MSCI has described its mission as enabling investors to build better portfolios for a better world. MSCI’s largest and most profitable segment is its index segment, where it provides benchmarking to asset managers and asset owners. In addition, it boasts over $1.4 trillion in ETF assets linked to MSCI indexes. The MSCI analytics segment provides portfolio management and risk management analytics software to asset managers and asset owners. MSCI’s all other segment was broken out into ESG and climate and private assets segments in 2021. In ESG and climate, MSCI provides ESG data to the investment industry. In private assets, MSCI provides real restate reporting, market data, benchmarking, and analytics to investors and real estate managers.

MSCI has described its mission as enabling investors to build better portfolios for a better world. MSCI’s largest and most profitable segment is its index segment, where it provides benchmarking to asset managers and asset owners. In addition, it boasts over $1.4 trillion in ETF assets linked to MSCI indexes. The MSCI analytics segment provides portfolio management and risk management analytics software to asset managers and asset owners. MSCI’s all other segment was broken out into ESG and climate and private assets segments in 2021. In ESG and climate, MSCI provides ESG data to the investment industry. In private assets, MSCI provides real restate reporting, market data, benchmarking, and analytics to investors and real estate managers.

The Fed wrapped up its Open Market Committee meeting on Wednesday and held the federal funds rate steady at 5.25%-5.50%. This was the fourth pause following a hike in July, which was the eleventh increase by the central bank over 16 months. The fed funds rate remains at its highest level since 2000 and is above the long-term average of 4.4%. The hikes have been reducing inflation. The latest core CPI reading was 3.9%, down from 9.1% in July 2022, and the latest core PCE Price Index reading was 2.9%. Despite the downtrends, both are well above the Fed's target of 2.0%. And that's the problem. While the central bank disclosed at its previous meeting that it may lower interest rates three times in 2024, Wall Street jumped the gun a bit and was expecting five or six. When Fed Chairman Powell commented on Wednesday that the March meeting is probably not the appropriate time for a rate cut, stocks started to tumble. By the end of the session, the DJIA had given back 250 points and the Nasdaq had dropped 2.0%. At Argus, our forecast has been that the Fed will start to cut rates in July, and will likely keep to its word of fewer cuts, rather than more cuts. That forecast stands. We believe the most important sentence from the Fed's statement was the following. "The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent." The Fed is indeed ahead of the inflation curve, and the current real fed funds rate of 2.4% is above the historical average of 1.6%. At the recent pace of decline, core PCE could be closer to 2.5% by mid-year, at which point the Fed might feel a move is more appropriate.

MSCI is a leading provider of investment decision support tools worldwide. Its line of products and services includes indices, analytical tools, and ESG and climate research products. The stock is a component of the S&P 500. The company has approximately 5,000 employees.