Navigating the Three Rs: Rates, Recession, Regulation

01 November 2024
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AB Carval Lucas Detor - Navigating the Three Rs - Rates_ Recession_ Regulation
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    | Managing Principal—AB CarVal
    Transcript

    The three key areas that we are seeing on a macro perspective that are pushing things around are what I like to call the three Rs: rates, recession and regulation.

    When I’m saying rates, I am not talking about which direction they’re going in. I’m talking about the volatility in rates, which is undeniable.

    The risk-free asset is the most volatile asset that we’ve seen in the last 12 to 24 months. That volatility is creating space for us by changing funding markets and allowing us to operate in places where we couldn’t have before.

    When I talk about the second R, or recession, we’re not making a prediction, “Which way are we going?” But the fact that the economic cycles are in flux is also creating opportunity.

    And when I talk about regulation, I’m talking about Basel and I’m talking about the Inflation Reduction Act. Undeniably, both of them are creating lots of opportunity for us.

    This is the time for experience, not intuition.

     

    The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to revision over time.


    About the Authors

    Lucas Detor is a managing principal and member of the Investment Committee for AB CarVal, responsible for leading the firm’s investment strategy and management. He also leads the firm’s transportation investments and oversees capital formation, emerging markets and real estate investments for the firm. Detor joined AB CarVal from Morgan Stanley, where he most recently served as managing director and co-head of the global distressed and US leveraged loan business. He has also served as a special agent with the United States Secret Service, as well as serving in the US Army Reserves and New York National Guard. Detor holds an MBA from NYU’s Stern School of Business and a BS in accounting from SUNY Albany. He is a Certified Public Accountant (inactive). Location: Minneapolis