Near-term market volatility is high, but depending on how the Trump administration's tariff diplomacy settles, the outcome could be better, said Jonathan Gray, president and COO of alternatives giant Blackstone.
“I think near term, short answer, a fair amount of volatility, maybe some slowdown, given what’s happening, but probably a better prognosis as we look out over time,” Gray said speaking at the Economic Club of New York on March 20, adding that he anticipates there will be negotiations over tariffs and policy moves.
Amid the current conditions, Gray believes pricing across most asset classes seems reasonable.
“Now just feels like a time where the nervousness is high and the pricing for assets is reasonable,” he said, adding that it is a moment when many investors tend to wait or sell as the best opportunities emerge.
And changes in the regulatory environment, will “be helpful for businesses, certainly in the M&A area,” he said.
Gray argued that investors need to take a longer-term approach because "I think you can have an expectation that a number of these things will ultimately settle and then we can find sort of terra firma."
On the real estate sector, Gray said “we have definitely seen the bottom.”
Demand, other than for office buildings, has been “pretty steady” while supply has “gone down dramatically.”
“You’re now in that period like you were in the early ’90s or after the financial crisis, where people have taken a bunch of losses in real estate,” Gray said. “They’re very cautious about the sector, but the prices have readjusted, and if you deploy capital now you'll generate higher returns. It’s a cyclical business, and so you see us deploying a lot of capital.”
Digital infrastructure and energy remain key investing themes for Blackstone, he said.
“We continue to like digital infrastructure, data centers,” Gray said. “Because despite DeepSeek, or maybe even because of it, you’re going to drive down the cost of compute, and I think drive up usage.”
Gray sees continued growth in private markets, especially the private credit sector.
“I think it'll be varying. Things like private equity may not grow at the same pace. But private credit, I think is still very early days,” he said.
Wealthy individuals are still allocating only a small portion of portfolios, between 1% and 2% to privates, he added.
Gray does not see systemic risk within private credit and sees banks as a partner.
“Banks are really important, because banks continue to do a lot of things we can’t do, and we're partnering with a lot of these banks as they originate credit, and we can put it in terms of these long-term assets in the right place. So, I see it as incredibly positive,” he said.
From his seat, Gray said other than a handful of full-funded corporate pensions, clients he meets with are looking for greater exposure to private assets.
Blackstone had over $1.1 trillion in assets under management as of Dec. 31, 2024.
