A higher-for-longer interest rate regime impacts every asset class, and in Michael Arougheti’s case, it’s a tailwind.
Leslie Picker sat down with the Ares Management CEO just a year after their first conversation for this newsletter. Arougheti said the private credit giant is benefiting from rising rates from a relative return perspective.
From the data points from the 3,000 portfolio companies Ares lends to and invests in, he said he has seen “fundamental strength despite the rise in rates.”
It might be a different story for the public markets, especially equities, which have taken a beating from the Fed’s latest plan to keep rates higher for longer. A new CNBC Delivering Alpha investor survey showed the majority of Wall Street investors believe the stock market’s gain this year has just been a bear market bounce, seeing losses on the horizon.
Stocks have given back a chuck of 2023’s gains as the benchmark 10-year Treasury yield popped to its highest levels since 2007. Surging bond yields are not the only thing that kept investors on edge. A rally in crude oil — coupled with an economic slowdown in China and a strong U.S. dollar — have raised concern once again that a recession could take hold.
The 13th annual CNBC Delivering Alpha Investor summit will be an opportunity to hear from top investors about how they are navigating the tricky environment for various asset classes– equities, commodities, real estate, credit, alternatives and beyond.
We polled about 300 chief investment officers, equity strategists, portfolio managers and CNBC contributors who manage money about where they stood on the markets for the rest of 2023 and beyond. The survey was conducted this week.
More than 60% of respondents believe the stock market’s gain this year has just been a bear market bounce, seeing more trouble ahead. A total of 39% of investors believe we are already in a new bull market.
The S&P 500 has fallen more than 5% this month alone, cutting its 2023 gains to 11%. Stocks struggled as the Federal Reserve signaled higher interest rates for longer, sending bond yields higher. The market also contended with a rally in crude oil as well as a 10-week winning streak in the dollar.
Asked about the probability for a recession, 41% of survey respondents said they expect one in the middle of 2024, and 23% said a downturn will arrive later than 12 months from now. Only 14% said they don’t expect a recession.
Bill Ackman said he still thinks long-term Treasury yields will continue to rise, potentially to levels not seen since before the great financial crisis. The investor said he did not believe the Federal Reserve could get inflation back down to its 2% target due to a resurgent labor movement and high energy prices.
Steve Eisman says the whole bank sector is ‘uninvestable’