US Election 2024: Here’s What Carlyle CEO Harvey Schwartz Has To Say About Post-Election Certainty, Fed’s Policy And M&A Activity

Carlyle Group Inc ($CG) CEO Harvey Schwartz highlighted during the firm’s earnings call that markets like certainty and with the election results out of the way, the enthusiasm is apparent in the equity markets.

“Over the medium to long term, this should be a further catalyst for IPOs, M&A and key sectors we invest in. This should be an environment in which we are well positioned to capitalize on monetization opportunities and put capital to work,” Schwartz said, according to the earnings transcript.

The S&P 500 and the Nasdaq indices were trading in the green on Thursday, continuing their rally from Wednesday after Republican nominee Donald Trump clinched victory in the U.S. Presidential elections.

However, retail sentiment for two of the most popular ETFs — the SPDR S&P 500 ETF ($SPY) and the Invesco QQQ Trust Series 1 ($QQQ) — remained divergent.

While the sentiment meter dipped into the ‘neutral’ territory (48/100) for SPY from the ‘extremely bullish’ zone, QQQ saw the metric inch higher into the ‘extremely bullish’ territory from ‘bullish’ a day ago.

Meanwhile, Carlyle shares fell over 6% on Thursday after the firm reported third-quarter results. Distributable earnings came in flat at $367.1 million or $0.95, higher than a Wall Street estimate of $0.88. Fee related earnings rose to $277.9 million compared to $204.7 million in the same quarter a year ago.

CEO Schwartz noted that the Federal Reserve's shift in stance on interest rates was a clear sign that “we entered a new era of monetary policy and that inflation has stabilized.”

“The election certainty and the change in monetary policy are a powerful combination supporting economic growth and our business,” he said. “I think Fed policy normalizing and being past the election, that's a pretty powerful 1-2 punch for markets and for our business specifically at Carlyle.”

Schwartz also highlighted how tax cuts and lighter regulatory touch would bring in confidence in the business environment.

“…from a policy perspective, whether it's sustained or further cuts in the tax regime, whether it's a lighter regulatory touch, all these things will get translated in CEOs' minds, boards or portfolio companies in really confidence around the operating environment, and that will lead to more decision-making,” he said.

The Carlyle CEO believes this should lead to more M&A activity. “If you're not quite certain whether or not you can get your transaction done from a strategic perspective, obviously, that gives you a lot of pause as a board. And so I think this is what the market is reacting to,” he said.

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