Interpretation of the BlackRock report - the world's largest, most powerful, and wealthiest company.
Introduction to BlackRock: It accounts for 10% of the world's market value, twice that of Japan's GDP, the third-largest economy in the world, meaning one out of every ten dollars in the world is in its hands.
Short-term outlook:
In the coming months, stocks, the economy, and other risk assets may experience greater uncertainty and volatility.
Medium-term outlook (6-12 months):
U.S. stocks are expected to strengthen and may regain global leadership.
Asset allocation advice:
Emerging market stocks: Maintaining a neutral view, without significant additions.
Long-term U.S. Treasury bonds: Due to a severe fiscal and inflation outlook, the allocation ratio remains low.
High-quality credit assets: Leaning towards increasing allocation in pursuit of stable income.
Gold: Allocated as a diversification tool for the investment portfolio.
Basic forecast:
Economic growth will slow, and inflation may remain high (i.e., 'sticky inflation'), but it will not lead to recession.
Next steps:
Pay close attention to the first quarter corporate earnings reports and flexibly adjust investment strategies to respond to market changes.
Interpretation of report content details
1. BlackRock predicts that the average effective tariff rate in the U.S. could settle at a maximum of 20% to 25%, a level not seen in at least a century. If the reduction is not substantial after negotiations, there is a high probability of slow economic growth and inflation in the next two years, meaning the U.S. could fall into stagflation and global economic recession.
2. It is estimated that the uncertainty of trade policies will peak in the coming months. The longer the uncertainty of U.S. policies lasts, the greater the potential damage to economic activity.
3. Forecasting that in the tactical cycle over the next 6 to 12 months, U.S. stocks are likely to return to global leadership. This is due to the gradual easing of trade policy uncertainty and the emergence of potential policy benefits (such as the tax cuts and deregulation in 2017), leading to gradual improvement. Our basic forecast is: slow economic growth, sticky inflation, but no recession. Pay close attention to the first quarter earnings reports of major companies and flexibly adjust strategies.
4. Maintaining a neutral stance on emerging market stocks, believing that the impact of U.S. tariff policy is more favorable for Latin America and worse for Asia.
5. It is not expected that there will be four rate cuts this year (each by 0.25 percentage points), as the core inflation rate in the U.S. was already well above the Federal Reserve's target of 2% before tariffs.
6. Considering the severe fiscal and inflation outlook, BlackRock has allocated a lower proportion of long-term U.S. Treasury bonds, increased allocation of high-quality corporate credit assets, and positioned gold as a diversification tool for the portfolio.
