At the sixth annual BNP Paribas Global Markets Americas Conference held on May 23rd, clients gained insights from an elite group of world-class authorities on some of the biggest market drivers for 2023 and beyond. These included expected growth and inflation trends, central bank policies, the U.S debt ceiling, geopolitical developments, structural trends such as de-globalization and AI, and the green energy transition.
Over 700 institutional and corporate attendees packed the ballroom at the historic Casa Cipriani in downtown Manhattan to hear an exclusive conversation with George W. Bush, the 43rd President of the United States, and to benefit from the expertise of all speakers. These included Michael Milken, Chairman of the Milken Institute; Larry Fink, Chairman and CEO of BlackRock; Sheila Bair, former Chair of the FDIC; Esther George, former President and CEO of the Federal Reserve Bank of Kansas City; and Torsten Slok, Chief Economist at Apollo Global Management.
Below are three of many key takeaways from the day that are expected to impact markets during 2023 and beyond:
The geopolitical balance of power is shifting
Governments and global companies are reassessing their dependencies, resulting in increased supply chain fragmentation and on-shoring. As a consequence, China’s role as an exporter of manufactured goods to the West is changing. Following Russia’s invasion of Ukraine, European countries are also reducing their dependency on Russian energy. Meanwhile, some countries such as China and Japan are experiencing population decline, while sub-Saharan Africa is seeing the opposite trend. All of this has profound implications for where companies will do business and invest in the future.
New technologies will drive U.S. growth
The development of new technologies, from artificial intelligence to green hydrogen, will be a significant driver of growth in the U.S. economy and provide compelling investment opportunities. Taken together, home-grown decarbonisation technology, fueled by new federal subsidies in the Inflation Reduction Act, will power the rapid energy transition required to reach net zero, and produce an accompanying wave of job creation. Potential relaxation of permitting requirements as part of the US debt ceiling resolution could accelerate this timeline.
‘Sticky’ inflation will keep interest rates higher for longer
Persistent U.S. inflation will continue to drive monetary policy and impact markets. The Fed is expected by many to keep interest rates the same or higher than today to achieve its 2% target, likely tipping the U.S. into recession. Among the likely impacts, this sequence is expected to put more pressure on regional banks, reduce term bank lending, fuel growth of private credit underwriters and exacerbate stresses in the CRE market.
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