BlackRock’s CIO Says Paradigm Has Changed
01 mins 44 secs
This is your market minute as markets react to the news of Silicon Valley Bank's collapse.
Blackrock's Ci O Rick Ryder says the economy is still in pretty good shape, but the stickiness of inflation has changed the macroeconomic paradigm. And as a result of the firm's investment strategy, Blackrock has shifted allocations to more liquid asset classes including cash, pointing out that safer asset classes are generating the highest yields they've seen in years and yields in riskier assets have not seen their margins increased to reflect the market's increased risk.
You had a window where it looked like inflation was coming down. You know, we're pretty confident economies in good shape. We don't think that the discussion of recession, deep recession was a really durable one. But the thing that changed in the last month was gosh, the pervasive nature of inflation, you look at the score PC numbers, the CPS Mohammad said we gotta focus on next week's data. And by the way, not just in the US, you look at the European data that changed the paradigm quite a bit and all of a sudden, not only is inflation not coming down in some places it's accelerating.
So yes, we've built a decent amount of cash and quite frankly, some of the asset classes,
you know, if the fed has to go further, if they have to go to six, you create, you do create a slower economy, do create potential recession in 2024 high yield. Not very interesting.You can buy things like commercial paper at 5.5, 5 and three quarters percent. Looking at double b high yield at seven and a quarter.
Why, why you don't take the risk? So, yes, we've reduced some of that, some of that spread risk and say, you know what, I'd rather sit in commercial paper, treasury bills and you're getting paid for sitting in the front end in a way we haven't gotten paid in years.
As markets react to the news of Silicon Valley Bank’s collapse, BlackRock’s CIO, Rick Rieder, says the economy is still in pretty good shape, but the stickiness of inflation has changed the macroeconomic paradigm and as a result their investment strategy.