Wealth Outlook 2024 - Slow then grow

66 Wealth Outlook 2024 | Opportunistic Our top 10 high conviction potential opportunities FIGURE 12 Regulators’ insistence on shoring up bank balance sheets with long- term debt instead of deposits will potentially be very costly for banks 0 2010 2015 2020 2005 2000 Yield (%) 12 3 6 9 IG financial 5-10yr debt yield FDIC banks cost of funds (including deposits) Recession Source: Haver Analytics as of November 22, 2023. Index information from ICE BofA Merrill Lynch Corporate Bonds: Financials: 5 to 10 years yield to maturity. Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which would lower performance. Past performance is no guarantee of future results. Real results may vary. This creates a potential opportunity for firms that provide alternative sources of financing, such as the private capital managers that oversee private credit and other types of private equity funds. One of the ways to access this potential opportunity is to own the asset managers themselves that are seeking to take advantage of the regulatory burdens being placed on the banks. This can be done either by simply buying stock in the managers (for those that are publicly listed) or through other vehicles available in the alternatives markets for qualified investors (see Alternative investing in 2024 on page 41 ) . 8. The Japanese yen and yen- denominated Japan tech, financial shares Once the strongest currency in the world during its decades of deflation, the Japanese yen has more recently been among the developed world’s weakest. From January 1, 2022 until October 31, 2022, the Japanese yen fell 23% against the US dollar since the Fed’s first rate-hike eight months earlier.⁹ ⁹ Bloomberg as of October 31, 2022. However, now Japan’s policymakers seem to feel that their stubbornly dovish monetary policies have achieved their mission in helping to finally reinvigorate the