TPG’s Co-Chief Executive Officer Jon Winkelried said he’s concerned that market investors are apathetic to growing geopolitical and social unease.
“The level of complacency about where markets are today is pretty scary,” the private equity executive said Wednesday during an interview with Jason Kelly at the Bloomberg Invest New York summit. “People are just sort of assuming it’s OK, that it is what it is, and I have to say that I’m a little bit concerned about it.”
Global markets have been relatively unfazed despite a tide of looming political risks and tightening monetary policy. Equities worldwide have continued to climb, with the MSCI All-Country World Index setting record highs each month this year. In the U.S., investment-grade corporate bond issuance is on pace to pass last year’s record as companies feel comfortable borrowing in gobs. The U.S. market’s main volatility gauge -- the CBOE Volatility Index, or VIX -- hit a record low this month.
While pointing to stabilizing factors such as better-capitalized banks and lower leverage in investments, Winkelried drew parallels to conditions before the 2008 financial crisis, such as high valuations and cheap debt.
“A lot of that stuff has come back, but nobody is talking about it,” he said. “I’m always amazed, but it’s always been the case, at how short the memory of the market is.”
Winkelried stepped down as co-president and co-chief operating officer of Goldman Sachs Group Inc. in the heat of the financial crisis, about six months after it received emergency funds from Berkshire Hathaway Inc. and the U.S. government and was converted to a bank under Federal Reserve supervision. Gary Cohn, who became Goldman Sachs’s sole president and COO after Winkelried’s departure, is now President Donald Trump’s chief economic adviser.
Winkelried joined TPG in 2015 to run the alternative-asset manager alongside co-founder Jim Coulter, noting Wednesday that he was attracted by the firm’s growth potential, culture and San Francisco location. TPG, which has its main offices in San Francisco and Fort Worth, Texas, oversees $72 billion in private equity, credit, real estate and hedge-fund assets.
To contact the reporter on this story: Melissa Mittelman in New York at mmittelman@bloomberg.net.
To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Devin Banerjee, Michael Hytha
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