Alternative Investments Mid-Year Outlook

Global markets have had a robust start in 2024, with the S&P 500 Index rising 14.5% due to strong performance in technology and growth stocks. Developed markets, reflected by the MSCI EAFE Index, increased by 3.5%, while emerging markets saw a 6.2% rise. Fixed income performance has been flat, as the Bloomberg US Aggregate Bond Index remained unchanged through June, amidst tempered optimism over potential Federal Reserve interest rate cuts. Key drivers for market growth include stronger-than-expected global economic performance, solid earnings, and excitement surrounding Artificial Intelligence. However, geopolitical tensions, inflation above target rates, and political uncertainties, particularly with numerous elections in 2024, pose risks.

Looking ahead, economic growth is forecasted to slow but is expected to avoid recession, with potential real GDP growth above 2% in the US. While inflation is likely to moderate, it will not meet the Fed's 2% target this year, prompting possible interest rate cuts by the Fed towards year-end. The resilience of economies amidst stringent monetary policy is attributed to earlier low interest rates and government stimulus. However, rising borrowing costs and declining consumer savings might soften demand. As a result, while equities could benefit from positive economic growth, investor focus should shift to earnings alignment with high market expectations amidst a backdrop of slowing consumer spending and a softening labor market. High-quality public securities and select private market opportunities are favored in this evolving landscape.