Marc Rowan on Trade War Impact, US Economic Exceptionalism, and Investment Strategy

Trade Policy and Economic Impact

• 🎯 The administration's goals with tariffs are not inherently wrong, but the uncertainty they create risks slowing the economy, potentially leading to two quarters of negative growth.
• 💡 While the US has a strong hand with low unemployment and investment, unresolved trade rules deter new investments and hiring.
• 🇺🇸 The US is moving from "hyper-exceptionalism" to "merely exceptional" due to damage to its brand for stability and predictability.

Reshaping Global Trade

• 🤝 Rowan suggests that resolving trade with Mexico and Canada first, then addressing other countries individually, would strengthen the US position.
• 🌍 The current approach of seeking new trade terms country-by-country could be a positive momentum builder if successful, but uncertainty could persist if not.
• 📈 While the US brand for stability has been damaged, there are currently no good alternatives for global investors, though this could change.

Investment and Market Uncertainty

• 📉 Rowan believes current asset prices are not low, interest rates are unlikely to plummet, and geopolitical risks are heightened, suggesting a need to reduce risk in credit.
• 🏦 Apollo is moving up the capital structure to senior secured investment grade and shifting equity focus from growth to cash flow-based investments.
• ⚠️ The perception that public markets are safe and private markets risky may be flawed; the liquidity of public credit is not guaranteed, especially under stress.

Inflationary Pressures

• 🏭 Moving manufacturing to higher-cost countries like the US, reduced reliance on global trade, and a tight labor supply are contributing to inflationary pressures.
• ⚡ While energy prices and technology could offer some relief, current policies carry a risk of being more inflationary, potentially leading to higher long-term rates.