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Chapter 1: What is the main topic discussed in this episode?
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Subject to credit approval, Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch. Terms and more at applecard.com. Bloomberg Audio Studios, podcasts, radio, news. John Rogers, founder, chairman, and co-chief executive officer of Aerial Investments, joining us here at Bloomberg Invest. Thank you so much. We've got a lot going on. We appreciate your patience.
I want to go back to something. How are you, first of all? Doing okay, dealing with all this volatility and craziness. Well, is it crazy? I love talking to folks like you. You guys have been investing for a long time. You've seen a lot of market cycles.
How do you kind of factor in this one and the stuff that feels like every morning we can wake up and there can either be something out of Washington that really impacts the trade and there are days it doesn't. So how do you kind of work all that into strategy? Well, I think of the 43 years. The noise, if you will. Yeah. I mean, the 43 years of Airedale, we've had lots of ups and downs.
The 1987 crash, of course, 08 and 09 financial crisis. But this is the first time we're seeing like they're sort of we're making this crisis happen. You know, making a conscious decision to make policy decisions, whether it's the tariffs or now whether it's the war. And that's causing all this drama and all this angst. And that's something that's unusual and different for us.
How do you trade that? Well, I think on the one hand you trade it is that we know that President Trump cares about the markets. He sees that as a scorecard. So the one positive thing you can pluck out is that eventually he figures out a way to adjust to get things back to a calm state eventually.
But you just hope he doesn't go too far, you know, one more time and stretch and do something that really he can't pull it back. I'm curious about your view on this as it does not relate to markets. It sounded like you were saying that we've entered a new paradigm, at least with the decisions that this administration is making.
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Chapter 2: What insights does John Rogers share about the current economic climate?
I'm wondering how you're looking at that. We understand what the president wants to achieve with tariffs. I would not say I understand what he wants to achieve right now. Yet, with Iran, we're still waiting to hear exactly what the U.S. wants to achieve there. But how do you view this, not necessarily with regard to markets?
What I worry about is that Iran does something that's extraordinarily painful for America or another part of the world. As they fight back and feel like they have to defend their honor, they'll just do something that we'll all have a hard, hard time living with over the long run.
So we all saw what happened when the World Trade Center collapsed and all the trauma and drama and extraordinary heartbreak from that situation. And you just hope that nothing like that happens again ever in the United States or in our friendly countries. I've got to say, I went right there after this happened, and that's what I thought about retaliation.
Any of us who were here in New York during 9-11 remember it like it was yesterday. And it does make me a little scared, and I'm not an alarmist, but it did make me think, okay, what's the retaliation of all of this? We're going to set that aside for now. We can shift back to markets, Carol. We can shift back to markets.
Well, I want to go back to something you said actually in January, and I was doing some read-in on this. And you said the U.S. will likely slide into a small recession at the end of the year. Stock market will drop as average income consumers struggle with high living costs.
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Chapter 3: What strategies does John Rogers suggest for navigating market volatility?
Um, and this was, I think at the executives, uh, club of Chicago's annual outlook event. And you talked about the Dow maybe declining 15 to 20% this year. Um, but it, and it also got into this dichotomy, which I think really increasingly, I know it bothers us wealthy consumers doing okay. So many other consumers are not. So talk to me about that.
Do you still feel this way about maybe we, we see some kind of small recession? Um, I still do. I've never seen anything quite like it. I know a lot of people have been talking about this, but we're right. When people are still going and spending money on cruise ships or going to Las Vegas for experiences, doing things that are really the wealthy people can do. Right.
But the average American is really, really struggling. I go to McDonald's pretty much every day, and you see how much it costs to buy your drink and your french fries and what happens, and you realize that ordinary Americans are having a hard time covering the cost of just day-to-day life in America. I think that's a real challenge for our economy, a real challenge for certain industries.
The so-called K-shaped economy is something that we talk about a lot and we think about a lot. Are there policy proposals or are there policies that the U.S. government could enact that would make the gap between the very wealthy and the poor? Or that would bring back the middle class, I think, is something that we talk about a lot, too. Is it something that you think the free market can solve?
How do we get out of this? I think the free market will solve it. America always goes to extremes, and things ultimately get back to normal. As Warren Buffett says, our capitalist democracy is the best system ever invented.
And so we'll ultimately put the right people in place, governments will shift and change, and people will be able to get to a place that I think will bring back a better life for folks from middle America. And I think that's really, really important.
I think keeping interest rates reasonable, keeping inflation low is really, really important, creating the other tax policies that are fair and equitable. So I think we'll get there. It takes a while, but we'll be on our way back, and I think we're in that process now. So you're optimistic? I'm optimistic that we will create the wealth gap in our country will start to diminish over time.
So when I look at, I want to talk a little bit about the investment environment. We saw broadening out certainly in terms of where investors were placing some bets here. Where do you see some mispricing within the market where you think that that presents some opportunities for investors? I think right now the financial services companies are what I think have gotten to be extremely cheap.
They've gotten very, very worrisome about what's happening with private credit, as we all know, and you guys are reporting on and talking about all the time. But I think it's overdone. I saw David Rubenstein speak last week. He was interviewed by our chairman, Charlie Bobrinskoy. Yeah. You know, his optimism about Carlyle, I thought, was striking.
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Chapter 4: How do political decisions impact market dynamics according to John Rogers?
The nifty 50s during the 70s, the nifty 50 stocks. You saw it during what happened in the go-go 20s. People just fall in love with the sector and think it's just going to go up and up forever, and the small stocks get neglected. They get misunderstood. They're not as well followed. And so opportunity gets created because everyone's falling in love with this hot, shiny, shiny dollar out there.
And you think that's happening right now? I really, really do. Up until most recently. I mean, I've seen the Palantirs of the world and others have finally started to have some of their comeuppance. It reminds me of what happened during the turn of the century when the Internet bubble finally burst.
So you start to see some signs that the world is coming back to rationality and people are realizing some opportunities in their smaller names. When it comes to the investment environment, are you anticipating that investors need to be thinking about it's going to be a higher rate environment going forward, and so you've got to think about that and what it means in terms of valuations?
Well, I think I'm more optimistic about rates. Meaning they'll go lower? I think they'll go lower. Okay. I really do. I think that the new Fed chairman is clearly someone who's going to want to make the president happy. He's going to do everything he can to bend the will of the Federal Reserve to... Doesn't that make you nervous, though, if it's not fundamentally based?
Long term, it makes me nervous. Okay. But I do think in the short to intermediate term, if we keep rates lower, it's always good. Low rates are always positive for the markets. And, of course, some things will come back to haunt us because of it. Yeah. But I think that's more longer term.
In the short term, I think this will be something that will help the market stay where it needs to be and be sort of a tailwind for the markets. It doesn't sound like, you know, one of the narratives it felt like we were coming into was, I mean, think about Biden before, President Biden before President Trump won the election. Like, the U.S.
was the best place to invest when President Trump came in a year ago. Again, like, the U.S. market was the place to invest. And then we were just thinking about the U.S. being uninvestable. Like, that became a narrative. And to a certain extent, even though the U.S. markets did well last year, there was a lot of underperformance compared to global markets for 2025.
Is that something you think a lot about or that we are seeing investors start to diversify away from the U.S. market? Or that's impossible because of how deep and how liquid the U.S. market is? I think it's really, really hard to diversify away from the U.S. markets in any meaningful way.
We still have the deepest economic system, the most successful economic system, the best universities in the world. We're the United States of America. And even though there's been all this drama and trauma right now, ultimately people want to come back to the country where you can count on
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