In this market update, Jack, Mike, and Doug explore interest rate policy, evolving credit markets, and investor positioning amid a backdrop of economic ambiguity and geopolitical complexity.
Key Takeaways
- Fed Flexibility, Not Finality: While inflation is cooling, the Fed remains cautious. Jack noted the central bank is “stuck in neutral,” waiting for more clarity. A September rate cut is possible, but not guaranteed. He emphasized the risk of the Fed “waiting too long,” especially with unemployment beginning to tick up.
- Economic Slowdown Signs Emerging: Mike highlighted signs of weakness in the labor market and broad-based economic slowdown. Fewer job openings, slowing retail sales, and consumer pullback are beginning to surface, reinforcing expectations for a policy pivot later this year.
- Private Credit at a Crossroads: Jack and Doug discussed the rise of private credit ETFs. Jack voiced concerns about liquidity, transparency, and investor behavior under stress, warning that “you don’t really know what it’s worth until there’s a problem.” Doug added that performance gaps between public and private markets are narrowing.
- Risk Assets Holding Up—for Now: Despite slowing growth, equity markets remain firm. Jack pointed to “low expectations for earnings growth” supporting current valuations. Mike noted resilience in megacap tech, but flagged that most gains are still “very concentrated” among a few names.
- Positioning for What’s Next: Amid uncertainty, Jack recommends reducing duration, leaning into shorter-term credit, and favoring quality assets. Doug echoed this view, advising a disciplined approach that emphasizes “core allocation, plus some agility” to take advantage of dislocations.
Watch the replay for insights on the Fed’s tightening bias, stress points in private markets, and how Cresset is adapting investment strategies in a late-cycle environment.
