The liquidity-driven trade that has pushed asset values higher for the past decade is over, Carlyle Group Inc. Chief Executive Officer Kewsong Lee said.
“That whole momentum trade is gone,” Lee said Wednesday as part of a panel during a benefit lunch for the Museum of the City of New York. “We’re back to fundamentals, we’re back to real growth and I think that’s healthy.”
Lee, 56, has been pushing for Washington-based Carlyle to diversify beyond its historical reliance on performance fees to fuel profit, which has helped generate huge revenue during past periods of economic strength but leaves the firm more vulnerable in a recession -- an outcome that some see as increasingly likely.
Still, the US consumer remains strong and “we shouldn’t underestimate the resilience we’re seeing,” Lee said. “Financial markets are quite volatile and causing agita, but I think corrections are healthy.”
His remarks come on the same day that JPMorgan Chase & Co.’s Jamie Dimon warned investors to prepare for an economic “hurricane” as the economy struggles against rising interest rates and Russia’s invasion of Ukraine.
Lee, for his part, welcomes the disruption. He said Carlyle is looking for opportunities around the energy transition and the broader decoupling among economies across the world.
As for the firm’s return-to-work policy, he’s remaining flexible.“Certain parts of our business are going to be five days in the office and certain parts are going to be virtual,” Lee said. “This is not easy, we’re trying to figure it out as we go along. I think the mode of mandating people in too early is a big mistake.”