Articles Wall Street Week: BlackRock’s Rieder Sees ‘Exceptional Economy’ Finance I December 16, 2023 Summary He says Powell waved a ‘checkered flag’ on rising rates — and credit losses A ‘pretty incredible’ Fed pivot Jerome Powell and his Federal Reserve colleagues certainly got markets’ attention when they dialed up the number of rate cuts they anticipate next year, and the chair made it explicit that they are actively discussing when easing will come — without any suggestion of new hikes. Rick Rieder, who is chief investment officer of Global Fixed Income and head of the Global Allocation Team at BlackRock, told us that, in effect, the Fed has waved a “checkered flag on the rise in interest rates and credit losses in portfolios.” This year wasn’t particularly kind to real estate — especially commercial real estate. The dramatic rise in interest rates put pressure on valuations and financing over and above the struggle of employers to get people back into the office.  But Morgan Stanley’s Lauren Hochfelder finds “the opportunity, honestly, among the best we’ve ever seen.” Industrial property is particularly attractive, whether it’s from continued e-commerce growth or “a supply chain overhaul, which we’re seeing on a global basis,” according to Hochfelder, the bank’s co-CEO of real estate investing. Trillion Dollar Debt ‘A trillion-plus dollars of debt that’s coming due’ Private credit had a year of dramatic growth in 2023, and listening to Glenn August, founder and CEO of Oak Hill Advisors, we haven’t begun to see the end of it. “You could see the private credit market tripling,” he said, given the need to support mergers and acquisitions and “the banks withdrawing from the market in a pretty meaningful way post-GFC.” The bulls among the Bloomberg Wall Street Week Elves are weighing in. Oppenheimer’s John Stoltzfus, one of the Street’s noted optimists, has a 5,200 target for the S&P 500 by the end of 2024. That put him among the most-upbeat voices about next year. But his call came just ahead of the pop triggered by the Fed’s pivot toward easing. His forecast implies a 10% rally, based on Friday’s close. Get PRO Get access to exclusive premium features and benefits. Subscribe PRO plan. See More More Articles Charting the Global Economy: Central Banks Diverge on Policy Path Load More

Articles Charting the Global Economy: Central Banks Diverge on Policy Path Major Points Argentina’s inflation soared above 160% in November ahead of President Javier Milei’s massive currency devaluation that’s likely to accelerate price increases ever further this month. The first days of December have already seen price increases of 15% compared with a month earlier, and may end the month up around 20%, according to consulting firm C&T Asesores. The Federal Reserve, European Central Bank and Bank of England all left interest rates unchanged this week, but signaled different paths for policy going forward. Officials in the US are prepared to cut interest rates in 2024, while those in Europe said they’d step up their exit from pandemic-era stimulus. Meantime, policymakers in the UK were more hawkish, with several still supporting a rate hike at Thursday’s meeting. The Federal Reserve pivoted toward reversing the steepest interest-rate hikes in a generation after containing an inflation surge so far without a recession or a significant cost to employment. While Chair Jerome Powell said Wednesday policymakers are prepared to resume rate increases should price pressures return, he and his colleagues issued forecasts showing that a series of cuts would be likely next year. The European Central Bank kept interest rates on hold for a second meeting with inflation tumbling, but said it will step up its exit from €1.7 trillion ($1.8 trillion) of pandemic-era stimulus. Officials, meanwhile, said they’d accelerate the end of reinvestments under the PEPP bond-buying program. That will put all policy tools into tightening mode, even as fresh projections showed a weaker economy softening the inflation outlook. Understanding Argentina Annual Inflation Hits 161% in November The European Central Bank kept interest rates on hold for a second meeting with inflation tumbling, but said it will step up its exit from €1.7 trillion ($1.8 trillion) of pandemic-era stimulus. Officials, meanwhile, said they’d accelerate the end of reinvestments under the PEPP bond-buying program. That will put all policy tools into tightening mode, even as fresh projections showed a weaker economy softening the inflation outlook. The European Central Bank kept interest rates on hold for a second meeting with inflation tumbling, but said it will step up its exit from €1.7 trillion ($1.8 trillion) of pandemic-era stimulus. Officials, meanwhile, said they’d accelerate the end of reinvestments under the PEPP bond-buying program. That will put all policy tools into tightening mode, even as fresh projections showed a weaker economy softening the inflation outlook. Get PRO Get access to exclusive premium features and benefits. Subscribe PRO plan. See More More Articles Charting the Global Economy: Central Banks Diverge on Policy Path Load More