Here’s What the World’s Biggest Money Manager Is Worrying About for 2018

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BlackRock blk is the world's biggest asset manager, overseeing about $6 trillion in client money as of the end of November, and its investment decisions create ripples that roll through every major global market.

To give Fortune readers a preview of what the firm expects in 2018, BlackRock's senior strategists shared their outlook with us in advance of its mid--December publication. Highlights follow from our conversations with the team:

Just about every economist believes the Federal Reserve will raise interest rates three or four times next year. The Fed has pretty much said it's going to do just that. And normally, that foreknowledge would have already led U.S. stock investors to tap the brakes a little. But BlackRock estimates that U.S. stocks are currently priced as though investors are expecting only one or two hikes next year. "The danger is that the Fed actually does what it says it's going to do," says Richard Turnill, BlackRock's global chief investment strategist. If that happens, it could mean short-term pain for both stock and bond investors, although prices most likely wouldn't plunge into bear market territory.

"The No. 1 one risk we're focused on," says Turnill, "is trade." Ongoing talks on the North American Free Trade Agreement (NAFTA) and looming elections (both for Mexico's presidency and U.S. congressional midterms) could elevate the simmering tension between the U.S. and its neighbors into open conflict. That could pour cold water on global growth--and make trouble everywhere that BlackRock invests.

A version of this post appears in the Dec. 15, 2017 issue of Fortune, as part of the article “The Planet’s Biggest Investor Prepares for 2018.”

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