Name: Are Stocks Still A Good Bet In 2018?
Uploaded: 2017-12-04
Duration: 2 min 23 s
Description: BlackRock’s Kate Moore says yes. Here's why

BlackRock’s Kate Moore says yes. Here's why

Are Stocks Still A Good Bet In 2018?

Mm. In 2018, we are still bullish on equities and think you're going to get the best returns out of stocks relative to other asset classes. Top two favorite sectors going to 2018. Our technology and financial services, particularly large cap banks in the U. S. Mhm banks, I think, are really interesting because there are a lot of I think, tail winds and drivers in 2018. The first I would say is we've had less regulatory pressure there so banks can go back to regular business. The second is we don't think the market is pricing in the full scope of Fed policy rate increases, and that's going to be supportive of margins for the banks. The third is global, and U. S growth is quite strong. So we're going to see continued demand for and use of financial services. And the fourth is I think we're going to have a huge amount of capital return coming from the banks to investors. We know that many banks have been clear to increase their dividends and equity income, we think, is increasingly important part of overall portfolio allocations. So I would say we have a good regulatory environment. We have a good macro and monetary policy environment, good demand and a very good story for dividends. It's really hard to predict how much longer this cycle or this bull market in equities can go on. But what I do know is we don't have a huge amount of excess in the market and by that I mean companies have not been over investing. They've been very thoughtful about how they've deployed capital. They've been cautious about how quickly they hire capital expenditure has been lower than other cycles and normally when you get too much investment, it leads to kind of overheating. We also don't have to deal with a significant amount of inflationary pressure. Our expectation is that inflation is going to pick up a little bit from kind of lower levels right now, but that we're not going to get so much inflationary pressure that it really causes the Fed to raise interest rates so fast and really kills the expansion. And the last thing I would say is we are at or close to full employment in the US and we see wages rising and more discretionary spend as a possibility and that consumers actually will continue to be an active part of the economy.