'Incredible alpha opportunities' in the year ahead despite headwinds, says Carlyle Group CEO Harvey Schwartz

cnbc.com:

Several of Wall Street's biggest names convened in Riyadh, Saudi Arabia, for the kingdom's annual Future Investment Initiative, during which they weighed in on risks and opportunities for investors and the global economy.

Bankers speaking on panel discussions notably stressed headwinds — particularly in the short term — from multiple wars, an economic slowdown and an environment of high inflation and high fiscal deficits.

When asked about the risk outlook, Carlyle Group CEO Harvey Schwartz, former president of Goldman Sachs, advised caution but remained positive about alpha opportunities. Carlyle Group is one of the world's largest private equity firms.

«I think this particular period, as we come out of a period of basically yield curve manipulation — which was done I think for very thoughtful reasons — but now we're shifting out of that into a totally different regime, I think there's reason for caution,» he said.

«But I think the year ahead will certainly present incredible alpha opportunities. But generally speaking I think we'll have more of a headwind than a tailwind, and my own personal view is as we adjust to this rate regime, I think there are going to be more challenges in the near term. It doesn't mean there won't be great alpha opportunities.»

In a drive to combat the surging inflation that followed massive Covid-19 economic stimulus around the world, central banks have carried out the steepest interest rate increases in decades. Monetary policymakers have hiked rates «by about 400 basis points on average in advanced economies since late 2021, and around 650 basis points in emerging market economies,» according to the International Monetary Fund.

This dynamic increases credit risk, making it harder for people