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Blackstone’s Schwarzman bets on V-Shaped Recovery

Mohit Oberoi
Author: Mohit Oberoi

Last Updated: June 23, 2020

Blackstone Group’s Steve Schwarzman (pictured) sees a V-shaped economic recovery from the coronavirus pandemic.

The global economy tanked in April and May due to the shutdowns due to the pandemic. Now, as economies have reopened and many business activities have resumed, there has been a revival in the global economy.

Schwarzman, cofounded Blackstone, the world’s largest alternate asset management firm, said “You’ll see a big V in terms of the economy going up for the next few months because it’s been closed. However, he cautioned that the economy will “take quite a while before we sync up and get back to 2019 levels,” speaking at an interview at Bloomberg Invest Global virtual event.

The asset manager’s comments come the day before Europe showed further signs of recovering from its historic downturn caused by the health crisis. The eurozone’s IHS/Markit flash PMIs (purchasing managers’ index) data released on Tuesday rose to 47.5 in June from 31.9 in May. The reading is very near 50 which separates contraction from expansion. In April it was a record low 13.6.

But not all are convinced. The June Bank of America global fund manager survey showed that only 18% of the surveyed fund managers expect a V-shaped recovery while 64% expect a more gradual W or U-shaped recovery.

Hedge fund manager Bill Ackman who shot to fame by correctly shorting the market in the first quarter expects economic recovery by the end of this year. He expects economy reaching normalized levels by the second half of 2021, citing the massive resources poured by governments and central banks.

US stock markets entered their fastest bear market earlier this year to break the record 11-year long bull market. However, the recovery has been equally swift and the S&P 500 is up almost 40% from March lows.

In April, Schwarzman said that Blackstone was “aggressively” looking to deploy $150bn of cash. He sounded positive on the recovery due to the US government’s fiscal stimulus.

Schwarzman is also positive on the Chinese economy and expects it to grow twice or thrice the growth rate of developed economies. Meanwhile, Chinese stock markets have actually been the worst-performing market over the last decade and the Shanghai Index is still below its 2007 highs.

Commenting on China. Jim Chanos said at the virtual conference, “It’s just not been, in aggregate, a great place for Western investors to put their money.”

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All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Mohit Oberoi

Mohit Oberoi is a freelance finance writer based in India. he has completed his MBA with finance as majors and also holds a CFA charter. He has over 13 years of experience in financial markets. He has been writing extensively on global markets for the last six years and has written over 6,500 articles. He mainly covers metals, electric vehicles, asset managers, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.

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