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Let's get into some of these deals. I never set deals. You can talk about, can't talk about when to talk in broad terms about the appetite here for the capital that we need to provide to this particular force, this growing Force II datacenters, where it's going to come from and why, given a team, are going to fit in.
So I think it's, I mean, it's it's a huge super secular opportunity. There is an enormous need for funding and equity in data center. We, I don't know whether the $6.7 trillion for McKinsey is remotely right, but it's very, very big. And there'll be plenty of financing deals to be done and there'll be plenty of construction to be done. And it's true in the US, but it's true in other part of the world. And the need also to have the infrastructure and the energy will come after that. So, you know, we all talk about data center, but there's going to be a real rush for energy in terms of providing the right set up for this data center. And, you know, that's one of the reasons to be very bullish on natural gas.
And we've reflected on one particular statement from one particular taxi over the last 12 months that I think was really quite important. It was last summer, it was the alphabet CEO when essentially he said that the greatest risk here was under-investing and not overinvesting. And I wonder how you think about that from the perspective as an asset manager when you've got a group of companies that are willing to run the risk of overinvesting. How do you think about the risk around it? In terms of, I think what we will do is we will look at every single deal and we will said this makes sense for us and this may make less sense. And I think I think we, I think one of the one of the strengths we have is to be to be pretty pretty focused on relative value and sort of thing that, you know, there may be a fantastic deal to be done, which would be very, very good for investors. And then we'll look at the next one in the full light of day and decide whether it fits our portfolio and whether it is something we want to do.
I think it's important to build on this that Mark Rowan said recently. We are what we originate when it comes to the private markets. You are what you originate. It's quite labour intensive. It takes a lot of work when you think about scaling this and building this as an opportunity. How difficult is it in practice? I think we, I think we have built it differently from Ark. We have built it based on our experience in fixed income, our experience in relative value, in the history of 54 years. In looking at all sorts of credit, we have 55 credit analysts to looks at every single segment of the market. And I think we look at it from a value standpoint. Does it make sense? Is it something we want to do? We shouldn't be originating for the sake of originating and there's a lot of money. It is a lot of money coming to this market. You know, some sectors would be very attractive and some will be less so. And I think you want to be very much on top of this and say, I want to do this and I want to do less of this.
There's a concern, especially as CEOs say it's more important to be throwing enough money at this rather than being underinvested. And then you have people like David Hyneman of Green Light coming out and saying the numbers that are being thrown around are so extreme that it's really, really hard to understand them. How difficult is it to invest in a market where people are throwing spaghetti at the wall to try to understand what's going to stick? And there is a feeling of excess that continues to bubble up around me. So my friend, my friend Richard Thaler, who who is a an economics number pricing consult for us, has this to say. He says, you know, when you make a long term prediction, the degree of humidity and the standard deviation around the estimate should be very, very big. So when I want to hear an estimate like $6.7 trillion, I don't know what to make of it. David may be very well be right, but we'll take it one step at a time. I think six months horizon is about all we can do in terms of the demand. And then, you know, the environment may change dramatically. You know, there are business cycles. Sometimes things are cheap, sometimes they are expensive. If there's a recession, all of a sudden spreads were widened. Company may revisit what they're trying to do and so on and so forth. So this is the difficulty.
How do you have a six month horizon when a lot of these investments are ten year buildouts, when they're ten year usage, when they are labor intensive? And infrastructure projects by nature are a lot longer than six months. So in terms of committing capital and in terms of finding the right opportunity with the right amount of time, we're totally fine to have a very long term horizon. What I'm saying is I'm saying making long term prediction in terms of how big the market will be, it's very hard. I think you have some visibility over the next six months in terms of what the demand is, what the real demand is, and whether that slows down or whether that accelerates, you just don't know. And I think I think you've got to have, I think you have to be very humble about this season. Just say, look, we take it one step at a time and see what the market gives us. And by the way, there may be other opportunities which are more attractive. You know, you look, for example, in an asset backed finance business aircraft leasing. Aircraft leasing is incredibly interesting. And then nothing happens for five years and then it becomes very interesting again. And you got to constantly say to yourself, are there better opportunity for me to deploy money? And what do I want to do? How do I think about the risk? How will I get out? What's the right risk-return profile?
You made a headline recently. Wanted to ask you about it. Private markets haven't been tested. Can you build that out a little bit more? What did you mean when you sent that the private markets haven't been tested? Well, my my partner, Dan Iverson, and or CIO, of course, Mohit Mittal, have the chart and we will check the number about 20 times because we kind of didn't believe it. But it shows the return on weak single B, which is a reasonably good proxy for direct lending. And what you see is you make money. Because the yield is higher. And then there's a recession and then you lose it all. And so I'm old enough to remember to remember 1991 and so that, you know, there's a recession which came out of nowhere from, you know, essentially SNL having too much yield. 1997. The world is absolutely fine until there's an Asian crisis and then you have healthcare. But then things become very cheap. And so you got to remember distinctly and and we have been in the period since 2009 of exceptionalism, where you have had very strong equity return and very strong higher return. If you believe this is going to this is going to continue for the next 15 years, then I think you should have this imposition. But it may not be the case. And I think I think we bring that and the data set the data.
Do you see parallels between now and those periods? What I think was the initial condition where we are right now, a search that equity markets are expensive by any measure, they may go higher because momentum is strong and credit market are tight in some part of the of the of the spectrum. And I think that's that's the reality. And look, we've been in a period where things things are expensive for a long time. 2005, 2006 were such a period where things remain expensive and became more expensive and then something breaks and then all of a sudden you have you have a lot of work to be done. Money. Let's continue the conversation. We were having equity markets very close to all time highs. Credit spreads near multi-decade ties on investment grade, high yield spreads and at the time of the year. And yet we've got a Fed official saying that we're excessively restrictive year across a range of funds. You look across markets all the time in the economy with the team. Do you see any signs that are excessively restrictive? What I think rates are very high across across the globe. Right. And I think I think, you know, part of the reason why I get up so early and happy to go to work is because, you know, the opportunity has never been better. And, you know, we talk here about the US, but look at the UK. The UK where you're from is ten year rates are four and three quarter. Australia looks really, really attractive. So when we think about the opportunity in a way, yes, we do expect the Fed to cut how much they're going to cut next year remains to be to be proven. No one knows what's going to happen to the labour market, but the reality is the opportunity in terms of global fixed income is very, very big and the opportunity to add alpha is quite high.
I'll tell you a funny story. We have a opponent in Tokyo called the Myanmar Senate. And, you know, for the longest time there's not much happening in Tokyo. So you sort of call them and you have metro with them and not much is happening. And then all of a sudden the Japanese sneaker market becomes super exciting and then there's a lot to do and there's a whole generation of people who have disappeared because they don't do it anymore. And so you have a labour market which hasn't supply fixed income investor because there was nothing to do for the longest time. And so what I think is interesting is the difference of view. The difference of opinion is also a source of incredible alpha. And, you know, if you want to think about why performance has been quite good, it's partially because the alpha that is being given by the market is quite good. I think it's interesting that John was talking about the Fed and you talk about the international sphere and I think that that's really telling about what people are looking to for that alpha, for that incremental extra yield. Are those Japanese investors staying in Japan right now and not coming to the U.S. for treasuries, even if the Fed cuts? No, I think they're very big investors in in US asset. And remember, one of the opportunity everyone has is to buy foreign assets and swap them back into dollars or slide them back into yen and so on, so forth. And so you can actually buy synthetic credit, you can buy synthetic dollar exposure. But for us investors buying, for example, JGB and selling forward the yen into dollar and having a different credit risk was JGB than you have with US dollar. And so there's a lot to do now we do that a lot in short term and longer term in terms of adding alpha. But all the time you can do this sort of transaction and sort of mitigate your exposure or increase your exposure or have different risk profile. That's a much smarter way of looking at it. I'm looking at this as sort of a blunt instrument, sort of dumb. Do you like international more than the United States? Really wonderful nuance that has an enormous amount of money to put to work and and has is a nation of savers. And so it is in this, you know, the reason the thing that I always say is you need to put your money somewhere. And the reality is the US is the only place where you can actually put scale. And when you want to think, for example, of the Australian problem, there was a whole delegation last week from the UN, from Australia. They need to move capital away from Australia because they are a nation of savers and the Australian market is not big enough for them and so they need to pivot to. For a long time Japan had to do the same thing. They didn't have you. To your point, the stories change. One thing we're trying to track is whether the Japanese bring the money home, whether we see this great repatriation where it could leave markets vulnerable, where typically they deploy that capital. I'm thinking of setting European markets, the US as well, using any of that flow story start to turn out? No, not so far. Would you expect it to change? Honestly, not really. These things are very, very slow to move. And the reality is people keep on saving in Japan. And so it may just be that the marginal dollar goes into JGB, but the credit market is very underdeveloped. And if you want to buy, for example, single exposure, you're much better off going to the US.
The conversation we had back in April was maybe the decline of US exceptionalism. The money was going to leave. It's going to go elsewhere. I want to understand where you are now, six months later. What did you see at the time in April? Did we start to see that decay? Click into US exceptionalism and are we back to where we were at the start of the year, just six months later? So I think we we were dollar underweighted. We literally just square off for position. We still very much like emerging market currency. We do like Australian dollars. There's plenty to do. But you know, there was there was a short dollar position to be had and you know, it moved 10%. And I think we just started to squirrel position.
You're talking a lot about rates and the era of income. We've been talking a lot of that just based on the fact that yields has been higher. We're talking about private investments through infrastructure. You're not mentioning equities. And this is a time when people are on the fixed income. I'm a fixed income. No, I know you have sympathy with us, but I'm wondering how much a higher rate regime limits future equity returns. We used to talk about that. That was before three years consecutive 20 plus percent returns. I mean, at what point will it constrain the equity side of the portfolio, even though some people are wondering what kind of buffer bonds really provide? Well, the PIMCO view is that equity return in the US is going to be 6% for the next three years or something like this. I mean, we, you know, we look at Cape valuation, you know, it's it's trading at 28 times earnings. It looks really, really high to us. We understand the excitement about the hyperscalers. But if you look outside of the hyperscale life in industrial America isn't great. I mean, top line is not is not is not growing. And one of the question that we don't know is the impact of tariff and what will happen in corporate America in terms of how they're going to deal with either passing on prices or diminishing margin and so on and so forth. And we don't know that. And so there's a whole leg of the of the of the equation that we haven't really seen.
Stock investors have been trying to output each other this morning. And Max Kuttner was on earlier of HSBC and he was saying, look, he thinks that the Fed is making a policy error by cutting more significantly, but they're along for the ride because it's just going to inflate the prices of assets significantly. They want to gain from that. Do you agree with that assessment? Well, I haven't. I haven't listened. I haven't listened to to him. So I would not be a good initial point. I mean, I don't I don't I don't know. I have we have a lot of trust in in the Fed in terms of them doing the right thing. And I think that the Fed usually doesn't know much more than we all do. They look at the same data. And so the decision is a very well thought out decision where they will decide what to do with the condition that they are being given. And if, for example, we were to see a very bad inflation print, it would be very difficult for them to cut. Now, they may argue that they have to look through inflation and so on and so forth. But the Fed is a very rational actor in a market and I don't think anything's going to change. And the same goes for the central bank in the UK and the ECB and so on and so forth. And I think I think once you in the job you behaviour changes also in terms of how you think about what the right thing to do is you alluding to the the new feature next. No I'm just, I'm just saying it's, it's, it's like being a Supreme Court justice. You know, it's a very important job and I think people take their job very seriously. It's a good change. Next year there's going to be a new Fed chair. Do you expect to be to see any daylight between a Fed chair selected by appointed by this White House and Chairman Jay Powell and his current leadership? Do you know, I. I was reflecting on this. And what we're talking about is I mean, every single Fed chair has been, to some degree, a political appointee. And, you know, there's been a history of very good Fed chair since the burns and the Nixon presidency. And I see no reason why that would change the list of candidates we've seen so far. We've said a repeatedly very credible names on that list from this White House and the Treasury. And it is it is it is it is important to remember that it's in everyone's incentive to have a very credible Fed chair because the market would not like a non credible Fed chair. You're running. I was defensive. No, no, he didn't answer. Yes, he's confirmed. I don't think he wants that show. And it's good to see you. Thank you. So good to see you. Thank you for do this to do for next time, okay. Absolutely.