Transcripts For BLOOMBERG Charlie Rose 20171202

This is the show where we delve into the regulatory challenges and opportunities for Financial Markets around the globe. But first lets get a round up of the news with sebastian salek. Sebastian President Trump has won the latest round of the head of the Consumer Financial Protection Bureau. Thateral judge has ruled Mick Mulvaney can remain acting head of the agency. By thected a bid bureaus deputy director. She is likely to appeal. Wells fargo is facing new problems with its regulator. The officer of the comptroller of the currency because of improprieties in wells fargos mortgage operation. President trump has nominated sometime critic of the Federal Reserve to be a governor of the central bank. Hes a professor at Carnegie Mellon university and a former research director. Earlier, he told congress that the fed had failed to secure the credibility of its inflation targets. The bank of England Governor Mark carney has indicated the u. K. Will review bank bonuses after britain leaves the eu. He says the u. K. Will reexamine a number of roles while aiming to maintain a high level of standards. His comments come as u. K. Antie. U. Negotiators reach a deal u. K. And eu negotiators reach a deal. Has rallied as much as 20 from the sudden selloff. The Digital Currency plunged after hitting an alltime high of 11,000. Its powered by intermittent outages. And fed chair nominee Jerome Powell told lawmakers he is concerned about bitcoin affecting the Central Banks ability to manage the economy. He said the Federal Reserve must monitor the cryptocurrency and its underlying. Technology. It has gone up a lot in the but from ourso, standpoint cryptocurrencies are something we monitor very carefully. Block chain may have significant applications in the wholesale payments part of the economy. Sebastian and banks in the eu will have to provide Customer Data to fintech. The European Commission issued a technical standards that set out how they share data with thirdparty payment providers. The rules flush out the updated Payment Services directive. And thats a regulation news roundup. Nejra thanks, seb. The mifid clock is ticking before the new rules come into effect in europe, and we have been talking for months about how it will affect the buy side and sell side. Says firms expect the source Less Research from the sales side under mifid ii. Gary baker joins me now onset. Welcome, delighted to have you with us. Its a really interesting report talking about the new paradigm for investment research, and in this survey you did, most of the respondents sia they expect to absorb Research Costs. Did you see any difference in what they were saying depending on the side of the firm . I think it is a phased process, boat where you have got run efficiente to markets, they are going to be able to absorb costs much more easily than smaller fund managers. That came through loud and clear in the survey. It stands to reason that the scale economies you can drive through large Asset Management firms will give you more flexibility. Were talking about what happens on january 3, but i am sure these models will change over time as we see with the experience is. Nejra but how could that change the industry . Does that put the smaller Asset Managers at a competitive disadvantage low . Potentially it does. I think certainly there has been some concern about if you are not able to physically pass on the cost of research, and forming new Asset Managers will be quite tough, because your hurdles to start up become that much greater if you have to factor in Research Cost as well. So are you going to lose that entrepreneurial end end of the market . And secondly, if you are a specialist, and your specialist Research Costs are higher largecap, smallcap, midcap, you can differentiate costs. If your specialization is emergingmarket smallcap, your costs will be quite high, and whether you will absorb yourself forget your client to pay is a big decision. Nejra any sign of whether there will be winners or losers in the type of firm . Pension fund versus hedge fund for example . It is too early, to say and i think it is difficult. To generalize in all of these pieces of legislation, its trying to find out what the unintended consequences are. The intended consequences are going to transparency, fairer playing. Field. That will benefit smaller Asset Managers trying to compete. But as ever, the devil is in the execution and the details, and can use source your sources of information and research . Cost, in terms of the there were some interesting differences you saw in the difference in the cost of fixed income and research. Fixed income has been a big issue in a lot of this, because the Equity Research model in the u. K. Is relatively wellestablished, and costs have been driven down really consistently over several years. Fixed income has never had a cost for research. The cost has always been contained in the spread. The idea that you have to pull Research Costs out is that much more difficult, and people who genuinely struggle with how to orce that, is there a price, is it still being contained within the spread rather than physical dollars . Nejra is there a reason the Equity Research would cost more, because there is more potential to generate by covering stocks that are less liquid . Yes, it is. In some ways, there are greater differences. Whenever you were talking equity stories and risk stories, there is probably more capacity to have differences of opinion, whereas fixed income is going to go largely macro input. That is the other area of research that we havent got our minds around yet, how will Macro Research be priced . If you havent got a specific stock recommendations or bond recommendation. Is that substantive research, or is it more informational . That classification is quite important within the mifid rule set. Nejra and in your survey, you were saying that 78 of respondents on the buy side expecting to resource Less Research. Who was going to lose that most . I fear it is the middle ground. I have seen some of the large investment banks finding a way of coping with this, and i think some of the boutiques will do quite well, because they can champion their specialization and expertise. It is the middle ground where you have had investment banks, smaller investment banks, trying to compete with their larger competitors, and that is always the tough ground whenever you see change in legislation. Nejra it is definitely a big change, and what i loved about euro port is you have a word cloud of commentary from people overall,buy side, and it was quite negative. Thoroughly negative. [laughter] nejra but the conclusion of the report is that in the long term it will be quite positive. How do you square that circle . I think you are talking several questions. One is preparedness to a massive piece of legislation, and i think theres still an awful lot to get done, finer details to get finalized. I think the immediate problem is quite a negative one, because whenever you ask people to change their Business Practices on a potentially huge scale, there is nothing positive. But as you get into the execution and implementation, that is where you start to see the benefits, and the benefits really could be two years away, maybe three years away, when you start to see slightly more efficient markets are better quality of research overall. It does seem somewhat in the distance, a bit like a brexit debate. The immediate change, i dont fancy this, my view is negative, but longterm i cant get my mind around that as to whether it will be positive or negative, so i will deal with what i see before me. Nejra sure. A brief yes or no answer, will the rules on research make it harder to generate alpha . No. I dont believe they will be. Down to the quality of the Asset Managers. Nejra all right. Mr. Gary baker from cfa, great to have you. A reminder, the Parent Company of Bloomberg News also provides mifid iirelated solutions. Coming up, our u. S. Regulations tough enough . Jerome powell was asked that during his first confirmation hearing in front of the senate. We will take a look at what wall street should expect, next. This is bloomberg. Nejra this is Bloomberg Markets rules returns. Im nejra cehic. Lets turn to the u. S. Jerome powell was quizzed by senators in his first confirmation hearing as nominee for chair of the Federal Reserve. He was asked by Elizabeth Warren what changes he would make to doddfrank and other regulation for taking on the role. We can make a more transparent, more efficient, that sort of thing. Other things we can do, more tailoring, and that is what we are involved in right now. As i said, the Financial System is quite strong. Tailoring is one of our most fundamental principles. We want it to be transparent and we want to err on the side of caution. That, itistent with doesnt help anyone for banks to waste money, to spend more money than they reasonably need to end spend to accomplish these objectives. There are a lot of problems we need to address and the banking system. I think we have had eight years of writing new rules, and i cant really think of a place where we are lacking an important role. We fill that with the rules we need, and its a question of supervising. So of all the rules the fed has issued during your time, you have been there for five years, on capital and leverage in liquidity and stress tests, you dont think a single one should be made tougher . Honestly, i think they are tough enough. Nejra tough enough. So will jay powell be a friend to the fed chair or should wall street expect more of the same . Joining us, mason d. Great to see you. You heard it there, mason powell saying the rules are tough enough, and he kept talking about tailoring. What does that mean . What it means is if you are a bank below 250 billion in assets, they will focus on you for regulatory relief. What he is talking about specifically to stress testing in capital annual review. Dont be surprised if the said take steps early on to tackle the stress testing, making it more transparent and open. If you are a larger bank, jpmorgan, citigroup, the fed will do something for you, but i think you will be living under the company of the doddfrank regime. Nejra yeah. Two priorities came out of that hearing, the first being a rethinking of bank capital, the second being the volcker rule. What progress might we see on these priorities . Capital rule, two things. One is the leverage ratio, Jerome Powell has spoken about the leverage ratio at length and has said that the way it is currently constructed may harm derivative clearing. It wouldnt be surprising to see them take a new look at the leverage ratio. Surcharge,o the g6 which american banks pay. I wouldnt be surprised if they took steps to dial it down, make it more on an even playing. On the volcker rule, he made a comment that he would like to exempt small banks, but i also think they will take steps to tackle the volcker rule for large investment banks. I think they will ask and Market Making definition, and the Coverage Fund provision, where they can invest more money to private equity and hedge funds. Nejra nathan, i want to talk about the Consumer Financial Protection Bureau. This came about as a result of doddfrank, and the drama there just astonishing. Who is going to prevail out of english and mulvaney . The trump administration. With this fight going on in washington, it is interesting, but from a compliance perspective, it is delaying the inevitable. Theythe administration, will take control of the Consumer Financial Protection Bureau either today or early next year. A lot of this is a great headline, but for our clients, its just delaying the inevitable. Youre going to see the cfpb changed dramatically as a result. Nejra so were talking about interim director. Who could finally leave the see cfpb, and what does it mean for the industry . It will be a conservative who at the core of his mission will disagree with what the cfpb is. A couple of names, former congressman randy not empower, but the new director, whoever he or she may be, they are going to and a look at the cfpb will not roll back a lot of existing regulations, it is set in stone. They will not put out new regulations, but i think the biggest change will be on enforced. Has in responsible for billions of dollars in consumer relief, mostly from large banks. I dont think you will see ilion dollar fi see ilion dollar fines. Nejra Bloomberg Financial policy analyst nathan dean, thank you so much. Up next, who is behind mifid ii . Insight into the chairman of the european securities and markets authority. This is bloomberg. Nejra this is Bloomberg Markets rules returns, im nejra cehic. Moving to europe, banks could face significant regulatory issues under socalled battle for reform. It would require banks for a predetermined level of capital to offset a plunge in market prices, but are they making finance any safer . Francine lacqua spoke exclusively to the ceo of Credit Suisse, who said he was well prepared. Things are moving in the right direction. We just got a pronouncement from switzerland, postponing a number itnges, so i think could move Credit Suisse down as a risk to the Global Financial its external validation of all the hard work we have done to reduce the level of assets and the risk of Balance Sheets. It presents less of a risk. Banks reduce the Balance Sheet and the whole Financial System is safer. Francine mifid, i know we talked a little bit the last time i came over about the pricing structure, but who do you think ultimately will be the winners and losers . I wish i knew. [laughter] best, i am our painfully aware of questions i dont know the answer to. I talked to people who should know, and what i can tell you is they dont know. Were not going to try for fixed Income Research anymore, and it s a complex situation that will evolve, so i think we probably have to come back to it in the coming months. Nejra that was tidjane thiam,. Lets talk more about mifid and the man behind mifid ii, chairman of the European Market authority, and his profile has been elevated from once obscure bureaucrat to one of the most important voices in the regulation space. But just how is he feeling a month ahead of the mifid ii deadline . Joining us, the reporters who profiled him. Welcome. Great profile in the latest issue. Two trips to paris to do this interview, and it is a good one. Its interesting, we focused on him in the first issue of this show, and you describe him as serene. I would say i got that impression, but how is he so serene ahead of such landmark regulation that could change Global Finance . I think he is serene for a couple reasons. One is, he feels pretty good about the new rules, basically. He feels they are good, they are necessary. I also think he is serene it is not an act, but it helps for him to be serene, because there are a lot of people who are worried about mifid who are not serene at all. I think he needs to project serenity for the markets, and also because we are coming right up to the time when it is going to be implemented, and for a lot of people it is going to mean a lot of late hours, if nothing else. A lot of lost holidays. Nejra yeah. And this really isnt about regulation, this is about markets. Did he have anything surprising to say about markets in your discussion with him . One of the weird things that came out of it was that he was critical of the surcharge, and he seemed very supportive of the idea of possibly investing growing in europe, particularly low fee models. Very clearly is an advocate of the idea that ornery people will have to move into the markets, away from the traditional system of deposit savings that is characterized europe for years. The u. S. Model, where you invest your savings and have a bigger return. Qe has changed returns across the world, in particular in europe, and he wanted to be able to protect those people and a sure are not overpaying for products. The focus on the man in the street was nothing surprising, because everyone is talked about it but he is clearly worried about the generational younger people will have to fund older people, and we dont want to be in a situation like europe, where people are paying higher and higher tax settlements. Nejra a sense of responsibility. Yeah. Hes also concerned about a couple things, too. One of them is brexit, because we dont know what is going to happen yet, and uncertainty is bad not just for the markets but also for the regulators. The second thing he is worried about is the trump factor, because we are all under the impression that trump is in favor of a less regulated economy and Financial System, but we dont know how that is going to play out. Those two things, i think, are playing on his mind. Nejra you have taken a global. You asked some interesting questions about his views on regulation. What did he say about that . This is related to what we were just talking about, he is big on harmony. He wants harmonization of rules. He is worried that there are things out there that might prevent him from getting just that. But interesting, at the same time, he sees mifid ii going global, which would surprise me. Were obviously going to see with the fcc does, there is clear pressure from managers who dont want to pay these Research Fees anymore, so therefore he is probably right, that we will see mifid rolled out in other jurisdictions. Nejra mifid ii going global was. Interesting. Iii, you asked and his response was dont ask about mifid iii. [laughter] there werent a lot of funny moments, but that was one of them. His point was, i think, that mifid ii, as was mifid, our organic, and that they change over time and can adjust and move and shift, taking care of different situations. In that sense, you could have shifting rules, the rules, but not necessarily under the umbrella of something called mifid iii. That goes to the serenity part, where he feels there are options that will allow them to react quickly to any problems that emerge. Regulators hadal leniency at the start, with takes the pressure off him. Nejra regulatory hygiene. Thank you so much. The parentder, company of bloomberg provides mifid iirelated solutions. If you have any questions or feedback on financial regulation, drop the team an email. Im nejra cehic. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Emily he cofounded tpg, one of the largest private equity firms in the world. Jim coulter along with David Bonderman got their start by investing in a bankrupt Continental Airlines in 1993. Today, tpg has its hands in everything from j. Crew to movie studios. And two of the most prominent tech unicorns, uber and airbnb. As these Companies Take longer to go public, tpgs Investment Strategy is undergoing a new evolution in the era of private markets. Joining me today on bloomberg studio 1. 0, tpg coceo jim coulter. So tpg is an investor in uber, airbnb, vice, spotify, what do all these companies have in common and what does it tell us about your strategy . Jim i think they all have in common that they are driving disruptions in their industries. If you look at tpg, we are often called a private equity firm, from the beginning when we started with Continental Airlines. People thought we were airline investors, but that was a moment in time. We have not done much airline investing in 10 years, but since that founding 25 years ago, we have constantly specialized in finding where the economy is changing and how we can expose capital to it. Emily you and david cofounded tpg in 1993. What was it in those early days that set the stage for what tpg became . Jim we came to the industry from a different place. First of all, it is a bit aggressive to call it an industry and 1990. In fact, it was a backwater piece of the investment world. But in those early days, there were a couple of small funds, kkr literally managing hundreds of millions of dollars him about some of the largest players were families. And as the industry grew up, the gene pools on one side wall street, on the other side families, came together to form what is now called the private equity industry. We came from that different gene pool that has affected how we behave as investors. Emily tpg did take some hits during the financial crisis. How has that changed the way you do things . Jim you always have to learn from your mistakes. What we learned last cycle was that the larger deals we did often thought to be safer in areas like utilities or casinos actually did not do as well as the companies that were fundamentally growth companies. As we have come through the last decade and you look at what tpg has done, we have been focused on the Midsize Companies driving industry change. Emily you are fresh off your meeting. What are your investors asking you that they were not 15 years ago . Jim what we are seeing is that the Venture Capital market is active, but today more companies are staying private longer, so activities that used to happen in the Public Market are happening in the private market, and our investors are trying to understand how to participate in that and how to sort it out in their mind. Emily you have talked about this upcoming era of the private markets. Is this good for the economy . Jim i think so. I am obviously an advocate for private markets, but i do think that over time the Public Market has evolved to be a little more shortterm, a little more indexed, and the private markets have grown up to where we can bring a toolkit of value added that is difficult for Public Market investors to bring. Emily softbank has about 100 billion to invest in tech. The cofounder of paypal said it is like the asteroid in the room. How dramatically is softbank changing the investment landscape, the Competitive Landscape . Jim i have seen a lot of astroid scares over my career, so i am trying to take a balanced view of it. So what we have in softbank is a large fish in a very large pond, so the question is how is that large fish going to change life in that very large pond . I do think their appearance as a Market Leader will shift some of the tech investing landscape, but i also think it will shift more tech dollars into the private market over time and may actually expand the opportunities set as well as affecting the price dynamics. Emily what you think about the position uber is an today . What do you think uber is worth with Dara Khosrowshahi as ceo . Jim i am very excited to have dara in the seat. I think the market will tell us over time. If uber continues the growth that it has exhibited so far and continues to broaden what it does, uber eats is a fascinating idea, doing really well, i think there is an exciting path ahead for uber, but it has a lot to clean up. I wont comment on the values today, but if it has the success that we believe it can under dara, success may surprise us all. Emily would you think the potential is for uber eats . Jim local delivery starting with food, packages, etc. , is a truly interesting issue. You see amazon struggling with it. You see retailer struggling with it. Once you get a network effect, what can you deliver . Maybe there is more we can deliver in more markets around the world. Emily what do you think Travis Kalanicks role should be at the company . Jim i think the board will decide that. Emily so he is on the board. Some people think he should not be on the board at all. Jim i think the board and travis will decide what his role is going forward. I suspect travis will remain a large shareholder of the company and hopefully a positive player in the companys evolution. Emily has your position on traviss role changed . Because tpg did not sign that original letter asking for him to resign. Curious how your own position as a main investor has a fault. Jim we have a huge amount of respect for what was accomplished of the company and what was accomplished for ridesharing generally. Companies have to evolve, so we have then in favor of evolution positive ways. I dont think that is necessarily a focus on any individual, but we are are pleased to see the Company Moving forward on a number of fronts in the way that they must. Emily what is the lesson tpg has learned from the way uber story has unfolded . Jim uber works in reverse dog years. Both in terms of growth and in terms of earnings. If i take away one message it is that governance and culture really matter. We knew that, but sometimes in the flurry of growth out here in Silicon Valley we need to keep focus on governance and culture. Emily how so . Jim i think it is making sure that has we build revenues, we also build the cultural aspects that make companies what they are, and that governance models evolve as a Company Moves through its life history. Uber moves through life history so quickly that at times the models have grinded to keep up. I think there is a general lesson to make sure those models around governance and culture bear the same discussion in companies as the business models, which often drive them. Emily so David Bonderman the cofounder of tpg was on the board of uber and made an offcolor remark about women and he resigned. Is that kind of remark acceptable, that kind of attitude . Jim davids remark was unexplainable and inexcusable, clearly inappropriate. David immediately apologize broadly and deeply and immediately stepped off the board so that was not part of the discussion. There is no excuse for what was done. Davids Actions Prove that we in fact understand that. There is obviously a broader discussion going on on these issues and i think it is not really just about uber. It is about a journey that businesses everywhere have to move more quickly on. Emily does it concern you at all that it could change the level of influence tpg has added uber . Jim no, uber is moving towards regular governance and we are just one seat in the board room, but i do think that we live in the world of largescale, international companies, and it has been a boardroom that has not had as many voices with that background. And as the board expands and we bring in new members, it will be a very positive thing for the company. Emily as you alluded to sexism is a huge problem in tech, in investing, in business. What is tpg doing to improve its own culture in this regard . Jim to be clear, it is the right thing to do, but it is also the smart thing to do. I have no doubt that more than 50 of the worlds iq and 50 of the wisdom lies with the female gender, so we need that wisdom at this time in business and in the world. We have to be more inclusive. When our coceo join tpg, he brought a lot of efforts that have been launched decades ago a goldman to begin to grow their commitment to diversity, and we have been traveling that path with vigor and with focus for years at tpg. If anything, we have two accelerate it. Emily how so . Jim to understand unconscious bias where it exists and really encourage diversity of all sorts to enter our organization everywhere, from the boards that we appoint to the entrylevel recruiting we do. For example, last year, of the partners we made, over 30 were women. That for our industry is a high number, but i am embarrassed it is a high number for our industry, and we have a long, concerted effort ahead of us. Emily what is the single most important thing this Administration Needs to address . Emily tpg and others have been a lot more vocal about policy, especially during the trump administration. Are there other issues you think you will speak up about . Jim we spoke up on the bathroom bill in texas. We spoke up on a number of issues. For most of my career in private equity, we did everything we could to keep our head down. I think there is a general shift in business, and it is about doing the right thing. You cant stand on the sidelines the way you used to. Emily what is the single most important thing this Administration Needs to address . Jim the division in the country. At the end of the day we have a system built on compromising governing, and not divisiveness in politics. We need a government that governs. Emily is the divisiveness, these political issues, the volatility, market uncertainty, is that having an impact on your Investment Decisions . Jim yes, but if you think in a macro sense, one of the things that concerns me the most is how Little People are concerned with the market flirting with new highs every day or breaking them. What you see in the business pages and the front pages arent aligning as they have most of my career, so how that uncertainty plays through our investments is something we are discussing deeply and trying to express in the portfolio. Our favorite way to express it is trying not to invest in the macro. We are trying to invest in situations, companies and industries, that are interesting and changing. That is where our focus is. Emily so what are you most concerned about . Jim i am most concerned about what i cant predict, and that is geopolitical events. What today would be the subprime of the future. We dont know. So that combined with the geopolitical events means life is more complicated than the low volatility in the market indicates. Emily when it comes to tax reform, what are you most concerned about as it pertains to dealmaking . Jim generally i am not optimistic we will have tax reform. We may have tax cuts, tax changes, but tax reform is one of the most difficult things that governments do. My job is to take the cards as they are dealt and play them well. Unfortunately we cannot affect tax reform, but we are anxious to see what will happen here and from there we will play our cards well. Emily what sorts of moves could materially impact tpgs behavior as an investor . Jim i think most notably for us would be changes in interest deductibility. A portion of what we do, the use of leverage is important, and there has been various potential moves on the deductibility of interest in that i think would change the relative attractiveness of certain types of capital structures. Emily carried interest has been an issue for more than a decade. Will the change, first of all, and if it does, will that materially impact your behavior . Jim i have no idea if it will change. I think it will arguably affect behavior broadly. I think one of the interesting things about carried interest is that it tends to be discussed as if it were particular to the private equity industry. It is real estate. It is to ensure capital. It is entrepreneurship. It is small family businesses. It is something that has been in the tax code for 100 years, so if they decide to take it, they will change it, but it will affect the economy more broadly than the discussion typically captures. Emily tpg has long been active in asia. What is the most significant investment trend that you are seeing there, whether it is in china or elsewhere . Jim my favorite trend in asia is health care. People want to spend more on their health and wellbeing come yet the existing systems are not set up for either the economy or change in health care delivery. To give you a sense, we own one of the largest maternity hospitals in china. We are building Cancer Centers across hong kong and southeast asia. We are doing surgery Centers Across india, so this concept of catching the demographic wave, but also catching what is a Global Change in the delivery of health care, is a truly interesting investment area. Emily you were in saudi arabia recently. What to do think those opportunities are . Jim you have an economy built on hydrocarbons which is pivoting to an economy involved in the Global Markets technology. That is a massive, bold move. I think it will create Investment Opportunities in several ways. Emily any plans to open an office there . Jim i dont think they need us to open an office there to help in the economy. Its funny, i spoke with a number of local investors while i was there. The point i made to them is they dont need chevron. They need aramco. Emily any plans to partner with the Saudi Public Investment Fund . Jim i would be happy to partner with them. We are happy to partner with a lot of the sovereign wealth funds. As they transfer capital, i expect we will be active with them. Emily do you think tpg will still go public someday, and if so, when . Emily uber and airbnb are often compared as two of the most highly valued unicorns. You are an investor in both. Uber or airbnb, how do you see the trajectory of these two companies playing out and comparing them. Jim hard to know. Which of your children do you love best . Each has an opportunity. We tried to choose specific companies that have places in their industry which are special, and i think that is true of uber, airbnb, spotify, and vice. What interests me as an analog to uber eats is that they are now beginning to focus on experiences at airbnb. If you think about traveling to a hotel, you dont just want the room. You want the concierge and its exposure around the city. I have been a big advocate of a general shift in the economy from things to experiences, and i am really interested in how uber is building uber eats, but airbnb is building its connection to experiences. Emily uber surrendered in china. Airbnb is pushing forward in china. They are not the Market Leader there. Could you foresee a partnership with the local rival . Jim i would not use the word surrender in china for uber. It is that partnerships and alliances are smart. I think as anyone tries to expand at rates that these companies are, finding partnerships and alliances is smart business. Emily you guys are putting more money to work in content and entertainment than almost anyone when it comes to vice or caa. What is giving you the confidence . Jim overthetop the top and delivery of content when you wanted is fundamentally changing elements of the Consumer Industries out there. And we dont even know quite where it will end. Game of thrones would have been almost unimaginable a few years ago, and now we have a move from that content to short form, so the idea of content and content shifting is to me one of the most interesting things happening. Emily are you at all worried that too much money is getting put into content . Are we in a tv bubble . Jim we are certainly increasing the number of scripted shows in tv very rapidly, and the pendulum will swing back and forth, so for me, i am fascinated about the concept of enjoy watching. Binge watching is how people will watch in the future. You will see it becoming some of the dominant dollars in content. Emily you are also an investor in spotify. What makes you think spotify can take on apple in the long run . Jim taking on apple is daunting, but spotify has shown rapid growth and effective positioning doing that. One of the things about spotify is that it is positioned as a data company, so its ability to evolve to meet the customer need, so i think it will be one of the winners. I think we tend to believe there will be one winner in a lot of these industries, but generally spotify will clearly be one of the winners in the music business going forward, and maybe adjacent to music. Emily you brought in an outsider as coceo, you are a founder yourself. That is a tricky position. How have you split up responsibilities . Jim in the old days, you simply had to invest well. Now we have to invest to higher standards, but we have to manage ourselves well. Those skills of investing in managing are sometimes not present in one person and certainly take a broad set of efforts and personalities. My background is a little bit more as an investor, although i have been a manager for long time. Johns was more as a manager, although he had been an investor running a Goldman Sachs division reporting to him, so it was bringing the best those two together. Emily you guys will start raising a new fund next year. We heard the cap is as high as 13 billion. Can you share anything about your plans . Jim our goal is to have enough capital, but not too much. Emily tpg has remained private while your competitors are publicly traded, whether it is blackstone, kkr, or carlyle. Do you think tpg will still go public, and if so, when . Jim it is still unclear to me. We have no real desire to go public. Emily but there were plans to go public, and those plans were shelved. Jim they were shelved, and the reason was because we said we will only do it if we think we need to do it, and what has become clear to me is that those who have gone public or maybe not as pleased with being public has they might have anticipated. There is now capital available in the private markets for Companies Like tpg also. Why go public if you dont have to and dont particularly want to . Emily jim coulter, cofounder and ceo of tpg, it has been great to have you. Thank you. Welcome to the best of Bloomberg Markets middle east. Here are the major stories for the region this week. Egypt suffers its worst terrorist attack in modern history, but why didnt the markets seem to care . What are the implications and e. M. Investors . Bitcoin goes ballistic. It smashes through 10,000 for the first time