What have been the main themes of your business so far this year?

• The ongoing demand for midstream energy infrastructure has followed the boom in energy production created by improvements in energy exploration and production technology. This has created strong investor demand for midstream energy companies.
• A shift in the tectonic plates of monetary policy with the U.S. and U.K. entering into a more restrictive phase of their monetary policy cycle while the BOJ, PBOC and ECB double down on monetary stimulus.
• Emerging market equity has been catching up to developed markets in the wake of attractive valuations and a tail wind of stimulus coming from a more accommodative monetary regime in China.

 What has surprised you in 2014?

• Five years following the 2008 financial crisis there is still a persistent degree of labor slack in the economy. The percentage of unemployed working age citizens in the U.S. rose from its 20-year average of 37% pre-2008 to 41% in 2009 and remains there today.
• The persistent weakness of European financial institutions relative to the U.S. remains a major concern as the inability to create credit weighs heavily on the European economies.

What are your expectations for the duration of 2014?

• We expect a low-growth economy that will be anchored by low inflation, low growth, low real interest rates and expanding equity multiples.
• In our base case scenario, we think we could see 10-year U.S. Treasury yields moving back down toward 2% while the S&P 500 advances to over 2000.
• We find equities to have a more symmetric risk/return profile than credit. After recently experiencing historic low yields on high yield credit, we believe that credit remains less attractive than equity alternatives and recommend investors rotate from credit sensitive investments into equities.