(Bloomberg) -- The titans of finance who congregated in Riyadh this week for Saudi Arabia’s annual Davos-style confab were mostly upbeat on the prospects for the US economy, but concerned about more sluggish growth in Europe.
Bankers and financiers including Citigroup Inc.’s Jane Fraser, BlackRock Inc.’s Larry Fink, Goldman Sachs Group Inc.’s David Solomon and several other financial leaders arrived at the kingdom’s Future Investment Initiative, where they have become regular attendees.
“The US economy is doing quite well, it has been very resilient,” Solomon said, adding his base case is for “a soft landing” there. That’s a major change from the years after the Covid-19 pandemic, when fears about an American recession were a cause of major concern among FII attendees.
The US economy will rise 2.8% this year, the International Monetary Fund said last week as it upgraded the country’s growth. The eurozone area will grow just 0.8% and the UK 1.1%, according to the Washington-based lender.
The Federal Reserve lowered its benchmark interest rate by a half percentage point last month, a surprising start to a policy shift aimed at bolstering the US labor market.
Many of the executives in Riyadh suggested market bets for Fed rate cuts might be overdone. Asked if they think there will be two more rate cuts this year, not a single executive in a panel that included the heads of Goldman Sachs, Morgan Stanley, Standard Chartered, Carlyle, Apollo Global Management Inc. and State Street Corp. raised their hands. A majority agreed there might be one more reduction by the end of 2024.
“I think we have to give central banks around the world, particularly the Fed, a lot of credit where credit is due,” said Carlyle Group Inc.’s Harvey Schwartz. “No one expected to go through a 500 basis point raise and now some reduction in rates.”
But executives also repeatedly laid out a string of concerns that included weakness in Europe, lagging global-growth forecasts and geopolitical risks.
“Europe is not growing very fast,” said Bill Winters, the chief executive officer of Standard Chartered Plc.
Growth in European corporate profits is coming substantially from the markets outside the continent, he said. “That is a structural problem.”
Goldman’s Solomon said he is “a little bit more concerned about European growth and also the economic situation in China” during an interview with Bloomberg Television on Tuesday.
Last week, the IMF lowered its global growth forecast for 2025 and warned of accelerating risks from wars to trade protectionism. Meanwhile, the conflicts in the Middle East have escalated and the grinding war between Russia and Ukraine has continued.
Speakers at the conference were also quick to highlight the US elections on Nov. 5 as one of the biggest uncertainties facing markets. Vice President Kamala Harris and former President Donald Trump are in a dead heat in the polls.
“The expectation today is that Donald Trump will win the White House,” said Ken Griffin, CEO of Citadel. “We are at that moment of peak uncertainty. It is a race that Trump is favored to win but it is almost a coin toss.”
Then there’s the lack of clarity around the policies that might come after the election.
“It is hard to think about monetary policy in 2025 in the US until you get through the election and we get a clear sense of policy actions,” Goldman’s Solomon said.
--With assistance from Omar El Chmouri, Christine Burke, Joumanna Bercetche, Nicolas Parasie and Dinesh Nair.
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