FireSide: Q3 2023 Research roundtable—Rethink what you know

The Investment Research team offers their outlooks for macro, credit markets and commercial real estate.

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July 31, 2023 | 53 minute read

About this episode:

In this episode of FireSide, the Investment Research team offers their Q3 outlooks for macro, credit markets and commercial real estate. The first half of the year saw a contradictory confluence of pessimism and impressive performance. That has left investors rethinking the popular market ideas they’ve held for the past 15 years. 

Join Head of Research Robert Hoffman, Chief U.S. Economist Lara Rhame and Director, Investment Research Andrew Korz as they shed light on CRE corrections, Fed rate hikes and the key indicators they’re watching for a potential slowdown.

Transcript excerpt:

Rob Hoffman (00:05): Welcome back to FireSide, a podcast from FS Investments. My name is Robert Hoffman, and it is time for an episode of our latest research roundup. I am always excited to be joined by my fellow members on the investment research team, Lara Rhame, our Chief U.S. Economist; and Andrew Korz, our Director in charge of real estate and equities research, among other things. So, welcome to both of you.

Andrew Korz (00:30): Good to be here, Rob.

Lara Rhame (00:31): Thank you.

Rob Hoffman (00:33): So, we recently published our Q3 outlooks for Macro, Real Estate and Credit Markets. And given the time of year—and we’re halfway into July—it’s a good opportunity to take stock of where we are and where we see the economy and markets heading over the second half of the year.

I don’t know if you two agree with me, but it seems like this year has been a bit difficult to predict. Sentiment entering the year was pretty negative: There were calls for recession that were pretty rampant. Not everyone agreed though, and certainly the timing was a bit mixed depending on who you talked to. And stocks weren’t all that cheap when we started the year. Plus let’s not forget that the Fed was still raising rates and inflation was by no means under control. It didn’t seem like the best setup for markets and yet here we are: The S&P is up nearly 20% on the year.

There’s virtually no sign of recession in today’s macro data (more on this in a bit), credit markets have been very pro risk and the Fed is still maybe going to increase rates again this month. So, I think it gives us a lot to talk about, both where we are today and where we’re going for the rest of the year.

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Andrew Korz, CFA

Executive Director, Investment Research

Lara Rhame

Chief U.S. Economist + Managing Director

Robert Hoffman, CFA

Managing Director, Credit Wealth Solutions