Roger Altman is the founder of Evercore, one of the biggest independent investment banks in the world. On Friday he was interviewed on CNBC’s “Squawk on the Street” to offer an inside take on what he sees across the business community.
‘Solid’ Economic Outlook
Altman is an investment banker by trade and is in constant communication with CEOs running companies of all sizes who deal with consumers of all sizes. He told CNBC that his conversations point to a “solid” economic outlook. However, the favorable economic outlook is due mostly to its overexposure to the consumer.
The American consumer accounts for around two-thirds of total GDP. Fortunately, the consumer is “strong” and backed by “amazing” household net worth figures, he said. Consumer confidence levels continue to hover near historic all-time highs.
But the remaining one-third of the economy comes from businesses and are showing some concerning signs, he said. Capital expenditure trends and business confidence sentiments are weak. While these sentiments are sometimes difficult to quantify, the market often flashes some signs to those who know where to look.
For example, lower railcard loadings and oil rig counts along with the falling 10-year Treasury yield suggest a “mini-recession from a manufacturing point of view” is underway.
Nevertheless, economic fundamentals with the exception of manufacturing “are good,” he said. Adding support to an encouraging environment is the hypothetical and made-up “trade index” which would be “well down” thanks to the U.S. – China “Phase One” deal.
Sorry Bears, Bulls Win This Round
In a separate CNBC interview, BlackRock global allocation investment team head of thematic strategy Kate Moore said bulls are on the right side in the current market environment. She said a bullish stance on stocks is backed by supportive fiscal and monetary policies throughout the world.
Meanwhile, China and multiple European countries are showing their “green shoots” in recent economic data reports, she said.
Many investors, managers, and other experts are worried about multiple potential headwinds that could impact global markets from geopolitical tensions, she said. It is possible that every concerning headline would prompt investors to take a more risk-off approach — regardless if it is justified or not.
Another concern could come from Wall Street’s overly optimistic tone as research firms merely readjust price targets higher seemingly at will.
But at the end of the day what matters most to support upside, she said, is stability in economic data and earnings coming in “better” this year compared to last year.