Which topic should we focus on in 2022?

Every other week, we ask for your thoughts on a top question our portfolio managers and strategists are debating. We share the final poll results and our insights.  

An unusually wide range of market outcomes are possible in 2022 depending on the inflation, policy and growth mix.

#QuestionOfTheWeek: As we navigate this tricky environment: Which of these four topics is most worth analyzing – and most important to get right?

1. Central bank policies (23%)
2. Inflation and growth (45%)
3. Valuations and earnings (22%)
4. Politics and geopolitics (10%)

Source: Blackrock Investment Institute, with data from SurveyMonkey. Note: Data does not include results from BlackRock social media polls.

What should we collectively focus our research efforts on in 2022? In line with public poll responses, BlackRock portfolio managers also considered “inflation and growth” (41%) and “central banks policies” (35%) as top priorities.

A rare combination

The BlackRock Investment Institute (BII) noted last year’s rare combination of strong stock returns and poor bond performance. BII sees this pattern repeating for a second consecutive year - the new regime highlighted in our 2022 outlook. A key pillar of BII’s asset views is a historically muted response from central banks to inflation. Most central banks are poised to nudge up policy rates – but this is taking the foot off the monetary accelerator, not hitting the brakes. We don’t see them responding aggressively to persistent inflation.

Work is underway at BlackRock on disaggregating inflation baskets to understand what’s happening under the hood and get a better grasp on persistent drivers of inflation. Central to the Multi-Asset Strategies & Solutions team’s research is looking at alternative ways to forecast U.S. CPI.