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Blackstone’s Schwarzman Isn’t Worried About High Valuations

Blackstone CEO Steve Schwarzman said markets could go up “for some time” even as geopolitical risk remains a concern.

  • Amy Whyte

Current market valuations may be high by absolute standards, but these prices are not overly high when factors like economic performance and impending tax reform are taken into account, according to Blackstone Group Chief Executive Officer Stephen Schwarzman.

Speaking at the 2017 Delivering Alpha conference, hosted by CNBC and Institutional Investor at the Pierre Hotel in New York, Schwarzman pointed to positive economic growth around the world and the promise of tax reform and infrastructure spending in the U.S. as events that could move markets higher.

“If you get tax reform, if you get an infrastructure bill that’s substantial, you could have the economy go up for some time,” he said.

Schwarzman said he believed tax reform would be accomplished before mid-term elections, if Republican politicians hope to remain in office. He estimated that the federal corporate tax rate would be cut to somewhere between 22 percent and 28 percent.

“There’s certainly consensus to do that,” he said. “I think the probability something gets done is quite high.”

[II Deep Dive: Schwarzman on Hedge Funds, Private Equity and Presidential Politics]

Until last month, Schwarzman had served in an official capacity as an advisor to President Donald Trump as the head of his strategy and policy forum. The council disbanded last month shortly after Trump failed to immediately and explicitly condemn the white-nationalist rally in Charlottesville, Virginia that ended in deadly violence. CEOs on the council had fallen under pressure from shareholders and employees to publicly distance themselves from the administration.

“People were under legitimate, astonishing pressure,” Schwarzman said. “I was accused of being a Nazi – I’m Jewish.”

The Blackstone CEO said he continues to speak to Trump, although he would not comment on how often or the exact nature of the relationship. He said he previously advised both President George W. Bush and President Barrack Obama, arguing that he has an obligation to serve regardless of which political party is in office.

“I’m a great believer that people who have a background that’s relevant should help their government and help society,” Schwarzman said. “Now that’s become a little controversial.”

The billionaire co-founder of Blackstone, the world’s largest private-equity firm, added that “we all have a higher obligation than just making money.”

Although Schwarzman said he believed economies around the world are currently “pretty good,” he warned that there are some major geopolitical risks, such as the threat of nuclear war with North Korea.

“There are some bad things going on,” he said. “Those are the things I think about.”