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Blackstone’s Jonathan Gray On Private Equity And Real Estate Investments

CNBC’s David Faber interviews Jonathan Gray, Blackstone COO and president, at the 2018 Delivering Alpha conference.

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Blackstone's Jonathan Gray
Image source: CNBC Video Screenshot

Blackstone's Jonathan Gray On Private Equity And Real Estate

Transcript

Thank you for doing this. Great to be back here again. We always appreciate it. You're a veteran of Delivering Alpha. Earlier today Jim Cramer interviewed Larry Kudlow and it seems to me Kudlow had. In particular remarks on China that were. Strident. And did not seem particularly.

Lending themselves to the idea that we're making progress. You're launching your first P fund in China. You're launching your second real estate fund there you rely on time to a certain extent I would think for Flo's as well in terms of investing in various products in Asia. But yes Chen and China will be part of it.

And as you pointed out many times Asia is two thirds I think of the growth overall of global growth. China is an important part of that. So give me your take. Are you concerned about what seems to be the growing tensions still between our country in China.

So we think of ourselves as long term investors that if you get caught up in the News of the day it can be very disconcerting. We saw that with North Korea a year ago and we tried to step back and see what's going on here and I think a couple things are happening. One is the parties involved here. There is conflict but they recognize that if there was a sharp cessation of trade a real trade war it would have negative impacts on both sides. And there is a collective self-interest to try to resolve this. That's the first thing I'd say. The second thing is I think all the parties recognize and in the case of China as well that there needs to be a rebalancing that China has historically not had as open of a market and that needs to change. And so I think the overall picture is one of these should be a resolution. The fight is really about the extent of that shift in rebalancing. Now is this going to be easy or clean will it happen fast. I don't think so. There are a lot of big issues at stake and there will be some volatility along the way. But I do think if you look at the broader trade issue the same underpinnings exist. It sounds like there's probably more progress on the NAFTA front may maybe behind that Europe in China given the scale of the issues is behind that. But if you step back looking at it from a long term perspective we believe there should be some resolution here but there is obviously risk for all of us as investors.

Right. All right. So but if it gets bad before it gets better. How do you. I mean obviously we don't know what's going to happen but how do you view it from Blackstones perspective. Well for a lot of businesses that are domestically focused the impact is less for businesses in the service area less of an impact.

When you start thinking about folks in the global supply chain. So if you're an exporter or you're a retailer I think you have to start to factor in some potential friction. There could be some interruption your cost of goods sold could go up. And so I think you've got to incorporate that in investing but not necessarily as broadly and I would say the bigger trend today this is getting obviously the most attention today. But the biggest focus probably should be on the strength of theU.S. economy which has proven to be I think much stronger than most people realize. So. I believe fundamentally these will get resolved. There'll be volatility and there is risk and escalation could happen but in the fullness of time we're hopeful that the parties will self.

You know I hear this a lot. Of course we bring people on all the time on CNBC. There does seem to be this continued belief that rationality will prevail. But I mean Steve Schwarzman your CEO who spent a lot of time in China on your earnings call on the 19th of April was saying China trade look good and NAFTA was a few weeks away.