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    So in general, energy is one of the parts of the market that we're interested in. We think energy stocks are cheap. The other obvious catalyst is that there's been this fantastic revolution in technology in the United States, fracking and horizontal drilling, that's allowed us to access gas and oil that were previously inaccessible. And as a result, in 2012, U.S. oil production increased by 1 million barrels per day. It was the largest single increase in one year, going back to the 19th century. So great story. Not only good for the energy industry. Also good for manufacturing, for segments of the manufacturing sector like plastics and chemicals that are very dependent upon energy prices.

    Now, one caveat. The caveat is that while we're seeing a surge in U.S. oil production, oil is still a global market. And to the extent that production has fallen in many parts of North Africa, of the Middle East — this is one reason why oil prices have not dropped as much as some people expect. And the cautionary note that I would put out to everybody is that while we're very bullish on U.S. energy production, it doesn't mean that what happens in the rest of the world doesn't matter. So we still need to pay attention to the Middle East, because this will ultimately still have an impact on global oil prices.

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Investment Directions

With most of the world on the side of easing, the Federal Reserve is making the diametric move of raising interest rates. Let Russ Koesterich and his Investment Strategy Group explain how such divergence affects your portfolio.

Investing involves risk including loss of principal. Investments in the natural resources industries can be significantly affected by events relating to those industries, such as variations in the commodities markets, weather, embargoes, international, political and economic developments, the success of exploration projects, tax and other government regulations, as well as other factors. The opinions presented are those of Russ Koesterich, BlackRock's Chief Investment Strategist, as of January 23, 2014 and may change as subsequent conditions vary. Individual portfolio managers for BlackRock may have opinions and/or made investment decisions that may, in certain respects, not be consistent with the information contained in this presentation. This 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 to adopt any investment strategy. The information and opinions contained in this presentation are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. Past performance does not guarantee future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the viewer.

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