(Bloomberg) -- Blackstone Inc. Chief Financial Officer Michael Chae said the firm is “cautiously optimistic about a soft landing,” signaling the alternative asset manager is betting the Federal Reserve’s efforts to tamp down inflation won’t trigger a US recession.
“Soft landings are hard to land,” Chae said Wednesday at the Barclays Global Financial Services Conference. “They’re pretty rare in history — but where we sit today looks pretty encouraging.”
Bureau of Labor Statistics data paint a mixed picture of inflation and set the stage for a more gradual pace of rate cuts. The core consumer price index — which excludes energy and food costs — rose 0.3% last month from July, the most in four months, according to new BLS data. Still, overall CPI eased for the fifth straight month, climbing 2.5% from a year earlier.
Blackstone’s own measure of inflation — stripping out shelter costs and adding other metrics — puts that measure at 1.7%, according to Chae. This would make the US “at target” for inflation, he said.
Wall Street generally expects the Fed to cut interest rates after a series of raises that began in March 2022. While these expectations typically rely on CPI numbers and employment statistics, Blackstone also mines data from its vast portfolio that spans real estate, buyouts and financing.
The data gathered from Blackstone — the world’s largest alternative asset manager — indicate that labor markets have been softening, according to Chae. Blackstone portfolio company chief executives said they expect wage growth to moderate in the coming year, according to a June survey.
While there’s “decelerating revenue growth” across Blackstone’s global portfolio, those businesses have shown “resilient margins,” Chae said.
The finance chief also signaled optimism about a deal comeback after a years-long drought.
“We’re seeing signs of the return of animal spirits in the transaction market,” Chae said. “If these trends hold, I think that could in particular lead to a pretty robust 2025.”