BlackRock pushes investors to be ‘active’ in 2024 amid macro uncertainty

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BlackRock, one of the world’s largest asset managers, says next year will be a time to “grab the investing wheel” amid continued uncertainty within the market.

That’s according to the firm’s new 2024 Global Outlook. Jean Boivin, head of the BlackRock Investment Institute, spoke about the firm’s report and wondered whether the consensus about the U.S. and global economy is accurate.

“There’s a lot of discussion, as we speak, about looking at this environment about whether we’re going to get a soft landing or not,” Boivin said. “As if the economy is flying, and we need to land it.”

Boivin explained that looking at the last 18 months makes it feel like the market is “flying and needs to land.”

But Boivin said one of the keys of the BlackRock report is that “context is everything” and that analysts need to zoom out to see the “complete picture.”

“Instead of looking at the last 18 months, if we look since the start of the pandemic, the story is somewhat different. The story is that we’ve been coming out of a huge pandemic hole. This is something that we have never experienced before: A massive drop in activity, and then we’ve been since climbing out. There’s no clear benchmark on how climbing out of a pandemic whole should play out,” he said.

“If you go back to, like, January 2020 and what we thought 2023 would have looked like back then, it looks like what we’ve managed to climb out at is back to what would have been on the very low range of the forecast at the time.”

That led BlackRock’s analysts to be more skeptical of a possible recession.

“Nothing is flying in our view. So we’re just back to ground level. We haven’t, like, started to fly,” Boivin added. “The good news is that it’s not clear something has to crash.”

During a presentation of the report Tuesday, Boivin laid out three main focuses for investors in 2024:

— The need to manage macro risks due to high uncertainty.

— Recognition that becoming active in your investment portfolio can be rewarding, given the current climate.

— The benefits of harnessing the firm’s “mega forces”: demographic divergence, digital disruption and AI, a fragmenting world, the future of finance, and low-carbon transition.

Tony DeSpirito, Global CIO of Fundamental Equities and the lead portfolio manager for the firm’s Equity Dividend and value portfolios, also argued that quality stocks should be a target in 2024 rather than high-risk, high-reward stocks.

“Normally, quality stocks trade at a premium to the overall S&P 500. Today, they’re trading at a slight discount. So I think you need quality, and you want quality. But what’s really interesting is you’re able to get it at a discount,” DeSpirito said Tuesday.

He added that the Fed has likely stopped raising interest rates, creating a suitable environment for quality stocks.

“Quality stocks work better than average,” DeSpirito said. “And that’s true one year out, two years out and three years out, historically.”