The landscape of the U.S. market exploded after Wall Street received a smaller-than-expected inflation print for the month of October last week. While some may believe that markets are now headed for a soft landing, BlackRock, the world’s largest asset manager, isn’t One of them.
Jean Boivin, head of economic and markets research at the Blackrock stated: “Surging stocks show markets believe hopes of a soft landing by the Fed to be true. We disagree and stay underweight developed market stocks.”
BlackRock added: “The U.S. market surged after a smaller-than-expected inflation print for the month of October. That in itself is good news, but one data print does not make a trend.”
Investors have been repeatedly disappointed by Fed’s hawkish rhetoric, according to the financial institution. Multiple instances have occurred this year when market participants hoped that the Fed would be less hawkish, only for them to become discouraged when the Federal Reserve continues its hawkish rhetoric.
A prime example was back at the Jackson Hole Symposium where Fed Chair Powell backed up the Fed’s hawkish talks and markets subsequently dropped.
“We believe that this time is no different. In fact, given the market bounce, we are even further away from markets pricing in the recession that we see coming next year.”
While the investment community analyses the market landscape, the major averages (SP500), DJI), and (COMP.IND), as well as their market tracking exchange traded fund (MARKET TRACKED FUNDS) (NYSEARCA:SPY), (NYSEARCA:VOO), (IVV), (NYSEARCA:DIA), and (NASDAQ:QQQ) continue to track higher.
BlackRock isn’t the only institution that believes investors aren’t out of the woods yet. Russell Investments recently published a research note that suggested it was premature to declare victory so soon.