A disconnect with economic fundamentals

Mar 17, 2025

U.S. recession fears are causing stock pullbacks, yet economic fundamentals don't align with these concerns. The discussion highlights significant job growth and shifting investment strategies in the tech sector, emphasizing resilience in the market. Additionally, the strategic role of gold during inflationary times is explored, offering insights into why staying overweight in U.S. stocks might be the prudent choice amidst volatility.

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INSIGHT

Disconnect Between Market and Fundamentals

The recent U.S. stock market sell-off doesn't align with current economic fundamentals.
Positive factors like strong job creation and good earnings expectations suggest a healthy economy.

INSIGHT

Drivers of Market Pressure

The recent market pressure is due to rapid exits from crowded positions and high policy uncertainty.
This uncertainty has increased the risk premium, meaning investors want higher returns for holding risk.

ADVICE

Investment Recommendations

Consider underweighted European equities and overweight Chinese equities.
Gold has been a better diversifier than long-term bonds in the current inflationary environment.

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U.S. recession fears have spurred a pullback in stocks yet economic conditions don’t signal a downturn. In this special edition of Market take, Wei Li, Global Chief Investment Strategist at BlackRock, highlights the disconnect in recent market concerns and share why we stay overweight U.S. stocks.

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