Billionaires adding more than a trillion dollars to their wealth this year. Lets get straight to the burning issues. With me is jason kelly, sonali basak, and Patrick Connor clark. The Public Markets have been shrinking. Give us a sense of how much we have seen the public world contract. Jason its dramatic. Obviously, im here in the heart of it in San Francisco, where Companies Stay private for longer. What that has meant is, over the last two decades, about half of the Public Companies have gone away, they are not publicly traded anymore, and that has been a boon here, Companies Stay in private for longer, but it has life implications for investors. A sense of whyt so Many Companies are deciding against going public, why they are sticking with private financing . The moneynly because is absolutely available. Here in silicon valley, we talk about venture capital, but private equity, we are talking about 4 trillion plus under management when you talk about private equity writ large, including venture capital. All ofes of uber, lyft, these unicorns and roam around this part of the country, they can get money, they dont need to go public. Lisa you make an interesting picture of San Francisco with all of these unicorns wandering around looking for financing. I am curious, do we ever see this trend changing, companies deciding to go back to ipo and Public Market . Jason certainly, those of us that were around for the. Com bust remember that the money dried up a little bit, and things can change, for sure. But you cover this on your show all the time, we talk about it on the desk. The market has shifted. It feels more secular than cyclical, as they say. Private markets certainly here to stay. The question is if investors can get the liquidity they need to trade in and out of these names, in the way they can on the Public Market. Lisa it brings us to the companies that decide to go public. Sonali, there are companies hoping to rely on ipos next year for financing. What are those names . Sonali some of the biggest names we are looking forward to is airbnb. They do tend to turn a profit. We will watch how they do it. Lisa which is rare among them. Sonali not something that is unanimous among the unicorn world. Airbnb is one of the hopefuls in 2020. We also have doordash, which is not profitable, saw bankbacked. Given how much money there is in private markets, why are they going public . Like to havee liquidity for their employees, as well as their existing investors. Lisa like the founders. A hope thate is going public will help you grow faster, give you a more diversified base of shareholders, longer life line. Look at the top for big tech companies, the fangs, it still gives you a rite of passage into being a grownup company. Those with a hope of longevity would still like to use that path. Lisa there will be some ipos. Meanwhile, Luxury Real Estate has been rough around the world, sort of. Some are growing more optimistic next year. All, i cameirst of in and said, how that hasnt been . You said fine. How big has the declines been in the Property Market . Patrick it goes market by market, and in cities like new york, there has been a large influx of new supply, so there are too many highend apartments on the market. Sellers have not been able to get the prices they wanted. Taxes and other government efforts in places like london, vancouver to cool off markets, to make it harder or more expensive for foreign buyers. All of that has had a toll. Lisa on the you seem to be playing the smallest violin. Next year, what are we expecting . Patrick the pendulum will swing back a little bit, particularly where theres been less inventory coming onto the market. , like london, where the political situation looks more clear, maybe people have more confidence in investing in real estate there. Cities like miami, where the u. S. Tax policies are pushing wealthy homebuyers to take up , where they florida dont have to pay income tax. Where themarket supplydemand balance is a little better for sellers. Lisa thank you all so much for that update. It brings us to real estate roundup. I recently discussed the new. Ork Real Estate Market it was a challenging market, for sure. Its been a little bit slow, a little bit of a push in the Second Quarter because people were trying to close before the mansion tax hit in july. It was a slow year, steady. We are probably similar to 2018 as far as numbers go. Its been a slow decline. The markets been doing this, and we are in a correction environment. Lisa how much is it going down . 10 give orbout take, but it depends. If you have been overpriced on the Upper East Side by 30 , then you have to come down. Some sellers have been totally off the mark, and some sellers are more realistic. They realize the market is a different place, no longer a sellers market, completely a buyers market. If they want to sell, they have to be realistic, or their home will linger. Lisa are we starting to see a bottoming out, or will the pain continue . Bess i think we are starting to see a little bit of bottoming issue i see 42020 is we are in oversupply mode. We have a lot of supply. When supply and demand is here, if they dont intersect, it is slow. Right now, we have a lot of product to so, and buyers are taking their time, because they can. The what price point are extra apartments . Y. Ss that is hard to sa roughly, we have them listed around 19 billion worth of resale listings, versus 2014, 14 billion worth of resale listings. That is all together. That could be one bedroom, but it just shows you there is a lot of product. An increase of roughly 30 . There is so much to tuesday from. Lisa how much is it new york city emblematic of a weakening more broadly throughout the much is this aw very specific issue having to do with overbuilding, taxes, and other issues . Bess i think it is more specific to new york city. Other areas around the country are pretty healthy, not a lot of supply. The economy is good, the numbers look good, rates are great. But new york is specific. To solve the cap on that deduction, people have been moving to florida. We have that this looming legislation that will be hurting our market, so that concerns me. Lisa you were talking before about one legislative provision. Talk about that. Tax much is this anding. Ery specific im sure Everybody Knows this, but somebody who lives in new york city part, their second or third home. We have a lot of people who have homes here but dont live your full time. They dont pay income tax, but all the other taxes. Manually. Ould tax the i dont have the numbers, but it would be egregious, and would deter people from buying and owning second and third homes. We did a study of this, looked into it, and there is roughly a billion dollars annually generated from these homeowners in new york city. That said, millions of dollars in taxes for the city. That means thousands of jobs for the city. Real Estate Developers and brokers in general, homeowners [indiscernible] you. E flipside, talk about what this but due to property valuations. Are there any estimates of how much this would reduce valuations of apartment buildings, commercial real estate in the city . Bess we dont have any estimates of that, but actually tax, wethe piedaterre think it would only generate around 250 million. Lisa you focus on miami. What are you seeing their . Bess its been a decent market. A lot of people have been moving from new york, moving to palm beach, miami. They find a safe haven. People dont want to be in new york because they want to avoid the taxes. Lisa i think about these people buying these beautiful houses on the beach in miami and i wonder, how concerned are they about the fact that we occasionally get hurricanes that might thought the entire properties . Bess definitely some are concerned about it. I would have some trepidation about it. You only live once, they want to have these homes. Who knows what will happen. Lisa that was bess freedman. Coming up, 2019 was a big year for us. Favoriteone of my interviews of the year, howard marks from oaktree capital. Lisa im lisa abramowicz. This is bloomberg money undercover. A look at some of the most notable names and private market. We turn back the calendar to the First Edition of the show when i spoke with howard marks. Recentlyd debt supply increased to a new high of 127 billion, last seen in 2016. I asked marks how he was investing in that climate. I dont think were in a bubble, i dont think we are going into a bubble comfortable to 2008. No reason to believe we will have the panic that we had following the bankruptcy of lehman brothers. Another Global Financial crisis. But there has been a great deal of debt issued. There has been a battle to be the person who buys that debt. The battle has taken the form of down the quality of the safety, so theres a lot of risky, aggressive debt thats been issued in the last fiveplus years. With a weakllides economy, i think there will be great opportunities. Lisa right now, theres a record amount of dry powder, cash being committed to these mandates. I wonder where you are seeing opportunities, even though everything has been bid up. Howard opportunities are few today. Investing in distressed that is a struggle today. The economy is too good. The Capital Markets are too generous. It is hard for a company to get into trouble. If they get into trouble, the Capital Markets are happy to bail them out. It is a struggle today. It would be misleading to your viewers to talk about where they are opportunities. They are practically nonexistent. Lisa does that mean that you are not investing . Howard largely, yes. It is very hard to put money to work in distressed debt. Lisa where do you put it instead, cash . Howard we dont call it. We form funds, people commit money to those, and we call it as we spend it. Right now we are not calling much. Lisa what about china, you talk about opportunities there. Is that still the case . Howard that is the big question. They have some troubled companies, if you can buy the loans at the right price, should be worth more down the road. Will you get it . Will they apply the rule of law . One of the reasons our investing has been successful in this country over the last 31 years, we understand the process, know how to project the outcome based on the rule of law. Will it apply in china . We believe so. We are taking baby steps to explore whether it does. Lisa you said baby steps, so does that mean that you are not deploying cash there yet . Howard baby cash. Lisa what is baby cash for oaktree . Howard you put a toe in, foot in, that sort of thing. We have been doing it for four years, stepping up the amounts. We are testing the waters. Overalling back to the distressed debt market, how its become more mainstream, there have been a number of giants in the field that had taken a step back, exited the overall distressed debt field for new opportunities. Do you view that as a market peak . Howard well, even if you look at us, we are not doing much in distressed debt right now. We are active in other fields. One thing to understand distressed debt, you have to understand we cannot create our own deal flow. If you are in private equity, you can go to any company in the country, public or private, and say we would like to buy you. Distressed debt does not create its own deal flow. If there is no distress, we cannot make it. We have to turn to other activities. Oaktree is active in lots of otherif there is fields. Lisa what are some of the areas that are pulling you toward them, rather than distressed . We are doing private lending, mezzanine lending, investing in real estate, real estate lending, we are investing in infrastructure, the power industry, high yield bonds, leveraged loans. Was my conversation with howard marks. Distressed debt has had an inconsistent year this year. The lowest rated bonds have underrated hire one for most of the year. This year has been one of discretion under which is giving managers confidence and that markets the debt markets are not jeff bezos was on a 52 people on the billionaires index that saw their fortunes decline in the year. The winners and decliners of 2019. Money bloombergs undercover. Lisa time for pension pressure. Arizona state retirement system is taking a big bet on private credit, putting one out of every six dollars it manages indirect lending. That is more than five times the industry average. Here with us now is kelsey butler. But this shift into perspective. Definitely high above what some of the peers are doing. Right now they have about 13 indirect lending, looking to boost that to 17 . To put that in perspective, another pension fund recently decided to shift away from junk bonds to private credit. Their target allocation is 5 . We are talking about a much bigger bet that others are making. Lisa there has been a large shift among pensions toward private lending. And you give us a sense of how big its been . Right now, nearly 300 Pension Funds in the u. S. That are active in private credit. That is up from 180 in 2015 alone. They are boosting their allocations as they go as well. Lisa can you give us a sense of what the goal is here, bigger returns . Kelsey that is basically what it boils down to in this low rate world we are living in. They are looking to make sure they are meeting their return benchmarks. Research has shown, by investing in direct lending, investors and get up to five Percentage Points above what they would get in other more liquid parts of credit. Pension funds are taking note and are pouring into private debt. Lisa is there any concern that the future returns will not be like past returns, given how much money has been coming into the area . Kelsey definitely a concern since these new managers have not gone through multiple cycles. There is always the concern about deteriorating credit quality. A lot of these Pension Funds the righthave picked managers, made the right decisions about where to put their money, and are comfortable with where they are. Lisa thank you so much for that. The rich got even richer this year. According to the bloomberg billionaires index, the worlds 500 most wealthy people added more than a chilean dollars to their fortunes. For more, we welcome ben c berman. Can you give us a sense of who did well, who did less well . Ben basically, all of them did well. 90 of these billionaires we track, the 500 richest people in the world, 90 of them did really well, as the markets went up, values went up. One exception is jeff bezos. That is entirely because he got Richest Woman in the world. Lisa is this just a matter of billionaires having their money in the markets, the markets rally, so they added to their net worth, or does this go beyond that . Ben that is basically it. Once you have that much wealth, it is in these businesses that are trading, doing well. Asset values have exploded since the great recession. We have seen this continuing trend. It is not ending. Adding 26 zuckerberg billion dollars to his wealth, Warren Buffett, 5 billion. Heading into an election year, how does this play politically . Ben its a big question. This is the year Elizabeth Warren introduced her both tax, and it is surprisingly popular. I dont know and nothing that happened this year was jeremy the richn on his tax strategy, and he lost. Lisa how much are we seeing in engagement in philanthropy . Ben this is the year that we have seen more scrutiny. Bill gates and Warren Buffett and others have been incredibly generous but they are not giving their money away fast enough. They are wealthier than they have ever been. To what extent is this paper over the worlds problems, how much of it is pr, how much is making a difference . There has been a conversation about that. Lisa really interesting story. It is time for this weeks big number. 13. 5 billion. That is the amount raised by specialpurpose Acquisition Companies this year. These vehicles have become a popular choice of habit companies spooked by the swings in the regular ipo market, as we were talking about earlier. That does it for us, happy new year. Watch us every tuesday at 1 00 p. M. New york time. York, this is bloomberg. [ dramatic music ] this holiday. Ahhhhh ahhhhh a distant friend returns. Elliott. You came back and while lots of things have changed. Wooooah woah its called the internet. Some things havent. Get ready for a reunion 3 million light years in the making. Woohoo yeah viviana im Viviana Hurtado with bloomberg first word news. A new year and new laws will roll out across the country. In new york city, tomorrow, allowing farm workers to unionize. Governor cuomo approving nearly sivan hundred 50 bills. In west virginia, the republican governor fire 31 prison guard trainees. This after giving a not to salute in a photo. For instructions were also suspended without pay. The move follows a report that the trainees regularly gave to their instructors the salute. Respect, they of say. 20 cities are reporting the best pace in five months. Since october of 2018, Property Values also increasing by 2 . Cities like phoenix, tampa, and charlotte leading the gains. San francisco was the only u. S. City to post a yearoveryear decline. New years celebrations are underway around the world. Right now, india is ringing in 2020, crowds cap ring on the streets to welcome in the new decade. Across india, protesters are also using the celebrations to challenge a religiousbased citizenship law that they say is discriminatory. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Viviana Hurtado. This is bloomberg. Live from bloomberg World Headquarters in San Francisco, i am taylor riggs. Greg i live in toronto, i am greg pennell. We are joined by our bloomberg and Bnn Bloomberg audiences. Here are some of the top st