Apollo Global CEO warns: Fed's aggressive rate cuts may backfire
Apollo Global CEO Marc Rowan warned that the Federal Reserve's aggressive rate cuts may backfire, suggesting that current economic stimulus measures are no longer necessary. He pointed out the active financing and rising real estate prices, questioning the need for further rate cuts. Rowan also mentioned that Apollo's goal is to increase assets under management to $1.5 trillion within five years and may establish partnerships with more banks. He expressed concerns about the speed of government spending, stating that the United States is "spending the next generation's money."
Apollo Global Management Inc. CEO Marc Rowan said he believes there is no reason for the Federal Reserve to continue cutting interest rates to stimulate the economy.
"Financing remains active. Real estate prices are rising," Rowan said in an interview with Bloomberg TV on Wednesday. "It is not yet clear whether we need further rate cuts."
Federal Reserve officials decided last month to cut interest rates for the first time in four years, by 50 basis points. This week, Fed Chairman Powell's remarks indicated that rate cuts will continue, but the pace may slow down.
In an interview the day after Apollo's triennial Investor Day, Rowan expressed concerns about the Fed potentially overstimulating the economy.
He said, "To some extent, if we accelerate economic growth to the point where we have to go in the other direction, it won't be a good day."
Apollo revealed ambitious goals at its Investor Day on Tuesday, aiming to increase managed assets to $1.5 trillion within five years and generate $10 billion in annual revenue.
Rowan said on Wednesday that Apollo may partner with more banks, similar to the agreement with Citigroup to seek private credit investments. He mentioned that the company may establish international, investment-grade, and infrastructure-related partnerships.
The CEO noted that the gap between public investment-grade debt and private investment-grade debt continues to narrow, especially when credit rating agencies indicate their quality is the same.
"18 months from now, I believe investors won't know the difference," Rowan said. "Everything that exists in the public market will enter the private market."
He mentioned that these developments will also extend to the equity investment field. He stated that investors who are overly concentrated in a few large stocks, adding private investments to 401(k) portfolios could increase returns by 50%-60%.
Rowan also warned about the current pace of government spending, noting that the U.S. is "spending the next generation's money."