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CNBC
24-07-2025
- Business
- CNBC
Investors seem comfortable with tariffs for now, but 'we're going to see volatility,' says chief investment strategist
The first half of the year was a wild ride for investors. After cruising along for the first few months, the market skidded off the road after an April announcement from President Donald Trump of sweeping new tariffs. Fears that the levies would reignite inflation and spark a trade war with the potential to tank the global economy drove investors to sell to the tune of a 19% peak-to-trough decline in the S&P 500. Trump soon announced a months-long pause on many of the tariffs, and countries have since negotiated down duties on their imports to the U.S. "[Trump] burned his hand on the stove in April," says Jeff Buchbinder, chief equity strategist at LPL Financial. "But he got his finger in ice water real quick and recovered from it." The market bounced back from the tariff shock, and then some: the S&P 500 is up more than 8% year-to-date and continues to make new highs. The threat of tariffs still looms. The Trump administration plans to reinstate blanket tariffs on more than a dozen nations starting Aug. 1. So far, investors have demonstrated they believe U.S. firms can take higher import taxes in stride, says Wei Li, chief investment strategist at the BlackRock Investment Institute. This resilience, coupled with other positive factors, such as corporate deregulation and stimulative tax policy, could help push the market higher for the rest of the year, experts say. But don't be surprised to see some jumpiness in your portfolio, Li says. "We're going to see volatility," she says. "We're going to have headlines creating a lot of uncertainty and markets have the tendency of being carried away one way or another, both on the downside and on the upside." Part of the bull case for stocks in the second half of the year relies on a shift away from the sort of financial headlines that sowed chaos for the first six months. "We're hopeful that there will be a baton handoff from a lot of hyper policy focus, whether that's been tariff policy, tax policy, monetary policy — that baton will eventually be handed off to more of a focus on the fundamental economy, meaning, how are businesses and consumers performing?" says Eric Freedman, chief investment officer at U.S. Bank Asset Management Group. For Freedman and other investment analysts, the market's underlying fundamentals are encouraging. Recent corporate earnings results have come in ahead of expectations, on average, and Wall Street analysts project continued growth in the back half of the year, according to data from LSEG I/B/E/S. Other positive factors for stocks: And importantly, investors seem to be comfortable with tariffs — for now. The effective tariff rate (including levies slated to go into effect Aug. 1) across all U.S. imports is around 21%, according to a July 14 report from the Yale Budget Lab — the highest level in since 1910. The White House has since announced a deal with Japan, and continued buoyancy in the market suggests that investors believe more rollbacks and carve outs are to come. "Tariff rates in the mid-teens are already being priced into stocks, and the market isn't necessarily believing threats that it will stay about 20%," Buchbinder says. Even if tariffs subside some, mid-teens tariffs are a serious boost from where they stood when Trump took office. But it's unclear to what extent the taxes on imports will hurt the bottom line for U.S. businesses or to what extent those firms will pass cost increases along to their customers. "The question about who is going to eat the tariffs is, it's still uncertain. Is it going to be the consumers? Is it going to be the American corporates? Or is it going to be the international suppliers, international exporters?" says Li. If it turns out that persistently high tariffs are damaging corporate profitability and hurting U.S. consumers, the market very well may do an abrupt about-face, experts say. If you're a long-term investor, though, the key is to stick to your plan, stay diversified and, ideally, ignore short-term swings in the market. To that end, remember that American corporate profitability has steadily risen over the past decades, a phenomenon that has, in turn, driven up stock prices over the long term, says Buchbinder. "If you keep that in mind, it helps tune out all this noise that can scare people out of the market, and it helps you avoid making emotional decisions that that can hurt you — selling at the bottom or taking too much risk at the top," he says.
Business Times
08-07-2025
- Business
- Business Times
BlackRock prefers European government bonds over US Treasuries
[NEW YORK] BlackRock Investment Institute shifted its view on European government bonds to neutral from slightly underweight, citing the attractiveness of their yields versus Treasuries. 'We prefer euro area government bonds and credit over the US,' strategists including Jean Boivin and Wei Li wrote in a weekly note. 'Yields are attractive, and term premium has risen closer to our expectations relative to US Treasuries.' The strategists see sticky inflation keeping the Federal Reserve from cutting rates far. They also said high fiscal deficits may prompt investors to seek more compensation to hold long-term Treasuries. Treasuries sold off over the past week after posting their best monthly performance since February last month as traders priced in the prospect of Fed rate cuts. Some of those bets have been rolled back after the US reported strong employment data for June. Within the eurozone, BlackRock prefers peripheral bonds such as those from Italy and Spain. BLOOMBERG
Economic Times
04-07-2025
- Business
- Economic Times
India growth prospects robust, justify high valuation: BlackRock Research
Mumbai: A BlackRock research platform has pegged India's current equity risk premium (ERP) around 4.9%, close to the metric's historical average, indicating that valuations may not be as stretched as high earnings multiples imply. ADVERTISEMENT In its Mid-Year 2025 Global Outlook, BlackRock Investment Institute said stable policies and rising domestic demand have continued to attract strong investor interest in India, even amid elevated equity valuations. It believes that India's robust growth prospects justify the valuation premium over the long term. ERP is a valuation gauge reflecting the extra premium that investors require to compensate for the additional risk of equity investment compared with a risk-free asset. The MSCI India Index currently trades at a forward P/E of around 22.5, slightly above its 10-year average and nearly twice that of broader emerging markets. Among emerging markets, the Institute sees better investment opportunities in India, while favouring Japan among developed markets. "India offers one of the most compelling opportunities across emerging markets for investors looking to tap into mega forces," said Vivek Paul, head of portfolio research, BlackRock Investment Institute. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
04-07-2025
- Business
- Time of India
'India remains attractive to long-term global investors'
MUMBAI: India is increasingly becoming central to the global investment landscape as mega forces that reshape economies and markets, like demographic change, digitalisation, energy transition and global supply chain realignment combine to bring in long-term changes for the high growth economy, a report by BlackRock Investment Institute has said. The authors of the report said that they are neutral on Indian stocks in the short term but advocate for "above-benchmark allocations to Indian equities within strategic portfolios with investment horizons of five years as (India's) economic transformation unfolds." They feel India equities "aren't immune to global risk-off episodes, yet over the long-term, we see compelling overlaps between India's development priorities" and BlackRock arm's global investment themes. The BlackRock Investment Institute's 2025 Midyear Global Outlook said that India's scale, expanding digital infrastructure and demographic profile now place the country at the heart of technological adoption. "Relatively stable policy and rising domestic demand have drawn strong investor interest, even as equity valuations have moved higher. India faces external risks like any open economy, but its long-term case is compelling. " Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
04-07-2025
- Business
- Time of India
India growth prospects robust, justify high valuation: BlackRock Research
Mumbai: A BlackRock research platform has pegged India's current equity risk premium (ERP) around 4.9%, close to the metric's historical average, indicating that valuations may not be as stretched as high earnings multiples imply. In its Mid-Year 2025 Global Outlook, BlackRock Investment Institute said stable policies and rising domestic demand have continued to attract strong investor interest in India, even amid elevated equity valuations. It believes that India's robust growth prospects justify the valuation premium over the long term. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Palestinian Territory: New Container Houses (Prices May Surprise You) Container House | Search ads Search Now Undo ERP is a valuation gauge reflecting the extra premium that investors require to compensate for the additional risk of equity investment compared with a risk-free asset. The MSCI India Index currently trades at a forward P/E of around 22.5, slightly above its 10-year average and nearly twice that of broader emerging markets. Among emerging markets, the Institute sees better investment opportunities in India, while favouring Japan among developed markets. "India offers one of the most compelling opportunities across emerging markets for investors looking to tap into mega forces," said Vivek Paul, head of portfolio research, BlackRock Investment Institute.
