Much of the US market’s attention has been on the Federal Reserve’s more aggressive interest rate hikes as reason for recession fears.

But Carlyle Group co-founder and co-chairman David Rubenstein, a billionaire investor and philanthropist, says the trajectory of the economy may be beyond the control of the central bank and that two other global players are more important when it comes to is to assess the risk of recession.

The Fed’s efforts to fight inflation with higher interest rates “can be hard to know how it will work out,” Rubenstein said Monday in an interview with CNBC from the Aspen Ideas Festival. “No one knows how it will work.”

Nevertheless, the two most important questions in his view are what will happen with China, including its Covid policy which is further slowing down the global economy, and the duration of the Russian-Ukrainian war, which has an impact on the energy market.

“Currently, nobody has the answer,” Rubenstein said. “I don’t think it’s inevitable that there will be a recession. I think it’s hard to avoid a recession, but it’s not inevitable,” he added.

In an organization as large as the private equity giant Carlyle Group, he says there is no “common opinion on anything”, but he added: “we have no don’t feel like we’re going into a recession”.

China as a risk factor could remain unstable until the end of this year and a decision by the Communist Party of China to award a third term to President Xi Jinping. Once politics becomes clearer, there should be greater clarity on Covid policies, as well as tech sector regulation that has baffled investors. He expects a somewhat softer tone with tech companies than China has shown recently.

As the Russian-Ukrainian war led to energy price spikes and concerns about energy shortages in Europe, Rubenstein said a reassessment of the energy transition was underway. “Everyone wants more climate-friendly energy, of course, but it’s not easy to get there. What we learned from the Russian-Ukrainian war is that the world is still very strongly dependent on carbon energy, and right now the world is scrambling to get more carbon energy.” He added: “The world is realizing that you can’t move to carbon neutral policies overnight; it will take some time.”

Oil prices have already fallen from around $140 to $108 a barrel, and Rubenstein thinks the price trajectory remains lower, with US supply increasing and other major players like Saudi Arabia likely to rise. their output.

In Carlyle’s deal market, prices have fallen, he said, but there is still room for valuations to fall further, referring to multiples of EBIT to buy companies that are still down. “double-digit levels” – going from about 14 times to 11-12 times.

“They’ll probably go down a bit,” he said.

The transaction market is slower, but not dead. Debt remains readily available, the debt component of transactions is much lower (less than 50%) than it has been historically, and equity valuations are slightly lower, if not as low as they will be. “Deals are on the way,” Rubenstein said, and after a record year for takeover deals in 2021, “we’re on track to do quite a few this year,” he added.

Disclosure: NBCUniversal News Group is the media partner of the Aspen Ideas Festival.