Tweaking our views yet staying risk on

Feb 10, 2025

Sharp market volatility this year has been influenced by U.S. policy shifts and breakthroughs in artificial intelligence. Experts discuss how tariffs and inflation are reshaping investment strategies worldwide. The conversation explores the fine balance between adapting tactics and maintaining a risk-on approach in these changing times.

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INSIGHT

Adapting Tactical Views

BlackRock maintains a risk-on framework but adjusts short-term views due to US policy shifts and AI advancements.
They see US equities outperforming due to resilient growth, AI, and potential deregulation, but watch for triggers like faltering earnings.

INSIGHT

Tariff Risks

Proposed US tariffs could reach 1930s levels, increasing inflation and hindering growth, potentially delaying Fed rate cuts.
This creates a challenging economic environment with higher inflation and slower growth.

ADVICE

Investment Recommendations

Overweight US equities due to the macro backdrop and AI, upgrade Euro area government bonds given tariff risks, and trim UK guilds to neutral.
Underweight EM local currency debt due to tariff and global risk sentiment vulnerabilities.

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U.S. policy shifts and artificial intelligence advances have driven sharp market volatility so far this year. Michel Dilmanian, Portfolio Strategist at the BlackRock Investment Institute, discusses how we’re adapting our short-term tactical views.

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