It’s an election year. The only thing more uncertain than the outcome is how markets would respond to a second term for either President Joe Biden or former President Donald Trump. What investors “really want to know from us on an investing side is: Are you going to be able to endure in your investments, regardless of what happens with an election? If there's a change, can you still perform?” Brian Bernasek, the Carlyle Group’s co-head of Private Equity in the Americas, said during a meeting with Zach Warmbrodt, Gavin Bade and me last week. “Investors are thinking about stability, certainty. Can you weather the storm?” The Carlyle Group prides itself on its Washington roots. Co-founder and co-Chair David Rubenstein is an alum of former President Jimmy Carter’s administration. Federal Reserve Chair Jerome Powell and Virginia Gov. Glenn Youngkin both have “Carlyle” on their CVs. So did President George H.W. Bush. There is no shortage of institutional knowledge or political savvy. But even for Carlyle, the nature of the storm that’s coming — or if a storm is coming at all — is an open question. Biden administration policies come with their own challenges and opportunities. Investments in companies that will benefit from enduring domestic industrial policy are in (“This is probably the largest concentrated capex cycle since the late ‘90s,” said global head of research and investment strategy Jason Thomas.) Investments in Chinese businesses? Not so much. Trump is more of a known unknown. Should he win, Carlyle’s top brass isn’t sure if he will go through with some of the more seismic policy shifts that have been floated by him and his advisers. “I don't think I have insights on exactly what he's thinking of doing, other than I think I know him well enough to know that he's not focused on exactly what he's going to do except for saying things at rallies and so forth. Once he wins the election, he'll figure it out,” Rubenstein said. “I'd be surprised if he's sitting through all the things that the Heritage Foundation is preparing and he's reading these position papers,” he added. Regardless of the outcome of the election, they do believe that the rule of law will prevail. “It's fashionable these days to point at authoritarian regimes and to feel like they're on the march,” said Admiral James Stavridis, Carlyle’s vice chair of global affairs. But recent elections in Mexico, India and South Africa — along with the relative strength of centrist coalitions in Europe in the face of ascendant far-right parties— have been encouraging, he said. With “our election coming, we're going to have a choice,” Stavridis said. Geopolitics is a product of systems of governance, “and I feel cautiously optimistic about where the world is headed in that regard.” IT’S MONDAY — Send tips and suggestions to ssutton@politico.com or on Signal at 925.216.7576.
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