Record US Stocks Disconnect or Not

BlackRock maintains a pro-risk stance, arguing that record-high U.S. equities are justified by staggering AI-driven earnings growth which offsets geopolitical shocks. They prefer U.S. and emerging market equities while remaining underweight long-term government bonds due to persistent inflation risks.

Key Takeaways

• 1.BlackRock sees no disconnect between record U.S. equities and high oil/yields, as markets are simultaneously pricing AI-driven growth and Middle East supply shocks.
• 2.The AI buildout is currently offsetting the economic drag from geopolitical tensions, with tech-heavy markets like South Korea and Taiwan outperforming.
• 3.Sticky inflation and higher long-term yields remain the primary risks to valuations, particularly if the Strait of Hormuz remains closed.

Table of Contents

• Weekly commentary
• Record U.S. stocks: disconnect or not?
• Mideast shock creates dispersion
• Market backdrop
• Assets in review
• Week ahead
• Big calls
• Tracking five mega forces
• Granular views

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