Risk Managed Strategy Funds


BlackRock: Global Investment Outlook: Q4 Update

October 2, 2019
BlackRock Q4 2019 Outlook

  • Trade disputes and geopolitical frictions have become key drivers of the economy and markets. U.S. trade policy has become increasingly unpredictable. Recent geopolitical volatility – including attacks on Saudi oil infrastructure – underscores this message from our Midyear Outlook.
  • Persistent uncertainty from protectionist policies is denting corporate confidence and slowing business spending. Yet we still believe the economic expansion is intact, supported by dovish central banks and a robust U.S. consumer. This suggests moderate risk-taking will likely be rewarded – even as recent events reinforce our call for a greater focus on portfolio resilience.
  • We expect more Federal Reserve rate cuts, but believe markets are pricing in too much monetary easing. The ECB materially exceeded market expectations on stimulus, launching a broad package with a combined impact that should be greater than the sum of its parts.
  • We do not believe monetary policy alone is a cure for the fallout from global trade tensions. Supply chain disruptions could deliver a hit to productive capacity that fosters mildly higher inflation even as growth slows. This complicates the case for further policy easing.
  • Overall, we favor reducing risk amid the ongoing protectionist push.
    We prefer U.S. equities for their reasonable valuations and relatively high quality; and the min vol and quality factors for their defensive properties. We like EM debt for its coupon income. We are overweight euro area sovereigns: a relatively steeper yield curve brightens their appeal even at low yields. And we see government bonds as important portfolio stabilizers.
Click here to read.