The Tariffs Effect On Private Equity Giants

 

The announcement of higher than expected tariffs on US imported goods sank US and global stock markets.

The stocks of Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC etc. and other leading alternative investment - private equity, private credit, real estate, infrastructure investment management firms fell by more than the market and even by more than JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, Citigroup, Wells Fargo and other leading banks' stocks.

The explanation offered by Wall Street analysts is that due to a possible tariffs invoked recession  Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC's portfolio companies will be hurt and thus Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC's private equity investment portfolios will sour and bring down the respective firms' value.

In addition, the real estate and private credits investment management lines of Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC will suffer as a global recession will invoke a fall in real estate prices and medium sized firms will face difficulty paying off the 8 % + loans they have been disbursed by the private credit investment management lines of Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  etc., further eroding the value of Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  and other leading private equity firms.

The effect on Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  and other leading private equity firms will not be as bad as Wall Street traders currently and Wall Street equity research analysts forecast for the future in their Microsoft Excel models, according to Wolfteam Ltd.'s projections and estimates.

The Federal Reserve will be quick to lower the Federal Funds rate and thus the interest rate levels in the US and by extension the global economy by 3 or 4 times in 2025 and thus stave off a coming recession or make it shallower. Lower interest rates will again beget deal activity by Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  and other leading private equity firms, because they will able to fund acquisitions more cheaply. All this velocity of money will feed into the economy and help the US and global economy avoid or experience a shallower recession. Lower interest rates will support Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  and other leading private equity firms' real estate and private credit businesses as the leading private equity firms will be able to disburse loans more cheaply and firms will naturally be able to repay them more successfully.

In short, Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  and other leading private equity firms' stocks could fall by 30 % or slightly more where they will prove undervalued, in Wolfteam Ltd.'s view.  Afterwords Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC's stocks could surpass easily the previous peaks.