Panel, Conference Presentation
Global Investment Outlook: Investing in a Shared Future | Middle East and Africa Summit
Milken InstituteDan Murphy, His Excellency Waleed Al Mokarrab Al Muhairi, Katie Koch, Tony Minella, Anne Walsh
- Mubadala anticipates a growth trajectory over the next five to ten years mirroring the previous decade's performance, driven by a conviction-based capital deployment strategy, while noting that U.S. growth may continue if regulations are reduced and regional conflicts are dampened, though the path will not be linear.
- Geographically, the United States is expected to experience a prolonged period of prosperity despite inflation or risk-reward headwinds, whereas Europe presents challenges offering tactical opportunities for outsized returns, and Asia is projected to remain a global growth engine for the next five to ten years.
- Outlooks for 2025 are described as cautiously optimistic with a probability of positive outcomes outweighing negatives, though TCW warns that volatility is likely to return to markets, potentially within five minutes of a significant volatility event in July.
- TCW predicts a scenario where equity markets roll over quickly with widening credit spreads if a market break occurs, likely initiating in the riskier segments of the credit market or potentially within opaque private markets.
- TCW forecasts that the Federal Reserve will cut interest rates slightly more than currently priced in, influencing positioning at the front end of the yield curve, while the speaker acknowledges a belief that business cycles will eventually be predictable.
- Eldridge Industries plans to consolidate investment management businesses under a single Eldridge-branded holding company and expects to generate returns in the 9% to 10% range for asset-based finance and opportunistic real estate lending in gateway cities.
- Guggenheim Partners intends to adjust fixed-income duration based on a predicted 3.5% to 4.5% trading range for the 10-year treasury and anticipates an extraordinary opportunity for asset-backed finance assets to move private, structured as investment grade or mezzanine.
- Regarding the Trump administration, Guggenheim expects tariffs to be used as a negotiating tactic regarding the drug trade and immigration, leading to a less inflationary outcome and allowing global central banks, particularly the Fed, to see inflation decline if measures are targeted.
- U.S. fiscal expenditure is expected to remain at massive levels with only a small reduction in deficit spending in the short run, contributing to high fixed-income volatility over the next two years driven by fiscal policy and down-ballot government positions.
- Real estate and infrastructure are expected to benefit from a stable, accommodative rate backdrop with a trajectory for lower rates, while the speaker predicts a continuation of reshoring, nearshoring, and freight-shoring trends with trillions invested in manufacturing, logistics, and transportation equipment.
- Eldridge expects to increase its portfolio allocation toward Middle Market Equity (MES) and warrants over time, building on previous hybrid strategies, while Mubadala maintains a personal bias toward a future weakening of the U.S. dollar.
- Risk factors include the potential for the 2024 election result to impose a "governor on growth" due to voter focus on inflation, the U.S. current account deficit becoming a growth constraint if the 10-year treasury misbehaves, and persistent geopolitical uncertainty involving political shocks to stable regimes.
- While the U.S. Department of Government Efficiency (Doge) is expected to reduce costs potentially strengthening the dollar, the speaker notes that only a finite amount of costs can be eliminated.