WHEN: Today, Tuesday, March 15, 2022
WHERE: CNBC’s “Closing Bell: Overtime”
Following is the unofficial transcript of a CNBC exclusive interview with Avenue Capital Group CEO, Chairman & Co-Founder Marc Lasry on CNBC’s “Closing Bell: Overtime” (M-F, 4PM-5PM ET) today, Tuesday, March 15th for premiere week. Following is a link to video on CNBC.com:
All references must be sourced to CNBC.
SCOTT WAPNER: Alright we’re back in “Overtime” joined now exclusively by billionaire investor, Marc Lasry. He’s the Chairman and CEO of Avenue Capital. Welcome to Post Nine, it’s nice to see you after all this time.
MARC LASRY: No, thank you. It’s a pleasure to be here.
WAPNER: So we’re talking about the market environment that we’re in, this volatile environment which makes you smile, makes us nervous and the people watching nervous. Do you feel like this volatility is going to continue?
LASRY: Yeah, it is. I mean, look, what’s happening is the market’s reacting to all the news that keeps on happening. And you know, if oil shoots up, market goes down. If there’s some, some really negative events that are happening in Ukraine, the market will get more nervous. If I had said to you think about it, I think in June of last year, if I said to you look, the S&P is at 4,200 and in nine months, inflation is going to be 8%, oil is gonna be over 100 and by the way, you’re gonna have a nuclear power invade a neighboring country. Would you have thought the S&P would be the same, would you? Like—
WAPNER: I would have thought it may be a lot lower than it—
LASRY: It would. That’s exactly it. I would have thought it’d be a lot, lot lower. And so what you’re seeing is a lot of this is really what’s happening with the Fed. And the Fed tomorrow is going to be a big day because if they say that rates, they’re increasing by 25 BPS, then what they’re telling you is they’re a little nervous and, you know, they’re trying to make sure the economy is going to be fine. And you may not have those seven rate increases. You may have them but they may only be 25 BPS as opposed to 50 BPS.
WAPNER: So is that what you say if they go 25 tomorrow, it’s suggested they’re too scared to do the 50 which you think they should?
LASRY: No, I don’t. I think right now in today’s environment, they should be doing 25. I think at the end of the day, what’s happening today is nobody really knows what’s going on and when you don’t know and you have uncertainty, be a little careful. Right? And that’s what the Fed is going to do because what we’re seeing in our world is there is a lot of volatility. There is a lot of uncertainty, that uncertainty is actually beneficial to us.
WAPNER: Well that’s why I said at the outset, like volatility picks up, Lasry smiles because it makes more opportunities as everybody else is feeling queasy about the world.
LASRY: Right, and we have long term money. So we’re happy to invest in an environment like this because we still believe at the end of the day you’re going to have positive GDP. It’s just capital scarcer today because people are nervous.
WAPNER: So, it really caught my attention and our producers as well when you told the producer who pre-interviewed you that your view on China has changed. How so?
LASRY: Well, I think what’s happening in China today is because of COVID, there’s strict no COVID policy that’s going to have an impact on GDP. It just is and you’re, you know, when you really think about it, why has our country opened up? Because a lot of people caught COVID. Right? The problem in China’s as they open it up a little bit, all of a sudden people start catching it and they get nervous again and they close it back down. That’s actually that’s not good because what that means is they’re going to keep on slowing things down, GDP will go down, supply chain is going to have issues. So for us right now, I want to invest in Asia. I don’t want to be investing in China because I think that’s just going to take a lot longer than people think.
WAPNER: What are the better markets to be in besides China there?
LASRY: I think today Australia is actually for us. We’re seeing India, there’s huge opportunities there. So Singapore, which has opened up, so areas that opened up they’re, they’re not going to be as nervous if you get more COVID cases. Right? We’re not going to be, I don’t think we are in the United States. I think we’ve yet to become endemic as opposed to a pandemic.
WAPNER: But you mean you were, you, you had offices there? An office? You were lending there. Does this mean that that’s dried up like are you leaving?
LASRY: No, it means we’re slowing down. We actually moved our office from Hong Kong to Singapore. And the reason we did that is because we were nervous about this no COVID policy. So for us now we’re in Singapore. Because if you go to Hong Kong, you’ve got a quarantine for 21 days, how would you like to just not move? So you’ve got to be able to travel. That’s having an impact. We see that impact. So for us, we’re right now investing outside of Hong Kong, outside of China because we just think there’s gonna be issues for the next six months to a year.
WAPNER: The other thing I thought of and I texted you about this was whether you were buying any Russian or Ukrainian debt because you’re the kind of guy who looks at potentially those types of opportunities. Is this one too hot to touch though?
LASRY: It’s too hot because what you don’t know is what’s gonna happen to those companies and especially with Treasury, like are we allowed to do business? Are we allowed to do something? It’s just there’s too much unknown today and that’s why prices are really low. But I don’t want to sort of make a political bet. You know, I want to make an economic bet right now. You’re making political bets if you’re buying those bonds.
WAPNER: I mean sometimes you would have looked at a situation like this.
LASRY: I would.
WAPNER: Did you at least put your foot in the water, take a look and said it’s just too much, too hot to get in?
LASRY: No, no, we did but the problem is these sanctions are, there’s gonna be more and more and I don’t know what the full impact is gonna have on sort of our ability to collect on the bonds. I mean you’re seeing in Russia today they’re saying that if you say, if you’re a Western company and you’ve got an office there and you say anything negative, you could get arrested. I mean, there’s there’s too much going on for us to be buying those bonds.
WAPNER: Are you buying sovereigns anywhere?
LASRY: No. Normally we’d be buying the debt of the companies. I just think today, I’d rather wait until I know a little bit more.
WAPNER: Do you feel like once the Fed if we spin it forward again to what’s going to happen tomorrow, once we know that the world will become a little less volatile in terms of markets, are we still going to have to watch inflation numbers every month?
LASRY: You will.
WAPNER: We’re still going to, you know, be worried about whatever they say, whenever they say it.
LASRY: You are, you’re going to be a little calmer but after tomorrow, I promise you next week, next question is going to be what do you think the Fed’s going to do at the next meeting? Right? Where do you think rates, does this mean it’s 25 BPS or 50 BPS. So I think there’s a it’ll be a little bit calmer. But then you gotta go see what the pattern is and what happens, you know, sort of the next time around but I think the market is now sort of convinced that the Fed’s gonna take things a little slower.
WAPNER: I, we were talking about that with our panel before you and I—
LASRY: Yeah, I saw that.
WAPNER: And I just wonder whether it’s wishful thinking for some at this point that inflation is such a problem and the Fed is convinced it has to tackle it almost by any means necessary that despite all of these concerns, even geopolitical ones, they’re going to do what they have to do.
LASRY: Yeah, but it depends. You’re right inflation, the one thing you don’t want is a recession. You’ll deal a little bit with inflation. You don’t want a recession because that actually will impact people a lot more. So I think the Fed is going to be kind of slow and I think the market sort of sees that.
WAPNER: Okay so on that note, we’ll finish with I want you to take our Twitter poll. Alright. We asked people, how many hikes do you think you’re going to get from the Fed, 3, 4, 5 or 5+? What do you think?
LASRY: Oh, I think, I don’t think it’s 5+ at all. I think it’ll be at max 4 or 5.
WAPNER: Did you think it was once 5+?
LASRY: Yes, yes I did. If you had asked me three months ago, I would have told you 5+. I think today with what’s happening in the Ukraine and what’s going on around the world and where oil is, you got to be a little bit more careful.
WAPNER: Interesting. It’s great to see in person.
LASRY: Always a pleasure.
WAPNER: Thanks for being here on “Overtime.”
LASRY: No, thank you for being on this show. So, thank you.
