Lehman, E-Trade Execs Offer Global Outlook
Liquidity is the one word that characterizes Lehman Brother’s booming private equity business, says Tom Russo, vice chairman of the investment giant. But he also says the bubble can burst at anytime.
“Inevitably, something will go wrong. The kinds of things that you worry about, and it is hard to quantify, are the geopolitical issues, anything in that area could really have a real dramatic effect,” Russo said in a “Squawk Box” interview with CNBC’s Maria Bartiromo in Davos, Switzerland. “I’m much more worried about things like avian flu, things that you don’t know how to deal with.”
And globalization is affecting the financial services sector in many ways.
E-Trade Financial CEO Mitch Caplan told Bartiromo that the company aims to see 20% to 30% of total revenue from its international business. It recently acquired a 10% stake in an Indian financial services firm and is looking to expand in emerging markets, especially in Asia.
“There’s this creation of a new middle class,” Caplan said. “They are building wealth and trying to figure out what to do as they build the wealth.”
“They’re much less speculative,” Caplan added. “Savings rates are higher. And as they begin to think about ways in which they want to invest, you’ll see a real focus on mutual funds and products other than pure equities trading.”