Alex Karp, CEO of Palantir arrives ahead of the “Tech For Good” meetup at the Marigny hotel in Paris on May 15, 2019, held to discuss good behavior for tech giants .
Bertrand Guay | AFP | beautiful pictures
Palantir Co-founder and CEO Alex Karp believes this period of “deadly” macroeconomic uncertainty will crush many companies whose fundamentals are shaky.
“Bad times are incredibly good for Palantir … bad times really reveal durable companies, and technology is going through bad times … interest rates are the reason,” Karp said Thursday on CNBC’s “Squawk Box.” “Will this deadly tide wipe out some companies? It is.”
Federal Reserve on Wednesday benchmark interest rate hike added 3/4 percentage point to the 3%-3.25% range, the highest level since early 2008. Bank of England, Swiss National Bankand the central banks of Norway, the Philippines, South Africa, Taiwan, Vietnam and Indonesia have followed suit, raising interest rates to control inflation that has risen over the last year.
Palantir is a developer of data analytics software public through direct listing in September 2020 after nearly two decades as a private company. Shares are down nearly 60% this year.
Karp says only quality companies that make durable goods can survive tough times.
The risk of a recession in the US increased as the Fed vowed to beat inflation with aggressive interest rate hikes. The central bank dismissed its economic projections, predicting higher unemployment and much slower GDP growth.
Karp believes the situation is even worse abroad.
“People are afraid — less about energy outside of America,” Karp said. “They’re so scared of macro-political conditions that no one wants to talk about them. Their businesses are built for a peaceful, unified and static world. Balance sheets are clearly not often prepare for what’s to come, I think it’s going to be pretty bad over the next few years politically and economically.”