Global finance leaders flag shifting capital flows, AI impact at Milken
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May 4 : Top global investors and executives gathered at the Milken Institute Global Conference in Beverly Hills on Monday to discuss geopolitical tensions, private credit risks and opportunities, shifting capital flows and the economic impact of artificial intelligence.
Here is what they had to say:
JONATHAN GRAY, PRESIDENT AND CHIEF OPERATING OFFICER, BLACKSTONE
"Now we have this war, which the UAE has done an extraordinary job navigating. Through each of those crises, the people in this room, all of us, would have said, 'Oh, I'm nervous. What's going to happen?' And yet the US economy and the global economy powered through, the markets powered through and my expectation is that will continue."
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JIM ZELTER, PRESIDENT, APOLLO GLOBAL MANAGEMENT
"It's going to be a variety of private credit conversations. And so, for a few of us on the stage who have been asked about the private credit issues the last six to eight months, last eight weeks or whatever, it's such a small area of the BDCs (Business Development Companies).
"It's really missing the big plot. The big plot is the ocean of private capital in aggregate. And if we ask ourselves, there's a massive IPO pipeline.
"In the past, you went public because you needed access to capital. Well, the last four or five years have shown us that that's not the case anymore."
WALEED AL MOKARRAB AL MUHAIRI, DEPUTY GROUP CEO, MUBADALA
"Private credit is really interesting for the reason that it is filling a market need. Now, it may be that you have to design your portfolio a little bit differently. It may be that you want to look at resiliency, but it is inexorable that this asset class is going to grow and that it is doing okay as long as you're a good picker."
RON O'HANLEY, CEO, STATE STREET
"The Iran war, and what that is triggering now, I believe will be a big realignment of capital flows. There's $3.2 trillion that the Gulf states and the various sovereign wealth funds have deployed now, and that has been an enormous export of capital to lots of people in this room, really, all over the world."
HARVEY SCHWARTZ, CEO, CARLYLE
"I think the real win (from AI) is when you see companies delivering better outcomes, innovating faster and actually being more productive. So I'm a buyer of the productivity story.
"I'm not a buyer of the, you know, we have massive unemployment. I just, I'm not an advocate of that scenario.
"I think there are a number of concerns that I would describe as important but not systemic that are being conflated. And now, there's this narrative around systemic out there, and I do not think that is right. I think that we are probably seeing a move into a different part of the credit cycle. I would argue that that is healthy.
"If you go back to 2008, why the system suffered was that it was banks that were at the center. Banks are concentrators of risk. All that risk was concentrated and a financial crisis turned into an economic crisis. Private credit is exactly the opposite, it is a distributor of risk."
MARCIE FROST, CEO, CALPERS
"I think (AI is) wonderful, wonderful technology, but it will disrupt these entry-level positions. And then, are there really retraining programs for the gig economy? Probably not. They would have to do that on their own as independent contractors.
"I think some of the more recent headlines around software and exposure in the debt markets were partially related to retail investors having access. And were these instruments really set up for the liquidity requirements that would have been necessary, I would have the same concerns about retail investors accessing private equity in the same way."
DANIEL SIMKOWITZ, CO-PRESIDENT, MORGAN STANLEY
"I would say we think the noise is overdone in private credit, but that will create an opportunity. There is an M&A wave coming. The financing of that M&A wave, especially given some of the noise, is going to enable some alpha to be generated by being the financier into that M&A market."
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