Wall Street is on a five-day losing streak. The decline, as measured by the S&P 500 SPX, of 3.6% is not that great, but it seems depressingly inevitable once the benchmark again failed to hold above its 200-day moving average.
Our call of the day is from BlackRock BLK , who say this challenging macroeconomic scenario will continue and that investors require a new three-pronged strategy to navigate it. “That means the only way for central banks to bring inflation down to target is to hike rates enough to crush demand down to the level the economy can comfortably sustain. That’s well below the pre-Covid growth trend . Central banks appear set on doing ‘whatever it takes’ to fight inflation, making recession foretold, in our view,” says BlackRock.
Next, investors should “rethink bonds.” As investors know, yields are now much more attractive than they have been in many years, but it’s important to differentiate. Finally, investors must learn to live with inflation. The politics of inflation will turn to the politics of recession and the Fed will be able to stop hiking rates without inflation being on track to return to the 2% target, reckons BlackRock.
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wait a second...isn't this a huge conflict since blackrock owns the federal reserve?
From 3% sustained inflation to 9% is not a joke. We will still carry 18% burden. Commodity, Transportation, Housing, Energy is coming down, but Corporate profiting is deeply entrenched. 3.7% unemployment will not. Only a recession will reset the Economy.
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