Feb 5, 2019

The market is expecting monetary policy to ease worldwide

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Reproduced with permission from a chart by BlackRock; Chart: Axios Visuals

Two weeks ago, we wrote about the end of quantitative tightening, highlighting the European Central Bank and Bank of Japan's reversal of expectations to end their stimulus programs and begin reintroducing above-zero interest rates to their respective economies.

The big picture: The market also is expecting U.S. monetary policy to ease, with Eurodollars futures pricing an interest rate cut from the Fed as more likely than a hike this year as early as December.

On the fiscal side: The U.S. is coming off of close to $2 trillion in government stimulus; Japan recently signed its largest budget ever; and in Europe Italy and Spain are ramping up public spending, France has pledged to cut taxes and increase wages, and Germany is considering tax cuts.

What they're saying: "Global stocks kicked off 2019 with a bang ... A key impetus: a big shift in policy expectations across the globe," BlackRock's global chief investment strategist Richard Turnill wrote in a note to clients.

What's next? The easing of financial conditions globally are likely to stabilize growth in the second half of 2019, Turnhill says.

Yes, but: "We caution against chasing the rally in risk assets, particularly in areas vulnerable to growth downgrades, geopolitical risks or sudden shifts in supply/demand dynamics."

Go deeper: The end of quantitative tightening

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Powell and the risk-off bull market

Jerome Powell. Photo: Alex Wong/Getty Images

The Fed’s 180-degree turn was the story of 2019, asset managers and market analysts say.

What happened: Chairman Jerome Powell and the U.S. central bank went from raising interest rates for a fourth time at the close of 2018 and giving market watchers the explicit expectation this would continue in 2019, to doing the opposite. The Fed cut rates thrice and even began re-padding its balance sheet in the last quarter of the year, bringing it back above $4 trillion.

Go deeperArrowJan 2, 2020

World Bank cuts growth forecast for fourth time in a row

Photo: Win McNamee/Getty Images

The World Bank cut its global growth forecast for the fourth straight time on Wednesday, reducing expectations by 0.2 percentage points each year for 2019, 2020 and 2021.

"Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist. ... U.S. growth is forecast to slow to 1.8% this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty."
— World Bank statement on its Global Economic Prospects report
Go deeperArrowJan 9, 2020

The climate spotlight on BlackRock

Illustration: Eniola Odetunde/Axios

Investment giants are becoming increasingly prominent actors — and targets — in battles over corporate climate policy.

What's happening: The behemoth fund manager BlackRock has joined Climate Action 100+, an investor network that pushes fossil fuel companies to make new disclosures and carbon emissions commitments, adding heft to the 3-year-old group, which has already won concessions from companies including Shell, BP and Norwegian oil major Equinor.

Go deeperArrowJan 10, 2020