$356 Billion Fund Manager: "Now Is The Most Treacherous Time Ever. I've Never Seen This In My Career"

Tyler Durden's picture

Last week we reported that Tad Rivelle, fund manager at the $195 billion TCW Group, uttered a harsh warning, telling readers of his newsletter that "the time has come to leave the dance floor", providing numerous examples and anecdotes as to why that is the case.

 

Today it was the turn of Joe Baratta, the top dealmaker at Steve Schwarzmann's $356 billion Blackstone Group, to follow up with a comparable warning.

Speaking at the WSJ Pro Private Equity Analyst Conference in New York, Baratta said that "for any professional investor, this is the most difficult period we’ve ever experienced", adding that “You have historically high multiples of cash flows, low yields. I’ve never seen it in my career. It’s the most treacherous moment.”

Unlike strategic buyers who have used their inflated stocks as the acquisition currency of choice to engage in what until recently was a record M&A scramble, PE firms have been largely left out, as they have to invest their own equity which has not levitated at the same rate as the overall market, and are forced to plug the purchase gap with ever more greater amounts of debt. As Bloomberg notes, "the same lofty valuations that created ideal conditions to sell holdings and pocket profits have made it exceedingly difficult to deploy money into new deals at attractive entry prices." 

Just like in the case of the global housing bubble, now openly blamed on central bank policies as UBS did overnight, several executives, including Blackstone Chief Executive Officer Steve Schwarzman, have pinned those unprecedented conditions squarely on the Federal Reserve’s near-zero interest rate policies."

As a result of the prevailing asset bubble, Baratta said that Blackstone isn’t finding value in large leveraged buyouts of publicly traded companies. Instead, the New York-based asset manager is targeting smaller companies with low leverage, he said.

Still, when not buying Blackstone is mostly selling. In a separate interview with Bloomberg TV, Blackstone COO Tony James said that the firm is still selling more assets than it’s buying,

“We’re net sellers on most things right now -- prices are high,” James said in a Bloomberg Television interview Tuesday. “Interest rates are so low and there’s so much capital sloshing around the world.” So much capital in fact, that Blackstone had no problem gathering $18 billion for its latest private equity fund last year. The firm also has an energy private equity vehicle, which finished raising $4.5 billion last year.

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JackT's picture

So that's about 1/2 tril in question?

bamawatson's picture

only question is, how fast does it vanish ?

SomethingSomethingDarkSide's picture

"At this point, what difference does it make?"

JRobby's picture

October

Known to be a treacherous time. Just around the corner, tick, tock, tick........

Creative_Destruct's picture

"this is the most difficult period we’ve ever experienced", adding that “You have historically high multiples of cash flows, low yields. I’ve never seen it in my career. It’s the most treacherous moment.”

AW, how can that POSSIBLY be? This CERTAINLY isn't a BUBBLE is it?  PERISH THE THOUGHT!! Pooh-pooh on you Donald Trump for being so STUPID to suggest it is!!!

...And I feel soooooo sorry that this Blackstone a-wipe has to deal with it. How TERRIBLE for him.

GOLDMAN SACKS FED's picture

WHAT BUBBLE!

THE USA IS ON TRACK FOR THE GREATEST EARNINGS SEASON THE WORLD HAS EVER SEEN = = =AS PRINTED FED MONEY IS VERY PROFITABLE TRILLIONS!

NidStyles's picture

When con-men that sell worthless paper are the richest in the land, there is something seriously fucked up with your land....

SafelyGraze's picture

left out the student-loan bubble

and the health-care-for-all-immigants bubble

and the decode-the-human-brain bubble

plus the colonize-mars bubble

there's lotsa bubbles only just getting the air hose attached to them

future = beautiful

TimeIsTheFire's picture

I've always seen the richest in the land as having won by some con or other... no news here.

TimeIsTheFire's picture

I've always seen the richest in the land as having won by some con or other... no news here.

Bill of Rights's picture

2008 was the end of the world as well and look ...still here...

King Tut's picture

Another maroon mistaking debt for wealth. Are you still long oil?

LadiesLoveCoolJames's picture

Jeez. This guy couldn't even get called "Iconic" or "Legendary" by Tyler. He must be a total limp dick loser. The bar for superlatives is shockingly low around here when it comes to paper shufflers.

SomethingSomethingDarkSide's picture

You didn't like the piece yesterday about Osparie?  That guy seems legit, a lot of the people who get positive recognition are reluctant bulls and get mixed with the Buy SPY and walk away type managers. 

That being said, this guy was probably a limp dicked loser.

Bill of Rights's picture

Hey cunt don't think you know me, Trust me asshole your not even on the same level as me when it comes to this shit so fuck off.

 

And yes I am VERY long oil since $36 and not worried one bit, $1 dollar swings mean little but to you the world is ending ha ha ha tool.

SomethingSomethingDarkSide's picture

He called your mom fat too!!

*slinks back into the crowd*

BabaLooey's picture

+1,000

That was a akin to a sissy in a biker bar being "corrected"

gramps's picture

The comments on this site were so much better before Drudge invited all of the retards over.

Peak Finance's picture

LOLZ Yea --> I <-- am still here!

But my moneys is not!! :)

My Busness aint so hot either :) 

Kirk2NCC1701's picture

Correct.  Pay attention, ZH kiddies, I'll type slowly so that some of you can keep up...

If.. IF things were TRULY as bad as they claim, then GOLD would be going through the fucking roof, not porpoising in the $1315-1345 regime.

Wake me when TSHTF, or AU goes parabolic.  Until then, sell doom porn elsewhere.  Because... In a fiat Casino, the games go on as long as the players stay. 

 

p.s. Last night's 'Debate' had more pre-show hype than the last 3 Super bowls put together.  At least those had a half-time show.  Maybe the debates should also.  And Hillary's sponsors would be required to do commercials.

RawPawg's picture

and yet this bastard is still playing the game(even a small amount of playing still counts)

man up,and just walk away with your remaining chips

or buy up more PM's...and then walk away

bamawatson's picture

what remaining chips ?
at this moment certainly there are more claims than chips.
he can't walk away; the chips are not his, they "belong" to others; he has less than nothing

RawPawg's picture

what ever bait ya got left on the line

just cut it

lester1's picture

No worries when Joe Barlotta and Blackstone need to sell, Central Banks/PPT will be there to buy using unaudited electronic money !! 

SomethingSomethingDarkSide's picture

Who knows, they may even be middle manning Central Bank purchasing for other foreign nations. Anything goes without a Confirmed Audit Trail! Wahoo!

venturen's picture

well you funded Obama...so you will get to see what happens to the financial end of the world....because 2008 was compared to this!

Theta_Burn's picture

Keep pounding the shit outta that narrative boys.

Just like that cramer clown crying about how bad it is out there, we never saw this before, personal friends of mine are suffering..

 

This needs to be done before they ask, again, for the blank check to keep it all going, a little longer.

Bill of Rights's picture

Yup, its called building the mind set. Yet everywhere I go I see standing room only and lines...but hey were doomed. I was 4 weeks for appliances cause they  had back orders but yet were doomed once again.

King Tut's picture

You should take some English 101 classes and polish up on your spelling and grammar.

bamawatson's picture

actually, "polish up" is improper grammar

all-priced-in's picture

Polish up is still better than Greek up.

 

 

Bill of Rights's picture

And you should get those balls off your chin, oh wait they look good there.

 

" Polish up " lol fuck'en retard...

GOLDMAN SACKS FED's picture

GOOD GRAMMER IS FOR EDUCAATED TROLLS!

tarabel's picture

 

 

One thing I am seeing is a collapse of inventory on hand. People simply aren't restocking items the way they used to. JIT should cover the problem, but the warehouses are also running down their stocks.

Don't know where you're at, but it is definitely lots of SRO around here. Tons of bored employees standing around with nothing to do. At least they've finally got tired of the "need any help" BS on every aisle.

For most of this summer, it's been literally impossible to find a 1x6x6 cedar fence picket in town. Finally had to drive to another city and buy redwood. Now that the season is over, the lumber yards are rebuilding their inventory... and it's gonna sit there until next spring, you morons. Thank god I'm out of the business and only do an occasional job for friends.

GoldToDaMoon's picture

Trouble is, a "treacherous moment" today can seem to be written in geological time, while all the time we can see a train wreck coming, it's like it's in slow-mo... reasons being:

Economic cycles stretched because people live longer

Economies of countries have never been so closely coupled - with greater mass comes greater inertia, and extended powers of CBs to kick the can down the road a bit further...

The policy of "too big to fail" instead of allowing the bad businesses to go to the wall, thus leaving the healthy ones to regenerate - as illustrated by the failure of increasing debt to produce increasing GDP - allows zombie businesses to linger on...

The same mechanism of globalism that exports jobs to low-wage countries allows them to export deflation, thus putting a damper on runaway inflation that might otherwise terminate a bubble cycle more rapidly...

Interest rates at the lowest for multi-millenia allow debt loads to be piled on without the consequences of repayment obligations that would occur at "normal" rates... allowing the zombie economy to continue sliding along the iced-up rails...

GOLDMAN SACKS FED's picture

NONE OF THE ABOVE,,,!

THE ONLY PROBLEM WE HAVE IS LEADERS ARE SNORTING COCIANE AND CANT THINK STRAGHT ANYMORE!

King Tut's picture

Just BTFD, dipshit

falak pema's picture

When a financial Oligarch finds the world melting below his feet; what made him top dog can draw him down to foggy bottom...

"I wasn't born to bear this stress, I was born to win! I want to win without stress!"

Hahaha! Nemesis calls !

Panafrican Funktron Robot's picture

Translation:  Really rich guy wants more shorts to torch.  Literally all asset classes are dependent on the Fed interest rate.  This is the same as what happened back in 2004-2005, which caused the crash in 2008; the Fed raised interest rates from 1% to 5.25%.  Obviously this was going to cause a massive crash.  It was engineered.  Until/unless the Fed raises rates, valuations will remain elevated.  End of story.

monad's picture

These aren't "bubbles". These are engineered financial warfare events. Look who gathered what was spilled every time.

buzzsaw99's picture

translation: it's a real bitch trying to justify our management fees these days.

seek's picture

Nominal GDP... would love to see this re-plotted in real dollars. I bet it'd be scarier.

Yen Cross's picture

   Boo fucking Hoo to the asshole Blackstone cocksuckers.

  Go sell some of those rental properties you schlepped off of foreclosed homeowners for pennies on the dollar, with free Fed. handouts after the GFC.

milking institute's picture

Joe the Plumber knows more about our current state of affairs than this over payed ass clown IMHO

Anopheles's picture

It has nothing to do about what they know about the current state of affairs. 

It has everything to do with how well they can MANIPULATE and take advantage of the current state of affairs.

KuriousKat's picture

Analysts are baffled, pundits are scratching their heads, I've never seen anything like it in all my life! , traders were stunned to see, Stock holders were freaked out..

Are they describing a market or a  ufo? .Jesus..these people are imbeciles..

 

Grandad Grumps's picture

Blackstone is run by aliens.

wobblie's picture

Why are you listening to finance assholes?

These are the same shitheads that crash the market and then profit from it.

Fuck you Wall St. corporate whores.

FromWhere ImStanding's picture

Printing Money, well that's easy! Try making an honest living or retiring...that's a whole lot tougher thanks to the Banksters! Anyone got a pitchfork?