Global financial markets are inflated by the hope of Feder Chairman Jerome Powell ’s tightening pace theory and soft landing theory. Next year, the U.S. economy will successfully achieve a soft landing, approaching the 2% inflation target. Accordingly, the Federal Reserve will slow down the pace of tightening the currency chain. The market is already full of expectations for the Santa Claus rally at the end of the year. Will
arrive as scheduled? The world's largest asset management company, BlackRock, expressed different opinions to attract attention. Last 30, just before Chairman Powell mentioned the Brookings Institution speech, Edaily listened to a client webcast at BlackRock Investment Institute (BII).
"The alternation of the last 40 years is over."
BlackRock's economic outlook for next year can be summarized in one word: "We are now entering a new system characterized by high volatility and recession," said Jean Boubin, director of BII. “In contrast, due to production restrictions, it is difficult for the economy to return to current levels without causing inflation ,” he stressed. He explained that aging population, reconnection of global supply chains, and low-carbon transformation are factors that increase production costs. For example, the "Made in the United States" policy that the United States, which has expensive labor, even produces and manufactures, is interpreted as having no choice but to raise prices in fundamentals .
He emphasized the most that it will not return to the 2% inflation economy for the time being. "Inflation will fade (as central bank tightens), but the 2% target will continue to be exceeded," he said. This is fundamentally different from what most Fed officials say is reducing inflation expectations while sticking to the 2% target in some way.
Regarding next year's global economy , Director Boybin believes that "I don't think a soft landing is a possible result" and "we have to go through an economic recession to lower prices." He specifically explained that since central bank , including the Federal Reserve, deliberately caused an economic recession by over-tightening of the money supply, a recession next year is inevitable. Chairman Powell said there is a way to lower prices without a recession, but he proposed a completely different analysis. “The market needs to adapt to high inflation,” Boyvin said.
Therefore, BlackRock's investment advice is "agile". Li Wei, chief investment strategy teacher at Tiantou Securities, said: "We are in a new system with higher macro and market volatility. We need to adjust our investment portfolio more flexibly and more frequently." BlackRock said that in cyclical stocks, we should pay special attention to energy and financial stocks. “The 12-month forward price-to-earnings ratio of (PER) for the U.S. oil refiners are 10-12 times, but European companies are trading at only half of that level,” a representative suggestion. BlackRock added that companies actively involved in energy transformation, such as wind and biogas, represent the greatest opportunity in the energy sector. Investments for the rapidly growing elderly population are also recommended, such as healthcare-related stock .
On the same day, BlackRock leader Larry Fink , who appeared at the Deal Book Summit of New York Times (NYTh), also made similar remarks, which attracted attention. "The U.S. economy will face higher interest rates and higher inflation rates in the coming years," he said. He called the energy crisis in Europe "the biggest resistance facing the economy right now", he warned. Chairman Fink also mentioned the unprecedented simultaneous plunge of stock and bond prices (surge in bond interest rates) and super-strong dollar this year, saying, "This is evidence that the market environment has been completely reset." It was interpreted as time to change the investment model we have maintained.
