Some top Wall Street figures sound more concerned about sustained inflation than the occupant of the Oval Office in 2025.
“The world has built-in inflation that is unlike anything we’ve ever seen,” BlackRock (BLK) CEO Larry Fink said Tuesday at the Future Investment Initiative in Saudi Arabia. “I’m sure,” he said, adding, “No one asked about ‘inflation.’ How much does it cost? ”
BlackRock Chairman and CEO Larry Fink, 2023 Reuters/Brendan McDiarmid · REUTERS / Reuters
Few Wall Street luminaries who attended the annual Future Investing Initiative conference were willing to offer aggressive predictions about whether Kamala Harris or Donald Trump would win on November 5th. There wasn’t.
“It’s a race that looks like a win for Trump, but it’s pretty much a coin toss,” Citadel CEO Ken Griffin said.
Blackstone (BX) CEO Stephen Schwarzman, a Trump supporter, acknowledged that he doesn’t know who will win, but said Trump is more interested in “how the job works than in 2016. “We have a much better knowledge base about it.”
Apollo (APO) CEO Mark Rowan said he expects more mergers and acquisitions “if Trump wins.” (Disclosure: Yahoo Finance owns Apollo Global (owned by management).
Stephen Schwartzman, CEO of Blackstone. Reuters/Shannon Stapleton · Reuters/Reuters
No matter who wins the election, most finance chiefs are concerned that inflation will be stronger than expected. Therefore, we do not expect rates to fall as quickly as traders currently expect.
“Interest rates aren’t going to be as low as people are expecting,” BlackRock’s Fink said.
Traders expect the Fed to cut rates by another 25 basis points next week, following an initial 50 basis point cut in September, and another in December. September’s rate cut will be the first in more than four years, following the central bank’s aggressive campaign to curb inflation.
Read more: How Fed Rate Cuts Affect Bank Accounts, CDs, Loans, and Credit Cards
But on Tuesday, when asked by a moderator in Saudi Arabia to show their hands whether they expected the Fed to cut interest rates by another 50 basis points this year, none of the committee’s finance leaders raised their hands.
The group includes Carlyle (CG) CEO Harvey Schwartz, Citigroup CEO Jane Fraser, Goldman Sachs CEO David Solomon, Morgan Stanley (MS) CEO Ted Pick, and State Street (STT) ) CEO Ron O’Hanley was included.
“Inflation is more deeply entrenched in the global economy than the current narrative suggests,” Solomon said. “That doesn’t mean we’re going to rebel in a particularly ugly way, but I think that’s a possibility, depending on the policy measures that are taken.”
David Solomon, CEO of Goldman Sachs. Reuters/Mark Stockwell · Reuters/Reuters
JPMorgan Chase & Co. (JPM) CEO Jamie Dimon said Monday at the American Bankers Association’s annual conference that he is also concerned about a return to higher inflation.
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“Inflation, in my opinion, may not go away anytime soon,” he said, pointing to long-term trends that suggest a return to inflation similar to the 1970s.
Part of Wall Street’s inflation concerns is that U.S. government spending will continue to rise under either political party.
Vice President Harris and former President Donald Trump proposed economic policies during the campaign that could increase the U.S. debt by trillions of dollars, according to the bipartisan Committee for a Responsible Federal Budget. policies will continue to increase.
“We’re dealing with huge deficits and really strong economic conditions,” Carlyle’s Mr. Schwartz said Tuesday.
Rowan with Apollo cited the government’s increased defense production and two landmark laws passed during President Joe Biden’s term as examples of “stimulatory” and “inflationary” actions. I mentioned it.
“I’m trying to remember why we’re cutting interest rates.”
Harvey Schwartz, CEO of Carlyle. (Photo by: PATRICK T. FALLON/AFP via Getty Images) · PATRICK T. FALLON via Getty Images
At the same event last year, many of the same CEOs were far more pessimistic about the near-term future of the global economy.
They were still waiting to see the impact of high interest rates on the US economy as the geopolitical environment became increasingly deteriorating. The outbreak of the Israel-Hamas war occurred just weeks before last year’s events.
That conflict is not over yet, and neither is the war in Ukraine. But the stock prices of many large banks, asset managers and private equity firms run by CEOs who attended the Saudi conference are all up at least 40% from a year ago.
“The good news is that this time last year there were all kinds of predictions of a global recession, and we largely avoided it,” State Street’s O’Hanley said Tuesday.
David Hollerith is a senior reporter at Yahoo Finance, covering banking, cryptocurrencies, and other financial areas.
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