Silver as an investment

Signs From The Peak: Carlyle Group’s Rubenstein Admits “Never Been Easier” To Raise Money

In the latest indication of just how much money is sloshing around the global financial system after nine years of unceasing central bank asset purchases, Carlyle Group co-founder David Rubenstein admits that it’s “never been easier” to raise money.

In an interview with Bloomberg News, Rubenstein said he’s seeing more money flowing into private equity right now than at any point during his three-decade career, even as the facile “global synchronous recovery” narrative is unraveling.

Rubenstein

He added that raising money is “one of the biggest trends” in asset management, he said. Of course, when investors are handing out money to anybody with a CFA, that’s a clear warning to be careful.

The private equity industry brought in $453 billion globally in 2017, according to Preqin data cited by Bloomberg. And that sum is expected to climb as higher yields push investors to look for better returns.

Carlyle alone is purportedly on track to meet a four-year fundraising goal of $100 billion by the end of 2019, Rubenstein said. He expects to raise $25 billion this year, following $43.3 billion raised in 2017.

“When you take a look at what the biggest trends are right now, number one: There is a lot of money that’s being raised,” Rubenstein said at a conference hosted by the Investment Company Institute in Washington Tuesday.

“It’s easier to raise money than anytime I’ve been in the business over the past 30 years or so.”

Of course, nobody can say with certainty where exactly we are in the business cycle (for all we know, we could be in the middle of the longest expansion on record, or the recession could be just around the corner). But not everybody shares Rubenstein’s optimism. Bank of America’s Michael Hartnett said in his latest report that we are now “so long in the vermouth” that the late-cycle is getting “tipsy”.

And when growth falters, there isn’t much the Fed will be able to do. As the chart shows, we’ve reached peak policy stimulus as the unemployment rate has fallen to its lowest level in a decade.

Policy

And the liquidity supernova that has kept asset prices inflated is due to disappear as central banks start reducing their asset purchases.

Supernova

But Rubenstein’s firm likely stands to benefit in either case. If a recession does arrive in 2019, something that many investors, including Jeffrey Gundlach, fear could happen, interest rates would likely be wrestled lower again, bolstering the appeal of private equity and other investment strategies that can offer better returns.