In this annual session, we discussed the U.S. and global economic outlook, with a particular focus on growth prospects, interest rates, and risks. Furthermore, we explored equity valuations and take a critical look at the underlying assumptions that lead to conclusions of over or under-valuation.
Operational improvements are a key lever for achieving value creation after a deal closes. There are three critical ways private equity firms can both protect and grow value through operations.
Detailed analyses and quantitative rigor go into every sound investment decision. To make matters more challenging, we are constantly battling our instincts, which can pull us in conflicting directions and get in the way of sound investment discipline.
The Tax Cuts and Jobs Act (TCJA) is here to stay and its provisions change the landscape of the private equity world going forward. The decrease in corporate rates coupled with new net operating loss limitations, corporate alternative minimum tax repeal, and accelerated expenditures will directly impact how the value and price modeling of deals are calculated. When all of the TCJA provisions roll out, deal teams will have many additional tax attribute facets to consider when acquiring or exiting an investment.
Research has shown that demographic trends have important relationships with many economic variables. As a nation’s population ages, the balance of capital tends to shift from debtors to creditors. The supporting data behind the phenomenon and other initial baseline assumptions outlines our capital market return forecasts for approximately 50 asset classes around the world for the next 10 years, and are intended to guide investors in developing their long-term strategic asset allocations.
There are currently more than 1,000 cryptocurrencies with a combined market capitalization of over $400 billion dollars.
FOX Foresight – Appeal of Direct Investing shows the growing interest in private company investments. It tells the story of families who are pursuing this opportunity, highlighting the top themes from FOX's research and ongoing conversations with FOX members.
While 2018 will have a difficult time living up to 2017’s stellar returns, we believe the markets should still have a more-than-decent showing. Central to this generally optimistic view of the markets is our expectation that the global economy is fairly healthy. Broad-based synchronized growth, which began in 2017, should continue into 2018 and deliver real gross domestic product growth of 2.7% in the U.S. and 3.8% globally. With that growth, financial markets should be positioned to deliver a solid year of returns.
The supply-and-demand dynamics are setting up for a very good year for municipal bonds relative to Treasuries. New-issue supply will most likely drop materially from above $400 billion the last two years to below $300 billion, which would be a low supply not seen in over 20 years. Demand will be particularly strong from high net worth individuals that reside in states that have high in-state income tax regimes.
Despite historically low interest rates and increasingly favorable economic conditions, inflation has remained persistently below the Fed’s 2% target for nearly six years. While stubbornly low inflation would have been cause for alarm in the past, few seem to be worried. With other economic indicators headed in a positive direction, the Fed has indicated its intention to continue to raise rates in order to achieve equilibrium between the federal funds and inflation rates and wind down its quantitative easing program.