David Rosenberg. Jonathan Ernst / Reuters
- David Rubenstein predicted stubborn inflation and warned that recession fears could freeze markets.
- The Carlyle billionaire predicted a return to dealmaking in 2022 after a quiet year.
- Rubenstein pointed to private equity’s industry track record and global growth opportunities.
David Rubenstein casts doubt on a full inflation reset, marking a major downside to recession concerns, and predicts a rebound in dealmaking this year.
The billionaire investor and Carlyle cofounder also predicted better returns in private markets than in public markets and outlined global growth opportunities for private equity. He weighed in during a recent episode of the “Exchange at Goldman Sachs” podcast.
Here are 6 of Rubenstein’s best quotes, lightly edited for length and clarity:
1. “People are probably willing to accept 3% as acceptable, given where we’ve been recently. I suspect 3% will probably be the norm for a while. Trying to get to 2% and quickly By getting there, you’re almost certainly going to get a very high unemployment rate.” (He was discussing the outlook for inflation, which topped 9% last summer and remained north of 6% in December, well above the Federal Reserve’s 2% target.)
2. “When you don’t know whether you’re going into a recession, it freezes the markets. Buyers are afraid to buy in a recession, and sellers don’t want to be seen as giving something away. There they are.” There’s a big difference in what you feel the property is worth.”
3. “As it becomes clear that we’re not going into a deep recession, and as interest rates decline or don’t rise as much in 2022, I suspect you’ll see more and more deal activity.” Last year was a relatively modest year for activity. I suspect 2023 will be better.”
4. “From the time I first came into the industry in 1987, to when I helped start Carlyle, people said: ‘There’s too much money in private equity. The price we’re paying is too high. Returns No. It will be as spectacular as people had predicted. They’ve been wrong almost every year.”
5. “Almost every year for the past 30 years or more, private equity has outperformed public-market indexes by anywhere from 200 to 500 basis points, on average. I suspect this will continue, and that’s partly because the economic incentives are incredible. If you do well you get 20% of the profit on someone else’s money, in some cases above the minimum return. As a result, I think people are highly motivated to do well , And they are very careful.”
6. “I’m not really concerned that there’s too much money behind too few deals. Remember, two-thirds of all private-equity deals are done in Western Europe and the United States. The world’s largest population That’s still a relatively modest penetration of private equity. (Rubenstein pointed to China, India, Latin America, Africa, and especially the Middle East as attractive growth markets for private equity.)
Read more: David Rubenstein considers Warren Buffett the ultimate investor. Carlyle Billionaires outlines the 12 traits and habits that are key to Buffett’s success.
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Source: markets.businessinsider.com
