The largest investor in the world freezes investment on Wall Street for up to a year and further stresses the Stock Market

The largest investment fund manager in the world, Blackrock, announced this week that it is freezing its investments in the US stock market for the next “six or 12 months”. It is a fundamental player in the financial markets, not only because of its size —it is considered the largest investor in the world— but also because of its power of influence. His analysis is very well followed in the markets and is often followed by many other managers. The decision comes at a time of crisis in the stock markets, in full normalization of monetary policies in different regions to deal with inflation.

The Blackrock managers' decision has been announced through their weekly analysis, which they publish on their website. "US stocks have suffered the biggest losses to date since at least the 1960s," begins this analysis signed by four analysts from the Blackrock Investment Institute. Traditionally, if a market is down, there are those who take advantage by buying cheap to take advantage of future profits, however, from the manager it is indicated that "we pass for the moment". “We see a risk that the Fed will raise rates too much, or that the markets believe it will. Also, margin pressures are a risk to earnings. That is why we are neutral in actions in a horizon of six to 12 months”, they point out.

Analysts point to three reasons not to go shopping in a market with falling prices. “We see growing risks to the downside” in the margins, they point out as the first reason. They believe that the climate crisis will affect growth and the increase in labor costs will "eat profits". They point out that the forecast handled by analyst houses is "too optimistic" and they believe that the shares "could fall even more." “We see a decline in consumer demand as the restart of economic activity slows. In our opinion, this will reduce the ability of companies to pass on higher costs to consumers.

Second, analysts understand that stocks "haven't gotten that cheap." Specifically, they point out that lower earnings expectations and the possibility of higher rate hikes will cause further declines. “Finally, we are not thinking about buying shares at this time due to the increasing risk that the Fed tightens too much, or that the markets believe it will, at least in the short term,” they point out as a third reason not to buy actions.

During the note there are successive allusions to the FED, the US monetary authority. In fact, he assures that Blackrock will not change its strategy regarding the purchase of shares “until the FED does not explicitly recognize the high costs for growth and employment if it raises rates too much”. "That would be a signal for us to be positive on stocks again," they remark.

The manager also has words for the ECB, the monetary authority in the euro zone. "We believe that the ECB and the markets are underestimating the risk that the energy crisis could bring the euro area to the brink of recession," she said in the note. "We hope that the ECB accepts this at some point and reconsiders its path of interest rates," she stresses.

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