A taxing question for U.S. stocks
We see equities in developed markets (DMs) outside the U.S. as better positioned to capture the …
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Posts From BlackRock
Tempting FAIT
Systematic Fixed Income Outlook: BlackRock’s quant bond experts tackle some hard questions around the recent inflation data. What is behind the headlines? Are rising prices just temporary or the start of something bigger? What does greater inflation uncertainty mean for
Sizing China in strategic allocations
The narrative around China has shifted away markedly, in our view, from concerns about the health of its financial system and credit-fueled growth. Its economic and market outperformance through yet another global shock has brought sharply into focus the important
Commodities rewired
Oil and industrial metals have rallied since late-2020 on expectations for a swift economic restart, sparking talk of a new commodity “supercycle.” We see a more nuanced outlook – with a divergence across different commodities. The lift for oil from the economic restart is likely to be transitory, while some metals may benefit …
What’s in store for emerging markets?
What’s in store for emerging markets? Q1 2021 Outlook Emerging markets experienced a strong recovery both in activity and capital inflows in Q4 2020, supported by intense search for yield and a more optimistic global growth outlook thanks to vaccine
Downgrading government bonds
Downgrading government bonds Weekly commentary We broaden our tactical pro-risk stance in light of major developments since the publication of our 2021 outlook in December: the vaccine rollout and up to $2.8 trillion of additional U.S. fiscal spending this year.
A new investment order
A new investment order – 2021 global outlook We have entered a new investment order. The Covid-19 pandemic has accelerated profound shifts in how economies and societies operate. We see transformations across sustainability, inequality, geopolitics and macro policy. This is
Vaccines shape 2021 outlook
"We still like high yield for income. On a tactical horizon, we strongly prefer high yield for its income and more room for spread tightening. We are neutral on IG and underweight emerging market debt."
U.S. election through a sectoral lens
Weekly commentary The potential outcomes of the November U.S. election could have starkly different policy ramifications, as we argued last week. What will this mean for equity markets? We believe simplistic narratives about the overall market direction are best avoided
Greater inflation risks ahead
Weekly commentary We see a higher inflation regime in the medium term after a decade of inflation persistently undershooting central bank targets. Three new forces are at play: rising global production cost, new central bank policy frameworks that allow for …
Why we stay moderately pro-risk
Weekly commentary The broad macro backdrop has been improving, risk assets have rallied a long way, and increasing market volatility points to risks that investors will need to navigate as the U.S. presidential election draws closer. All this leaves us …
Changing credit views amid volatility
Weekly commentary Markets have rallied sharply from their virus lows, driven by the policy revolution and economic restart. Tighter valuations increase the risk of volatility, particularly ahead of divisive U.S. elections. Last week’s equity selloff illustrates this. Against …
Strategic views for a post-Covid world
Weekly commentary The pandemic has sped up key structural trends and triggered substantial market swings, precipitating an urgent need to rethink strategic asset allocations. Among …
Implications of a weaker dollar
Weekly commentary A prolonged period of U.S. dollar gains has reversed abruptly. The policy revolution to cushion the pandemic’s blow is a key driver, as it has eroded the dollar’s interest rate advantage and helped lift risk appetite off its
Focusing on factors
Weekly commentary Corporate earnings estimates look to be troughing as economies reopen with fits and starts. We have increased our overweight in the quality factor because we see it as most resilient to the dynamics of a choppy activity restart,
Real resilience in sustainability
The tectonic shift toward sustainability is gaining pace. We highlight an underappreciated climate-related risk to portfolios: water stress. Negotiations have kicked off over the size and make-up of a new U.S. fiscal package as key benefits are set to expire
Favoring Euro stocks in global restart
We consider European stocks the most attractive regional exposure to a multispeed global restart, especially versus emerging markets outside of north Asia. We could see a $1-1.5 trillion U.S. fiscal package that extends some, but not all, federal stimulus measures
Troubled waters – Water stress risks to portfolios
An understated risk The global pandemic has reinforced the importance of resilience in investment portfolios. This includes sustainability-related risks that investors may have been underappreciating, ranging from vulnerable global supply chains to health and safety issues. We believe increased asset
Why we like credit
Weekly commentary We recently moved to a strategic overweight on credit after being underweight for the past year. Cheaper valuations compensated for the risk of corporate defaults and downgrades in the wake of the Covid-19 pandemic, in our view. We
Downgrading U.S. equities to neutral
We downgrade U.S. equities to neutral after a strong run amid surging COVID-19 cases and risks of fading fiscal stimulus. We are tracking the interplay of containment measures and mobility changes on activity as economies have started to reopen. Markets
Dividends in danger?
The world was quickly thrust into a health crisis and economic tailspin that neither individuals nor businesses saw coming. The stress has prompted talk of companies having to reduce or eliminate their dividend payments to preserve operating capital. Tony DeSpirito
Our midyear outlook
The virus shock is accelerating key structural trends. We update our three investment themes and investment views against this backdrop. We are tracking the interplay of containment measures and mobility changes on activity as economies have started to reopen. Markets
The future is running at us
2020 midyear outlook The future is running at us. The coronavirus shock is accelerating structural trends in inequality, globalization, macro policy and sustainability. This is fundamentally reshaping the investment landscape …
Warming up to Europe
BII Global weekly commentary We are warming up to European assets as the region steps up its policy response and demonstrates relative success in tamping virus growth. We are tracking the interplay of containment measures and mobility changes on activity
Private markets as diversifiers
We see diversification with – and within – private markets as crucial to building resilient portfolios in a low-rate, post Covid-19 world. The key to the policy response has shifted to ensuring successful execution and avoiding policy fatigue before the
Policy revolution: What’s next?
Macroeconomic policy has undergone a necessary revolution in just three months, but this is a slippery slope without proper guardrails. The key to the policy response has shifted to ensuring successful execution and avoiding policy fatigue before the shock passes.
Investment Directions
The great poet Ralph Waldo Emerson famously wrote, “Do what we can, summer will have its flies.” As we head into the summer months, this mood may best describe nervous investors who recently experienced large bouts of market volatility due
Dealing with the next downturn
From unconventional monetary policy to unprecedented policy coordination Unprecedented policies will be needed to respond to the next economic downturn. Monetary policy is almost exhausted as global interest rates plunge towards zero or below. Fiscal policy on its own will
Systematic Fixed Income Outlook Q2 2020
Investing without a parachute In the wake of the coronavirus crisis, the U.S. bond market finds itself flirting with negative interest rates and bumping up against the “zero lower bound”—calling into question the ability of bonds to provide ballast in
China emerges from virus lockdowns
China’s economy is restarting after emerging from lockdown, likely benefiting countries and assets exposed to its growth. The key to the policy response has shifted to ensuring successful execution and avoiding policy fatigue before the shock passes. Markets will watch
Virus compels a strategic view revamp
BII Global weekly commentary The virus shock is accelerating and changing structural trends, leading us to shift our long-term return expectations and strategic views. The key to the policy response has shifted to ensuring successful execution and avoiding policy fatigue
Current opportunities in the TIPS market
Treasury Market Dislocations This past month market volatility and risk premiums rose to levels not seen since the global financial crisis of 2008- 2009. Sparked by a global collapse in activity in response to the Coronavirus pandemic, the increase in
Upholding our equity views
Weekly commentary Global stocks have recovered more than half of the selloff triggered by the coronavirus pandemic since late March – alongside a sharp contraction in economic activity and corporate earnings. We see the unprecedented policy …
Europe bond outlook under review
Weekly commentary A decision by the German constitutional court last week could potentially undermine the independence of the European Central Bank (ECB) – and threaten to fuel fragmentation within the euro area in the long run. This comes as the
Global Outlook – April update
2020 investment themes update Activity standstill – The coronavirus shock is sharper than what we saw in 2008 – but we believe its cumulative hit to growth is likely to be lower. The main risk to our view: policy needed
How the pandemic changes our long-term asset views
The coronavirus shock has triggered market turbulence over the last three months – and prompted historic policy actions globally. Does this represent a need and opportunity for long-term investors to adjust their strategic allocations – or the broad mix of
Strategic asset views amid virus shock
Weekly commentary The coronavirus shock has triggered market turbulence over the last three months. Does this represent a need and opportunity for long-term investors to adjust their strategic allocations? We think so – based on price dislocations alone and when
Variation in government responses to COVID-19
Abstract: COVID-19 has prompted a wide range of responses from governments around the world. There is a pressing need for up-to-date policy information as these responses proliferate, and governments weigh decisions about the stringency of their policies against other concerns.
5 ways the world could change: An investor watchlist
Market volatility never feels good. The kind we’ve felt amid the coronavirus pandemic has been particularly taxing. Of course, this is no ordinary moment in history. It will be a defining moment for individuals, businesses and industries worldwide. Long-term stock
Gauging the coronavirus shock’s economic impact
Global economic activity is being deliberately frozen to stem the coronavirus pandemic. This initial shock is very sudden and deep. Yet what matters for asset pricing is the cumulative impact of the growth shortfall over time. We believe that policy
Stock market winners may keep winning
While the market has staged a spectacular and unanticipated rally, looking at the broader indices can be somewhat misleading. Year-to-date, the S&P 500 Index is still down -15%, but large cap tech and healthcare indices are down 3% or less.
Gauging the virus shock to economy
Weekly commentary Global economic activity is being frozen to stem the coronavirus pandemic. Yet implications for asset prices will depend on the cumulative impact of the growth shortfall over time. We believe that policy actions to cushion the impact of
Downgrading EM local debt
We downgrade emerging market (EM) local debt to neutral on currency concerns, but still like Asia ex-Japan equities and credit. U.S. stocks extended gains, brushing off poor economic data including a collapse in retail sales and China’s GDP contraction. This
Caution: emerging market local debt
We see improving outlook for credit in general due to overwhelming policy action to limit the coronavirus shock and recent market selloffs. Yet we have turned more cautious on emerging market (EM) local debt despite depressed valuations after selloffs. Why?
Sustainability: The tectonic shift transforming investing
Portfolio perspectives A framework for incorporating sustainable investing in portfolio construction The past year has seen a marked shift in society’s attitudes toward sustainability. This shift is spurring political pressure, a regulatory push and technological advancements to create the foundations
Even at these yields, bonds still work
The coronavirus poses a unique and difficult to quantify threat to health, the economy and financial markets. One manifestation of this has been how fast stocks and other risky assets have collapsed. But while the catalyst is without precedent, other
Discount double check in CEFs
The Dow Jones Industrial Average just closed out its worst first quarter on record, after a dropping 23% since the start of the year1. The selloff has disproportionately affected equities relative to bonds, potentially resulting in an overweight to bonds
Stay calm and remember why you own bonds
Since late February, U.S. equity and bond markets have been historically volatile—on the same level of the 2008-2009 Global Financial Crisis in fact. In March, we saw the fastest bear market correction in the S&P 500 Index on record. Rates
Why we are overweight U.S. stocks
Weekly commentary We see U.S. stocks outperforming their developed market (DM) peers over the next six to 12 months. The overall U.S. policy response to the coronavirus shock has been decisive and comprehensive, already exceeding the scale of policy action
Two reasons for favoring U.S. stocks
We have an ongoing preference for U.S. stocks over other developed markets. Mike explains why. We favor U.S. stocks to their other developed market peers over the next six to 12 months. Why? The U.S. policy response to the coronavirus
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