435: News of the Week 06/05/24

Market Updates:

• Economic data since last week’s update:
  • Core PCE Price Index rose 0.2% in April, in line with expectations
  • Job openings decreased in April, indicating a cooling labor market
• Equity markets have been a bit volatile recently, down a couple of percentage points
• Ongoing volatility is expected as we move through the summer and elections
• However, the economic and inflation backdrop should provide good support for public equity and bond markets
• Potential for the Fed to start reducing rates in the second half of 2024, which could restart the real estate investment cycle
• The recommendation is for investors to be deployed and looking for opportunities, rather than sitting on the sidelines

Investment Topic: Private Credit Funds

• Also known as private debt or direct lending
• Growth in non-bank lending due to regulatory changes making it harder for banks to expand their balance sheets
• Private credit funds raise capital from investors and deploy it as loans and other debt instruments
• Can target different types of credit and debt structures
• Potential benefits include regular interest payments, 7-12% annualized cash returns, and portfolio diversification
• Risks include being locked into a long-term investment and fund manager selection being key