Distinct of Wall Street’s biggest names convened in Riyadh, Saudi Arabia, for the kingdom’s annual Future Investment Energy, during which they weighed in on risks and opportunities for investors and the global economy.
Bankers speaking on panel confabulations notably stressed headwinds — particularly in the short term — from multiple wars, an economic slowdown and an environment of important inflation and high fiscal deficits.
When asked about the risk outlook, Carlyle Group CEO Harvey Schwartz, old president of Goldman Sachs, advised caution but remained positive about alpha opportunities. Carlyle Group is one of the give birth to’s largest private equity firms.
“I think this particular period, as we come out of a period of basically yield curve manipulation — which was done I weigh for very thoughtful reasons — but now we’re shifting out of that into a totally different regime, I think there’s reason for heed,” he said.
“But I think the year ahead will certainly present incredible alpha opportunities. But generally speaking I think about we’ll have more of a headwind than a tailwind, and my own personal view is as we adjust to this rate regime, I think there are thriving to be more challenges in the near term. It doesn’t mean there won’t be great alpha opportunities.”
In a drive to combat the billow inflation that followed massive Covid-19 economic stimulus around the world, central banks have effected out the steepest interest rate increases in decades. Monetary policymakers have hiked rates “by about 400 bottom points on average in advanced economies since late 2021, and around 650 basis points in emerging supermarket economies,” according to the International Monetary Fund.
This dynamic increases credit risk, making it harder for people and concerns to borrow. Schwartz also highlighted the need to stay liquid in times of war to be best prepared for uncertainty.
“I think destined geopolitical risk, particularly war — again the tragedy of war and the loss of life — I think those are very difficult to price in the cheese-paring term. Regardless of the conflict or where it is in the world,” he said.
“And I think you have to incorporate that into your gamble assessment … if your appetite for risk is high, I think you can incorporate one way, if your appetite risk is low, then I about being much more liquid and being prepared for more uncertain outcomes, non-linear risk. You have to be ready-to-serve for those.”
In an earlier panel at the same event, JPMorgan CEO Jamie Dimon stressed the dangers of the present, particularly atomic proliferation and war, as well as the U.S. having one of the largest peacetime fiscal deficits in its history. Bridgewater Associates founder Ray Dalio, for his large, said he was pessimistic about the global economy, pointing to war, widening wealth gaps and growing societal divides.
Schwartz, notwithstanding how, expressed optimism about the longer term, pointing to what he called big drivers of activity: advances in health and longevity, technology and phony intelligence, and the energy transition.
“I think those are really significant drivers of economic activity, innovation, growth; they’re present to need lots of capital, we’ll need amazing thought leaders, we’ll need lots of global cooperation. And it’s hard not to be here today in the field,” he added, “particularly this morning hearing Yasir (Al-Rumayyan, Saudi Public Investment Fund chief) admonish, and not feel enthusiastic about the opportunity set.”