BlackRock Think Tank: Expects the Fed to cut interest rates twice this year, with significant limitations on the extent of rate cuts due to large AI investments in the United States
BlackRock Institute predicts that the Federal Reserve may cut interest rates twice this year. However, due to the significant initial investment in artificial intelligence, the extent of rate cuts will be limited. Pang Wenbo advises investors not to overly rely on central bank rate cuts, but to look for high-quality stocks with profitability and cash flow. He also stated that regardless of when the Federal Reserve cuts rates, terminal interest rates will remain relatively high in the coming years, urging investors to focus on the actual economic fundamentals. Pang Wenbo prefers the Japanese and Indian markets, believing that Chinese stocks will remain volatile in the second half of the year
According to the Wisdom Financial APP, the market generally expects the Federal Reserve to start cutting interest rates in September. Pang Wenbo, Chief Investment Strategist for BlackRock's Middle East and Asia-Pacific region, pointed out that the Federal Reserve is expected to cut interest rates twice this year. However, due to the significant initial investment in artificial intelligence, it may lead to inflation. Therefore, the magnitude of this round of interest rate cuts is limited. He urges investors not to rely on central bank interest rate cuts to drive the market higher, but to look for high-profitability and cash-flow quality stocks in the market.
Pang Wenbo stated that the current market forecasts are similar to BlackRock's estimates, and a September interest rate cut is a more reasonable prediction. With the November election date in the U.S. too close, it may increase the complexity of monetary policy, but the actual timing of interest rate cuts still depends on economic data. Even if the timetable for interest rate cuts is delayed, the performance of U.S. stocks remains quite ideal, which is related to the rise of stocks driven by the artificial intelligence theme. He believes that this trend will continue.
Pang Wenbo further pointed out that regardless of when the Federal Reserve cuts interest rates, terminal interest rates will be at a relatively high level in the coming years. This means that the low interest and low inflation environment of the past is no longer present, and it is no longer possible to rely on central bank monetary policy to stimulate the economy and business environment as in the past. He urges investors to focus on the actual economic fundamentals and select asset classes, industries, or companies that can continue to grow in profitability and cash flow.
In terms of Asia, Pang Wenbo prefers the Japanese and Indian markets. He believes that Chinese stocks are still attractive in terms of historical averages or from a global perspective. He expects Chinese stocks to maintain a range-bound pattern in the second half of the year, but opportunities can still be found in the market