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BlackRock Speaks

Depending on what you measure, BlackRock is the largest asset manager in the world.  To some extent, this actually makes their predictions of market behavior self-fulfilling; which means they manage so much money they could theoretically cause the market to behave as they suspect.

Anyway, here are their latest predictions:

1.  They believe the market will continue upwards over the coming months but volatility will also increase.
2.  Don’t think emerging markets are yesterday’s story.  They will still out-perform developed markets.
3.  The Fed will begin tightening credit conditions before year-end.
4.  Generally speaking, they don’t like bonds, except for bank-loans and some municipal bonds.
5.  They like mega-cap U.S. stocks, global technology stocks, and energy stocks.
6.  The dollar remains too strong to expect much improvement in oil or gold prices, but they didn’t predict how long the dollar would remain so strong.

There has been much speculation lately that the U.S. is the “best-looking horse in the glue factory” because the rest of the world is so deeply mired in debt and other troubles.  My observation is that the U.S. is recovering better than most of the world but remains too hide-bound for the significant growth expected in many foreign nations.  I was gratified to see BlackRock agree.  Remember:  over half of the world’s stocks are outside the U.S.

Their enthusiasm for mega-cap U.S. stocks also reflects a way to invest in international growth, since most of the business of mega-cap companies is international.

Lastly, BlackRock deserves the “truth-in-predictions” award for saying a market drop could result from “unknown unknowns” . . . well, duh!  That is just a stylish way of saying “I don’t have any idea what else might happen to hurt the market.”

Situation normal!