Co-CEO/Co-Founder of Carlyle Group Inc. David Rubenstein joined Bloomberg Television’s “Bloomberg <GO>” at the SALT Conference in Las Vegas this morning to discuss the hedge fund industry, the 2016 Presidential race, economic impact of the turmoil in Brazil.
- He’s surprised macro hedge funds ‘got it wrong’, and believes the hedge fund industry will thrive again: “It does seem surprising that so many macro people got it wrong…But many of them will probably do pretty well in the future. I suspect when returns come back the industry will thrive again.”
- He thinks it’s a mistake to say it’s impossible for Trump to win, but he gives the odds to Clinton in a race against Trump: “I’d say you have to give the odds to Hillary Clinton. I think she probably — because of the electoral map and the minority factor that I mentioned, is probably more likely to win. I think most people would say that. But anybody who says it’s impossible for Donald Trump to win I think is making a mistake, and I think the people in the Hillary Clinton campaign would agree with that.”
- He believes the next president will face a recession: “I think there’s no doubt that whoever’s president, we’re likely to have a low growth period of time. We’ve been growing at relatively modest rates, and we are due for more of an economic slowdown than we probably have had over the last couple years. Our last recession ended in June of 2009. Typically, you have seven years between recessions. It could go 8 years, maybe 8.5, it doesn’t usually go 10 or 11 years, so probably in the first term of the next president, we’ll probably have something close to a recession or something that might be close to very low growth.”
- He thinks the economic impact of political turmoil in Brazil will not get worse and is optimistic about the country’s future: “It’s been the biggest recession they’ve had in 80 years, so I think it’s likely to get better…I don’t think it’s likely to get worse. I think the worst has occurred in Brazil and I do think that ultimately the trend is positive and many of our people in Brazil feel that while it’s been a challenging time, it’s likely to get better over the next couple of years.”
David Rubenstein on the hedge fund industry
David Rubenstein on the U.S. election
David Rubenstein on Trump
David Rubenstein on Brazil
Full transcript below; Bloomberg News story link.
**CREDIT: “Bloomberg Television”
Erik Schatzker, Bloomberg Host: I am here with David Rubenstein at, as you say — David, good morning to you.
David Rubenstein, Co-CEO and Co-Founder, Carlyle Group: Good morning. My pleasure to be here.
Erik Schatzker: Well, it’s our pleasure to have you. I can’t decide where to begin. Should we begin with hedge funds or should we begin with Donald Trump? I’m going to leave that choice to you.
David Rubenstein: Well, you’re the interviewer, so what do you think makes the most sense?
Erik Schatzker: Why don’t we start with Trump because I think hedge funds makes more sense a little later because that is a nice segue into the rest of your business. So, when you spoke on Carlyle’s first quarter conference call, you seemed quite positive about the economy relative to where you had been three months earlier. You seemed fairly positive about market conditions. And I’m wondering to myself what you think a Trump president — first of all, is a Trump presidency a possibility? Why don’t I ask you that question first.
David Rubenstein: When I was young, I worked in the White House for Jimmy Carter and we begged to run against Ronald Reagan. We said he was old, he was 69, we said that he didn’t really know the issues that well, we said he really was too far to the right and didn’t really have a clear message that we thought would resonate with the American people. We proved to be wrong. So I think you have to be very careful what you wish for in politics, so I think at this point it’d be difficult to say either Hillary or Donald Trump couldn’t win. I think both have good chances of winning, but it depends on voters in the Midwest, in my view.
Erik Schatzker: Well, you’re quite a — for those who don’t know, a politically savvy individual. You live and work in Washington and you know many people on Capitol Hill and in the White House and in previous White Houses, including, of course, the one that you worked in. The electoral map suggests otherwise, right? People counting the electoral college numbers come up with a conclusion that Hillary Clinton is going to win decisively.
David Rubenstein: Well, that is based on this, and I wouldn’t say it’s impossible, but if you go through the last six presidential elections and Hillary Clinton were to win this time the same states that went Democratic the last six, she’d have 242 electoral votes. If she had the same states that went Democratic the last five out of the six, she’d have 257, 13 short of what you need, 270. But Donald Trump may be able to get votes in the Midwest, so-called white male vote, Reagan Democrats, and may be able to take away states that traditionally went Democratic. But there’s no doubt that she has an electoral map advantage. She also has an advantage that the minority vote is increasing. When John Kennedy ran for president of the United States in 1960, 92 percent of the voters were white Caucasians. This time, it will be 70 percent, and it’s likely that she’ll get a majority of, a very big majority of those voters, but put on the other side this factor. Since World War II, we’ve had six times where a president of the United States served two consecutive terms. In five out of those six, the party switched the next time. Only time that didn’t happen was when George Herbert Walker Bush succeeded Ronald Reagan, so you don’t know what could happen. The country might be more conservative. When Barack Obama was elected, the senate was Democratic, the house was Democratic, a majority of the governors were Democratic, and there were 800 more Democratic legislative seats than there are today, so maybe the country’s become more conservative or more Republican. So it’s too early to say.
Erik Schatzker: When you say that either Hillary or Donald Trump could win the election, are you suggesting that the odds are 50/50?
David Rubenstein: I wouldn’t say 50/50. I’d say you have to give the odds to Hillary Clinton. I think she probably — because of the electoral map and the minority factor that I mentioned, is probably more likely to win. I think most people would say that. But anybody who says it’s impossible for Donald Trump to win I think is making a mistake, and I think the people in the Hillary Clinton campaign would agree with that. They’re not going to just say, well,