Top investors on the market outlook

Bill Ackman doesn’t think it’s worth making a long-term bet on the U.S. government, at least not on its debt.

The head of Pershing Square Capital Management said Thursday at CNBC’s Delivering Alpha that buying the 30-year Treasury bond isn’t worth it with inflation — and uncertainty surrounding the government —running high.

“We have an economy that is still strong and inflation at 3.5, 4%, persistent,” Ackman said during the conference’s closing panel. “Our view is basically you’re not being paid enough to enter into a 30-year contract with this government at a fixed price of 4.7%.”

The long bond’s yield has been soaring, up about half a percentage point in September alone. As yields and prices move in opposite direction, the jump reflects fear from investors about going long in duration. Ackman said he could see the 30-year yield hit 5%.

“People reflexively buy it because they’ve made money doing it in advance of a recession,” Ackman said. “But it’s really not an instrument you should use to speculate on the short-term economy.”

—Jeff Cox

Pershing Square’s Bill Ackman wouldn’t be surprised to see the 10-year treasury yield push even higher.

“I would not be shocked to see 30-year rates through the 5% barrier and you could see the 10-year approach 5,” he told CNBC’s Scott Wapner at the Delivering Alpha conference Thursday.

These movers, he added could happen in the short-term, or within weeks.

The yield on the 10-year Treasury yield last traded at around 4.577%, pulling back from a 15-year high touched as markets ponder a potential higher-for-longer rate environment.

— Samantha Subin

Bill Ackman didn’t sound upbeat about the economic outlook during his Delivering Alpha interview, and with an expectation that bond yields continue to rise, it would be easy to conclude he is bearish on stocks. But Ackman says he is not.

“The key is owning businesses that have pricing power, businesses that can do well,” he said, “in a world of 3% inflation.”

One of the companies Ackman’s Pershing Square Capital Management now owns a lot of is Alphabet. Why Ackman got into Alphabet is a classic case of seeing a stock beaten up for knee-jerk reasons and sensing an attractive entry point.

When OpenAI launched ChatGPT to worldwide excitement and Google followed with the fumbled launch of its Bard AI, Ackman said he saw an opportunity to pounce as a long-term investor.

“AI was the reason why the stock was cheap,” he said. “Google really fumbled their offering. And so people said ‘oh my god, Google’s way behind on AI’ and the stock sold off to 15 times earnings for one of the greatest businesses in the world.”

“We did a fair bit of work,” he said. “It’s a company known for hiring great engineers. … They took a much more cautious launch approach. And I think then kind of fumbled an early demonstration, made people think they were behind and Microsoft and ChatGPT would … eat their lunch.”

That led to what Ackman described as a “very mispriced stock.”

Alphabet is now his hedge fund’s second-largest stock holding.

— Eric Rosenbaum

Billionaire hedge fund manager Bill Ackman called himself a Warren Buffett devotee, learning from the legendary investor’s patient and disciplined investing philosophy.

The Pershing Square Capital Management CEO revealed that he decided in his 50s that he would focus on winning bets and try his best to avoid mistakes. He said his hedge fund has had the best five years in history.

Buffett has been “my unofficial mentor for many years,” Ackman said. “We’re fortunate the way that we’re structured.”

— Yun Li

Hedge fund billionaire Bill Ackman is known for his stock and bond bets, but at Delivering Alpha, he also referenced $24 million in investments he made related to supporting Ukraine that are less well known: one going to drone maker Zipline.

Ackman said he got a call from venture capital firm Sequoia which was looking for investments to help Zipline launch in Ukraine, which wasn’t originally in the company’s business plan.

Ackman, who recently met with Ukrainian President Volodymyr Zelenskyy, described his investment in Zipline and other initiatives in Ukraine as philanthropic — not made in search of an investment return — and said his connections with Ukraine’s government, including its top logistics official, enabled him to connect Zipline directly with top Ukrainian officials.

Ackman said while he wasn’t familiar with the company when first approached about an investment, he noted that Zipline has raised over $400 million from venture investors.

Zipline — a five-time CNBC Disruptor 50 company that ranked No. 25 on this year’s list — started as a drone-based medical care supplier in Rwanda but has grown to serve human and animal medical needs in geographies across the U.S., especially hard to reach ones, as well as food deliveries, prescriptions, agriculture products, and retail items, with partners including Walmart. It recently received FAA approval to fly “beyond the visual line of sight,” a key milestone for the development of the domestic drone industry.

Ackman said the Zipline launch in Ukraine is similar to the company’s original mission in Rwanda — with a focus on critical medical services in hard to reach places. He gave Zipline a vote of confidence in his comments.

“You have to have a lot of confidence those are good drones to launch in Ukraine,” Ackman said.

He is also betting on Ukraine long-term. “I’m very bullish on Ukraine post-war,” he said.

— Eric Rosenbaum

After nearly a year-long lull, the market for initial public offerings got a boost after a string of modestly successful debuts from Instacart, Arm Holdings and Klaviyo.

While none of these companies saw first-day pops sustained in trading similar to IPOs in 2020 or 2021, Lydia Jett, SoftBank Investment Advisers managing partner, said there were positive signs to take away from these recent public debuts.

“I would argue looking at the performance of the last couple of weeks, these are well priced IPOs,” Jett said, who focuses on the U.S. media and communications industry segments for Softbank’s Vision Fund. “There’s a little marginal pop, they aren’t trading down much, and you’re not seeing a lot of volatility — I think that is so preferable to the big pops.”

Jett said in the private markets right now you have a lot of companies that have capital funding challenges they need to solve, and these IPOs show “a path that these companies should be pursuing.”

She said that she wouldn’t describe the IPO market as having been closed. “I think there was just sort of a lack of confidence about the ability to make that transition,” she said.

“I am excited to get this period of over-capitalization in the private markets in the rearview mirror,” she added.

— Ian Thomas

The market currently thinks there is around a 75%-80% chance that the Fed holds off on another 25 basis point rate hike in November. That’s not a majority view that includes BlackRock fixed income chief Rick Rieder.

Rieder said the Fed could stop raising interest rates, but it probably won’t.

“You’ve got to take them at their word that they want to get another 25” basis points, Rieder, senior managing director, chief investment officer of global fixed income for the world’s largest money manager, said at Delivering Alpha.

“I don’t agree with doing it because the data would suggest you can start pausing. … but I think you’ve got to assume when you invest, that they [do] what they’re telling you.”

— Eric Rosenbaum

The energy grid is going to need a lot more capacity to power booming demand for artificial intelligence and supercomputing, according to Lazard’s president Raymond McGuire.

“The amount of energy that’s needed to support that — the demand on the grid — is going to be much greater than the supply that we have today,” he said. “We don’t have the infrastructure today to meet that demand.”

That’s one reason when he was asked at Delivering Alpha how he would invest $1 trillion, McGuire answered this way: “A third each into energy transition, housing and education.”

While AI wasn’t name-checked in that answer, he explained that the two big tech investing themes he sees, AI and cybersecurity, “are all governed by human capital,” and without education, we won’t succeed in these areas.

— Samantha Subin

Three years ago, the first peace deal in the Middle East in 25 years was signed between Israel and several Mideast and African nations including United Arab Emirates and Bahrain. It was a critical step to long-term security in the MENA region, but if Israel and Saudi Arabia reach a peace deal, it will be several magnitudes greater in importance, says Dina Powell McCormick, BDT & MSD Partners vice chairman & president of global client services, and a former Deputy National Security Advisor of the United States.

“It’s a hugely seismic opportunity,” she said at Delivering Alpha.

The economic opportunities from the Abraham Accords added up to $2 billion in trade and investment between Emirates and Israel in just three years. “That does not compare to what it will be like if you see a peace deal between Saudi Arabia and Israel, and the message it will send to billions of Muslim people around the world is significant,” she said.

“We can’t overstate the importance of this alliance, geopolitically and geoeconomically,” said Raymond McGuire, Lazard president. “It’s a $4 trillion economy in MENA and the sovereign wealth funds, it’s $2 trillion of assets that will be deployed across the globe. … Highly sophisticated investors looking to make an impact on five macro themes,” he said, referring to generative AI, energy transition, deglobalization — “in brackets,” he said — demographics in an aging North America and rising emerging market younger generations, and cybersecurity.

Powell McCormick said the reason the Biden administration is pressing for the deal despite criticism of Saudi Arabia’s record on human rights and national freedoms is simple: “We’d much rather work with Saudi Arabia than push them to Russia, Iran or China.”

While inflation may be under control and the Fed at, or at least near, the end of its rate-hiking cycle, Rick Rieder, BlackRock senior managing director and chief investment officer of global fixed income, isn’t ready to take much duration risk in the bond market.

“I think we’ve got some time … but there’ll be a point in time you want to get some more duration,” he said at Delivering Alpha.

It’s just that the time is not now, not yet.

Rieder thinks that the Fed does want to “get another ’25’ in,” referring to one more rate hike of 25 basis points — the market is currently rating that outcome at odds of only roughly 25%.

In the current market, the BlackRock bond trading guru is instead focusing more on the “boring” world of commercial paper.

“I love commercial paper at 6.5% for one year,” Rieder said,. noting that he started his trading career in commercial paper decades ago and is now surprisingly back to a focus on it. “I know what my return is gonna be for single A issuers, big high-profile issuers and I can just lock in that rate.”

Better yet, if he locks in that rate in Australian issues, he can then convert it back into dollars at 6.5%-plus, he said.

That’s during a period of time when treasuries have been extremely volatile, moving by as much as 800 basis points, Rieder noted.

“We’ve got some time and the fulcrum point on the yield curve is the five year. There will be point in time to get some duration in but not yet,” he said. 

— Eric Rosenbaum

Altimeter Capital Chair and CEO Brad Gerstner says the artificial intelligence boom is a “supercycle” like the rise of internet in the late 1990s where there could be conflicting sentiments and uncertainties.

“We like to describe these moments as super cycles, right? The Internet, mobile, cloud computing and now AI,” Gerstner said. “You have to get comfortable with two simultaneous but competing truths. On the one hand, we probably overestimate in the very short term which leads to price inflation.”

AI has been dominating headlines this year, creating a buying frenzy on Wall Street that pushed major enabler Nvidia over a $1 trillion market cap. Buzzy chatbot ChatGPT, capable of taking written inputs from users and producing a human-like response, was an instant phenomenon globally, becoming the fastest-growing software in history.

“But much like the internet in ’98 and ’99 where there was overpricing in the short run, we dramatically underestimated the impact it was going to have over the preceding decade,” Gerstner said.

— Yun Li

The stock market’s recent weakness shouldn’t be ignored by investors looking at how much the market is still up year-to-date. More pain is coming for stocks, says tech investor Brad Gerstner.

His firm has reduced its exposure to long equities’ bets by at least 50%, he told CNBC’s Scott Wapner at Delivering Alpha.

“I think the risk has increased that the Fed has overshot,” he said.

Gerstner pointed to consumer data points that show the lag effects that occur throughout the economy amid higher rates are increasing, from travel demand to housing demand and purchases of big-ticket items like RVs.

“I mean, think about this. We’ve gone from effectively a 0% interest rate environment, where corporations borrowed for free and consumers borrowed for free, to now we have 8% mortgages; we have 10% car loans; we have 20% credit cards, student loans are about to kick in, the huge bulge of corporate borrowing that occurred at next to nothing, April to December 2020, now has to get ‘re-fied’ [refinanced] at rates a lot of these companies can’t afford. So this is the definition of lag effect.”

While Gerstner didn’t say whether he’s confident there will be a hard landing for the economy, he thinks the market is underestimating the risk of one more Fed rate hike and he said he is confident that “we’re going to have meaningful slowing in 2024.”

That’s why “dollars at risk on the long side relative to dollars at risk on the short side are down by at least 50%,” he said. 

— Eric Rosenbaum

Markets work according to supply and demand, and one under-supplied market where there is still huge opportunity is in real estate, especially niches like student housing, according to Kathleen McCarthy, global co-head of real estate at Blackstone, the world’s largest commercial property owner.

“We have seen insufficient new supply of housing for the demand for it in the markets where you’ve seen job population or student growth,” she said at the conference.

Even after a period of rapid rent growth that has cooled, economics remains strong for landlords.

“In all the different markets where we invest, major cities in Europe, major cities across Asia, U.S. certainly, I think what is supporting demand for rental housing is the overall, I’d say, high cost of housing.”

Particularly in a higher rate environment, she said, there need to be more options.

“I do think that’s attractive in a world where purchasing a home is 50% more expensive on a monthly cost basis than renting a home or renting an apartment,” she said.

“When you have over a decade of not delivering enough supply for the household formation, the path out is to have more supply of housing,” she added.

— Eric Rosenbaum

How to play the decarbonization trend was a big part of the discussion between international investing executives, but they looked to the U.S. as a major opportunity despite the partisan political divide on the issue.

While you can make the case that an investment boom related to the Inflation Reduction Act already is a major story in the U.S., Suni Harford, UBS Asset Management president, said she thinks the opportunities are still mostly being overlooked.

“It’s a huge amount of investment,” she said. “There’s a tremendous amount of opportunity here in the U.S., in energy storage, and that’s not a political story.”

She pointed to Texas, a state where the politics can be big and loud, but where she said in her own experience traveling through the state she saw oil rigs on one side of the road and wind farms on the other. “They get it,” she said.

While ESG has become a controversial word, she advised investors to focus on the “tremendous trends in the ESG space that are wide open for investment.”

Even if the 2024 elections lead to a threat to the IRA, Harford said that the provisions in the act that promote investment and growth will work on both sides of the aisle.

“We believe the vast majority will stay in place,” she said.

— Eric Rosenbaum

Mark Delaney, AustralianSuper chief investment officer & deputy CEO, noted at the conference some of the things he saw on a recent trip to China that have big implications for the global economy, like a lack of construction cranes in Beijing. But he also spoke about an experience he had: being driven by an autonomous EV on a Chinese highway.

“It went out on the highway, changing lanes … no one in the front seat, and it was quite a unique experience on a three-lane highway. … It almost ran into a bus.”

Even with that near-collision, Delaney came away from the experience with a reinforced view of China’s EV lead. “They are heading down the EV path and it’s the biggest car market in the world and they are going to be very dominant.”

“This is China,” added Suni Harford, UBS Asset Management president. “If they want everyone to drive an EV, they will drive an EV.”

— Eric Rosenbaum

Despite concerns about a recession and a softening of the consumer, companies are still spending. S&P 500 companies have ramped up capital expenditures for the ninth straight quarter, which follows years of underinvestment, according to a recent report from Bank of America.

That has presented several investment opportunities, said Tina Byles Williams, Xponance founder, CEO, & chief investment officer.

“The capex recovery is a global story,” Williams said. “The offshoring, inshoring, enemy shoring with China, trying to subvert potential sanctions in Vietnam or Mexico, the green transition making up for under-investments in ESG, all of that leads to an interesting capex story that I think that has a lot of legs and opportunities for long-term investors.”

Edwin Cass, CPP Investments chief investment officer, said that even with corporate leadership sentiment falling, capex has held up as CEOs continue to reinvest in their businesses.

“In some sense they need to, because they need to reshore or energy transition,” Cass said. “The thing about capex is that it builds on itself; one company’s capex is going to another company and that company uses capex.”

But Cass also warned that he is actively monitoring to see if capex holds, or if it could be a lagging indicator at this point.

“We talk about the very, very resilient U.S. consumer that has certainly been buoying the entire world,” Cass said. “If the consumer begins to stumble, how does it make it through the chain and eventually hit some of the capex?”

— Ian Thomas

AustralianSuper Chief Investment Officer Mark Delaney believes this year’s rally has been a bear market bounce and he thinks it’s important to be selective.

Given the tremendous rise in interest rates, Delaney said he finds floating-rate securities attractive. The fixed payments on floating rates go up as rates rise, which helps preserve their value.

“I’m in the bear market rally camp,” Delaney said at the conference. Anything with a floating rate nature “must be a pretty compelling opportunity.”

— Yun Li

TCW Group CEO Katie Koch sees a recession coming for the U.S. economy and is encouraging investors to play it safe.

“We are going to have a recession, because that’s the way the world works,” Koch said during the opening Delivering Alpha panel. “We haven’t had a real one for over a decade and a half.”

To combat the slowdown, she recommends a variety of conservative investments, ranging from Treasurys to mortgage-backed securities to cash. “We haven’t seen the pain of higher rates, but it’s coming.”

—Jeff Cox

The U.S. press doesn’t miss a day playing up the geopolitical rivalry with China, with the business press specifically focusing on the risks to companies relying on Chinese consumers and suppliers. But two top international investing executives say that you shouldn’t believe everything you read.

Mark Delaney, AustralianSuper chief investment officer & deputy CEO, said he just returned from a trip to China and saw several notable things in Beijing. One, there were very few construction cranes. Second, there were very few foreigners. Third, he saw a lot of retired people who looked like they were having a great time. “They were healthy and they’ve got singing competitions and line dancing.”

While the lack of construction illustrates the economic trouble in the country, he said the lack of foreigners should highlight the risk of trusting what you hear from Western experts. “China is just China. It’s just different and they are managing their way through like they’ve always done. So I didn’t think it was anywhere near as bad as people thought it was,” Delaney said.

He added that many China experts have said over the past two decades that the government in the country is “very practical.”

“That’s something you don’t pick up from the Western press,” he said.

Suni Harford, UBS Asset Management president, agreed. “We rely on the media, with all due respect, to tell us these stories. There are no foreigners there, people don’t know, they’re not on the ground,” she said, referring to the fact that most readers of news in the U.S. do not have real-life experience visiting China — her firm has staff on the ground in China. The headlines about an invasion of Taiwan aren’t something you hear about nearly as frequently in Europe, or when you travel in the Asian region, she said. “If you’re in Europe, you have a very different perspective on U.S.-China relations and how danger[ous] it is. … You go to Asia or Europe and it’s not the same issue that’s the first of mind that everybody has. It’s not about the [South] China Sea and it’s not about Taiwan. .. How much of the news we get has a political bent to it?”

“We’ve been there for a very long time, and we will be there for a very long time. … we actually believe in China,” she said. And she added that at a time of increasing talk of de-globalization or de-coupling from China, she said, “I’m a long-term believer we’re going to be global again.”

— Eric Rosenbaum

One reason the Federal Reserve won’t raise interest rates in 2024 is because it won’t want to become a story during an election year, according to Tina Byles Williams, CIO at multi-strategy investment firm Xponance.

“The Fed is going to stay behind the curve because it doesn’t want to be part of the election narrative,” Williams said at CNBC’s Delivering Alpha conference Thursday.

She noted that the Fed historically hasn’t raised rates within six months of an election.

Fed officials already have indicated that they expect to cut rates by half a percentage point next year. Well-anchored inflation expectations and the presidential race give them further ammunition, said Williams, who thinks the U.S. could enter recession but probably not until “way at the end” of next year.

—Jeff Cox

Many investors were burned in the years leading up to Covid during the rise of ESG and the bear market in oil. Buying energy amid all that negativity paid off in a major way for investors, and as oil comes off its most recent bull run, energy remains a big part of the equation for the Teacher Retirement System of Texas.

“We like that investment,” said Jase Auby, the chief investment officer for the pension system, which has a 6% allocation to energy and energy infrastructure.

Even after energy’s big comeback, there is still a lot of pressure on many institutions to stay out, or get out, of fossil fuel investments, and Auby said it helps when other pools of capital are exiting an asset class. He said investing in energy becomes a strategic advantage when others are backing away from the sector and in a market dominated by passive beta, strategic advantages are rare.

“We like that from a flows perspective,” he said. But he added that new investors are coming in, especially family offices around the country “stepping in where there might be a dearth of capital.”

It’s a risky asset class and oil prices can go down as quickly as they go up, especially if the economy weakens. Auby said his pension system stress tests for oil prices because it is very volatile. While he hesitated to put a number on where energy investments “break” because it is different for every exploration and production company and opportunity, he did say that if you take the fracking industry as an example, a breakeven number that’s fair to use is $50 a barrel.

The Texas pension system is a long-term investor and looks at energy that way, as it does the broader commodities complex. But Auby said it’s important to make a distinction between long-term and infinite, and to evaluate energy and commodities holdings based on business risk. “I get the hedge in the inflation scenario,” he said, adding that the pension system holds commodities in its risk parity portfolio for inflation reasons. But he added, just holding commodities for the long-term the expected rate of return “goes to zero.”

— Eric Rosenbaum

Returns on private credit look appealing in today’s market, according to Oaktree’s Armen Panossian.

“There’s clearly a need for a replacement source of capital from pension plans, insurance clients, institutions and even retail entering that market,” with the departure of incumbent lenders, said the incoming co-CEO and head of performing credit. “I think the need is quite apparent and the returns are very attractive given the risk.”

— Samantha Subin

Even with the recent decline in stocks, the market has been resilient this year, but two top investing officials say investors should not be complacent when looking at U.S. stock market returns year-to-date. Things are likely to get worse before they get better, and with cash in the bank able to earn 5%, aggressively betting on stocks in the short-term is a mistake.

“We’re more bearish than most people about what lies ahead,” said Katie Koch, TCW President & CEO. “Things break when you reprice aggressively,” she said.

With the Fed raising rates from zero to above 5%, the lag effects of monetary policy on the economy haven’t fully hit yet and the longer it takes for them to hit, the more things that will break, Koch said.

“You’re getting paid to be patient right now,” Koch said. “Cash has a good return.”

Dawn Fitzpatrick, Soros Fund Management CEO & chief investment officer, noted that the hundreds of billions that banks are holding in to-maturity bond portfolios are still holding a lot of pain under the surface that’s being exacerbated by the recent spike in bond rates.

Meanwhile, U.S. consumers have $2 trillion in mortgages that are fixed rate and that means the pain of the interest rate rise isn’t felt as acutely, in real-time, in the U.S. as it is in other markets, where more mortgages are floating rate.

“Everything gets harder from here,” she said.

— Eric Rosenbaum

The U.S. dollar has defied a lot of market pundit calls in the recent past, but with $33 trillion in national debt, and a government debt load that is rising, don’t bet on the currency’s continued strength.

That’s the view of Tina Byles Williams, Xponance founder, CEO, & chief investment officer.

Answering an audience question at Delivering Alpha about the market and economic impact of the rising national debt, she said, “The first victim is the U.S. dollar.”

“People have been saying that and lost money for a while, but it is 21% above purchasing power parity levels,” she said.

“That is the first to me, and most direct asset class victim … and that then has implications on U.S. equities vs non-U.S. equities.”

“I think it’s the primary victim. I can think of others, but that’s the one at the center of the bullseye.”
— Eric Rosenbaum

Remember what happened in retail a decade ago as large swaths of retail properties starting disappearing? That’s going to happen in the office market next.

About a third of the existing supply of office square footage will need to get taken out of the market, led by office properties that aren’t the top tier, TCW CEO and president Katie Koch said.

“We have to give people a reason to come to work and that has to be nice property,” she added.

The debt load in the market will remain under stress as well.

“A trillion and a half dollars of the CMBS market is going to need to be extended in the next about year and a half at four point higher,” Koch said.

Koch, who noted that TCW is both a tenant and investor in downtown Los Angeles, said that it is a “really tough real estate market” for big cites across America, which will lead to that supply getting taken out of the market.

“We’ve had a few people start to walk away from buildings in Los Angeles, San Francisco, other cities,” she said. “It is a long tailed event.”

— Ian Thomas

Even after this year’s run up, artificial intelligence still has more room to run, according to TCW CEO and president Katie Koch.

“We’ve got a long way to go for the story to play out,” Koch said, noting that while all technologies go through hype cycles, AI hasn’t hit its peak just yet.

She called AI a “transformational technology” likening it to mobile phones and one that will determine the winners and losers across sectors.

— Samantha Subin

The 13th annual CNBC Delivering Alpha Investor Summit is taking place at a crucial time for markets as investors grow concerned about a further pullback in stocks. A majority of Wall Street investors haven’t taken solace in stocks’ 2023 gains, thinking the market could retreat further as risk of a recession creeps up, according to the new CNBC Delivering Alpha investor survey. 

We polled about 300 chief investment officers, equity strategists, portfolio managers and CNBC contributors who manage money about where they stood on the markets for the rest of 2023 and beyond. The survey was conducted this week.

More than 60% of respondents believe the stock market’s gain this year has just been a bear market bounce, seeing more trouble ahead. A total of 39% of investors believe we are already in a new bull market.

Asked about the probability of a recession, 41% of survey respondents said they expect one in the middle of 2024, and 23% said a downturn will arrive later than 12 months from now. Only 14% said they don’t expect a recession.

— Yun Li

With yields of 6% available in the bond market, stocks have to do a lot to deliver on a risk-adjusted basis for investors.

They can, according to Ashish Shah, Goldman Sachs Asset Management CIO of public investing, but only for investors willing to look beyond the U.S. market.

Shah sees the setup in the markets as an “interesting buying opportunity” for equities in India and Japan, among other global markets. “Lots of good things are going on across the globe in equities and one of most important things is looking globally,” Shah said in an interview ahead of Delivering Alpha on CNBC’s “Squawk Box.”

How much should investors who buy overseas stocks expect?

“I think you can get 10% in equities, but you have to look internationally,” he said.

The U.S. dollar trend line and the tightness of U.S. balance sheets, combined with bond yields, mean that in the near-term there are headwinds for U.S. dollar-based assets. “It’s a nice setup for cheap assets abroad,” Shah said, point to reflation trades in India, where there considerable investments related to secular trends taking place, and Japan, where diversification of the supply chain is a tailwind.

And where, he said, “valuations are a lot better than in the U.S.”

— Eric Rosenbaum

Kyle Bass, Hayman Capital Management founder and CIO, said investors and companies that are looking to deepen ties with China as opposed to severing them are making “the wrong bet.”

“China’s hooks on Wall Street are so deep into us, all of the big players keep saying we need more integration, not less,” Bass said on “Squawk Box” in an interview on the sidelines of Delivering Alpha. “They’re not interested in our national security, they’re interested in making another dollar, and one day we’re going to wake up and realize that was the wrong bet.”

Bass said that the desire to forge business relationships with China stems from “looking for the cheapest labor, and we’re looking for the cheapest labor with counterparties that are adversarial to our way of life and our values system.”

He called the situation with China a cold war, and said that “we’re not doing a great job but we’re starting to protect ourselves.”

One way Bass says the U.S. should be protecting itself is through an FTC review of TikTok. “TikTok broadcasts straight into our kids’ bedrooms and has never had to obtain an FTC license,” he said.

— Ian Thomas

Les Brun, Ariel Alternatives CEO, says private equity valuations will decline as more companies “run out of cash” and need to complete transactions to fund their growth.

In an interview with CNBC’s “Squawk Box” ahead of the Delivering Alpha summit, Brun said the current situation reminds him of the 2008-2009 period when those in private equity with money were able to make a lot more money, but those holding onto assets that had seen their values drop during the crisis were going to see valuations drop even more because there wasn’t a sufficient pool of buyers. 

The current interest rate environment will add more pressure on valuations.

He said traditional companies are having trouble finding financing at rates that are attractive and transactions have to be completed with either greater amounts of equity or lower valuations. “It has to be one or the other,” he said.

“They will have to find ways to do transactions at valuations that are lower than they expected,” Brun added.

— Eric Rosenbaum

Treasury yields have hit multi-year highs and major stock market averages look poised to cap off a losing September and down quarter. The S&P 500 closed below the 4,300 level for the first time since June earlier this week, while the Dow Jones Industrial Average posted it largest one-day loss since March. Technology stocks have also come under pressure in recent weeks from the threat of rising rates

Comments from Pershing Square’s Bill Ackman later today could play a pivotal role in market sentiment. The renowned billionaire hedge fund manager who’s been a vocal commentator on inflation, the Federal Reserve and the state of the market is slated to speak with CNBC’s Scott Wapner at 4:15 p.m. ET.

— Samantha Subin