In the second quarter of 2025, alternative investments (“alternatives"), on average, had mixed returns and significantly underperformed global equity markets. Economic data continues to show slower growth, a softer job market, yet stubborn inflation. The policy volatility of tariffs is making the economic data more diffuse than normal and therefore harder to draw definitive conclusions as to the direction of the overall economy. The Federal Reserve (the “Fed”) made no changes to the Fed Funds rate, but there has been a more visible division amongst the members with regards to future cuts. The dovish members have become more vocal than in the recent past, citing the need for cuts to sustain the economic growth amidst tariff disruptions and an inflationary environment that, while not at the Federal Reserve’s target of 2%, has remained manageable. The executive branch has made it no secret that they want lower interest rates, a weaker dollar, and lower taxes while not directly addressing any potential resurgence in inflation. Equities, for their part, have clearly embraced both the current waning of a draconian tariff/trade war along with the hope of significantly easier financial conditions. As a result, equity valuation metrics have rebounded to historically elevated levels. 

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