How challenging has it been to predict the next recession? An inverted Treasury yield curve, a reliable forecaster of the past eight consecutive downturns, has been signaling recession for almost two years. So far, the economy has failed to cooperate. While growth is slowing, and inflation along with it, expectations are broad of a solid GDP number around 2.4% for 2024.

We mention this not to puncture any specific indicator, but to underline how challenged investors are today to get a clear economic or market outlook. Even within the commonly accepted context of a Fed seeking a rate cut at the next opportunity, the macro narrative is still evolving. An unexpected jump in CPI or labor gains could put a hike back on the table.

As we’ve seen in the post-Covid era, markets are whip-sawed by good and bad inflation data; bullish today, bearish tomorrow. That creates havoc with liquid asset prices, with 2022 a grim reminder for adherents of the 60/40 model. Alternatives such as private capital have proven to be constructive in building diversified portfolios more resistant to headline volatility risk.