Global finance leaders flag shifting capital flows, AI impact at Milken – Image for illustrative purposes only (Image credits: Unsplash)
Beverly Hills, California – Executives from powerhouse firms like Blackstone and Carlyle filled the stage at the Milken Institute Global Conference on Monday, dissecting how artificial intelligence and geopolitical strains are redirecting global investments. The gathering highlighted a resilient U.S. economy navigating wars and uncertainties, even as leaders flagged potential disruptions from technology and energy shocks. Private markets emerged as a focal point, with speakers underscoring their role in a transforming financial landscape.[1][2]
Navigating Wars and Economic Endurance
Jonathan Gray, president and chief operating officer at Blackstone, pointed to recent crises, including a war that the UAE managed adeptly. He noted that initial nerves among investors gave way to sustained growth in the U.S. and global economies. Markets, he observed, continued to advance despite the challenges.
Ron O’Hanley, CEO of State Street, described the Iran conflict as a catalyst for major capital realignments. Gulf states and sovereign wealth funds have deployed $3.2 trillion outward, fueling investments worldwide. Oscar Fahlgren, chief investment officer at Mubadala Capital, warned of an impending severe energy crisis tied to the Strait of Hormuz closure, whose full effects remain unfelt.[2]
Private Credit Draws Scrutiny and Optimism
Jim Zelter, president of Apollo Global Management, shifted focus to private credit, calling recent concerns over business development companies a distraction from broader trends. He emphasized the vast pool of private capital and a swelling IPO pipeline, noting that companies no longer rush to public markets for funding. This evolution, he said, marked a departure from past practices.
Waleed Al Mokarrab Al Muhairi, deputy group CEO at Mubadala, viewed private credit as essential for unmet market demands. Growth in the asset class appears inevitable for skilled investors, though portfolios may require adjustments for resilience. Daniel Simkowitz, co-president of Morgan Stanley, saw current market noise as a setup for gains in upcoming mergers and acquisitions financing.[1]
AI’s Productivity Boost Versus Job Risks
Harvey Schwartz, CEO of Carlyle, embraced AI’s potential to enhance company outcomes, speed innovation, and lift productivity. He rejected fears of widespread unemployment, positioning himself firmly behind the technology’s upside. Private credit, he added, disperses risk unlike the concentrated exposures that plagued banks in 2008, framing current shifts as a healthy cycle adjustment.
Marcie Frost, CEO of CalPERS, praised AI as remarkable yet cautioned about its toll on entry-level roles, particularly in the gig economy where retraining lags. She raised parallel worries over retail investors entering private equity without adequate liquidity safeguards. Meanwhile, George Goncalves, U.S. macro strategy head at MUFG, depicted a split global economy where AI-fueled sectors thrive amid neglected legacy industries.
Karen Karniol-Tambour, co-chief investment officer at Bridgewater Associates, characterized the economy as robust due to steady, non-demand-driven spending. Inflation persists in tangible areas like data centers, power, and defense, constrained by supply limits. Employment impacts remain muted, making official figures appear stronger than ground-level realities.[2]
Emerging Patterns in Capital Allocation
André Esteves, chairman of BTG Pactual, observed no exodus from the U.S. but rather diversified inflows, reviving emerging markets after years in the shadows. Rising rates abroad, including in Japan, now challenge U.S. dominance after decades of low-rate advantages. Frederick Pollock, chief investment officer at GCM Grosvenor, found no broad mispricing in credit markets, only localized opportunities amid disruptions like AI.
John Vibert, head of credit at PGIM, noted markets pricing near perfection while overlooking geopolitical hazards. These dynamics suggest investors must adapt to a more competitive, fragmented flow of funds.
Key Insights from Milken Speakers:
- Private credit distributes risk, unlike banks in past crises.
- AI drives productivity but threatens entry jobs and fuels inflation via infrastructure.
- Gulf funds’ $3.2 trillion shifts capital globally amid wars.
- Emerging markets regain appeal as rates compete worldwide.
The conference underscored finance’s pivot toward adaptability in an era of technological leaps and international frictions. Leaders projected continued market strength, tempered by vigilance on energy vulnerabilities and labor transitions. As these forces unfold, the strategies debated at Milken will shape investment paths ahead.[1]