In the latest weekly report, he assured that the economy is not in an “atypical economic cycle” and highlighted the change that occurred this year: from enthusiasm for artificial intelligence, to concerns about technology spending and fears of recession.
“We remain risky as US inflation cools, interest rates fall and growth slowly slows. We remain overweight US equitieswe go beyond technology within our theme of AI and we remain agile on Japan and China stocks“, they point out in the manager.
“Markets have swung wildly this year. Enthusiasm for AI gave way to doubts about AI spending. In August, a rising unemployment rate in the US sparked recession fears, boosting markets to expect rate cuts as deep as in previous recessions. We said recession fears and price cuts were overblown. This is not a typical economic cycle: it is a world shaped by supply constraints,” they reiterated at BlackRock.
“The recent rise in unemployment was not due to layoffs, but rather to high immigration, which expanded the labor supply. Job growth remains strong, Friday’s employment data confirmed. The unemployment rate has returned to fall and the markets have somewhat reduced expectations of a rate cut by the Federal Reserve,” these analysts warn.
“Wage growth cooled, which reduced inflation. However, that may not last: immigration will likely fall to its historical level and will no longer offset the decline in the workforce due to an aging population. “That could boost inflation again,” they noted.
Outlook at the end of the year: which sectors can be promoted
“Demographic divergence is one of five megaforces, or structural changes, that we see adding to inflationary pressures and long-term macroeconomic uncertainty. However, The short-term macroeconomic outlook presents reasons to continue leaning towards risk”they point out in BlackRock.
“Cooling inflation has allowed the Fed to cut rates, and growth is not slowing sharply. We see this resilience reflected in the strength of corporate earnings expanding beyond the technology sector and we remain overweight US stocks over a six to twelve month horizon,” these experts added.
“Analysts expect earnings to grow 20% for tech and around a solid 8% for the rest of the market over the next 12 months, data from LSEG Datastream shows. We believe that the topic of AI has more room for growth. But as investors question the heavy capital spending on AI by major tech companies, We have expanded our AI overweight to other sectors that support AI development: energy, utilities, real estate and industry”, they claim.
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BlackRock analysts overweight Chinese stocks
Investment recommendations and geopolitical risk
Elsewhere in the document, cWith the US elections in the spotlight, geopolitics and global political changes, Chinese stocks became “overweight”.
At the same time, they cut their overweight in Japanese stocks and warn of the escalation in the Middle East: “Its impact on the market has been limited, but could increase if there is a further escalation. For now, we remain pro-risk. These events emphasize that the geopolitical risk is structurally high,” they say in the manager.
“In a strategic horizon, nyou like infrastructure stocks and private creditas they seem to be ready to benefit from the mega forces. Private markets are complex, with high risk and volatility, and are not suitable for all investors,” they say at BlackRock.
“In short: we use our investment framework as an anchor in the volatile markets heading into the fourth quarter. A key part of that involves interpreting incoming economic data through the lens of a world shaped by supply constraints, not a typical business cycle,” they concluded.
Source: Ambito

I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.