Blackstone CEO: Inflation Overstated, Fed Rate Cut Delayedᐧ

Key Takeaway
Blackstone CEO Stephen Schwarzman asserts inflation is near 2%, challenging the higher CPI figures and suggesting the Fed could overextend its rate policy.
Schwarzman predicts rate cuts in the second half of 2024, contrary to market expectations of cuts starting as early as March.
Despite questioning Fed data, Schwarzman commends their handling of inflation, while Blackstone shares outperform with a 250% increase over five years.
Reassessing Inflation: Blackstone's Perspective
Stephen Schwarzman, CEO of Blackstone, challenges the current inflation narrative, suggesting that actual inflation is closer to 2%, significantly lower than the official Consumer Price Index (CPI) figures. The CPI showed an annual gain of 3.4% in December, up from 3.1% in November, while core CPI was at 3.9%. Schwarzman's analysis, based on data from Blackstone's extensive portfolio, indicates that the Fed's numbers might be overstated by 1.5 to 1.7 percentage points, particularly in the shelter category, which is a substantial component of the CPI calculation.
Fed's Rate Path and Market Expectations
Despite market expectations of six or seven rate cuts from the Fed in the coming year, Schwarzman predicts that rate cuts will occur in the second half of 2024, later than many anticipate. This is based on his belief that the Fed's reliance on official inflation numbers may lead to a more prolonged period of higher interest rates. He commends the Fed for managing to orchestrate what seems to be a soft landing, bringing down high inflation without triggering a recession.
Blackstone's Market Position and Growth
Blackstone has seen its market value grow to $141 billion, with shares soaring more than 250% over the past five years, outperforming the S&P 500. Schwarzman attributes this success to the company's ability to innovate and observe market trends that others may not see, thanks to the vast amount of data produced by their numerous portfolio companies. Analysts rate Blackstone as Overweight, and the company has recently gained attention for its viral Taylor Swift-themed Christmas video, highlighting its presence in the alternative-assets market. $S&P 500 Index(.SPX.US)$ $Dow Jones Industrial Average(.DJI.US)$ $Nasdaq Composite Index(.IXIC.US)$ $Invesco QQQ Trust(QQQ.US)$ $SPDR S&P 500 ETF(SPY.US)$