Like a sneeze coming on… Just dive in?
Good morning. I'm Rick Rieder, chief investment officer of global fixed income at BlackRock. It’s the week of May 4th. Here are three things you need to know, and one you don’t.
First up… I would say the markets have, in many ways, become this gambling arena. And you can get very, very immersed in: got to be fast. You got to move. This is happening, this piece of news, react to it. You got to step back and think about, okay, what do I need to really think about today? The tortoise wins the race.
Coupon works. Dividend works. If you map, over time, return versus yield, emerging markets go through incredible volatility. But then you look at it in the end, you’ve clipped a lot of coupon along the way. Versus, you know, I’ve said, like, long end interest rates give you a lot of volatility and they don’t give you as much income. If you’re clipping coupon, it will work for you. And the compounding effect is pretty powerful.
Number two. I actually think the next couple of employment numbers are going to be quite significant. Today, we are running a bit hot on inflation. But if you’ve got a hot employment number, this release or the next one, that’s gonna be a big deal. We have what I would argue is going to be an unemployment problem, a greater one is coming. But I don’t think we’re necessarily going to get more data on that in the next couple of months, and we actually may get something to the contrary in the very short term. We are going to watch those numbers closely.
Which brings us to…number three. You’ve had the interpretation of the ECB being hawkish and that they’re going to have to react to inflation and they’ll hike rates. Well, the markets have priced that in already. Whereas the fed, you know, has priced in an ease. So one of the things that I think has been pretty exciting is we shift some our interest rate exposure to Europe, because you’re already pricing in the hikes, but you can buy things like Spain and Italy that are basically European credits, literally, close to 7%. That’s pretty spectacular. You think about your nine years of negative interest rates in Europe. You can’t ask for more. You can’t ask for more than that.
And the one thing you don’t need to know…
I will say I’ve been to Disney World, Disneyland, Tokyo Disney, Shanghai Disney, Paris Disney. I know every square inch of every park. I’m still going. And now I’m a grandfather. I think I have another trip planned. My hot take: the ride I look forward to, because it’s a great competition, is Toy Story the ride, because you actually get to compete against everybody else in the cars.
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