Billionaire private equity tycoon Steve Schwarzman, the CEO of $439 billion Blackstone (BX), was asked what keeps him up at night at the conclusion of the firm’s investor day at the Plaza Hotel in New York on Friday.
“I was up at 4:30 so obviously things do keep me up at night, or at least wake me up early,” Schwarzman quipped.
Before answering, he praised the firm’s leadership for speaking and noted that the investor day was the “quietest” he’s been in his life other than “being on a boat alone.”
Schwarzman said that “there’s always odd stuff going on” in the world. It’s “the geopolitical stuff” that worries him the most. Specifically, it’s the populism, not just in the U.S., but globally, that keeps him up.
“The biggest risks we face”
“On the broader sense, sort of the nationalism, the tribalism, the breaking to either the right or the left in the developed world, is concerning as a trend,” he said. “There used to be centers in almost every democratic country. And now the concept of the center is really being tested. And as things lurch from right to left, populism grows, you could end up, not particularly for Blackstone, but more for business communities in the broadest sense, with some outcomes that aren’t as expected and not as predictable. This area, rather than the laws of normal supply and demand, I think, are the biggest risks that we face.”
Schwarzman added that he spends personal time looking at how this trend could affect the firm and the country.
“I think these are big trends, and, you know, almost every country is dealing with it. You can go over in Europe and every other place and the U.S has its own version. I think one of the challenges [for] people of the next generation if you will and our generation in the business community is to find a way to have some normalization. It’s going the wrong way, I think.”
Schwarzman noted that the global economy is “quite good,” with the U.S. leading the way. In the U.S., the deregulation trend has been a “really good” and so has tax reform, which he added is “paying real dividends.”
“If we look at unemployment being at record lows, confidence being at record highs, really, it’s sort of easy to have a very positive conclusion,” he said.
Those good metrics are here for the moment.
“They’ll stay awhile,” Schwarzman said. “Certainly, for the next few years. I don’t know when that game ends. It usually ends with some event that you didn’t plan on.”
To be sure, a normal business cycle can get interrupted.
“Fraying for geopolitical reasons — that hasn’t yet been reflected in the numbers,” Schwarzman said. “I think we have to find a way to move that back. Anyhow, that’s a longer answer than you want.”
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter. Send tips to firstname.lastname@example.org.
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