BlackRock
Investment Institute

BlackRock Bottom Line: 2023 Global outlook

Speaker:

Wei Li

BlackRock Global Chief Investment Strategist

The new regime of greater macro and market volatility is playing out – and that’s not about to change. We believe investors need a new playbook for the new regime and the three themes for the 2023 global outlook are pricing the damage, rethinking bonds and living with inflation.

BBL Open

Title: BlackRock Investment Insitute: 2023 Global outlook

Our first theme is pricing the damage. We see major economies heading for recessions as central banks eventually back off from aggressive rate hikes. We need an ongoing dynamic assessment of the damage to come as well as to what extent it’s reflected in market pricing.

Our second theme is rethinking bonds. This new playbook requires looking at bonds differently, including the role of duration in a portfolio at times of recession and it also requires going more granular on fixed income views beyond the broad asset class block.

The third theme is living with inflation. We see three long-term drivers – aging workforces, geopolitical fragmentation and the net zero transition keeping inflation higher versus pre-pandemic levels, even as headline inflation falls heading into next year.

The bottom line is we believe that the old recession playbook may not work in the upcoming recession and investors should be prepared to make more frequent adjustments to portfolios based on balancing a risk-taking view with the estimate of how financial markets are pricing in economic damage.

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