Blackstone is the world's largest alternative-asset manager with $1.040 trillion in total asset under management, including $762.6 billion in fee-earning assets under management, at the end of 2023. The company has four core business segments: private equity (22% of fee-earning AUM and 28% of base management fees), real estate (39% and 43%), credit and insurance (29% and 21%), and hedge fund solutions (10% and 8%). While the firm primarily serves institutional investors (87% of AUM), it also caters to clients in the high-net-worth channel (13%). Blackstone operates through 25 offices in the Americas (8), Europe and the Middle East (9), and the Asia-Pacific region (8).

The Federal Reserve has an impact on financial markets beyond the direction of short-term interest rates, including an influence on longer-term bond yields and the federal deficit. The Fed recently released its Statement of Operations for 2023 and reported interest income of $175 billion and $1 billion in other income, versus $281 billion in interest expense and $9 billion in operating expense. That's a loss of $114 billion, which adds to the U.S. deficit. The Fed is losing money right now because it earns approximately 2.2% in its securities portfolio and pays out approximately 5.2% for repurchase agreements and excess bank reserves. It may be quite a while before the Fed is able to return to profitable operations In the aftermath of its quantitative easing program to boost the economy during the pandemic, the Fed's balance sheet ballooned from $4 trillion to just shy of $9 trillion in 2022. For the past two years, the central bank has been reducing its asset levels by allowing $60 billion in Treasury securities to mature and $35 billion in mortgage-backed securities to run off each month. This "quantitative tightening" increases the supply of bonds available in the market, but has reduced the Fed's assets to $7.5 trillion. We anticipate the Fed will lower its monthly Treasury cap to $30-$40 billion, reinvesting the remainder into the market at higher rates. Over time, as balance sheet shrinks, the Fed's annual loss should decrease. The central bank certainly has a long way to go, if it ever wants to shrink the balance sheet back to the pre-pandemic crisis level.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Blackstone is the world's largest alternative-asset manager with $1.040 trillion in total asset under management, including $762.6 billion in fee-earning assets under management, at the end of 2023. The company has four core business segments: private equity (22% of fee-earning AUM and 28% of base management fees), real estate (39% and 43%), credit and insurance (29% and 21%), and hedge fund solutions (10% and 8%). While the firm primarily serves institutional investors (87% of AUM), it also caters to clients in the high-net-worth channel (13%). Blackstone operates through 25 offices in the Americas (8), Europe and the Middle East (9), and the Asia-Pacific region (8).