BlackRock,
March 01, 12:15 p.m
The bull market is over.” BlackRock predicted the fall of all assets
Inflation has gone from a minor issue to a major one, according to BlackRock. The bull market is over, and now investors will have to be more careful and active in their investment approach
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BlackRock believes that the rapid growth in all asset classes is over and investors will have to be more careful and active than in the past in choosing where to invest their money, writes business insider. “We can’t just invest in everything—the bull market for everything is sadly over,” said Ben Powell, chief Asia Pacific strategist at BlackRock Investment Institute. Higher Fed rates will be a negative factor for risky assets, informed He.
According to Powell, investors will have to choose more carefully where to invest, both by geography and by asset class. They will no longer be able to simply stay in the assets that are in the portfolio. They may need to restructure their portfolio a little more often than before because the markets will be more volatile, he said.
The world economy has undergone a fundamental change driven by reduced supply. The result has been higher inflation, and this has important implications for investors making decisions about their portfolio structure. “The bottom line is that inflation has gone from being just a problem to being a big problem,” BlackRock said. The situation has become more unstable and risky.
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Over the past year, the US Federal Reserve has raised interest rates from near zero to a range of 4.5-4.75% in an attempt to cool inflation, which is at its highest in more than 40 years. Since March last year, the US regulator raised the discount rate by 450 basis points. The Fed is expected to raise rates even higher in the coming months.
Inflation in the United States in June 2022 updated its 40-year record and reached 9.1%. The Fed’s goal is to bring inflation down to 2%. In January, the consumer price index in the US was 6.4%. The indicator fell to its lowest level in more than a year, but still remains well above the regulator’s target.
Last year was a failure for the US stock market after several years of growth, when rates remained near record lows. In 2022, the S&P 500 has lost over 19%. In the first weeks of this year, the US stock market rose as investors expected that lower inflation would allow the US regulator to abandon aggressive monetary tightening. By early February, the S&P 500 was up nearly 9% year-to-date.
The tide turned when investors realized that all signs indicated that Fed rates would remain at high levels for longer than expected. By the end of February, the growth of the S&P 500 slowed to 3.4%. Powell said it has become clear in recent weeks that US inflation is not declining as fast as everyone had hoped. The Fed may continue raising rates, which will be negative for risky assets, he said.
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Marina Mazina.