Matt Wolf
speaker
221 appearances
14 recordings
2 series
first heard Jan 2025
last heard Jun 2025
Matt Wolf’s voice in public audio — every appearance, attributed to the second.
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Appearances
Yeah, thanks, Chanel. You know, as of this recording, we're a day away from the May non-farm payrolls report coming out, which is always, this one's going to be very much watched, I think, as we all try to ascertain the degree to which the economy and spending is slowing down, consumer spending, which really drives economic growth. is slowing.
We had a very lackluster, I think, maybe to put it nicely, April consumer spending report, 0.2% gain, which was down from 0.4 and 0.7% in March and February, respectively. The job openings report that we got yesterday, Wednesday, as of this recording, was not even just lackluster, it was bad.
There's always not often a direct correlation, though, really, between the openings and the nonfarm payrolls for a lot of different reasons. So really looking forward to that tomorrow. The watermark there is about 100,000 jobs. That's what the economy needs to add to sustain growth.
But I would encourage people not only to look at the May number, but also look into the report at the revisions and see how the prior months may be revised up or down, which is something that happens in every report. The Bureau of Labor Statistics does it each and every time that they release new nonfarm payrolls reports. So the fact that there are revisions is not something to be concerned about.
But We do expect or I expect to see kind of a reduction in prior months and we'll see the magnitude of those reductions as we look ahead towards a summer and fall plagued with indecision in Washington and uncertainty around future tariffs. We're all just trying to get a sense of what does the future economic demand look like? What does that mean for our sectors?
And even health care, where I focus, is certainly not immune to these macroeconomic pressures. It's less cyclical than other industries, but still affected by the economic conditions, if for no other reason than more and more patients we're seeing are having to decide between paying the high cost of food, paying the high cost of rent, or paying the high cost of medical care. And those decisions
On a micro level, we'll have macro implications across healthcare. So it's all very connected and it starts with the top line consumer demand. And that's what I'm really watching along with many others.
Thank you.
A lot, I guess. I'm not even sure exactly where to start. Like many people, I started to watch treasury auctions and pay attention to those. Just, I guess, overall, the level of
uncertainty in global financial markets as bond investors assess in various governments, including the US's ability to pay for their obligations and what that's doing to interest rates and what that's doing to cost of capital. And I think for private equity, what is really interesting, and I think we'll have some interesting deal flow implications is
You know, certainly interest rates will remain higher for longer, which I don't think is news to many. But, you know, as we look into the actual what that means for the operation of these strategies, you know, I talk to more and more sponsors who are are doing the math, doing the analysis and saying, you know, the the the add on game. is less appealing.
Certainly we'll do add-ons when it makes sense, maybe for a capability rather than a geography or something, but we're looking for de novo growth. And I'm really watching what that means on the lower middle market as the demand for some of these businesses, especially even founder-owned businesses, reduces. And that will continue to bring multiples down
And I think that'll create challenges for folks looking to exit in the middle market, but particularly in the lower middle market, a lot of founder-owned businesses, older Gen X, baby boomers looking to retire from the business they built over 40 years, not getting the multiple they were looking to get, might have implications on downstream healthcare demographic trends and ability to spend for senior care, things like that.
this global going from 100,000 feet down to 10,000 feet, but really looking at the interplay of the global financial uncertainty, what that means for rates in the U.S., and how that's playing out in real time as sponsors evaluate add-on acquisitions versus de novo.
And this is going to have effects on the wealth transfer, the so-called silver tsunami in the U.S., and it's really – there's a lot going on, and it's a very – Very interesting time, I guess, to be a private equity sponsor trying to navigate all of this.
Absolutely. And we're seeing that in the way that new platforms are financed, right? I mean, lower leverage, bigger equity checks, not only because of more restrictive debt covenants, but a de novo growth strategy almost by definition is Except for some industries, right? Certain industries, certain sectors, de novo growth can still require huge capital up front.
But for many industries, it really doesn't, right? It's a slower play of capital over time. You don't need to lever up as much. So we're seeing that sort of debt discipline manifest itself.
there too so it's changing the way i'm talking to bankers the way they look at deals the way they underwrite deals the way they think about deals it really is a a fundamental change and then you know everybody that's sort of playing down from the big question of you know how sustainable is a a six percent of gdp fiscal deficit in the us and what does that mean going forward not not just for this whole period but for the next fund and the fund after that what what does that mean as we look down
down 5, 10, 20 years in the future.
That's exactly right. I mean, not only a recession, it's also politically unpopular to pay down the debt. And, you know, we've seen through history that a six percent fiscal deficit happens. Right. But it doesn't. Often, or maybe even ever, or very rarely, I'll say, happen when we're essentially at full employment. So where is the growth going to come from? What is the growth story?
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