© Reuters. BlackRock sees recession coming to Europe and underweight equities
In its weekly comment, the BlackRock (NYSE 🙂 Investment Institute expresses a preference for Investment Grade credit. The ECB does not recognize the negative effect on the economy of its aggressive hikes
European equities have not priced deep recession what a second BlackRock is coming. Excluding commodities, European earnings growth estimates are too optimistic, according to the big house, which remains underweight onEuropean equity and on most of the stock markets of developed countries, preferring the Investment Grade credit whose returns better offset the risk of default. BlackRock is neutral on European government bonds with a slight overweight in UK gilts and a preference for shorter maturities, priced in line with the tightening direction of interest rates.
THE ECB DOES NOT RECOGNIZE COSTS
These are the indications of the weekly market commentary, entitled “the energy shock pushes Europe into recession” by the BlackRock Investment Instituteaccording to which the ECB is trying to fight inflation without recognizing the cost, has already decided on a maxi increase of 75 basis points of rates and will continue to raise them until the effects of the energy credit crunch are clear, which will push the economy into recession. Hence the preference for credit over equity …
** This article was written by FinanciaLounge