Bloomberg Audio Studios, podcasts, radio news. Joining us now is Jenny Johnson, Chief Executive of Franklin Templeton, which oversees around $1.7 trillion in assets. And I have to say, it's colder this morning than yesterday, but at least this wakes us up to try and understand and figure out the world economy and everything that goes with it. Jenny, thank you so much for joining us. A lot of the participants here, we're looking at the inauguration, a lot of the bankers here, and the world of finance is expecting deregulation and Donald Trump to not kickstart, because the economy is doing okay, but actually better the economy in the US.
Well, I think that's right. I think the view on Trump is that, and he's been very clear, he wants less regulation. I think he said he's going to, for every new one enacted, take away two regulations. So I think that's positive for business. I think he'll continue spending, which is positive in the short run for our economy. I do think we have a concern with the debt, and I think he'll extend the tax cut. So I think people view that as all positive. Obviously, there's a lot of rhetoric around the tariffs, and the reality is actually, I think two things. One is he's a dealmaker, right? And if you're a dealmaker, the first thing you do is you show your powerful stance. So you make a broad statement, 'I'm going to tax Canada and Mexico by 25%.' Well, and then you sit down at the table, you get them to the table, and you say, 'This is what I need. I need some help on immigration. I want you to import more of our goods.' And so I think we've seen that, that's his kind of approach. He makes big broad statements, 'I'm going to buy Greenland,' and then from there goes in with a more kind of practical deal approach.
But is there a danger that actually, if you're a CEO, you don't invest because you're never quite sure what's policy and what's negotiation tactics?
Oh, I think that most people have a clear understanding. I think you understand under the covers because he makes his statements in Europe, right? He wants Europe to import more from the US. He wants, particularly energy. He wants help on funding from NATO as far as military funding. He probably wants them to lay off a little bit on the tech companies. I mean, so there's an understanding of what his desire is, and so then you get to the table and you start to negotiate those things.
I mean, is it impossible to know whether he's better for private markets than public markets?
Well, I don't necessarily... I think the view is that he's going to be good for the economy, and that therefore is good for both public and private markets.
What are you seeing in private markets right now?
Look, I think you're starting to see more movement on IPOs, which is good for the private equity business. I think the areas that I'm most focused on, or that I think have tremendous opportunity, is secondary private equity. There's just been so much deployed in private equity, there hasn't been that kind of liquidity ability. There's been about 50 billion deployed in secondary PE, and we're still seeing, you know, Lexington Partners raised a fund that closed to a $22.7 billion fund last year. I think they've deployed about 70% of it with very large discounts, almost 60% more than the average discount historically. So secondary PE. We also think real estate debt's really interesting. Banks aren't able to lend; they're clogged up with office. Regional banks were the big real estate lenders, and so as they haven't been able to lean in, those private credit managers who have real estate expertise can fill in that void. And Benefit Street Partners, we have, has about $9 billion in real estate, and they think it's a really interesting opportunity.
Mainly in the US, or are there also other parts of the world where you could actually see distress?
Yeah, I think in the secondary PE space, you're seeing it all over because there's a need for LPs to get their liquidity. I think in the real estate, that is more of a US issue. Look, I think office all over the world has issues, but it's office space, not all office space. But in the US, it was the regional banks who were the primary lenders, and they're just not able... capital requirements have changed in the US, and they're just not able to lend like they used to.
There's also so much talk about crypto being at the center of the Trump administration's kind of second mandate. Did you participate in the Trump and Melania meme coin or whatever it is? I haven't, but this has everyone excited. They were even talking about it in Davos. Does it change, I know, appetite for ETFs? Does it change the market liquidity in some places, and does it impact basically your company?
First of all, I think it's really important to think of blockchain as a technology. It's a programming language, right, that does certain things really well. I do think that it's likely that ETFs and mutual funds will ultimately be built on blockchain, just because it's an incredibly efficient technology. And then there's the crypto world, some of which I think has tremendous opportunity, and some of which I think it'll be noise. It'll be a little bit like the dot-com era when eventually you had some of the biggest companies of the next decade that came out of it, and then you had a lot that kind of blew away to the side. And so I think the crypto world is similar. I think the thing with the Trump administration is we're going to start to see them converge more, the TradFi and the crypto, which is something that we need. We need to have some sort of regulatory clarity so that you can bring these together, because fundamentally it will drive out costs and there is great innovation that the technology enables.
But is that going to be overlaid by inflation?
