Portfolio manager market views and asset allocation insights

Hey dude. Bright lights, big city!  

Good morning. I'm Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock. It’s the week of November 9th. Here are three things you need to know, and one you don’t.  

First up. 

Our nowcast of current growth is up well over 7%. That is pretty incredible in terms of where we stand today. My sense is we’re seeing, what is, the highest level today. Normally, if you have an economy moving like this, you start to see employment. You’d see wages accelerate. You're not really seeing that. In fact, you’re seeing big companies reducing, companies that are saying we can operate a great economy, very good topline, revenue growth, and maybe we could do it without as many people. If you’re talking about where the economy is and where you think about where employment is. The chasm between the two is pretty significant.  

Number two.  

I did this analogy. I talked about a thermostat and if you have a Federal Reserve using the overnight funds rate, having a “thermostat” for the whole “house.” Different rooms, some are hotter, some are cold. Doesn’t really work. When you think about where we are today you’ve got an economy driven by AI and you’ve got aging population and net savers—they’re doing quite well. Then, you look at what is rate sensitive, is having a hard time. Small business, obviously housing, the people who borrow on credit that are already under pressure. Also, the economy is just operating in an extraordinarily divergent way. It's part of why I would argue there are tools at the Fed that are more current, than just, “oh inflations over 2 we just have to raise the overnight funds rate, because we've done that for 100 years.” 

Which brings us to. 

Today, if you said to me, “What should investors be doing?” It’s get a little more balance in their life. What income really does for you is bring down some of what is imbalance. The neat part about these real rates being where they are? Getting a 7%. You don't have to stretch. Think about what equities can get you over the longer term. You’re not that much higher than that. If I can get a 7, with stability and quality, that’s a lucky 7 if you ask me.  

And finally.  

I’ve been traveling around the world. I was noticing, there’s carpeting in a lot of airports today. They need to get rid of the carpeting. I don't need that friction in my life. I see people struggle. The world has moved to 4-wheel rolling bags. My hot take? We need less carpeting in airports and carpeting in hotels. I keep it in my living room, where it looks really nice, and I don't have to roll my bags through it.   

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