Oaktree's Marks warns of 'lofty' valuations under Trump

by Adam Haigh

Oaktree Capital Management LP co-founder Howard Marks said investors should expect uncertainty to endure under US President Donald Trump and relatively high valuations in global markets require a cautious stance. 

“As someone who is a serial negotiator, he values unpredictability, and I think you’re going to have that for a long time,” Marks said of Trump at the Morgan Stanley Australia Summit on Thursday in Sydney via video link from Spain. 

Just as Marks was speaking, Trump said he intended to send letters to trading partners setting unilateral tariffs ahead of a July 9 deadline to reimpose higher duties on their economies. 

“Don’t think that just because you reach the end of the 90-day pause everything is going to be settled,” Marks said. “Trump does not explain himself, and maybe that’s intentional.”

Global equity markets have rebounded from the early April ‘Liberation Day’-induced volatility as Trump suspended tariff increases. That’s resulted in a lot of optimism and “lofty” valuations, said Marks, meaning that “we need to be cautious.”

Marks said it was “troubling” that prices were near, or at, all-time highs, making it hard to find assets that “you would say are cheap.” Still, markets aren’t showing “psychological excesses” that characterize bubbles, he added.  

The growing American debt pile is also creating “great uncertainty,” the credit investor said, while adding that it was difficult to predict the timing of any crisis. “I don’t think I am going to figure it out before anyone else.”

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