Trends Watch: December 1, 2016

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies Snyderman.  

This week, Elana talks to Burton Weinstein, Managing Partner, Cedarview Capital Management.

What is your outlook for the alternative investment industry?

As active managers have been outperforming passive investments this year, investors in alternatives will also examine outperformance of managers vs. their benchmarks and peers. The outlook for active managers given the expected post-election volatility is favorable, especially for smaller, more nimble managers.

What is your outlook for the economy?

The U.S. economy is relatively healthy and has the ability to withstand a near-term interest rate increase. President-Elect Trump (and I’m confident this would have also applied to Mrs. Clinton) will most probably embark on fiscal stimulus, taking the baton from monetary policy which has run its course as a stimulative tool.  Fiscal stimulus can create additional jobs leading to increased consumer purchasing power which can lead to increased capital investment by corporations. This potential for a ”virtuous cycle” assumes China’s growth remains in the current range and that there is no external shock that will curb global growth such that it has a deleterious effect on U.S. exports.

What keeps you up at night?

Though not a near-term event, the potential for China’s debt bubble to burst given that debt to GDP has ballooned to 300%. A curb in Chinese demand could have serious global implications. Secondly, the market might be too complacent regarding rising inflation, setting us for a potential negative bond market surprise.