Bloomberg Surveillance Markets, Earnings and a Ceasefire
Jan 17, 2025
Wei Li, Chief Investment Strategist at BlackRock, dives into how rising yields impact equity resilience, while Katy Kaminsky shares insights on trend-following strategies amid market volatility. Ian Bremmer discusses geopolitical tensions and the shifting U.S.-China dynamics, echoing concerns about global stability. Jim Caron explores risk management in fixed income, emphasizing the dollar's strength and emerging market potential. The discussion also highlights earnings growth disparities, suggesting a promising outlook for double-digit growth in equities.
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Yields and Equities
- The increase in 10-year yields can be broken down into an increase in the cash rate path and term premium.
- Markets often misinterpret rising 10-year yields as negative for equities, but term premium increases don't have to be.
Mean Reversion Myth
- The simplistic view of a mean reversion, where everything returns to pre-pandemic norms, is inaccurate.
- Markets are resetting higher, and equities need to reflect this new reality.
China Sentiment
- Despite Chinese equities and bonds outperforming their U.S. equivalents in 2024, investor sentiment remains negative.
- Plummeting bond yields in China indicate worries about deflation and a potential doom loop, reflecting a sentiment and confidence game.