2013 Investment Outlook - BlackRock
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Slow Turn Ahead
The big question of 2013 is whether the global wave of ultra-loose monetary policies and quantitative easing has crested. Trillions of dollars in monetary stimulus and record low interest rates have failed to spur much credit growth and economic activity so far. But what if this changes?
Five Fundamentals for 2013
- We have become more upbeat about the prospects for risk assets and stabilizing economic growth (albeit at low levels). Low expectations = potential upside surprises.
- The US economy should gain momentum and help boost global growth—IF Washington can avoid the “fiscal cliff” and compromise on a sustainable budget.
- Many investors lack conviction in markets where risk taking is often punished and trends last a skinny minute. Rome—and confidence—was not built in a day.
- The era of ultra-loose monetary policy may draw to a close, challenging “safe” fixed income assets and heralding a shift toward equities. Safety = new tail risk.
- Income investing works in a zero-rate world—but the hunt for yield has narrowed valuations between top-quality and not-so great income assets. Take out the garbage.
The BlackRock Investment Institute is a global platform that leverages BlackRock's expertise in markets, asset classes, and client segments. Launched in 2011, the Institute's goal is to produce information that makes BlackRock's portfolio managers better investors and helps deliver positive investment results for our clients.
The International Monetary Fund forecasts 1% fiscal global tightening in 2013 – a large potato in a 3%-4% growth world.