Blackstone’s CFO Chae eyes soft landing as inflation cooling faster than expected

Investing.com — Blackstone (NYSE:BX)’s Chief Financial Officer Michael Chae said Wednesday he was “cautiously optimistic” on a soft landing as inflation is likely cooling faster than expected.

“We don’t have a crystal ball about where this goes, but we are cautiously optimistic about a soft landing,” Chae said in remarks at the Barclays conference Wednesday.

A recession forecast isn’t one shared by many CEOs running Blackstone’s portfolio companies, with about 14% predicting a recession in the next 12 months, Chae said, citing a Blackstone survey conducted in June.

“What we’ve been seeing is both inflation and the economy cooling,” Chae added, pointing to Wednesday data showing August CPI rose 2.5%.

The Blackstone finance chief believes, however, that inflation is slowing faster than expected. The August CPI data didn’t take into account the latest slowdown in housing inflation as shelter is a lagging component in the CPI.

Excluding shelter, CPI year over year in August is about 1.7% versus the 2.5%, Chae estimates, underscoring the lags in the shelter component, which “lagged on the way up” as inflation was picking up pace and “it’s lagged on the way down.”

As the debate about whether the Fed will cut by 25 basis points or 50 bps raging on the Blackstone finance chief instead said the destination of the 10-year Treasury rate was even more important to investors.

“At the current kind of mid-3s level, mid- to high 3s area, that’s a pretty constructive context for the capital markets and for our business,” he added.