FEG's Market Updates & Insights

Posted by FEG on December 13, 2018

November 2018 Research Review

A potential thematic shift rounded out the month of November, as Fed Chairman Jerome Powell’s remarks on interest rates during a speech to The Economic Club of New York represented a "dovish" reversal from previous hawkish sentiment in early-October. What could have sparked this unexpected dovish reversal?

Posted by FEG on December 10, 2018

FEG Insight: Brexit A Certainty of Uncertainty

Blog Feature Image (Brexit)-01 In 2016 the British took to the polls, and in a close vote, elected to leave the European Union. More than two years later, the exit is looming, and the full breadth and scope of Brexit’s consequences are still unclear.

Posted by Map { "displayName": "FEG" } on November 26, 2018

Third Quarter 2018 Private Capital Quarterly Review

With broad market uncertainty rising and questions of an inevitable downturn looming, private equity investors should find comfort in a recent study by authors from Stanford, Harvard, and Northwestern Universities highlighting both the outperformance of and greater downside protection offered by private equity relative to public equity during a crisis.

Posted by FEG on November 15, 2018

October 2018 Research Review

In the third quarter, the U.S. economy enjoyed broad-based improvement across many key economic data points, the strength of which has helped apply upward pressure to interest rates, inflation levels, and near-term sentiment for tighter monetary policy. The strengthening domestic economy has coincided with growing weakness abroad, likely increasing market dispersion and thus potentially improving the investment opportunity landscape.

Posted by Map { "displayName": "FEG" } on October 16, 2018

Third Quarter 2018 Market Commentary

After nine years in the current economic expansion—the second longest on record, according to the National Bureau of Economic Research—many investors have begun to question whether this upward trajectory can continue. Perhaps at the expense of key trading partners, domestic economic conditions further strengthened during the third quarter and likely supported recent increases in inflation, with incrementally tighter Federal Reserve (Fed) policy serving as a partial counterbalance.

Posted by FEG on October 11, 2018

Third Quarter 2018 Research Review

Posted by FEG on September 17, 2018

August 2018 Research Review

After briefly dipping into deflationary territory in 2015, U.S. inflation rates have since accelerated, with some measures reflecting the most robust inflationary backdrop since the economy was in the early recovery stages of the deflationary grips of the Global Financial Crisis (GFC).

Posted by FEG on August 31, 2018

FEG Insight: Micro on Macro

In the face of recent performance challenges, many investors are left questioning the ongoing merits of a global macro allocation. Nearly a decade of unprecedented, global monetary easing has driven interest rates and volatility lower–providing limited trading opportunities for macro managers. As market conditions begin to show signs of change, this may create fertile trading ground for macro strategies.

Posted by Map { "displayName": "FEG" } on August 21, 2018

Second Quarter 2018 Private Capital Quarterly Review

Following a calendar year in which public market returns were positive across almost every asset class—an unusual event—the first quarter saw modest declines across the board. Arguably by virtue of their sticky valuation processes, private markets remained positive across asset classes in first quarter of 2018. The distressed and resources sectors were the lowest returning strategies. Distressed strategies suffered from a lack of distress and resources were impacted by uncertainty in the energy market and other commodity markets, largely caused by political and regulatory factors.

Posted by FEG on August 21, 2018

July 2018 Research Review

U.S. gross domestic product (GDP) increased 4.1% in the second quarter, the strongest quarterly growth rate since late-2014. With year-over-year growth near 3%, the anticipated positive effects of recently-introduced fiscal stimulus appear to be taking root, leading many to speculate whether the momentum can persist. In July, most risk sectors witnessed positive returns, with notably strong performance generated across domestic equities and more modest returns emanating from international equity markets.

Posted by FEG on July 18, 2018

Second Quarter 2018 Research Review

The slope of the U.S. Treasury yield curve, often used as recessionary early warning signal, flattened to a new cycle low to round out the second quarter. Key drivers behind this dynamic include the potential full maturity of the economic expansion, continued Fed tightening, and fears of a trade war-induced global growth slowdown. In the second quarter, domestic equities—particularly small cap—generated solid returns while international developed and emerging market equities lost traction.

Posted by Map { "displayName": "FEG" } on July 13, 2018

Second Quarter 2018 Market Commentary

Following a first quarter spike in volatility, global market participants faced a multitude of risks in the second quarter. Central to these risks were heightened concerns of global trade wars, strong appreciation of the U.S. dollar (particularly versus emerging market currencies), diverging economic health between the U.S. and its largest trading partners, and continued efforts by developed market central banks to normalize monetary policy.

Posted by FEG on June 25, 2018

Private Investing and the J-Curve

One could take several months, or even years, to become completely comfortable with a swing change in golf, and completing the construction of a private equity program can take even longer. This is a true test of patience and commitment. For investors that are new to private strategies, here is a brief summary of the headwinds the strategy produces in the first few years of development.

Posted by FEG on June 15, 2018

May 2018 Research Review

As domestic economic fundamentals continued to strengthen in May, improving U.S. conditions appear to be diverging from the euro zone and Japan. Equity market returns corroborated recent fundamental disparities, while a flight-to-quality environment led to solid returns across the higher quality spectrum of the fixed income market. Energy infrastructure assets also continued to post strong performance following April’s impressive gain.

Posted by Map { "displayName": "FEG" } on June 4, 2018

Dallas Investment Symposium Event Highlights

FEG welcomed more than 100 guests to the George W. Bush Presidential Center in Dallas, Texas on May 8 for a day of education, learning, and networking. This was our second such event in Dallas (tenth, if you consider the history of LT&A) and we were pleased to have an outstanding group of speakers share with us their perspectives on a wide range of macroeconomic and investment topics.

Posted by Map { "displayName": "FEG" } on May 17, 2018

First Quarter 2018 Private Capital Quarterly Review

In the face of volatility, private investments offer the benefit of patient capital, but if market multiples decline, absent increased earnings, valuations will likely be marked down. We believe that it's during volatile times that managers can earn their keep, and with a selective approach, private capital can be a great place to invest even with an erratic VIX index.

Posted by FEG on May 14, 2018

April 2018 Research Review

February served as a reminder to investors that what goes up must come down. The spike in U.S. Treasury rates, as well as the early-February short squeeze in levered short-volatility strategies pressured markets despite ongoing indications that underlying economic fundamentals remain relatively healthy.

Posted by Map { "displayName": "FEG" } on May 11, 2018

An Approachable Asia: CIO Corner Event Highlights

This past March, FEG welcomed attendees to our inaugural FEG CIO Corner: An Approachable Asia. Select FEG representatives and clients spent several days in Hong Kong to learn more about the nuances of investing in Asia, specifically China. We were inspired to host this event because we expect that most institutions will be underweight China as their capital markets grow in tandem with their increasing percentage in various benchmarks. It is our opinion that this growth will provide numerous alpha opportunities for patient investors. While FEG is optimistic about this market, caution is still warranted, as this growth may not always be steady amidst concerns regarding the relatively high debt levels.

Posted by Map { "displayName": "FEG" } on April 16, 2018

First Quarter 2018 Market Commentary

The first quarter of 2018 marked the debut of incoming Federal Reserve (Fed) chairman Jerome Powell, who is widely expected to support prior chair Janet Yellen’s approach of gradual rate increases and a highly telegraphed reduction of the Fed’s balance sheet. The outcome of the March Fed meeting suggested that these policies will be carried forward as long as economic and employment trends continue.

Posted by FEG on April 13, 2018

First Quarter 2018 Research Review

Trade war fears, rising U.S. Treasury rates, and a disorderly unwinding of levered short-volatility equity positions helped drive an increase in market volatility in the first quarter. While most major equity indices experienced a strong start to the year, by late-January, that positive momentum began to fade.

Posted by FEG on March 13, 2018

February 2018 Research Review

Posted by Map { "displayName": "FEG" } on February 27, 2018

Fourth Quarter 2017 Private Capital Quarterly Review

A decade of accelerating interest in private capital has led to a record $1 trillion overhang—the amount of committed but uninvested capital. Has there been a structural change in how institutions invest in equity, or is this a signal that the party is about to end leaving investors with a painful hangover?

Posted by FEG on February 16, 2018

January 2018 Research Review

The start of the year witnessed a continuation of many of the dominant economic themes from 2017, including firming fundamentals, a flattening Treasury yield curve, ongoing labor market improvement, a weakening U.S. dollar, and increasing inflation expectations. Across the major asset categories, risk in general was rewarded during the month as global equities pushed higher, with impressive returns abroad and in domestic markets.

Posted by Map { "displayName": "FEG" } on February 2, 2018

FEG Insight: Eat, Drink, and Be Merry!

The phrase “eat, drink, and be merry for tomorrow we die” has been used throughout literature for centuries, and is generally understood to mean we should enjoy our life as much as possible because we will not live forever. This 2018 Credit Market Outlook aims to help readers understand if there is still some life left in the credit market party or whether it might be time to call it a night. Click here to read.

Posted by FEG on January 18, 2018

Fourth Quarter 2017 Research Review

The U.S. labor market shed 33,000 jobs last month, the first contraction in seven years, but the headline hid some positive news. Across the major asset categories, global equities witnessed strong returns during the third quarter, with significantly stronger performance in international markets, while below investment grade credit posted another solid quarter of gains. In real assets, despite a solid rebound in energy prices, master limited partnerships declined modestly.

Posted by Map { "displayName": "FEG" } on January 17, 2018

Fourth Quarter 2017 Market Commentary

There was an abundance of newsworthy items in 2017, some good, some bad, and some downright frightening. One of the most interesting aspects of 2017, however, was the capacity of most capital markets to calmly absorb the year’s unsettling geopolitical landscape—one which some forecasted might frighten investors into panic selling.

Posted by Map { "displayName": "FEG" } on January 16, 2018

Tax Update

President Trump signed a $1.5 trillion tax bill on December 22, 2017, officially making it the most sweeping tax law overhaul since 1986. The speed and manner by which it was passed left many lingering questions among individuals and organizations. In an attempt to aid institutional investors, FEG has developed a series of Questions & Answers regarding the new law and its potential strategic impacts on the non-profit landscape, and some considerations unique to various non-profit market segments.

Posted by Map { "displayName": "FEG" } on December 20, 2017

FEG Insight: What Is Your Private Equity Risk Appetite?

The choices one makes about where to go and how to spend your time away from your professional life can be quite revealing about your sense of adventure and personal risk appetite. As I look through the holiday cards, I see many beach vacations where days are spent soaking up the sun and listening to the tide roll in and the biggest risk is a sunburn. I also see newlyweds backpacking through Europe in search of the authentic experience of another culture. At the far end of the spectrum, I see friends who are zip lining through rain forests in exotic locations, squarely in the red zone of the Zika virus heat map. One must wonder how much their respective investment portfolios mirror their vacation risk appetite. Click here to read.

Posted by FEG on December 20, 2017

November 2017 Research Review

Posted by Map { "displayName": "FEG" } on December 4, 2017

Third Quarter 2017 Private Capital Quarterly Review

he weather in the Eastern U.S. is turning colder, but private capital markets remain hot. Through the third quarter of 2017, capital raised for private investments remains at or near record levels. Evidence of abundant capital can be found in increased prices. According to S&P Capital IQ data, the average purchase price multiple for middle market private equity deals rose above 11x in the quarter—a record high—and cap rates on real estate properties continued to decline below 4.4%.

Posted by Map { "displayName": "FEG" } on November 28, 2017

FEG Insight: The 2017 Investment Forum Summary

FEG welcomed more than 500 attendees to our eighth Investment Forum, Carousel of Change: Navigating the Ups and Downs of Market Cycles, in late August. Held in downtown Cincinnati, the Forum featured three days of networking, seven keynote speakers, and numerous breakout sessions, all designed to help clients understand and navigate the markets in support of their organizations’ missions.

Posted by FEG on November 16, 2017

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