Carlyle Group’s David Rubenstein: I'd give this economy a B+

I'm here at the Aspen Ideas Festival this morning and join us right now for a look at the state of the economy, the feds rate path and so much more. We're going to get into politics actually as well. David Rubenstein, Co founder and Co chairman of the car Law Group. He's also now the owner of a Major League Baseball's Baltimore Orioles. We'll talk to him about baseball. But actually let's start where you just we were just talking off camera. You just did an interview with President Biden, former President Trump, and we've been having conversations all morning, both with Joe Lonsdale, who I believe is supporting President Trump. We also took to Jeff Sonnenfeld about that piece in the New York Times yesterday about CE OS and what he believes is not their support for for Trump. What was your lesson from interviewing both of these gentlemen recently? It's a book that I have coming out in September. And I have said that the highest calling of mankind is private equity. But I decided to actually call this book the highest calling because probably being president is more important than private equity. So the book is called The Highest Calling. And for that it's a book about various presidents. But the last two I have interviewed them. I spent an hour with President Biden in the Oval Office, and then I spent an hour with what was the what was the revelation for you personally then? I think the characterization of both of them is not accurate. Accurate. I mean, President Biden could do the interview quite well. I mean, he answered every question. And the interview will be public. And President Trump was during the trial that he was doing this. He did it before the trial one morning, and he seemed to be focused on it. And so there's no revelations that I think are startling you. You've been a Democrat for most of your life. I'm an independent. You're an independent now. OK. Do you want to tell us who you plan to support? I don't get involved in politics, but you're but you're but you're, you're a demonstrable friend of the of the current president. He stayed at your house. I, I, he does stay at my house, but I friends with a lot of people. But would you therefore not support him? I don't support anybody publicly. I just vote the way I want to vote privately. But I, I, because I'm the chairman of the Kennedy Center, the chairman of the Library of Congress, chairman of the National Gallery of Art. I think it's best for me to be apolitical because I I have to get money from Democrats and Republicans for the appropriations for the Kennedy Center and I don't want to get in the middle. And then let me ask you this, though. What do you make of the Jeff Sonnenfeld piece in the New York Times yesterday that effectively was saying that he didn't believe that the presidents of major companies in America were going to support President Trump? We then had an interview with Joe Lonsdale, who made the argument that he believes that there is a quiet support for President Trump, but it's actually much larger than his appreciated or known. I think that the CE OS generally want to be with a winner as a general rule of thumb. Most CE OS of big publicly traded companies are probably more Republican than Democratic as a general rule of thumb. And generally they have had some resistance to President Trump for all the reasons you know. But now that they think that President Trump has a reasonably good chance of winning based on public opinion polls, I think they're drifting and coming home. How how should we think about that though? Well, I mean, business people generally like to be with a winner. They want to do what's going to help their company and they think their company might be helped by some of the policies of Trump, rightly or wrongly. Let's switch for a moment to to business if we could. Here we are on CNBC. We just talked to Austin Goolsbee about the path of the Fed. You're in the private equity business. The path of Fed has a huge impact on your ability to borrow money and how much you pay for it. Where do you think we really are? Well, I think the Federal Reserve is very reluctant. I don't know for sure what they're going to. Nobody knows for certain. I'm going to interview Jay Powell publicly on July the 15th in a public setting in in Washington, and maybe he'll give us some insights then. But I think that generally the Fed wants to stay out of politics. And so I've always said that I think the Fed is not likely to cut rates before the election because it would just cause too much political turmoil. So you don't believe Austin Goolsbee at the end of that interview when I believe he was asked specifically whether the presidential race has an impact on their decision? I know that that is the traditional line that the Fed has, and they should have that line. But I just think generally they're human and they recognize that they'll be heavily criticized by President Trump. I suspect if all of a sudden they were to cut rates right before the election. Therefore, I suspect the market is probably more right than wrong when it says the rates cuts are likely to come after the election. Let me actually ask you just a a Washington political question about the Fed. You know, the Fed has talked about its independence for a long time. And yet when you go back, even in the Volcker days and and other times, there's been some pressure applied by presidents, sometimes very quietly, increasingly when it was former President Trump publicly, we've heard from, we've seen that Heritage 2025 report and others that have suggested that if he were president, at least some that are around him, want to have a lot more control of the Fed. Do you think that's in the cards? I think that's unrealistic because I think trying to control the Fed now, given the way the country's evolved and and the history of the Fed would be damaging to the economy. And I don't think that would actually happen. I don't believe Republicans or Democrats on Capitol Hill would really support that in the end. And I think the American people wouldn't support that. The Fed has operated as the best of the central bank in the world for a long time, and I think destroying that would be a big mistake. How would you grade this economy today? I think economy now is probably AB plus. We're not a, but nobody's probably an A right in the world right now. But we're doing pretty well. Remember, we've had high interest rates for quite some time yet the economy is going to grow probably a 2 1/2 percent this year. That's pretty good for the economy with high interest rates. We've been predicting a recession for quite some time, 2324. It hasn't happened yet. So the economy is in pretty good shape. You have been a prolific fundraiser beyond some of the not-for-profit work you did, but a prolific fundraiser at Carlisle from pension funds and sovereign wealth funds around the world. There is a conundrum that is taking place in private equity today, which is that there have been very few exits, meaning that private equity has sold very few companies. A lot of pension funds have not gotten cash back, which means that you can't really go to them and say, hey, send me more money because they say I don't have money. You need to send me the money. A lot of folks have then gone to the Middle East to say, OK, we'll, we'll go after that money. Now in the Middle East, it appears they're saying, actually, you know what, we were sending you a lot of money. We need to spend some that money here in the Middle East instead of back in America as a fundraiser. What do you think of what's happening here? Well, it's obviously tougher to raise money than it was years ago because we haven't had as many exits. But there's a new thing called private credit. Yes, and many people have been raising money in private credit and there's a fair amount of money for that because interest rates have been high. So most of the large private equity firms also are doing large amounts of private credit and so they've been raising money for that. And there are other things they raise money for real estate funded funds. So the large private equity firms are not suffering. They could always do better, but I think you shouldn't cry for them. How do you think about the marks though on all these private equity investments? Because they have gone up and up and up, open up, and yet we haven't seen the realized sale of them yet. Well, historically, when you raise money, you're worried about the internal rate of return that you had and also the MOAC, the multiple and investing capital. Now the investors want something called DPI, which is to say how much cash have actually given me back. Don't tell me what the mark is or what it's going to be. Tell me what cash you're giving back. And so that's made it more difficult to raise money. But generally, I think as the economy gets better and it will get better because when interest rates come down, I suspect you'll see a loosening up of asset sales and more and more things will get sold. What do you think of this new phenomenon where some private equity firms effectively are leveraging the leverage, meaning they're basically to get some cash out to give to people. They're effectively taking a loan on top of the loan. These are continuation funds or things like that. I don't think it's any, any calamity has yet happened because of it. I don't think it's the worst thing in the world. I we've done it, other firms have done it. I think it's not a terrible thing. I don't see any big crisis that have happened because of it. Any big investment theme that we need to know about before we let you go? Well, I think sports, sports, let's talk about this. How do you feel? How do you feel as an owner of the Orioles now? Well, I had a bunch of losses and some wins, including against the Yankees. We won the Yankees. We beat the Yankees two out of three recently and a five out of seven so far this year. So we just lost three games to the Houston Astros, which in a row which we didn't anticipate. Of course, sports is a very attractive area to invest. As you know, a lot of private equity people have gotten into sports, right? And very few people have lost money buying sports teams. How much of this is an investment for you and how much of this is just supposed to be fun? This is mostly a philanthropic thing in the sense that I want to make money and I have investors that come along with me. But I am from Baltimore. I grew up in Baltimore and I wanted to do something for Baltimore and that's really why I did it.