What’s going on here?

Wall Street’s opening up some private assets to the masses, but credit rating agency Moody’s thinks that what’s behind closed doors should stay that way.

What does this mean?

Private equity and private debt funds (ones that invest in private businesses and their loans) used to be – as the name suggests – private. Rather than trading on public markets, they were reserved for institutional investors, pension funds, and the ultra-wealthy.

• Not anymore. Wall Street investment firms have bundled these assets with stocks and bonds into hybrid kinds of funds, designed for retail investors.
• The idea is to bring in more cash for the firms, from a greater pool of potential investors.
• But according to Moody's, a rush of fresh investment could overwhelm fund managers, forcing them to cut corners and take on riskier deals.

Why should I care?

For markets: And… freeze!

Most stocks and bonds let you cash out whenever you want. And when the economy heads south, plenty of retail investors take that option. That’s not the case with private assets. Many funds offering them limit withdrawals by the quarter – and if the masses try to stage an exodus, they can freeze trades or sell off investments for less than their market value.

The bigger picture: We don’t have to keep this private.

The volatile economy has put private companies off listing on public markets, so fund managers are looking elsewhere for fresh opportunities. And private assets fit the bill.

• Retail investors have found themselves in a similar situation. They’re making similar returns from cash, bonds, and stocks, regardless of how risky the investments are. So, determined to bring in the big bucks, they’re turning to alternative investments like – yep – private markets.
• Foreign public markets could be a better option. European and Japanese stocks are building momentum, with Europe slackening its regulations and Japan shaking off decades of deflation. And both countries’ stocks still look cheaper than America’s, too.

What’s going on here?

Blackstone is saying a big “yes” to Europe, committing to investing $500 billion across the continent over the next ten years – its heftiest regional bet ever.

What does this mean?

Blackstone’s CEO says the investment reflects Europe’s growing appeal. Makes sense: governments across the bloc are cutting red tape and pouring billions into key infrastructure. And with Europe’s more attractive asset valuations and growing tech industry, the $1.2 trillion investment fund sees real opportunities – across real estate, private equity, and more. But like so many summer vacationers, Blackstone is hardly alone in discovering Europe: firms like Apollo and Thoma Bravo are getting their passports stamped there, too.

Why should I care?

Zooming in: Can’t spell Britain without AI.

Nvidia’s CEO just dubbed the UK a “Goldilocks” zone for AI startups – and unlike most compliments, this one comes with cash. The chip giant’s doubling down on British AI, investing in the country’s infrastructure and launching a new developer center there. The UK, for its part, has pledged to massively increase its overall computing power – by a factor of twenty, no less. It’s a not-so-subtle hint that Europe might be Big Tech’s new home away from home.

The bigger picture: If Blackstone’s bullish, maybe you should be too.

European stocks are rocking the house. Eight of the ten best-performing markets this year are in Europe, and analysts’ heads have swiveled accordingly. JPMorgan Private Bank, for one, is predicting outperformance on a historic scale. At the same time, AQR expects US stocks to return just 4.2% a year over the next decade – versus 6.1% in cheaper markets like Europe. So this isn’t some quaint, short-term bet: it’s a credible, long-term strategy.