Insights

Highlights from the week of May 19 – May 25, 2023

Experienced active managers can capitalize on opportunities that fall outside their benchmarks and can manage unwanted concentrations. This has historically resulted in relatively high success rates in generating alpha.

Inflation appears to have peaked in the U.S., but wage growth and labor markets need to soften further before the Federal Reserve can start to lower rates.

We believe the risk of a technical default remains extremely low, but the consequences would be swift and painful, likely compelling elected officials to find common ground for a resolution.

Another regional bank falls, but the markets are seeing the forest from the trees as challenges appear contained.

An unexpected shock in the banking sector has stress-tested the economy and policymakers. Both initially passed. But the impact on lending and credit conditions remains unclear and increases the likelihood of a mistake by the Fed going forward.

Moving away from an abnormal regime of crisis-era stimulus won’t be a smooth process. But the volatility should be easier to stomach knowing that the destination is likely to be a healthier, more balanced economy.

The emergence of new investment vehicles has opened the private equity market to a wider range of investors.

We expect rates to hold steady for longer than the market expects, but they could also fall off a cliff. Bond investors need to prepare for both scenarios.

Big data — no longer the exclusive domain of Silicon Valley — is reshaping traditional industries and creating opportunities for investors, even in surprising places like manufacturing and agriculture.