05. Brian Friedman, President, Jefferies- Restart Economy IL New York

Good morning. I'm Brian Friedman, president of Jefferies, and I wanted to talk a little bit. I think my ultimate role here today is to talk a bit about the capital markets and where Israel will go from here. But we have to start with the horror of October 7th, and we have to feel for everything that happened and the reality that this was, for most of us, one of the two or three horrors of our lifetime. And we have to unfortunately recognize that it wasn't just a moment—and I say 'just' very carefully—the horror and losses of that day, but the reality of what it means for Israel and what it means for the Jewish people. We're living now in a period that probably will last a very long time where we will need to justify our existence. We will sadly need to justify our roles in society, and we're going to have to watch out for each other and we're going to have to work together in ways that often we struggle.

On the positive side, and before I get to capital, I'm going to talk about the social side and the politics. And as I thought about speaking here this morning, I realized that we're probably in the best place in New York, maybe in the US, that we could be to try to look forward to next October and to look forward to every October that's going to come. If you look out that window or you look out this window, you see the answer. In this place on September 11th, 2001, I happened on that morning at 8:45 in the morning to take off on an airplane from LaGuardia Airport going to Chicago. And as everyone knows, it was a bright sunny day. And somewhere over the George Washington Bridge, I looked downtown and I saw one of the two towers on fire. And within about 20, 30 minutes, I was getting—in those days our Blackberries worked up to about 20,000 feet—I was getting reports of what was happening. And actually, in a very crazy move because I didn't understand it was crazy, the first thing I did—I was on a big American Airlines plane—is I went right up to the pilot. Fortunately, he didn't react even though he already knew what was going on, and I said to him, 'I think World War III has started.' And for a good amount of time I believed it. And yet look where we are, look what's going on. And the reality is one year after that, real estate here was priced as it ever was. The vibrancy of downtown New York was back on track. And in the way of society, life goes on.

Professor Yaron referenced the judicial reforms. The politics of Israel probably is the greatest threat to the economy. And when we look forward, and I think it's the easiest way because in the end I'm an optimist about people and I'm an optimist about our way to come together and get it right. And there's the old Winston Churchill saying about the US, but I think it's equally true about Israel, which is that we try everything and then we do the right thing. And I would say that to everyone here. If this is a venture capital community coming together to look at startups and early stage and round A and the future of industry and the future of technology, there's every reason to be optimistic. There's every reason to want to be in Israel, and there's every reason to want to go forward.

We at Jefferies are endlessly committed to doing business and doing right in Israel. I'm proud that we have the distinction. When on October 7th, I was in the middle of about 10 to 12 days of business in Europe, and I arrived early that morning in London from the continent and was at the time hoping to spend a nice quiet weekend ahead of another week of traveling around in meetings. And I realized very quickly that life had just changed. It was that same feeling that I had on September 11th. As the day wore on and I realized the magnitude, severity, you know, lunacy of it all, I knew that we at Jefferies had to find our place. And we woke up on Sunday morning—and NY Gor is in the back of the room, our head of Israel, he was one of my first two calls, the other was to my partner Rich Hanley, we run the firm together—and I said to both of them, 'I don't know how we're going to do this, but somewhere between Monday and Tuesday we need to raise as much money as we can for Israel. And we need to support the hospitals, we need to support everything that's going to be needed to help society recover.' I mean, in a strange way, and I said this then, we can't help the Air Force, we can't help the Army, but we can help everyone that's been affected directly, and we have to do that. And I also had a sad second thought which I expressed to them, which is, 'And we have to do this really quickly because every day from now, this is only going to get worse.' And my 'getting worse' had not to do with the war but had to do with how the world was going to react. And so for us, it was important that we were out ahead, that we were responding quickly. And I'm proud that on that Wednesday, the 11th of October, we were able to truly wire—this all went out immediately—$13 million to hospitals and a series of other responsive groups that were and have been and will continue to be important to the recovery of society, important to the recovery of the soul. And that mattered a lot to us.

I first had my first business meeting in Israel in 1989. And from that moment to today, all I've seen is a line that goes like this. Professor Yaron had the bar charts. I mean, it started there and it's up there. And everything from not just the volume but the quality, the depth, the understanding, the sophistication—it's been a never-ending positive story. And that momentum will not be stopped by anything. Just as I point to what's outside these windows, look at this building, you know, look at what the Silversteins have done in lower Manhattan. We will see the Israeli business community, the tech ecosystem, the entire society, just as you saw those unemployment numbers go down and the credit card spending go back. We will persevere, we will recover, and there will be nothing stopping 2025, 2026, 2027 and beyond from being a continuation of the never-ending story of growth and opportunity in Israel. Period.

Again, we have the evidence here. There are many, many other instances. What's going on in the overall capital markets and the world today is, despite everything I talked about in Israel, despite Ukraine, despite Iran, despite China, despite Russia—you know, we could go on with the horribles and the terribles—despite all of that, in American parlance, we are in the second inning of a normal recovery. The years 2000 through 2003 were another aberrational period. Not going to go into the whys and the whats, but I think everyone understands that. And if you go back in time and you look at 1999 to 2002, a not too similar three- or four-year aberrational period, if you look at any of those bar charts and you take those years off the page, the bars are doing just fine. 2024 into 2025 into 2026, absent something we don't know—and we know a lot—absent something of again fairly epic proportion, because you can look at all that we have absorbed in the last one year, two year, or four year, so it really takes a lot to upset society and take us off our game. It takes a lot to upset the capital markets and take us out of our resiliency and our strength and our momentum. Absent anything of that ilk, so I'm giving myself a way out on this prediction, you're going to have progress in 2024, 2025, 2026, and who knows how much longer. There's nothing in the way. There are no meaningful excesses in society, there are no meaningful excesses in the markets. You know, lots of challenges, lots to be talked about, lots to be worried about.

So if you look at last week, we did several IPOs. One of them went up 70%, an outstanding company, somewhat prosaic—okay, it's an auto parts—I'm sorry, aircraft parts and servicing company, okay. And it's an IPO that was priced right, was received well. It tells you there is a market of capital that wants to participate. There is a risk-onward move. I won't say it's risk-on in the end, but it is risk-onward. We are in an environment where good ideas will not go wanting for capital. Being in the seed and early stage of great companies that operate in a great ecosystem—you know, for my measure, it's Tel Aviv. You know, narrow it to Tel Aviv. Tel Aviv is competing in the top five of forward-looking tech and growth community, okay. I mean, you know, New York is going to give it a run for its money. Silicon Valley will probably have the number one position for who knows how long. A couple of other cities—there's recently been some articles about some of the growthy cities in Texas starting to find their way. It's like the joke about Florida, which is it's really easy to move there, the tough part is actually living there, okay. So no offense if anybody came up from Florida. But the great cities are generally what drive the growth and the development, and Tel Aviv is real. The right leadership at the bank, everything behind it is right. The politics will get sorted out, and we will move forward.

So I give you the message of everything in the midst of ashes and sadness: every reason to have optimism. We have to all work together. There's a lot to do in the markets, there's a lot to do in building companies, there's a lot to do in protecting and enhancing the lives of Jews. We will do that together, and we should look forward. So next October is only the beginning. I look forward with all of you. Thank you very much.