearly,
what they are trying to do is to create positive
momentum by getting country after country to agree to new
terms of trade.
Speaker 3 (04:22):
If that happens, this could be very short lived.
Speaker 4 (04:25):
If it doesn't happen, uncertainty could continue for a period
of time. But we also have to take into account
short term and long term uncertainty will eventually resolve itself
longer term. The way we've done this, we have done
damage to the US brand, the brand for stability, for predictability,
for regularity, that will eventually have some cost to us.
Speaker 3 (04:48):
Right now, it does not.
Speaker 4 (04:49):
What I've said is I've see US moving from what
was hyper exceptionalism to merely exceptional because I don't think
there are good alternatives to the US today.
Speaker 3 (04:59):
But that can change overtime.
Speaker 2 (05:01):
Let's talk more about the US brand for a moment,
because you have businesses across the globe, from Europe to Japan.
Speaker 1 (05:06):
Now, what are they saying?
Speaker 2 (05:07):
What are your investors in different regents saying about their
willingness to put money into US capital markets. Your deputy
John Zido had written a letter to investors talking about
the risks to the US brand as well, the risk
to US capital markets. Right are you seeing any of that?
Speaker 4 (05:24):
We will see it, but we're not seeing it yet.
But think about that, the US is still sixty plus
percent of all the capital raised in the world. We
are in the absolute best position from a capital.
Speaker 3 (05:34):
Formation point of view. No one has what we have.
That does not mean they will not want it over time.
Speaker 4 (05:39):
Everything that we want to do here, build infrastructure, next
generation manufacturing, add energy, defense, next generation data and power.
Europe wants to do exactly the same thing, but lacks
any real source of long term capital. In the Drahi Report,
Mario Drahi lays out what Europe needs to do to
be competitive, and most of the board is focused on
(06:01):
revisions to capital formation.
Speaker 3 (06:03):
Will euro up do that? I don't know.
Speaker 4 (06:05):
I think what John Zieto points out in his letter
that they have the best chance relative to the US
to create this kind of positive momentum.
Speaker 2 (06:14):
So then there's a question of what you do in
this uncertainty. Now, recently, you told investors just last week
that you're willing to sit things out, You're willing to
reduce leverage.
Speaker 1 (06:25):
However, you believe that you were one of.
Speaker 2 (06:27):
The largest active buyers of assets post Liberation Day, that
is twenty five billion in April alone alone.
Speaker 1 (06:34):
What are you buying?
Speaker 3 (06:35):
So let's start. Let I talked to investors and I
asked three questions.
Speaker 4 (06:40):
Our price is low. No, I do not believe prices
are low. They are lower, But we're still talking about
an average Pe as a reference in the mid twenties
versus sixteen over time. Are rates likely to plummet. I
don't think so. On our firm does not think so.
Most of what we're doing is inflationary. Third, do we
(07:01):
have heightened geopolitical risk? Listen to our conversation. There's heightened
geopolitical risk. What do you want to do if those
three things are true? I think you want to reduce risk.
In credit, we're going up the capital structure senior secured,
investment grade, trying to reduce risk. We're not trying to
make money by being a good credit selector in a
(07:21):
volatle market. And in the equity market, moving from things
that are growthy and things that are venturing to things
that are cash flow based and more hybrid in their outcome.
Speaker 3 (07:31):
So what did we do in April? We bought mostly
investment grade.
Speaker 4 (07:34):
Ironically, mostly in the public markets, I think we will
see this interesting dynamic take place. We have a perception
that what's public is safe and what's private is risky.
Speaker 3 (07:46):
But what if we're wrong?
Speaker 4 (07:48):
What if public is safe and risky and private is
safe and risky. In private, most people are set up
to hold things for the long term. In public, we
have this belief that we can sell something every day.
In equities that is true in fixed income, It is
not true in the best of times. It is certainly
not true under stress. Takes five days today to sell
(08:08):
an investment grade corporate bond. We should expect in every
risk off moment public credit to trade poorly.
Speaker 1 (08:17):
So what about the future.
Speaker 2 (08:19):
If you think that we saw some moments of market let's.
Speaker 1 (08:23):
Say seizure, right, you did see full moments where there
were weeks at a.
Speaker 2 (08:28):
Time where the new issuance market was closed. Do you
worry about liquidity into the year given the way things
are going, and do you think that the FED would
need to step in?
Speaker 4 (08:37):
So I worry about liquidity, but in a different way
than you're asking asking. I think there's plenty of money
in the world. If we use that as a proxy
for liquidity, could we have tough treasury auctions around political events? Absolutely,
I don't think that is actually fundamental. What I worry about,
and the biggest build up of risk I see in
the world is we are brought up with an expectation
(08:59):
of being able to trade everything every day. Everything is
daily liquid, your ETFs, you're open ended mutual funds, and
so on and so on. In the equity markets, it's
actually liquid in the credit markets.
Speaker 3 (09:09):
It's not actually liquid. We just don't know that yet.
Speaker 4 (09:13):
We've seen it in the UK and something called LDI,
where people thought they could sell something and it turned
out they couldn't.
Speaker 3 (09:21):
We're going to see that. We saw it in the
run up to COVID.
Speaker 4 (09:24):
We saw a little blip in the market over the
past few weeks, which is why we ended up buying.
But again, this notion that everything that's daily liquid is
somehow safe is just a notion. It's just not true.
Speaker 2 (09:38):
So I want to go back to something you were
saying before that this environment that we're facing could be
very inflationary.
Speaker 4 (09:44):
Right.
Speaker 2 (09:44):
If you believe that we are facing an inflationary environment,
what do you make of President Trump's bid to try
to get the Fed to lower.
Speaker 1 (09:51):
Interest rates at this juncture? Do you think it's possible?
Speaker 3 (09:55):
Good news. I don't have that job.
Speaker 4 (09:57):
It's not not even in the realm of possible ability
for me to do. Look, we are moving things from
low cost labor countries to higher cost labor countries, particularly
to the US.
Speaker 3 (10:08):
There are strategic reasons.
Speaker 4 (10:09):
To want to do that, but we can't deny that
that is an inflationary In some ways, we are not
relying on a global trading system to the extent we
have previously that is inflationary.
Speaker 3 (10:20):
In some ways.
Speaker 4 (10:22):
We are a tight labor supply, four percent unemployment, We
have good job numbers.
Speaker 3 (10:26):
We have no legal or legal immigration.
Speaker 4 (10:28):
That is inflationary in some ways, Yes, are there countervailing measures.
Energy prices are lower at the moment. Technology will eventually
introduce savings, the keyword being eventually. At the moment, the
policies we're following have a risk of being more inflationary
than otherwise, which generally will lead to higher long term
rates even if short term rates come down.
Speaker 1 (10:50):
Mark get macro.
Speaker 2 (10:52):
I know it's the macro world that we're living in,
and we will be watching you closely because we are
waiting for that that pitch investment. Mark Growan of a
of course, joining us here at the Milken Institute,
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