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Core Insights - The research focus is shifting from equities to alternative investments such as crypto, commodities, and private markets, indicating a diversification in investment strategies [1] Group 1 - The trend towards alternatives does not imply that equities have lost their appeal, suggesting that equities remain a relevant investment option [1]

Price Target Adjustments & Ratings - Evercore reduces price targets for Blackstone to $180 from $197, maintaining an outperform rating [1] - Apollo's price target decreases to $145 from $160, also with an outperform rating [1] Alternative Investment Space - Apollo, Blackstone, and KKR operate in the alternative investment space, which is gaining increased allocation from advisors [2] - Alternative investments include real estate and private credit [2][3] - 401ks are increasingly allocating to alternatives globally, positioning Blackstone as a leader in this space [4] Market Sentiment & Sector Performance - The mood has soured for the financial sector, with financials down 2% in October while healthcare is up 5% [5] - The private equity space is considered oversold, with concerns surrounding private credit potentially overblown [6] Private Infrastructure as an Alternative - Private infrastructure is emerging as a new alternative investment due to funding gaps in government and municipalities [7] - BlackRock acquired a significant global infrastructure partnership [8] Competitive Landscape & IPO Market - Mid-tier private equity firms face intense competition, exemplified by auctions with a high number of bids [8][9] - The IPO market remains largely closed to old-line and manufacturing companies typically owned by private equity firms [10] Stock Rebound & Market Commentary - Apollo's stock is up almost 35%, Aries is up nearly 5%, and Blue Owl is up over 5% week-to-date [11] - Recent market commentary suggests concerns are idiosyncratic rather than systemic [11][12]

Market & Economic Outlook - The market initially reacted positively to the Fed's announcements, potentially anticipating an end to balance sheet runoff [1][2] - The Dallas Fed suggests the equilibrium for job creation is closer to 30,000 per month post-COVID, considering factors like reduced labor participation and immigration [3] - Increased productivity (up 1% to 2.5% from a decade average of 1.5%) means fewer workers are needed to maintain the same output [4] - Tariffs are considered inflationary, but upcoming tax refunds of $150 billion next February could stimulate the economy [5] - The market may be overly optimistic about the extent of interest rate cuts (100-125 basis points) in the coming year [6] - US deficits are a concern, requiring a strong economy to manage, and gold is seen as a hedge against potential inflation [10][11] AI & Technology - The AI market is in early stages, particularly regarding infrastructure investments in power and grid, and companies are primarily using AI to improve existing processes [8][9] - The full impact of AI on company margins is yet to be realized, as companies are still figuring out how to effectively utilize it [9][10] Alternative Investments - Franklin Templeton has $260 billion of its $1.6 trillion in alternative investments [13] - Individual investors are significantly under-allocated to alternative investments, with only 3% of advisor clients' portfolios allocated to alts [16] - The allocation to alts could potentially increase to 10-15% in the next 5 years, driven by innovation in investment vehicles and the role of financial advisors [17] - Innovation is making alternative investments more accessible to the average investor, similar to the introduction of mutual funds [15]

Core Viewpoint - The discussion centers around the Federal Reserve's policies, labor market dynamics, inflation, and the potential for growth in alternative investments, highlighting a generally bullish outlook on the economy despite some concerns. Group 1: Federal Reserve and Labor Market - The Federal Reserve has two main mandates: employment and inflation, with recent studies suggesting a lower equilibrium job creation number of about 30,000 jobs per month, down from 100,000 pre-COVID and 250,000 during the pandemic [2][3] - The labor participation rate has decreased, and immigration has significantly dropped, impacting the number of people needing jobs to maintain equilibrium [3] - Productivity has increased to 2.5% from a decade-long average of 1.5%, indicating that the labor market may be healthier than perceived, with fewer workers needed to sustain productivity levels [4] Group 2: Inflation and Economic Stimulus - Tariffs are contributing to inflation, and upcoming tax refunds totaling $150 billion in February are expected to stimulate the economy [5] - The market may be overly optimistic regarding potential interest rate cuts, but there remains a bullish sentiment due to fiscal and monetary policies [6] Group 3: Market Performance and AI - The S&P 500 and NASDAQ have shown significant year-to-date gains of 12.5% and 17%, respectively, indicating a strong market performance despite some corrections [7] - The discussion on AI suggests that while there may be concerns about a bubble, the market is still in the early stages of AI integration, with companies primarily focused on improving existing processes [9] Group 4: Alternative Investments - Franklin Templeton has approximately $260 billion allocated to alternatives out of $1.6 trillion, indicating a growing interest in alternative investments among institutions [12][13] - There is a significant opportunity for individual investors to access alternative investments, which currently only account for about 3% of advisor clients' portfolios, with expectations that this could rise to 10-15% in the next five years [16][17]

Industry Overview & Trends - The alternatives industry has grown significantly in the last 15-16 years, becoming more institutionalized with professional management and reporting processes [2] - Private credit may see a boom in an economic downturn due to big lenders' hesitancy and favorable terms for lenders [4] - Technology-focused investments are relatively uncorrelated to macro volatility due to secular trends [5] - Access to private equity is expanding from institutional investors to high net worth individuals and potentially 401(k)s [5][6] - Liquidity is a key issue in alternatives, requiring matching investor liquidity horizons with asset durations [6][7] Market Size & Opportunities - US private equity industry is valued at $3-4 trillion, compared to $8-10 trillion in 401(k)s, highlighting the potential of accessing the 401(k) capital pool [6] - Public markets in technology have approximately 700 companies, while the private market target is 20,000 companies, indicating broader opportunities in private markets [9][10] - A significant portion (20-30 trillion) of the public market value is concentrated in a few companies (the magnificent seven), suggesting diversification benefits in private markets [10] Investment Considerations - Alternative investments can be suitable for regular accredited investors depending on their profile and percentage of exposure [8] - Investing in private markets allows access to a broader range of companies compared to public markets [10]