Record asset prices, which according to some representatives of the financial world must eventually fall, and the greatest threat to global energy security in history – these are the topics that have been discussed on the markets in recent days. From the Bank of England to the luxury empire LVMH, market leaders are drawing scenarios full of uncertainty.
Sarah Breeden: At some point, markets will correct
Sarah Breeden, deputy head of financial stability at the Bank of England, said in an interview with the BBC that current asset prices are too high given the accumulation of risks.
– There are many risk factors and asset prices are at record levels, says Sarah Breeden. – We expect that markets will correct at some point.
Central bank representatives rarely assess the situation on financial markets so directly. However, Breeden did not specify when and how deep a decline she expected. However, she admitted that she was worried about the probability of several types of economic risk materializing simultaneously.
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– A huge economic shock, loss of confidence in the private debt market, correction of valuations of artificial intelligence and other risky assets – what will happen in such an environment and are we ready for it – described the scenario by Sarah Breeden.
Vanguard CEO: It's a form of financial exploitation
Salim Ramji, CEO of Vanguard, the world's second largest asset manager, warns against the dangers of the so-called prediction markets. During the Economic Club of New York conference, he pointed out that there is a very important difference between investing and gambling.
– Too many platforms try to increase user engagement regardless of the consequences. Too many people in this segment present speculation as something to make a living from. In fact, we see it as a form of financial exploitation, says Salim Ramji, quoted by the Financial Times.
According to him, one third of Generation Z representatives have tried or would like to try their hand at this segment.
“In a sense, if someone wants to do it for fun with their own money, that's fine,” says Salim Ramji. But the problem, he adds, arises when people do it not for fun, but treat it as a quick way to financial security.
IEA head: The greatest security threat in history
Fatih Birol, executive director of the International Energy Agency (IEA), told CNBC that due to the closure of the Strait of Hormuz, the world is facing the greatest energy security threat in history.
As he notes, currently 13 million barrels of oil per day have evaporated from the market, which is approximately 13%. pre-war global consumption of this raw material. In addition, supply chains for key materials have been severely disrupted. In his opinion, the beneficiaries of this situation will be nuclear energy, renewable energy sources and electric vehicles.
– I expect that in some countries coal will gain in importance and be used more often, especially in large Asian countries – adds Fatih Birol.
Aspect Capital Founder: I want to know what the model does
Martin Lueck is one of the pioneers of investing based on mathematical models and co-founder of AHL, a company managing funds in this segment, and currently the creator and head of the Aspect Capital hedge fund, managing assets worth USD 9 billion. He notes that in some corners of the financial world, enthusiasm for the use of artificial intelligence (AI) models seems overblown.
– I assume that I will not put my name or the reputation of the company on something for which I do not understand why specific items are recommended to me – said Martin Lueck in an interview for the Financial Times.
– I have to have some hypothesis I can agree with. If I invest my own money, I want to know what a given model does, he added.
However, he admits that artificial intelligence has great potential as an auxiliary tool for analysts creating mathematical models. It can help you organize data, conduct tests or prepare presentations.
– However, I still want the researcher to think about what he is trying to discover, and not just throw in data and tell him to look for correlations – emphasizes Martin Lueck.
Dow Inc. CEO: Unblocking the Strait of Hormuz will take longer
Jim Fitterling, outgoing CEO of chemical giant Dow Inc., estimates that the reopening of the Strait of Hormuz will take much longer than investors expect.
“Some of our scenarios show that even if the strait were to open today, it would take 275 days just to relieve the logistical congestion, and now it could be even longer,” Jim Fitterling said on CNBC's “Mad Money.”
The Strait of Hormuz was de facto closed in early March with the outbreak of the war in Iran, which caused massive bottlenecks in global flows of energy and petrochemical resources. The company's head emphasizes that the return to normality will be slow and operationally complicated.
– We need to bring the empty ships back. We need to clear the strait and the Arabian Gulf. It won't happen in a month or two. It will take several quarters before the situation returns to normal, said Jim Fitterling, who is retiring on July 1 after eight years as CEO.
LVMH CEO: The coming year will be unpredictable
Bernard Arnault, the main shareholder and president of the luxury empire LVMH, admitted during the presentation of the company's results that the coming year will be unpredictable and the range of possible scenarios is extremely wide.
– In the short term, it has not escaped our attention that the world is in quite a serious crisis in the Middle East – says Bernard Arnault.
The head of LVMH points out that everything depends on how this crisis will develop further.
– Or it will be a global disaster with extremely serious and very negative consequences for the economy, and if that happens, who knows what 2026 will look like – says Bernard Arnault.
The second option is that the crisis will somehow end sooner, which is what everyone is hoping for, although it does not seem like it will be easy.
– In this case, business will slowly return to normal. Either way, it is difficult to predict, notes Bernard Arnault.
If the latter scenario were to come true, the CEO expects LVMH's business to grow. In the case of the first one, the group will have to face a huge crisis. However, he noted that this would not be its first crisis, expressing the belief that even in such a difficult situation, the group would be able to successfully increase its market share.
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