Blackstone Inc. Barclays 24th Annual Global Financial Services Conference

Hey, Ben. Great to be here. Nice to see everyone. All right.

Hard to see everyone. Yeah.

Well, I would first say, we are obviously in the midst of a corporate earnings boom, I would say. There is lots of attention, of course, on stock prices, but maybe not enough on the underlying context, which is this extraordinary earnings environment that we have been in. I think the second quarter saw the fastest S&P earnings growth in five years. I think 2026 right now is projected to be the best S&P earnings growth year in 25 years, if you exclude sort of the bounce back years after the GFC and COVID. The massive investment in digital energy infrastructure that is taking place is, of course, a historically powerful engine, which we are obviously experiencing. We see that now diffusing further into the economy. Despite the scale of the AI build-out, these investments so far remain less than 1% of GDP.

That is well below prior investment cycles, starting with railroads all the way through the dot-com era, which I think were more like in the 2%-5% of GDP range. We really see this in our companies. Underpinning the earnings momentum is really robust margin momentum. That is while companies are mostly just scratching the surface on AI-driven productivity gains at scale. The S&P EBITDA margins have expanded about 500 basis points in the last 40 years to the mid-20s or so. In our own portfolio, we have seen margins expand around 700 basis points on average over that same time period, up to the sort of high 30s. While it is a little bit uneven, we see it as a pretty strong environment for companies to grow and make profits. You asked about the Fed.

I would say in terms of the Fed and path of rates, the market certainly seems to have made up its mind as to what is going to happen tomorrow. In terms of the actual data that we see and focus on, the reality is core CPI, excluding shelter, is at 2.0% year-over-year, 2.0% through August. Real-time market rent growth measures are also in the 2% area. Labor markets are in pretty good balance, which we certainly see in our portfolio. In a vacuum, based purely on the data, it is not clear a hike is absolutely called for.

But we are not in a vacuum, and in the context of the criteria laid out at Jackson Hole, and given the intensity of market expectations that have built up, it does feel likely that we will have some form, to me, of a dovish hike, whether those words are used or not, or conveyed, with the desired effect, I think, importantly, of keeping the longer end of the curve in check, which drives cost of capital in the real economy, importantly. So, I do have high regard for Kevin Warsh, and we will see what happens soon enough.

Well, I would start with the overarching notion that to us, it has never been more important to have scale of capital and breadth of platform. On deployment, there is lots to do and extraordinary opportunity if you are in the right places. So you have these enormous markets globally that are actually short of the capital required to support their growth. And that is where Blackstone, in our view, has a distinct advantage. We are a strategic capital provider at a huge scale across a wide array of strategies. And so specifically, obviously, in AI and related infrastructure areas, in power and electrification, but also life sciences, liquidity solutions for the private markets themselves, including especially secondaries, private investment grade credit, including corporate solutions. And from a regional perspective, Asia, particularly for us in India and Japan.

70% of our largest investments over the last 12 months have been in the areas I just named. And so if you are active in these areas, it is a great time for deployment. And it is probably a sharp contrast to maybe a traditional monoline manager built around a narrower set of focus areas. And then on realizations, which is the other side of the same coin, again, I would say maybe for the typical traditional private equity firm, regular way exits have been more constrained. You are seeing that in the overall sponsor volumes, as you mentioned, which have recovered more gradually than the broader M&A market. But the areas we have emphasized have, I think, positioned us more favorably. So I would say two dimensions. One, IPOs. We have completed nine IPOs in the last year, and five since May. Larger scale, high-quality companies are what the IPO markets want.

That has favored our portfolio construction. That has in turn led to more and more of our carry receivable. That is public and liquid. About a third of our corporate private equity net accrued performance receivable, NAPR, is publicly traded. As we continue to sow more seeds with six IPOs currently on file globally, that is going to create more public market cap and continue to grow what I would call our liquid NAPR. I would also highlight our energy private equity business has been exceptionally productive in investing in the power and electrical equipment area, and generated a really remarkable performance, doubling its NAPR over the last year to over $1 billion. I just step back and say the key question on selling assets is really, are you exposed to the places the world wants?

Fortunately, we think we have leaned into many of the right. Overall, I think it is a constructive environment for our firm. We think we are positioned well at the intersection of megatrends, and that creates a great flywheel in terms of transaction activities we have learned throughout the history of our business.