Co-CEO/Co-Founder of Carlyle Group Inc. David Rubenstein joined Bloomberg Television's "Bloomberg <GO>" at the SALT Conference in Las Vegas this morning to discuss the hedge fund industry, the 2016 Presidential race, economic impact of the turmoil in Brazil.

Highlights include:

• He's surprised macro hedge funds 'got it wrong', and believes the hedge fund industry will thrive again: "It does seem surprising that so many macro people got it wrong...But many of them will probably do pretty well in the future. I suspect when returns come back the industry will thrive again."

• He thinks it's a mistake to say it's impossible for Trump to win, but he gives the odds to Clinton in a race against Trump: "I'd say you have to give the odds to Hillary Clinton. I think she probably -- because of the electoral map and the minority factor that I mentioned, is probably more likely to win. I think most people would say that. But anybody who says it's impossible for Donald Trump to win I think is making a mistake, and I think the people in the Hillary Clinton campaign would agree with that."

• He believes the next president will face a recession: "I think there's no doubt that whoever's president, we're likely to have a low growth period of time. We've been growing at relatively modest rates, and we are due for more of an economic slowdown than we probably have had over the last couple years. Our last recession ended in June of 2009. Typically, you have seven years between recessions. It could go 8 years, maybe 8.5, it doesn't usually go 10 or 11 years, so probably in the first term of the next president, we'll probably have something close to a recession or something that might be close to very low growth."

• He thinks the economic impact of political turmoil in Brazil will not get worse and is optimistic about the country's future: "It's been the biggest recession they've had in 80 years, so I think it's likely to get better...I don't think it's likely to get worse. I think the worst has occurred in Brazil and I do think that ultimately the trend is positive and many of our people in Brazil feel that while it's been a challenging time, it's likely to get better over the next couple of years."

On the hedge fund industry:

On the U.S. election:

On Trump:

On Brazil:

ERIK SCHATZKER, BLOOMBERG HOST: I am here with David Rubenstein at, as you say -- David, good morning to you.

DAVID RUBENSTEIN, CO-CEO AND CO-FOUNDER, CARLYLE GROUP: Good morning. My pleasure to be here.

SCHATZKER: Well, it's our pleasure to have you. I can't decide where to begin. Should we begin with hedge funds or should we begin with Donald Trump? I'm going to leave that choice to you.

RUBENSTEIN: Well, you're the interviewer, so what do you think makes the most sense?

SCHATZKER: Why don't we start with Trump because I think hedge funds makes more sense a little later because that is a nice segue into the rest of your business. So, when you spoke on Carlyle's first quarter conference call, you seemed quite positive about the economy relative to where you had been three months earlier. You seemed fairly positive about market conditions. And I'm wondering to myself what you think a Trump president -- first of all, is a Trump presidency a possibility? Why don't I ask you that question first.

RUBENSTEIN: When I was young, I worked in the White House for Jimmy Carter and we begged to run against Ronald Reagan. We said he was old, he was 69, we said that he didn't really know the issues that well, we said he really was too far to the right and didn't really have a clear message that we thought would resonate with the American people. We proved to be wrong. So I think you have to be very careful what you wish for in politics, so I think at this point it'd be difficult to say either Hillary or Donald Trump couldn't win. I think both have good chances of winning, but it depends on voters in the Midwest, in my view.

SCHATZKER: Well, you're quite a -- for those who don't know, a politically savvy individual. You live and work in Washington and you know many people on Capitol Hill and in the White House and in previous White Houses, including, of course, the one that you worked in. The electoral map suggests otherwise, right? People counting the electoral college numbers come up with a conclusion that Hillary Clinton is going to win decisively.

RUBENSTEIN: Well, that is based on this, and I wouldn't say it's impossible, but if you go through the last six presidential elections and Hillary Clinton were to win this time the same states that went Democratic the last six, she'd have 242 electoral votes. If she had the same states that went Democratic the last five out of the six, she'd have 257, 13 short of what you need, 270. But Donald Trump may be able to get votes in the Midwest, so-called white male vote, Reagan Democrats, and may be able to take away states that traditionally went Democratic. But there's no doubt that she has an electoral map advantage. She also has an advantage that the minority vote is increasing. When John Kennedy ran for president of the United States in 1960, 92 percent of the voters were white Caucasians. This time, it will be 70 percent, and it's likely that she'll get a majority of, a very big majority of those voters, but put on the other side this factor. Since World War II, we've had six times where a president of the United States served two consecutive terms. In five out of those six, the party switched the next time. Only time that didn't happen was when George Herbert Walker Bush succeeded Ronald Reagan, so you don't know what could happen. The country might be more conservative. When Barack Obama was elected, the senate was Democratic, the house was Democratic, a majority of the governors were Democratic, and there were 800 more Democratic legislative seats than there are today, so maybe the country's become more conservative or more Republican. So it's too early to say.

SCHATZKER: When you say that either Hillary or Donald Trump could win the election, are you suggesting that the odds are 50/50?

RUBENSTEIN: I wouldn't say 50/50. I'd say you have to give the odds to Hillary Clinton. I think she probably -- because of the electoral map and the minority factor that I mentioned, is probably more likely to win. I think most people would say that. But anybody who says it's impossible for Donald Trump to win I think is making a mistake, and I think the people in the Hillary Clinton campaign would agree with that. They're not going to just say, well, we have this as a lay up. I think it's going to be a hard-fought campaign and I don't think it's going to be decided until near the end.

SCHATZKER: David, you have to have considered what a Trump presidency would mean for the economy in terms of fiscal and monetary policy, governance of the Federal Reserve, and of course the impact in your portfolio (inaudible). What conclusions have you drawn?

RUBENSTEIN: I think it's too early to say. I don't think anybody has the ability to predict what exactly Trump would do as president or Hillary would do as president --

SCHATZKER: Well, he said a few things.

RUBENSTEIN: He said a few things, but it's hard to know what you will really do when you're making policy and who his appointments would be. I think there's no doubt that whoever's president, we're likely to have a low growth period of time. We've been growing at relatively modest rates, and we are due for more of an economic slowdown than we probably have had over the last couple years. Our last recession ended in June of 2009. Typically, you have seven years between recessions. It could go 8 years, maybe 8.5, it doesn't usually go 10 or 11 years, so probably in the first term of the next president, we'll probably have something close to a recession or something that might be close to very low growth --

SCHATZKER: And it would not matter whether the president is Hillary Clinton or Donald Trump?

RUBENSTEIN: I think it's unlikely that the president immediately can make a big difference. I think some of the things are already set. But for example, the Federal Reserve is likely to increase interest rates this year again and probably early next year, and that will probably be independent of whoever the president of the United States is.

SCHATZKER: Let's talk now about hedge funds, if I may. The industry is going through a pretty rough patch. Carlyle has had its share of challenges. There is some palpable angst already at this conference, given that there are a lot of hedge fund people here. I don't know if you've been able to sample that just yet --

RUBENSTEIN: Well, mostly a hedge fund conference, so, sure.

SCHATZKER: The (inaudible) as you probably know, a couple of weeks ago, talked about killing fields in the hedge fund industry. How do you see it?

RUBENSTEIN: Well, the hedge fund industry has grown to a gigantic industry. We have more than $3 trillion in the industry now and it's gone from a very modest size 10 or 15 years ago to this gigantic industry, and it probably is about the same size as the private equity industry, maybe slightly bigger. People are investing because they want higher rates of return. With low interest rates and low returns on bank deposits and low public equity returns, people think that in hedge funds, you can get better rates of return. Some of these hedge funds had problems. Typically, the macro funds this year have had problems. But I do think that people will realize that you have very smart people, highly motivated, investing their own money alongside the investors, and it's likely they're going to do pretty well over a longer period of time.

SCHATZKER: Is $3 trillion too much money? Is there just simply too much money chasing the same set of opportunities?

RUBENSTEIN: Well remember, a lot of the money is being invested outside the United States now. It's not just in the United States, and $3 trillion isn't what $3 trillion was 10 years ago or 20 years ago, so it does seem like a lot, but not compared to the size of the total money under management. You have about $75 trillion of assets under management around the world, so $3 trillion isn't that big in that context.

SCHATZKER: David, I mentioned that hedge funds have been challenging for Carlyle, and in general, your global market strategies business, which includes a number of other things similar to but not exactly the same as hedge funds, has probably not, I think almost certainly not delivered the results that you would like. You are at -- are you as committed to hedge funds and global market strategies today as you have been in the past?

RUBENSTEIN: We're committed to doing what our investors want us to do. Investors in our firm and investors in our funds think that we have the good capacity to do these kinds of things, so while we've had some trouble, generally, we're very committed to this business, yes, we are.

SCHATZKER: Why?

RUBENSTEIN: Well, we think we have the ability, with the intelligence that we have, the intellectual information we get from around the world, we own about 200 companies from around the world. We have a pretty good sense of what's going on in the economy, and while our hedge fund people are Chinese walled off from the other information in our firm, I think they do have some benefit by being part of our firm, and as a result of that, I think we do have the ability to get pretty good rates of return, and we have, over many, many years for investors in many different funds.

SCHATZKER: But lately not so much.

RUBENSTEIN: Lately, it's been very good for us in the private equity area. It's been more challenging in the hedge fund area as it has been for everybody else, but if you have one quarter that's bad or two quarters that's bad and you decide to go home, you're not likely to be a very dedicated investor. All investors have challenges over a period of time.

SCHATZKER: You have, however, shown a willingness to shut down businesses that aren't generating returns. Your fund to funds business, for example, which you shut down last year, I believe.

RUBENSTEIN: We thought that that business was not likely to grow and we thought that industry was not likely to grow, so if you're in business, you always start businesses, some will work out better than others. If you're afraid to shut something down, you're probably going to be afraid to start anything, and so we always want to have new products, as our competitors do as well. Some will work very well as some have and some will not.

SCHATZKER: You have something of a preview, we could say, to what the other funds we're experiencing now in the way of redemptions. Are you surprised by what you see? Are you surprised by the number, the size and scale of redemptions, and furthermore, the losses that hedge funds have experienced lately?

RUBENSTEIN: Well, the last five quarters, you've seen I think more withdrawals than commitments to new funds in four of those five quarters, and so yes, there has been money taken out of the initiative, but this has happened before, and I suspect when returns come back and the industry will thrive again, so I can't say I'm surprised, but it does seem surprising that so many macro people got it wrong, or at least so far it seems that they have gotten it wrong, but many of them will probably do pretty well in the future.

SCHATZKER: David, outside the four main businesses that Carlyle runs, have you contemplated further diversification into other things as a way to profitably grow your assets in your management?

RUBENSTEIN: Well, we have a number of businesses that we're considering adding to the firm, and I don't want to advertise them right now because they're not fully formed yet, but we do think that we have the ability to --

SCHATZKER: Give me a hint.

RUBENSTEIN: We have good ability to attract people who can manage funds very well. We do think that we have the ability to add value, so yes, we will continue to grow in different areas.

SCHATZKER: As a matter -- let's talk about it in terms of principle, though. What kinds of things make sense being added to a Carlyle?

RUBENSTEIN: Well, let me give you an example. Right now, there is no gigantic infrastructure business among the global private equity firms, so they all have very good real estate businesses, they have very good hedge funds, in some cases, hedge funds buy out funds, none of them has yet had the dominant position in infrastructure, and it might be possible for one of these funds to build a very good infrastructure business.

SCHATZKER: Would you build that or buy it?

RUBENSTEIN: Well, I think it's probably easier to build it. We already have an infrastructure fund but we could add to it and other people could do the same kind of thing. I think it's a very attractive business. Many of our investors around the world think that infrastructure will be a very attractive area in the next couple years and we do too.

SCHATZKER: David, I want to ask you about energy. Your fellow co-CEO, Bill Conway, described it on your first quarter conference call as quote unquote, particularly compelling that 65 people working on energy. What are you waiting for?

RUBENSTEIN: Well we are investing. And right now, we do think that prices are down and relatively low, but they're going to come back. We think oil prices will eventually come back. We don't know exactly when, nobody can predict, but we do think that carbon related energy is one of the best areas to invest in in the world, because the demand for it is so great and it's a global business and we think that prices have been unduly depressed. So this has happened before over many, many years, and I think now, when the cycle comes back, as I think it will in the next year or two, you're likely to see the appreciation in assets and we hope to buy things at relatively lower prices.

SCHATZKER: Do you regret not having bought those things already? Because (inaudible) 45 and not 26 any longer.

RUBENSTEIN: Well, hindsight's always 20/20. I've wished there were some assets we had bought at lower prices than they are today, but we've bought a fair number of things that we're pretty happy with.

SCHATZKER: You have $12 billion to spend. How soon will we see you spend it?

RUBENSTEIN: Well, it's to invest, not spend, but I would say, we will over the next couple of years get this money invested, and we have a number of years to invest it, and we are investing, we're doing deals now.

SCHATZKER: What do you like better? Do you like private equity in energy? Do you like distress for control? Do you like lending? Do you like ENP? Do you like downstream?

RUBENSTEIN: Oh, that's like asking which of my children do I like the best. I like all of these businesses.

SCHATZKER: What seems most attractive?

RUBENSTEIN: Right now, I think distressed energy is probably an attractive area because there are a lot of distressed energy credits. I do think that distressed debt generally is probably going to be a pretty attractive area as well, and I do think the ENP market will thrive at some point, so you probably buy assets now that would probably be cheaper than they will be in a couple years.

SCHATZKER: Even with oil at 45?

RUBENSTEIN: I think oil will go up. I do think oil will get somewhere in the $70 range at some point in the next year.

SCHATZKER: Really?

RUBENSTEIN: Some point next year. I do think that finally the production is probably not going to increase and the demand is going to increase, and as a result of that, I do think that prices will go up.

SCHATZKER: David, quickly, what's your view on Brazil? Dilma Rousseff, the impeachment vote is taking place in the Brazilian senate today. She's expected to lose. That would put in process an impeachment, and it would immediately remove her from power as president of Brazil.

RUBENSTEIN: For 180 days, I think it is. Then there's a chance that she could come back.

SCHATZKER: But what does that mean to a firm like Carlyle?

RUBENSTEIN: Well, we're a very large investor in Brazil. We have a lot of investments there. We do think that the economy has been very challenged. The currency's down more than 50 percent at one point against the dollar. It's been the biggest recession they've had in 80 years, so I think it's likely to get better. Can't get worse, and I --

SCHATZKER: Can't get worse?

RUBENSTEIN: I don't think it can get worse, no. And most of the people that I talk --

SCHATZKER: Even if they shut down all of these investigations into corruption?

RUBENSTEIN: I don't think it's likely to get worse. I think the worst has occurred in Brazil and I do think that ultimately the trend is positive and many of our people in Brazil feel that while it's been a challenging time, it's likely to get better over the next couple of years.

SCHATZKER: David, always a pleasure speaking with you. Thank you for taking some time out of your schedule here at (inaudible).

RUBENSTEIN: My pleasure to be here. Thank you.