(Yahoo! Finance) - Some of the top figures on Wall Street sound more concerned about the persistence of inflation than the occupant of the Oval Office in 2025.
"I do believe we have greater embedded inflation in the world than we've ever seen," BlackRock (BLK) CEO Larry Fink said Tuesday at the Future Investment Initiative in Saudi Arabia, adding that "no one is asking the question, 'At what cost?'"
Few of the Wall Street figures who attended the annual Future Investment Initiative confab were willing to offer a strong prediction on whether Kamala Harris or Donald Trump would win on Nov. 5.
Citadel CEO Ken Griffin said, "It is a race that Trump is favored to win, but it's almost a coin toss."
Trump supporter and Blackstone (BX) CEO Stephen Schwarzman admitted he wasn’t sure who would win but said Trump "has a much better base of knowledge of how that job works" than he did in 2016.
Apollo (APO) CEO Marc Rowan said that "if Trump wins," he expects more mergers and acquisitions to happen (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
No matter who wins the election, most finance bosses are concerned that inflation will prove to be stickier than expected. Thus they aren't expecting interest rates to come down as quickly as traders currently expect.
"We're not going to see interest rates as low as people are forecasting," BlackRock’s Fink said.
The Fed is expected by traders to lower interest rates next week by another 25 basis points and then again in December, following an initial 50 basis point cut in September. The September cut was the first in more than four years, following an aggressive campaign by the central bank to tamp down inflation.
But when asked by one moderator Tuesday in Saudi Arabia to raise their hands if they expected the Fed to bring rates down by a further 50 basis points this year, not one finance boss on a panel did so.
The group included Carlyle (CG) CEO Harvey Schwartz, Citigroup CEO Jane Fraser, Goldman Sachs CEO David Solomon, Morgan Stanley (MS) CEO Ted Pick, and State Street (STT) CEO Ron O'Hanley.
"Inflation is more embedded in the global economy than the current narrative," Solomon said. "That doesn't mean that it's going to rear its head in a particularly ugly way, but I do think there's a potential, depending on policy actions that are taken."
JPMorgan Chase (JPM) CEO Jamie Dimon said Monday at an annual convention held by the American Bankers Association that he also is worried about the return of rising inflation.
"Inflation, in my view, may not go away so quickly," he said, pointing to longer-term trends that suggest it could rebound as it did during the 1970s.
Part of the inflationary concern from Wall Street is that US government spending under either party will keep rising.
Both Vice President Harris and former President Donald Trump have proposed economic policies on the campaign trail that could add trillions to the US debt, according to the nonpartisan Committee for a Responsible Federal Budget, although Trump’s policies would add more.
"We're dealing with significant deficits and actually strong economic conditions," Carlyle’s Schwartz said Tuesday.
Rowan with Apollo cited the government's increase of defense production and two landmark laws passed during President Joe Biden's term as examples of actions that are "stimulative" and "inflating."
"I'm trying to remember why we're cutting rates."
At this same event last year, many of the same CEOs were much gloomier about the global economy’s near future.
They were still waiting to see the impact of high interest rates on the US economy as the geopolitical environment was growing increasingly hostile. The outbreak of the Israel-Hamas war took place just weeks before last year’s event.
That conflict isn’t over, nor is a war in Ukraine. Yet the stocks of many big banks, money managers, and private equity firms run by the CEOs at the Saudi Arabia conference are all up by at least 40% from a year ago.
"The good news is that this time last year, there were all sorts of prognostications of a global recession, and we've largely avoided that," State Street’s O'Hanley said Tuesday.
By David Hollerith - Senior Reporter
