Following are excerpts from a CNBC interview with John Studzinski, Vice-Chairman, Blackstone, from the World Economic Forum 2017 with Carolin Roth.
CR: Let's talk about some of the other biggest issues that are facing investors and policy makers around the world, and that are being talked about here at the World Economic Forum in Davos. And I'm now joined by a very frequent visitor of the World Economic Forum, John Studzinski, the Vice-Chairman of Blackstone. What is the single biggest issue to you here at the WEF this year? Is it China? Is it Theresa May? Is it Trump?
JS: I think it's what I characterize as a new world order, or perhaps a new world disorder. It's all change, in terms of global leadership. I think President Xi kicking off the forum is a very strong statement about China's commitment to a long-term role, a serious role, an important policy role on the world stage, and I think probably the next thing you'll see is China playing a much bigger role in the security council and the UN, as well.
CR: Let's stick with China for a moment. Isn't it quite ironic how the Chinese President, who's actually the first Chinese President ever to attend the World Economic Forum, today in a speech is expected to defend free trade and globalization, when in the US we're seeing a move against free trade and a move towards protectionism?
JS: I think this is probably the beginning of a debate, I mean, you talk about free trade, protectionism, you're also going to talk about climate control, because the Chinese are going to be the poster children, or the poster child for, you know, major environmental policies. They've had to as a domestic matter. You know, big policies tend to emanate from domestic problems and domestic issues. The Chinese have had to deal with the environment because of the many problems domestically, and they're taking it very seriously, and I think they're going to emerge clearly as the global leader.
CR: Is the Paris Agreement dead in the water, given that Donald Trump has called climate change a hoax?
JS: I think the Paris Agreement is obviously going to have to be rethought. Whether it's dead in the water, that' a good journalist expression, I don't know in fact if you could say that, today.
CR: Let's push on and talk a little bit about Brexit, and Theresa May's speech later on today. No one really knows what exactly she's going to say, even though we've got the lead documents, but we've got the 12-point plan, some of her priorities, but the bigger question is will some of that have to be watered down? The starting point that she has is a very hard Brexit stance. Will some of that have to be watered down in the process of negotiating with the EU?
JS: I think first of all it's going to be predicated on what type of-, how she's tiering her 1, 2 and 3 issues. Theresa May is a very thoughtful , structured, disciplined leader. She doesn't do things-, and the press is trying to create this image that she's approaching Brexit like she doesn't' know how to negotiate. She's actually-, if you look at how she ran the Home Office, she ran the Home Office with a great deal of detailed, hands on acumen and aplomb. I think what she's probably doing, in the short-term, is she's probably trying to lay out a platform, and then she's going to, first and foremost, try and understand what type of trade agreement, the UK and North America, namely between Theresa May and Donald Trump, can be developed over the next month or two.
CR: So you say she's had a good plan all along? And she knows what position-,
JS: I think you have to separate-, I think the press has to separate her mindset and her team's mindset in terms of what they want to accomplish from actually how they implement it, and I think they're muddling them, and I think she probably has a very clear view as to what she wants to accomplish. I think, on the other hand, you and I both know, you can't negotiate a serious agreement in public.
CR: Alright. What are you seeing in the business community out there? What are you seeing amongst your own clients? How much uncertainty is there around future business decisions about investments, given the political uncertainty about what Mr. Trump is going to do about future trade links?
JS: If you look at the stock market in the United States since the election-,
CR: Well, there's euphoria.
JS: The market has spoken. I think people are excited because historically we've-, since 2008, there was a very good international concerted effort at solving the problem of the great recession, done heavily through monetary policy. I think we're now going to what I call a cocktail of monetary, fiscal and structural, and I think you're going to see this cocktail of monetary, fiscal and structural really catalyzed by what the Trump administration tries to do, and I think the market sees that as a great opportunity for the emergence of new businesses, lower ta x rates and, you know, further economic stimulus.
CR: What's going to happen to all the cash that will be freed up by the tax cuts, by the repatriation of cash from overseas? Is it going to go into deal making, or is it share buy backs to flatter some of the share prices? Is it about making major deals, or capital investment?
JS: You know, Carolin, I think we can get you on as an advisor, because I would guess that two thirds of the cash will go back to share buy backs and extraordinary dividends. So I think it-, one of the things that's disconnected right now is this notion that all the money is going to go towards building plants and creating jobs. I think some of it is going to go to R&D, as it has to, but I think a large portion of it-, if I were to line up 20 CEOs, and you should ask them over the next couple of days, the majority of them will say more than 40-60% of the cash will be used for share buybacks, which will continue to support the stock market and to enhance share prices even further.
CR: Alright, share buy backs, that's the name of the game, and John, I don't know if I can take up a job offer as an advisor to your firm because I actually quite like this job, even though it's freezing cold here, I mean, this must be the coldest Davos that you've ever been to, right?
JS:CIt's one of the coldest-,
CR: It is definitely.
JS Although we've got the sun today, at least, for the moment.
CR At least we do, and it's an absolutely beautiful day. John Studzinski, the Vice-Chairman of Blackstone.