The recent run-up in domestic equity markets is being fueled by expectations of pro-business reform, and those hopes are not "unreasonable," according to Blackstone Group LP's top executive.
Chairman and CEO Stephen Schwarzman on an earnings call said current market dynamics, which have fueled major indexes' rise to repeated record highs, could continue for some time. Schwarzman, who in December 2016 was named chairman of President Donald Trump's strategic and policy forum, said the country was likely to develop a more "pro-growth posture" under the new administration and a Republican-controlled Congress. While Schwarzman acknowledged anxiety about potential policy changes, he said that those changes are aimed at radically boosting GDP growth. The country could see annual GDP jump by double the average of the prior eight years, Schwarzman added.
The Blackstone chief noted that, while the alternative asset manager has global capabilities, it remains very much a U.S-focused company. Schwarzman said he is very optimistic about the company's prospects given what he sees as the potential for much stronger economic growth.
"I expect that we will see greater capital inflows and more opportunities to have realizations as international capital is attracted to the United States," he added.
Executives on the call highlighted policy changes in healthcare, energy, infrastructure and a more favorable view towards financial institutions as areas that could benefit Blackstone. Management acknowledged that it has been looking at infrastructure in particular for some time and would be launching a new fund in that space, but declined to give specific details about those plans.