DEER ISLE: Insights, Flows & Investment Trends

Market Liquidity – Large capital resources available once Fed stops hiking interest rates:  We have seen internal surveys done by large wealth advisors which show that cash balances/equivalents are approx. 40% of portfolio allocations which compares with approx. 40% equity allocations and 20% other (including fixed income). This capital is sitting on the sidelines waiting for the Fed to signal rate hikes are over before it will be put to work.

Capital Provider Interest – We have demand for complex Private Credit Opportunities that provide a Capital Provider yield between 12 and 15+%.  The demand includes asset backed as well as receivable backed transactions.

Venture Capital – Valuations remain uncertain, but demand exists for “risk reduced” sectors. Most Venture Capital Providers are reserving capital to help existing investments weather the storms but firms with 5 million+ revenues withing certain sectors such as Cybersecurity, Climate Change and Energy Security are seeing interest.

US Economy – Growing consensus from Capital Providers on Q1 Rates/GDP Outlook:  As per our Insights from last month where we stated that we were seeing growing consensus for Q1 to be a “soft landing”, the Wall Street Journal is now writing that “Investors Grow More Confident Fed will Pull Off a Soft Landingin Q1 2023.