In something of a surprise move, President-elect Donald Trump nominated Scott Bessent, CEO and Chief Investment Officer of Key Square Capital Management, as U.S. Treasury Secretary. Part of the surprise lies in Bessent’s time spent with billionaire George Soros at Soros Fund Management, a large contributor to the Democratic Party. In recent years, Bessent has been a vocal supporter of the former president’s policies, including tariffs and deep spending cuts.

Bessent has urged President-elect Trump to adopt what he calls a “3-3-3” policy. Today we’ll take a look at this policy and whether it is feasible in this economy. It is a bold, hawkish move that some observers believe will reshape the U.S. economy.

This letter is the second installment in our series on alternative investments. You can find the first in the series here and an overview of alternative investments in a previous letter here.

Real estate is a very big sector and probably the best known of the alternative investment group to retail investors. How big is the real estate sector? Well like many things, that depends from which angle you are viewing it. The real estate sector is generally broken down into three segments: residential, commercial and industrial.

In a recent edition of Forecasts & Trends, I mentioned a report by the Committee for a Responsible Federal Budget that projected Trump economic proposals would increase the national debt by as much as $8 trillion over four years. Today we’ll look at a different analysis, this time by the University of Pennsylvania Wharton School.

The Penn Wharton Budget Model gives us a different view of Donald Trump’s proposed economic policies. Read on to see what the major components of the policies are and the Wharton School’s analysis of how they could affect the economy and your pocketbook.

Historically, private equity investing has been the province of institutions and very high net worth individuals. Today, private equity is more widely available thanks to regulatory adjustments regarding investor suitability, increased transparency of the asset class in general, and the emergence of ‘fintech’ driven alternative investing platforms. These elements combine to bring access to private equity to more investors than ever before.

Our national debt has soared to a record $35.7 trillion. It isn’t rocket science to understand how this happens. National debt continues to rise because the government spends more money than it received in revenues. It then borrows from lenders to bridge the budget gap.

In the Halloween spirit and with that enormous debt number in mind, I thought about rewriting a few scary classics to keep with the times.

Investors have experienced uncertain and sometimes volatile market conditions over the last several years. Because of this, many advisors are introducing their clients to alternative investments with the goal of portfolio diversification with reduced volatility. Today we define alternative investment and give some common examples. Over the next several weeks, we will delve more deeply into the world of alternative investments and why “alts” have become more utilized in the investment community.

The cost of property damage due to extreme weather is front and center in the news. Damage estimates due to Hurricane Helene range as high as $48 billion. Fitch Ratings, one of the “Big Three” corporate credit rating agencies, estimates Hurricane Milton could reach $50 billion in insured losses for Florida property owners. Florida state officials say if Milton had reached Category 4, the losses would have easily doubled.

Even before these calamities struck, homeowners had seen insurance costs increase. And it seems like natural disasters take a bigger toll each year. What can be done to curb the meteoric rise in premiums? Today we’ll take a look at the problem, the underlying causes and what can be done to help.

Creative destruction is an economic concept developed by economist Joseph Schumpeter in the 1930s and 40s. Schumpeter’s creative destruction is a concept that describes the process of innovation-driven change in an economy, where new products, processes and industries emerge, replacing and making existing ones obsolete. This perpetual cycle of innovation and obsolescence is a fundamental characteristic of capitalism. According to Schumpeter, “The process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”

The biggest economic news of late has to be the Federal Reserve’s interest rate cut on September 18. The Federal Open Market Committee (FOMC) boldly decreased its target interest rate range by 0.5 percent to 4.75% - 5%. This is the first rate cut since the early days of the Covid pandemic in 2020.

In their post-meeting statement, the FOMC wrote, “The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.”

But important to note was the final vote on the rate cut was 11-1, with Federal Reserve Governor Michelle Bowman supporting a 25-basis point move. Bowman’s dissent was the first by a Fed governor since 2005.

Today we will examine the reasoning behind Governor Bowman’s firm stance and some reasons why the Fed needs to think again regarding further “jumbo rate cuts.”

According to recent data, investment frauds, including cryptocurrency scams, have seen a significant surge in the United States. The FBI’s Internet Crime Report 2023 reveals that overall investment frauds grew by 38% to $4.57 billion from $3.31 billion, with cryptocurrency scams accounting for a substantial portion of these frauds. Total investment fraud losses have ballooned over the last five years by nearly 10-fold. And these scams do not just target elderly Americans. Most of the scams are directed at adults aged 30-49.