Asset management and investment firm Blackrock has provided its forecasts for the potential developments in the financial markets in the upcoming year. The company, which is thought to manage $8 trillion in assets, predicts a period of recession brought on by central banks’ efforts to control inflation. Its 2023 Global Outlook report, however, predicts that this recession will be distinct from others in the past.
According to the report:
“Recession is foretold as central banks race to try to tame inflation. It’s the opposite of past recessions: Loose policy is not on the way to help support risk assets, in our view.”
Additionally, Blackrock asserts that since equities are not yet priced for this recession and the economic harm brought on by central bank actions is still growing, they will likely suffer more. The report claims that before reaching their intended inflationary targets and sparking economic crises, central banks will have to stop tightening policies in relation to inflation.
The report’s conclusion regarding this is that “even with a recession on the horizon, we think we will be living with inflation.”
Joint Bull Markets are not imminent
The company thinks that the new economic landscape necessitates new market strategies because the traditional strategy of “buying the dip” will no longer work because it requires a constant evaluation of how the dynamic policies being implemented cause economic harm.
The report states as a result of this:
“We don’t see a return to conditions that will sustain a joint bull market in stocks and bonds of the kind we experienced in the prior decade.”
The company has previously voiced its opinion about cryptocurrencies and cryptocurrency businesses. The collapse of FTX, formerly one of the biggest cryptocurrency exchanges on the market, according to Larry Fink, CEO of Blackrock, will kill off the majority of cryptocurrency businesses. He did, however, acknowledge the significance of blockchain technology as a tool for tokenizing securities in the context of next-generation markets.