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BLACKROCK Q4 OUTLOOK PACKAGE

New regime, new opportunities

We‘re in an unprecedented macroeconomic environment that is driving constant shifts in the market narrative. We think the new volatile regime still offers abundant but different opportunities, as we noted in our midyear outlook. We look through the short-term noise and get granular within asset classes and harness mega forces.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Investment themes

01

Holding tight

Markets have come around to the view that central banks will not quickly ease policy in a world shaped by supply constraints. We see them keeping policy tight to lean against inflationary pressures.

02

Pivoting to new opportunities

Higher macro and market volatility has brought more divergent security performance relative to the broader market. Benefiting from this requires granularity and nimbleness.

03

Harnessing mega forces

The new regime is shaped by five big structural forces we think are poised to create big shifts in profitability across economies and sectors. The key is identifying catalysts that can supercharge them and whether the shifts are priced by markets today.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or financial product or to adopt any investment strategy. The opinions expressed are as of October 2023 and may change as subsequent conditions vary.

Discover our key themes and Outlook for Q4 2023

Karim Chedid: Welcome to Around the World: spotlight on our Q4 outlook. This is a macroeconomic environment the likes of which we have never seen before.

A new regime is playing out, with higher interest rates despite stagnating activity, and structural forces set to keep inflation persistent. Despite this volatility, we see abundant investment opportunities. We think accessing them requires investors to get more dynamic with macro assumptions and granular in allocations. I'm joined today by Ann-Katrin Petersen, Senior Investment Strategist for the BlackRock Investment Institute. And she will discuss how our key investment themes are evolving for the final quarter of the year.

Ann Katrin Petersen: Thanks, Karim.

Our first theme is holding tight. We think markets have started to come around to our view that central banks won't quickly move to ease policy in a world shaped by supply constraints. And even as we approach the peak in developed market (DM) rates, we expect them to stay higher for longer as inflation pressures persist. Our second theme is pivoting to new opportunities. Higher macro and market volatility has meant more divergent performance with much stronger sentiment towards specific exposures, rather than the broader market. And we expect that divergence to persist, think sector and regional dispersion. Our third theme is harnessing mega forces. So the big structural changes we think are poised to create shifts in profitability across economies and sectors like artificial intelligence (AI), and thus have become greater drivers of asset allocation.

Karim Chedid: Thanks, Ann Katrin.

So what do these themes mean for portfolios? With central banks holding tight at the peak, higher rates mean bonds are back for income. We like to lock in high yields with fixed-maturity bond ETFs and have started to prefer duration in areas like European government bonds and UK gilts.

We're pivoting to new opportunities in selective DM sectors like US tech, like European banks, although our modestly risk-averse view keeps us underweight broad DM equities. We see opportunity in EM (emerging market) debt. Finally, we're harnessing mega forces through exposure to their catalysts and their beneficiaries. We like semiconductors as a foundational AI play. And we think sectors like industrials and some select commodities could benefit as supply chains are rewired. Read our views and our implementation ideas across asset classes at the link below. And thank you for joining.

Karim Chedid, Head of EMEA iShares Investment Strategy and Ann-Katrin Petersen, Senior Investment Strategist and Director with the BlackRock Investment Institute (BII), break down our key themes and Outlook for Q4 2023.

Discover our key themes for the Q4 Global Outlook

Read the latest views from BII across asset classes, as we take stock of recent events and their potential implications for tactical and strategic allocations.
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How to implement our investment ideas in your portfolio

Download the Q4 2023 EMEA Implementation Guide

Explore our implementation ideas and look at how investors could position, with an outcome-orientated approach to the key investment themes laid out in the BlackRock Investment Institute’s Q4 Global Outlook.
Q4 2023 EMEA Implementation Guide

Explore our fund range

Discover how BlackRock’s products could help you adjust your portfolio to a new world of heightened macro volatility. Navigate our range of iShares and BlackRock funds.

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