CNBC’s David Faber spoke with Apollo Global CEO Marc Rowanabout the Fed’s latest move, recession odds, government spending and more.
Squawk on the Street
CNBC LEADERS: Mark Rowan 9/19/24
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That's LinkedIn.com/results. Terms and conditions apply. LinkedIn, the place to be to be. In his three and a half years as CEO of Apollo Global Management, Mark Rowan has transformed the alternative asset manager and sent the company stock price to new heights. Origination is where I believe excess return comes from. And for us, we are very focused on scaling origination. The $700 billion firm is a champion of the private markets, but Rowan says they're just getting started and America's retirees are poised to be the beneficiaries. There's a massive white space for retirement services innovation. I'm David Faber and this is CNBC Leaders with Apollo Global CEO Mark Rowan. The Federal Reserve just lowered interest rates by 50 basis points. Did the Fed get this right? I don't think we're going to know for a long time. My view is what they did is they took out an insurance policy, insurance against things going poorly, but the insurance policy is not without risk. Certainly our house view is much more conservative than the market view as to both the level, the number of cuts and the final level of interest rates, but I come at this slightly differently. We've been through an extraordinary period of time. We've been through COVID, been through recovery. We've had unprecedented fiscal stimulus. How do we know that we're calibrated correctly? So every once in a while, I do the look out the window test. We look out the window and we say, "What's actually going on?" And we ask ourselves questions. Does everyone who wants a job have a job? For the most part, are wages going up? Yes. Our home price is going up. Is the stock market going up? Do companies have liquidity, access to capital refinancing? Are capital investments being made? The answer to all that is yes. And then you look at what is going on from a fiscal stimulus point of view, which is truly unprecedented. We forget already because so much has happened, but three years ago, we decided as a country to invest almost $2 trillion in infrastructure. Not a single piece of infrastructure is open yet. It's all being built. Two years ago, it was the CHPS Act, $52 billion, to encourage the creation of semiconductor manufacturing plants here. Not a single plant is open. It's all under construction. A year ago, Inflation Reduction Act, somewhere between $1.3 trillion and $2.3 trillion, to encourage the manufacturing of renewables. Again, not a single plant. Well, it's just that you talk about an insurance policy. What you've just reeled off does not sound like a person who thinks we should have got 50 basis points. What I think is not that relevant, but if you ask me, do I think we should have got 50 basis points? It's kind of relevant, Mark. I mean, you do run a very large financial services company. Well, we've $700 billion in assets. We do with market realities, and the market reality is the Fed was going to cut because they are guided by a set of models and an expectation and a belief that the absolute rate of interest is simply too high. But I think one of the reasons our house view is not as draconian, if that's a way of thinking of this. As the market view is you look at the other common sense things that are happening in the marketplace, which are very hard to calibrate. So of the list I was doing, U.S. has also been the largest recipient of foreign direct investment three years in a row. Again, most of that's still under construction. And we are ramping defense production. Every one of the things I just rattled off are stimulative. And we are against a backdrop of almost zero legal immigration. It does not feel to me like we are having a traditional recession. And yet we are using the tools of a traditional recession. We are going to run a $2 trillion deficit this year. So I think we're in uncharted territory. And that's why I say it's an insurance policy. Well, what's an insurance policy against? Because you seem to be indicating in some way, given your view or the house view, that in fact there could be a lot of risk from lowering rates to this extent. And I think there can. And that's why I say it's a risky insurance policy. The insurance policy is to get ahead of a potential slowdown based on incoming data. And the risk is that all of this fiscal stimulus, which is very long term, which has not yet come online against the backdrop of noisy data and a noisy model, forces the government into the Fed into a retreat. Well, as of now, the dot plot, which we also just got, indicates an expectation that we know they're not done. They're far from done. And we're going to get down into the lower threes within a year or so. The nice thing about our markets is nothing stays the same. The dot plot has been moving around all year from the long term dot puff and 2.4 to 2.8. I did not get a chance to see whether the long term dot plot had changed. But ask me again, tomorrow we'll have another day. But in terms of my reaction, this seemed like an expensive insurance policy. But it was certainly one the market was expecting. And it is one, as you suggested, that they are not done yet. No, well, they seem to be much more focused now. You don't seem to believe the battle for inflation has been completely won, or at least the signs you point to indicate that it could heat up again. They seem to be focused now on the employment side of their mandate. Which is true. Inflation may very well be done, but we're also stimulating against an economy that has lots of employment that has lots of thing fiscal stimulus coming online. In a way, we really have never done before. And so this will be an interesting time. They always say, maybe we live in interesting times, and I wake up every day and believe we are in interesting times. A bad scenario would be if they actually had to start hiking again, wouldn't it? That would be a bad scenario, certainly from a market expectations point of view. But again, I step back and I try to remember what we do. We are not traders on a day to day basis. We're obviously interested in what happens in the development of the economy. But the U.S. in our view is still the most attractive place to invest. Some of the buyers of your products in private credit, for example, I would think, come from an absolute return perspective. And they've been able to get what low double digit returns. I mean, in a declining rate environment, that's going to go away. And I wonder if they're going to go away. Well, I'd say it this way. The term private credit is itself subject to lots of definitional challenges, which I'm sure we will talk about. Yes, we will. But let's call it "levered lending," or private credit. And so, yes, is it as attractive today as it was in 2023? No, it is not as attractive today. But what are buyers trading off? Because this is all about where to put their money. For the most part, our investors who are investing in private credit the way you've used the term are actually taking their money out of equity and equity allocation. If long-term equity returns are 9% and you can be senior secured first-line debt and earn 9%, that sounds like a reduction in risk rather than an increase in risk. And that's what we see. We see people reevaluating in a very fundamental way how their portfolios are allocated. And so, I can't disagree. Would I rather have 9.5% than 9? Of course, I would. But it's always a question of what it is relative to the other alternatives that I have. So, this reevaluation that you discuss, I mean, that's in process. That's reflected in, obviously, assets coming in. Are we in the early days of that understanding or a different understanding of how you should be allocated? I think we're about to begin to rethink how we allocate. Who's the we here, by the way? I think we as investors. And it's not just people who are in the alternative asset management or in the insurance business or retirement service business. This is individual investors, institutional investors, portfolio managers, because all of us grew up against a backdrop of things that we thought were certain and true. Perhaps they're no longer true. So, I'll give you a couple. We used to think that private was risky and public was safe. And 40 years ago, when I started, it was true. Private was three products, venture capital, private equity, and hedge funds. And we can like those products. But we cannot deny that they have high volatility. They have risk. And public companies were 8,000 public companies diversified portfolios of stocks and bonds. Is that true today? I don't think so. I think we'll discover that public is safe and risky. And private is safe and risky. When something is risky, you want it in a small bucket. We've called that the alternatives bucket. And we want that to have very high rates of return. So, the whole theory of portfolio allocation where investors have invested in stocks and bonds and this little bucket called alternatives, because it was risky and private, I believe is going to be rethought. Right. What does that look like in terms of what you believe will be the opportunity for Apollo? And the change is that it will rot in terms of just the allocation of capital and the financial system. Well, long conversation, but one I'm looking forward. That's why we're here, looking forward to having it. So, I look at a traditional investment portfolio. And we can have some fun with this for individuals and also for institutions. They've mostly lived in a three-flavor ice green world. We've had vanilla chocolate and a little bit of strawberry. Stocks and bonds and alternatives, so-called privates. What we're watching happen and what's going to drive our business, and I believe drive much of our industry over the next period of time, is people are going to move out of this little bucket called alternatives where our entire industry has been built for 40 years and they are next going to go to their fixed income bucket. And they're going to go to their fixed income bucket, which has become 100% beta, no excess return per unit of risk. And they are going to begin to ask questions like, how much liquidity do I actually have in my fixed income portfolio? By recent measures, it would take you five days to sell at investment grade public corporate bond today because there is no liquidity. Once you accept that, why should I own public? Perhaps I should own public and private. And the reason it's going to happen in fixed income first is because you have helpful signposts, rating agencies. A rating agency can tell a prospective portfolio manager, this is a single A and this is a single A. They have the same measure of credit integrity, and therefore a buyer can make a choice as to whether to be in public or private or how much excess return they need for public and private. And by the way, we take for granted that there are actually differences between public and private. I will predict that a year from now, you will not be able to tell the difference between public and private. What does that mean? It won't be different issuers, it won't be different ratings, it won't be different sizes, and it won't even be different liquidity. Everything that exists in the public markets on the fixed income side, repo, borrowing, easy leverage, ratings, daily pricing is all coming to the private market, initially focused at investment grade where most of the action is going to take place. And that's why I look and I step back and I think about the drivers of our business and come back to your question on interest rates. Okay, interest rates are down, therefore the available yield on every fixed income instrument is down. That's not really the question. The question is how much more return can I get in the private market than in the public market? You talk often about liquidity discount, so to speak, or the fact that you're getting obviously a lower return as a result of taking liquidity on the other side or having daily liquidity, even though as you just indicated in some fixed income markets, that doesn't exist. So I think we're going to start again to change our nomenclature. The notion of a liquidity discount, I believe is going to disappear because there's not going to be appreciable differences in liquidity. And so I ask myself and I have really pushed the firm, where does excess return come from? Origination is where I believe excess return comes from. And for us, we are very focused on scaling origination. You have hired thousands of people to do this very test, correct? So thousands of people, we've spent nearly $8 billion. We have 4,000 people who wake up every day, and all they do is origination. Think of the number of firms in our industry who will actually make that kind of investment and who will master the ability not just to have the people, because the people are, are hireable, but to organize them into platforms who specialize in originating aircraft loans, fleet finance loans, receivable loans, inventory loans, other forms of secured financing, loans to investment grade corporates. This is a process. Very few investors will actually do what I've just suggested, and we found it ourselves here almost by accident. And I go back and sometimes it's the historical accidents that put you in the right place. When we started our retirement services company some 15 years ago, the secret to success in retirement services is the capacity to originate investment grade credit, after all ensuring people's retirement, that has excess return. But if you also believe, like I believe, that there's no excess return in public fixed income, you better go originate it. And so we started originating for a theme, and we built and scaled and built and scaled, and then we did what prudent investors do. We diversified. We started building client businesses around that, other insurance companies, other funds. It will eventually end up as you've now seen in ETFs. And so the notion that private somehow means risky or private infers a size of company, really, I think is going to be relegated to a distant way that we used to think. Coming up on CNBC leaders, 10 companies are 37% of the S&P. Four companies have determined almost all your return over the past year or two. 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Home to some of our lowest carbon intensity producing operations, that's energy and progress. Visit chevron.com/anchor. My dad works in B2B marketing. He came by my school for career day and said he was a big row as man. Then he told everyone how much he loved calculating his return on ad spend. My friends still laugh at me to this day. Not everyone gets B2B. But with LinkedIn, you'll be able to reach people who do. Get a $100 credit on your next ad campaign. Go to linkedin.com/results to claim your credit. That's linkedin.com/results. Terms and conditions apply. Linked in. The place to be. To be. 401K is in the retirement community. Obviously, it's an enormous opportunity. I think what there's $12 trillion or something along those lines. When you talk about new products, how much are you thinking about that? And the RIA channel, the brokerage channel essentially, for reaching those kinds of people and those companies that are setting up those 401Ks. So it's a big part of it. So I step back and I think of the four big drivers of our business if you permit me. The first is the structural need for capital going on in our country is unbelievable. We are doing energy transition, which is at a scale we've never seen before. We are building the next generation of infrastructure data centers and power at a scale we've never seen before. We're building infrastructure at a large scale in addition to all the foreign direct investment and everything else. Oh, and by the way, the US government might be borrowing a little bit of money. Most of what I've just articulated are not thing their long-dated complex project financing. They generally will not end up on the balance sheets of banks. They would either go to the bond market or they will end up in the private credit market and most of that is investment grade. I think we're at the beginning of this CAPEX cycle certainly for energy transition and certainly for next generation infrastructure of data and power. The second driver is this notion of retirement. Let's face it, we're getting older. We started that conversation just before we got on. We have done as a society a relatively poor job of saving for retirement. We have as you noted 12 to 13 trillion dollars in 401k. These are the people who need returns more than anyone. What do we have them invest in? They are in daily liquid index funds for 50 years. Why? We have no idea. It's a mistaken belief that public is safe and private is risky. It's a notion that public markets offer diversified risk. But if you actually were to unwind and index today, 10 companies are 37% of the S&P. Four companies have determined almost all your return over the past year or two. Did we really mean to leverage the entirety of US retirement and the Vidya and Apple and Amazon and Netflix saying nothing against those companies. But we have not prepared in a way and so you look at the most successful western retirement oriented society in the US. That's Australia. They introduced more than 40 years ago something called superannuation. Fancy term, it really means they gave 401k type investors access to private markets. They have done a better job preparing their population for retirement than any place else in the world. But the S&P over over a 40 year period has proved to be a pretty good creator of wealth. And in fact, even this year, the S&P is up over 18%. Nobody's complaining about the stock market right now. You know, it's funny. I've found that when things go up, no one complains and in hindsight, we all say, how could we not have known? But your point is they're taking much more risk than they realize. Is that fair to say? That is the point. And also, we're talking about risk over a 40 and 50 year period and diversified portfolios. And remember, this is an older population. As people get closer retirement, their portfolios generally go from equity to more fixed income oriented. The notion of including privates, particularly investment grade privates, that offer them more return without taking appreciably more risk has been very attractive. It sounds very attractive. Are you in the midst right now of creating and offering products to that channel to get these retirees? We are. We are in 401(k) plans. We're in target date funds. We offer all sorts of products to do it. Not so much in what you would consider traditional privates, like private equity, but very much in private investment grade and other things that are more consistent with the retirement. I've been saying through the annuity business, you're also ensuring people's retirement that's another type of product. But we haven't even started the so-called silver tsunami, which is how the people in a theme refer to what's happening. We're at the very beginning of this trend. And the notion of private or private industry helping employees, helping retirees, safer retirement is a big part of our growth driver. The third is the one you've just mentioned, which is individuals. Our entire industry was built on institutions out of their alternative bucket. We now have individuals as the fastest growing segment of our business. And we know this is going to happen because we can actually see what's happening at the top of the pyramid. The top of the individual pyramid is family office. Family office, in many instances, is greater than 50% private already and growing. That does not mean 50% risk, but 50% private. The interesting thing about a family office is generally you just have to convince the principle of the appropriateness of the risk and reward. They are not in any way beholden to history, and they are very willing to change. We're now watching behavior kind of filter down that pyramid to high net worth, who are advised in the RIA community, who are advised in the network community. Fastest growing segment of our business. It's been publicly reported for us more than a billion dollars a month and growing very, very fast. And then the final one, and I think it's larger than all three, all of the capital needs, retirement, and individuals, is this notion of replacement. Remember, and I come back to this, the whole industry is built out of this little thing called the alternatives bucket. As I joke internally, it's the small office down the hall. The fixed income bucket, which is 100% public today, and almost all of our institutional clients, is 50% larger than alternatives, and has not yet really moved into privates. And we're seeing the in the institutional part of our business. This is the fastest growing trend. Hence, why you call Apollo a fixed income replacement business? I think it's a I don't know the whole business is a fixed income replacement business, but certainly that in in the fixed income replacement in the fixed income replacement business, but to be candid, I don't think it stops there. I don't think it's going to happen tomorrow, but I think we will be in the equity replacement business. Okay, how? The same for the same reasons that you've been in that we're talking about fixed income replacement, more return per unit of risk, but we also have a dearth of public companies. We used to have 8,000 public companies. We now have 4,000 public companies. We have roughly 30 companies go public a year. We have more than 30 companies go private. I don't see compelling reasons for companies to want to go public. Capital access and private markets is much better than it's ever been. Regulatory oversight has pushed a lot of companies to stay in the private market. The tech community has shown that you can stay private for longer. As long as you have access to capital. So to the point you're making, obviously the two go together. I mean, if there's more capital available, you're going to stay private as well, because you never have to have that public moment. But this product has not been offered to either our institutional or our individual buyers, because we grew up in an environment where equity was private equity. But imagine doing what we do, active management of companies, but just with less leverage. And that's why I've said at various conferences, I see the future as equity replacement. I think our clients will own equity that is private rather than private equity. Just think of it as less leverage. They're going to be okay with no daily liquidity and not really knowing what it's worth and not being able to market appropriately at any given time and not being able to get a quote on it. I think we're not getting there today, but investors are realizing that for a portion of their portfolio, they don't need daily liquidity. What they want is good returns per unit of risk. They want diversification. But the problems you point out will need to be solved. You think they'll be solved? You know, I don't think they'll ever be solved in total. But I step back, if you need access to 100% of your money every day, you are likely not a good candidate for private investments. Where to come with Mark Rowan after the break? Things can always change. I never say never, but certainly the trend has not been in favor of public markets. Support for this program is provided by Chevron. The anchor offshore platform is utilizing breakthrough technology to enable us to produce oil and natural gas in the US Gulf of Mexico at pressures up to 20,000 psi, a new industry benchmark. Anchor is part of Chevron's plan to produce 300,000 net barrels of oil equivalent per day by 2026 in the US Gulf of Mexico, home to some of our lowest carbon intensity-producing operations. That's energy and progress. Visit chevron.com/anchor. Now two pigeons be moaning the fact you can stream direct TV satellite-free. These humans can stream all the top-rated national news channels on Direct TV, and now with no satellite dish. It's just in weather, sports, election coverage. Direct TV has it all, but something is missing. The satellite dish. What are you doing? I'm reporting the news. Back to you, Bob. Here's some news. You're a buffoon. Stream the top-rated national news channels. No satellite dish. Visit DirectTV.com, internet required. Top-rated news based on 2023 Nielsen ratings. Back to the public equity markets because the statistics you share and the viewpoint you share, I mean, is this a seminal problem with the public equity markets from 8,000 or 4,000? A lack of IPOs, to your point, dominated by a handful of companies? Or can things change on that front? Things can always change. I never say never, but certainly the trend has not been in favor of public markets. I do step back, and I have a very strong belief that private markets will be larger. It doesn't mean they will be larger than public markets, but private markets are growing faster than public markets. For many of the reasons I've decided. The IPO market, then, never really coming back. I mean, we talked about this year as better than last year, but last year was horrible, and we're actually surprised at how few IPOs there have been. Is that sort of going to be the rule? No, I think we will always have an IPO market, but there's not been a compelling reason, I mean, particularly as the market becomes more passive and more indexed. New IPOs generally are for smaller companies. They're generally not for the largest of companies who go right into the most popular indices. As active investors become fewer and fewer, who's following these smaller companies? Take me out five years then. What do the overall capital markets look like if your vision is realized? Look, I think public markets will definitely be the vast, vast majority of how capital is supplied. I think the market will be more passive. We've certainly seen the growth in passive strategies or semi-active strategies, depending on how you define the market, and we will see the large asset managers who are very low cost and are very efficient delivering data continue to grow. There's a handful of them. You will also see, in my opinion, the boutique asset managers, and this will shock you, but I think all of us in the alternatives industry are boutique asset managers, even the largest of us. Even as you approach a trillion dollars, you're a boutique. We are a fraction the size of the four or five biggest asset managers, but you keep going down the list. I haven't checked recently, but there are very few places where we feel like we're winning, but we're not in the top 25. Even for the others in our industry, it's exactly the same thing. Our business will be a larger business. It will be larger as a percentage, but we'll still be a relatively small fraction of the overall capital markets, notwithstanding the fact, we will be bigger. If I were to finish my tour of what I think is going to happen, I think the large asset managers who are primarily offering really efficient data are going to be larger. I think the boutique asset managers who are offering private markets exposure across debt and equity, replacement, and other things are going to be larger. I think the middle is going to have a more difficult time. I think the active management has struggled. There are some who obviously do it very well, and I think they're going to innovate. They have what we as the alternatives industry do not have. They have long-term relationships with clients, really efficient distribution, and our very low cost. There is nothing that we do that is very low cost at 9 West 57th Street, or for our pure set who are here in New York City. Our specialty and our pure specialty is originating good risk. Imagine if you started with a view of the world that public and private are both safe and risky, and you only need so much liquidity, we're watching unconstrained investors, investors who are not constrained by benchmark actually approach it in that fashion. More of my one-on-one with Mark Rowan in a moment. I think it was earlier this year doing another interview, not with me. You said, how could that be? I know, 100% of the interview. It should not have happened, Mark, but I allowed it. You believe the best investors are not in the US. It's kind of what you were quoted as having said. I actually heard you say it more or less. Why would you say that? They didn't finish the rest of the quote. The rest of the quote is because they are not constrained by benchmarks. I come back to it in a world where you are constrained by a benchmark, where you are compared to an index. Very few of the traditional managers are varying from that index. Everyone has a portfolio that looks pretty similar. You own publicly traded stocks, publicly traded bonds, and then you have 20% or so of your portfolio in things that are in private markets, and you create your alpha in private markets. Imagine if you started with a view of the world that public and private are both safe and risky, and you only need so much liquidity. We're watching unconstrained investors, investors who are not constrained by benchmarks actually approach it in that fashion. It is not a question of intelligence. It's a question of freedom to act. Get any CIO investment team out for an evening. I find that wine helps and ask them their view of where they could go and create value. There's a lot that they can do, but they are constrained. Do you think those constraints will eventually be relinquished? I think they will be very slow to move, but I come back to our industry. I look at the horizon of our industry, and I see demand coming from individuals. I see demand coming from family offices. I see demand coming from partnerships with traditional asset managers. I see demand coming from retirees. I see demand coming from institutions as they think about replacement. Those are all the sources of demand. That does not mean we don't need to be amazing at client service, really good at explaining amazing at education and produce good results because you serve clients at the end of the day and we are in the client service business. But what really captures my attention, given all those opportunities, how am I going to serve them? I have to be able to generate assets in an environment that allow me to produce excess return per unit of risk. My focus is on origination, and this is a change in mindset for our industry. Our industry started 40 years ago, and we were really small, and the capital we were given was really small, and so relative to the size of the market opportunity, we were peanuts. We were always in a race for capital, and so we developed a notion that our industry was actually constrained by money. To some extent, that's still true. Fundraising is a really important part of the business, but I look out and I think we will be less constrained by fundraising because of all of these other sources, and I think we will be more constrained by our capacity to originate. We have made our bet that origination is going to be where the key is. It's also where I think excess return comes from. I think as I said previously, I think the "liquidity discount" or liquidity premium, depending on your point of view, is going to become less and less. Well, as a point you've already made, I mean the need for capital for data centers alone and the power that they're going to need. Staggering, almost as large as energy transition, if not larger, almost as large as infrastructure, and again, all of these things are coming at the same time. We're going to have enough money? We eventually will find enough money. You think so? I think we will. Markets have a way of adjusting to demand. More to come with Mark Rowan after the break. You have to not screw it up while you're there, and you have to leave it better than when you were there and leave it in a good pair of hands. That's the job. Well, we've been talking obviously about your goals for the business and your view. You've been in the CEO chair for about three and a half years. I'm curious about your own journey in terms of journey and leadership. You laugh, but what you may have learned if anything along the way here and/or how you've changed doing the job as you've sort of understood it better. I laugh because we have a number of new CEOs in the financial services industry, and some of the longtime CEOs in the industry were very, very generous with their advice to me when I took over as CEO, and I try to summarize my learnings. I built a reputation on getting things done of doing things. It takes a while as CEO to realize that doing anything is not worth your time because if you do it, you have to do it again. That my job is really to make it easy for the rest of the organization to do it. In literary terms, I want people to paint my fence, and not only do I want my fence painted, I want them to be excited about painting their fence, and I want them to be creative about how quickly they can create that fence, and so I look at how I spend my time, strategy, which fortunately is only every couple of years, communication, trying to get our message out. Many times I'm so bored of saying the same thing, but I realize that new audience, new audience, and just because we live with it every day does not mean others do not need to hear it. Let's go back and forth. Let's continue to do this, but communication internally and externally. I deal with issues that come up in the business. They would find me anyway, but half the day is really culture. It feels like you have changed to follow significantly in these three and a half years. Obviously, just sitting and talking about it, but even in the culture, Apollo always had a reputation as being a pretty rough and tumble place, both internally and externally. Look, we are good stewards of capital for client, but remember, the business has changed, and the way these businesses are managed have changed, so without speaking ill, let's talk about the transition of the business. When you run a private equity firm, you make ten decisions a year. Everything else is ceremony. If you're making ten decisions a year, senior people can be in every decision that needs to be made in the firm, and the culture is around making those ten decisions about who's at the table, about whose voice matters, but there's line of sight to every decision that needs to get made. As our industry started to grow, many of the firms kept that same notion. They were going to do centralized decision making, and what happened? The line of people waiting for decisions got longer and longer, the quality of those decisions went down because no one is that smart, and the entrepreneurs got frustrated. It's just not possible to scale a business in the same management style. So how do we run the business? We're very specific on strategy. We're very public on strategy. We will hold an investor day, for instance, on October 1, the primary audience for investor day are 3,000 employees, and everyone else who joins Apollo on a go-forward basis. How else would they know what we're trying to do? So after you have a strategy, you need a culture where people are empowered to make decisions. Everyone says they want to swing the bat. Every time you throw them a pitch, they say, "Well, what do you think?" Encouraging them to swing the bat, making it safe to fail, recognizing that we are all fallible. As I joke internally, if I'm right two-thirds of the time, that's a lot, I just fail quickly and fix it, and I empower them to do the same thing to make a decision. That doesn't mean you shouldn't ponder a large investment decision, but most of the decisions we make each day on personnel, on specific clients or situations are not life or death or money issues. So we need to be better at empowering, and then what I'm focused on in particular this year, along with the senior team, wanting to win. This is not about finding places to grow. It's about choosing which place to grow to focus on. There's such a powerful set of tailwinds behind what we and our peer set do that our issue here is focus. Let's choose where we have a right to win. Let's choose big-scale markets. Let's try to get those big tailwinds right. Everything else will take care of itself. In the retirement services side of our business, completely different mindset. How do we widen the funnel so we are serving more and more clients in more and more ways, and then how do we rethink retirement, whereas there's been a massive amount of focus and innovation on the product side and asset management, very little true innovation in retirement services. There's a massive white space for retirement services innovation. So on one side, focus. Pick out of a number of things what you're going to do. On the other side, they've been so focused on execution. How do you open up the aperture so that they are doing other things? It's this two-speed running of the business. And you as CEO, I mean you seem to be enjoying it. Do you see yourself doing it for a number of years to come? I never had a better time. As I said, this is a great job, but I'm also mindful that you stay too long in a job. But how do you know? You just don't know. You just don't know. Do you have to rely on somebody to tell you? Well, let's hope not. We've sounded me like you're thinking about leaving tomorrow. I mean, you still got a lot going on. Tomorrow? This is weeks or months. We're talking years. We're talking years. This is a great gig. Yeah. Although succession, again, of course, is something you also need to be thinking about over years. You have to arrive well. You have to not screw it up while you're there and you have to leave it better than when you were there and leave it in a good pair of hands. That's the job. Up next on CNBC Leaders with Mark Rowan. You look at people willing to walk across the border to leave their families to come here and you look at whether it's the distribution of income or the ethnicity or anything else. Almost every group is better off today than they were 20 years ago. You know, many of our viewers and many of the people who are watching this or familiar with you will not even know you as the CEO of Apollo per se or one of the leaders in the financial services industry. They'll know you because you were so outspoken about anti-Semitism on college campuses, in particular your alma mater, Penn. Did you have any thoughts or concerns about being that public on that issue given your public persona as the CEO of Apollo? No. I really just jumped in and I think people appreciate moral clarity and us taking a stand. I say, you know, to most of the people who lead pieces of our business or to those institutions I'm engaged in, straddling is very unattractive. When you straddle, you try to be on both sides, you try to appeal to both, no one knows what you stand for. Your employees and your other participants in your community have no idea what they're supposed to do. Take a stand, make a bet. In this case, this was pretty straightforward. It was. And in our organization, I won't say that everyone agrees with me, but the hundreds of texts and calls and notes that said, thank you for the moral leadership. Some of them then went on to say, well, I may disagree with you here. I appreciate the clarity with which you spoke on the issue and the willingness to put yourself out there and to do it. And by the way, it doesn't stop at employees. Clients appreciate that you have a moral compass. They can agree or disagree with you. We try to, I try to, use the platform for those issues that are really, really important to me and that also are important to many of our leadership. And this just seemed like a blatant example of something that needed to be said. Have you given any money to pen sense? Not of the size and scale that I've had previously. I am very hopeful that higher education will reform itself. This notion on not straddling is roughly the same advice I've given to the leadership at the University of Pennsylvania. I continue to be the chair of the Board of Advisors of the Wharton School so they haven't gotten tired of me just yet. They may at some point, but I think academia is going to go through quite a bit of soul searching. We always think of campuses as having a bit of a protest mentality, a bit of a radicalism, but people forget as to what's happening on these campuses, in the 60s. And in other points in time, students, professors, they were protesting the administration. They were protesting something that was going on in the country. Now we have a situation that no one has dealt with before. We have students and faculty protesting other students and faculty. How do you allow an officially sanctioned bullying, harassment, and how do you allow it on this issue? What are the rules? Where are the lines? Where do these universities stand? Well, they say that this is a free speech issue and that's why they can't necessarily crack down, so to speak, on the right of people to say what they want to say. We have a long history in this country of free speech. We also have a long history of limits on the free speech. And free speech limit is where your free speech begins to terrorize and harass and restrict. UCLA just found this out. I believe other universities will find this out, that they have a duty to all of their students, not to some or not to those they agree with. Well, these kinds of cultural clashes are certainly a part of the upcoming presidential election as well. I am kind of curious as to, you know, I think you've been quoted as saying, neither one of the candidates is particularly exciting for you. I'm paraphrasing here. But do you have a choice that you will make? Certainly not with you publicly. I think that would be a negative. But I just start with, at the end of the day, we have very serious issues in our country. And we don't seem to be prepared at the moment to deal with them because we're in campaign mode. Eventually, we will need to deal with them. What's top of the list for you? For me? Yeah. The economy. Protection of the American dream. What's the American dream? The notion that if you come here and work hard and are talented, you can achieve something without regard to whether you belong to a specific ethnicity, group, or anything else. It's a notion of equal opportunity rather than preordained outcomes based on some preordained characteristics. These are the issues that resonate with me. It doesn't mean they'll resonate with all voters. But for me, I look for candidates who, and I'll continue to study. But it feels like we're going to have a very close election. Certainly does. Although, I mean, the economy, again, it depends on your view, but it doesn't look too bad right now. I don't think the economy is bad. So why is that a number one concern that? Economy is not the right way to say it. For me, it is the long-term notion. Think of what we've done over the past, not two years, four years, but 20 years. We have borrowed forward demand. We've essentially saddled the next generation with lots of debt. We, going back not too far, debt to GDP was a third. There was lots of room for investments. Right now, debt to GDP is one, 100%. Okay. Our interest costs will roughly that of our defense costs. Right. And so what we're doing is we're crowding out the capacity to invest for future generations, because we're consuming it currently. That bothers me. We are the luckiest people in the world, not just me personally for what I get to do, but you look at people willing to walk across the border to leave their families. Yeah. To come here and you look at whether it's the distribution of income or the ethnicity or anything else, almost every group is better off today than they were 20 years ago. It does not mean perfect. It does not mean progress is done, but the trend is in a very positive place. And I'd like to see that continue. That doesn't sound like you necessarily would support them. They deportation of 11 million people, not necessarily. This has been a special presentation of CNBC leaders with Apollo Global CEO, Mark Rowan. I'm David Faber. Thanks for watching. At EverNorth Health Services, we believe costs shouldn't get in the way of life-changing care, and we're doing everything in our power to make it possible. Behavioral health solutions that also keep your projections at their best, it's possible. Pharmacy benefits that benefit your bottom line, it's possible. Complex specialty care that cares about your ROI. It's possible, because we're already doing it. All while saving businesses billions, that's wonder made possible. Learn more at EverNorth.com/wonder. [BLANK_AUDIO]