Conference Presentation, Panel, Fireside Chat
Navigating the Crosscurrents: Global Macro and Investment Outlook | Middle East & Africa Summit 2025
- Market volatility is expected to persist for the next 12 to 24 months and beyond, with the 10-year U.S. Treasury rate forecast to trade between 3.5% and 5%, anchored by a Federal Reserve entering a third or fourth year of this range; neutral Fed funds are projected at 3%, with at least two additional rate cuts anticipated this month and in the near future.
- U.S. economic growth is predicted to remain at approximately 2% real GDP for the current and next year, maintaining a steady state or equilibrium through mid-2026 without significant recessionary triggers, while demographic headwinds in developed economies may be offset by growth opportunities in emerging markets and specific Asian nations including China, India, Korea, and Japan.
- Artificial intelligence is anticipated to drive a technology super cycle and a productivity boost over the next five to eight years, potentially disrupting SaaS multiples, reducing film production costs to 10 cents on the dollar of three-year-old levels, and replacing traditional junior analyst tasks, though volatility and adoption setbacks may occur as use cases evolve from back-office automation to institutional investment decision-making.
- Investment returns over the next decade are expected to be driven by regions and sectors mastering themes of AI, power availability, communications, education, and demographics, with the U.S. allocation expected to remain at 42% and U.S. and Japanese equity markets forecast to lead global returns due to structural reforms and technological leadership.
- Specific sector outlooks include private credit potentially being over-extended but remaining stable if diversified, pharmaceutical M&A from China expected to rise in the next two to three years, public equity valuations appearing "bubbly but not a bubble" similar to the dot-com era, and data center financing facing obsolescence risks regarding residual values and debt levels.
- Risks identified include a potential divergence between top-tier innovators and the broader market, medium-term income inequality gaps due to uneven technology adoption, systemic risks from excessive leverage and insufficient liquidity, and the possibility of a gray or black swan event if technological integration speeds vary significantly across governments.
- Capital allocation strategies suggest corporations will direct incremental funds toward compute and technology rather than mass hiring as rates fall, while Eldridge requires at least 5.25% returns to accept risk-free rates currently above 5%, and Mubadala anticipates returns from thematic investing despite a noisy environment.