• Except for commodities, public market asset classes have performed extremely poorly so far in 2022. A risk-balanced portfolio ofequities and bonds experienced one of its worst drawdowns in the past 100 years as the traditional diversifying relationship between the two asset classes broke down.

• The drawdown in equities of around 20% was not out of the ordinary from a historical perspective, but there has been a sharp underlying rotation away from stocks with high valuations and implied growth rates into those with low valuations and implied growth rates.This phenomenon has had a severe impact on technology stocks, many of which have fallen by more than 50%.

• The combination of strong corporate earnings growth and falling equity prices has led to a moderation in public market valuationmultiples, closing the valuation gap between private equity.

• The market’s expectations of the federal funds rate at year-end 2022 increased by 200 basis points to 2.8% in the past six months. This rise in discount rates has been one of the key drivers of recent market turmoil and the underperformance of the technology sector.

• While inflation moderated slightly in April, the 8.2% year-over-year change in the Consumer Price Index (CPI) remained near a 40-year high. Inflation has been fueled by a positive demand shock created by monetary and fiscal stimulus, especially for physical goods, and continued supply and production constraints.

• The economy is suffering from a lack of labor supply as the gap between the number of job openings and total unemployed persons widened to a record 5.5 million in May.

• Despite the challenging environment, our economic modeling indicates there is only a 19% chance of a recession occurring in the next 18 months based on data available at the end of May.