Blackstone Inc. · NYSE:BX
Blackstone — Q2 2023 Earnings Presentation
17 slides from Blackstone's earnings presentation, April 2023
Slide 1: Opportunities Are Brewing
Opportunities Are Brewing APRIL 2023 Joseph Zidle Chief Investment Strategist Senior Managing Director, Private Wealth Solutions Byron R. Wien Vice Chairman, Private Wealth Solutions Blackstone To receiveInvestment Strategycommentary publications, please email [email protected] futur
Slide 2: A Remarkable First Quarter
JOE ZIDLE AND BYRON WIEN: INTRODUCTION A Remarkable First Quarter The good news is that, as shown in this presentation, the latest data suggest that policymakers have been successful in stemming the The first quarter of 2023 was remarkable. There was historic volatility bleeding so far as bank depos
Slide 3: Key economic indicators point to a potential recession later this year
RECESSION INDICATORS Key economic indicators point to a potential recession later this year US Treasury Yield Curve Leading Economic Corporate Profits(3) (10-year less 3-month)(1) Indicators(2) (YoY%) (7-day rolling average) (YoY%) 4% 100% 15% 100% 90% 100% 90% 90% 90% 10% 3% 80% 80% 80% 60% 70% 5%
Slide 4: US Macro Scorecard
US MACRO SCORECARD positive neutral negative Indicator Current Description Monetary Policy The Fed has not signaled an end to its aggressive tightening Policy Fiscal Policy While likely to be resolved, debt ceiling risks remain Geopolitical Risks Geopolitical tensions (e.g., China, Russia) are heigh
Slide 5: Historically tight labor markets suggest that the economy has remained resilient
ARGUMENT FOR A POTENTIAL RECESSION TO BE SHALLOWER Historically tight labor markets suggest that the economy has remained resilient US Unemployment Rate Labor Demand Continues to Exceed the (log scale) Number of Available Workers (percent of population) 2.75% 67% 2.50% 64% 2.25% 61% 2.00% 1.75% 58%
Slide 6: Most aggressive Fed tightening cycle in recent history
ARGUMENT FOR A POTENTIAL RECESSION TO BE DEEPER This has been the most aggressive Fed tightening cycle in recent history, and the full effects are likely still lagging Federal Reserve Tightening Cycles (cumulative change in the federal funds rate) 5% Current 2004-2006 4% 1987-1989 1994-1995 3% 2015-
Slide 7: Inflation remains elevated and broad-based
UNDERLYING MOMENTUM IN US INFLATION Inflation remains elevated and broad-based US Core PCE Price Index(1) US Core CPI: Services Less Shelter(2) (YoY change and sequential annual rate of change) (YoY%) 8% 7% 6% 6% 5% 4% 4% 2% 3% 0% 2% -2% 1% -4% 0% 2012 2014 2017 2020 2023 2013 2014 2016 2018 2019 20
Slide 8: Home prices have led shelter CPI components by ~14 months
CPI RENT INFLATION AND HOUSE PRICE GROWTH Home prices have led shelter CPI components by an average of ~14 months, historically CPI Rent Components and Case-Shiller Home Price Index (YoY%) CPI Components House Prices 9% 25% Peak in March 2022 8% 20% 7% 15% 6% 10% 5% 4% 5% 3% 0% 2% -5% 1% Correlation
Slide 9: Contraction in money supply confirms that inflation has peaked
MONEY SUPPLY Contraction in money supply confirms that inflation has peaked, but money supply level much higher than trend US Money Supply (M2) Growth M2 Stock: Actual vs. 2010-2019 Trend (YoY%) (US$ in trillions) 30% 100% $22 Money supply remains $3.7 trillion above the 2010-2019 trend 90% 25% $20
Slide 10: Balance sheet spikes by >$300B as the Fed intervenes
FEDERAL RESERVE’S BALANCE SHEET REVERSAL Balance sheet spikes by >$300B as the Fed intervenes to shore up the banking sector and financial stability Federal Reserve Balance Sheet Level and Runoff Projections(1) (US$ in trillions) $9 $9.0 Balance sheet is now $8 $600B larger than it would have been i
Slide 11: Investors shift cash from bank deposits into money-market funds
US BANK DEPOSITS AND MONEY-MARKET FUND INFLOWS Investors shift cash out of traditional bank deposits and into money-market mutual funds Total US Commercial Bank Deposits: Total Money-Market Fund Assets(2) 25 Largest Banks vs. All Others(1) (US$ in trillions) (US$ in trillions) $20 $5.4 Money-market
Slide 12: Lending to banks has declined in recent weeks
FEDERAL RESERVE LIQUIDITY Lending to banks has declined in recent weeks as the situation stabilizes Weekly Change in Fed Credit Facilities Total Amount of Fed Credit Facilities (US$ in billions) (US$ in billions) $350 $400 $300 $350 $250 $300 $200 $250 $150 $200 $100 $150 $50 $100 $0 $50 -$50 $0 Pri
Slide 13: Crowd sentiment poll is now relatively neutral
INVESTOR SENTIMENT Crowd sentiment poll is now relatively neutral S&P 500 Composite Index S&P 500 Index Performance(1) 5,000 Full History: 12/1/1995 – 4/4/2023 NDR Crowd Sentiment Poll is: % Gain / p.a. % of Time Above 66.0 -0.4 27 57.0 – 66.0 from Above 2.0 17 4,000 57.0 – 66.0 from Below 19.2 18 B
Slide 14: Dividend discount model implied S&P 500 price levels
DIVIDEND DISCOUNT MODEL Dividend discount model shows implied S&P 500 price levels at various levels of earnings and risk-free rates S&P 500 Dividend Discount Model 10-Year Treasury Yield 3.00% 3.10% 3.20% 3.30% 3.40% 3.50% 3.60% 3.70% 3.80% 3.90% 4.00% $185 4,266 3,971 3,714 3,489 3,289 3,111 2,951
Slide 15: Private Markets: Asset Class Performance in Context
ASSET CLASS PERFORMANCE Private Markets: Asset Class Performance in Context Annual Returns of Key Indices, Ranked in Order of Performance (2007-3Q’22) 2022 Annualized 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total Return (1) YTD 22.4% 11.4% 58.2% 27.0% 16.0% 16.5% 3
Slide 16: Disclaimers
DISCLAIMERS The views expressed in this commentary are the personal views of Joseph Zidle, Senior Managing Director, and Byron Wien, Vice Chairman, in the Private Wealth Solutions Group and do not necessarily reflect the views of Blackstone Inc. (together with its affiliates, "Blackstone"). The fore
Slide 17: Disclaimers (Cont'd)
DISCLAIMERS (CONT’D) Issued by The Blackstone Group International Partners LLP ("BGIP"), which is authorized and regulated by the Financial Conduct Authority (firm reference number 520839) in the United Kingdom. This communication is directed only at persons: (a) who are "Professional Clients" as de