BlackRock: 9 New Predictions for 2023 and Beyond
'Ukraine is good for business'
Key points:
A representative for BlackRock was caught saying “Ukraine is good for business.”
Larry Fink is abandoning ESG… or so he says
BlackRock is buying Bitcoin
If unchecked you’ll be pushed out of the housing markets by asset speculators and subscribing to your apartment in no time.
These banking behemoths hold 15% of the housing market, but their focus is on affordable single-family homes in bustling urban centers in places like Texas, Miami, Phoenix and Las Vegas.
The high-end properties? They're not interested.
Many things have been going on at BlackRock in the past few months—and in that light, here are nine predictions for the 2023 economy from the horse’s mouth.
1. ‘War is Good For Business’
Polemical investigative journalist James O'Keefe just exposed BlackRock Recruiter Serge Varlay, declaring that "Ukraine is good for business.” Varlay added a chilling example of how if "Russia blew up a Ukrainian grain silo. The price of wheat’s gonna go mad up."
"Every f*cking day, I literally decide how somebody’s life is going to be shaped," Varlay said, adding, "I’m not actually a finance guy, I just know what happens because I’m recruiting people who do these things."
Is any of this really surprising? Not at all.
However, it's quite satisfying to hear a BlackRock employee acknowledge it.
2. Larry Fink ‘Ashamed’ of ESG
BlackRock CEO Larry Fink is dumping the term"ESG" (environment, social and governance) and he's "ashamed" to be part of the debate on the issue.
Frankenstein's monster went on a rampage and he now refuses to take responsibility.
If you’re unfamiliar with ESG, BlackRock invests in companies based on their compliance with social issues like climate change, Black Lives Matter, and LGBTQ support. But don't be fooled; they expect a profit too. It's capitalism with a trendy twist. And let's be real, ESG reeks of greenwashing. Corporations don't actually care about the environment or social issues.
My hunch is that ESG will continue under a new name.
3. ‘The Great Moderation’
The Great Moderation was a period of low inflation and steady economic growth that allowed stocks and cryptocurrencies to flourish.
That period is over. It’s dead. You missed it.
“The Great Moderation, the four-decade period of largely stable activity and inflation, is behind us,” BlackRock vice chairman Philipp Hildebrand wrote to investors in their 2023 Global Outlook. “The new regime of greater macro and market volatility is playing out. A recession is foretold.”
BlackRock believes sustained bull markets are like Bigfoot. They don’t exist.
Now a new investment playbook is needed.
4. A New Era of Investing
Three major trends will define the new era of investing, according to BlackRock:
First, aging populations will cause governments to increase debt and deficits, leading to higher inflation.
Second, fractured trust between global superpowers will lead to the proliferation of trade and currency wars, creating volatility. “This is, in our view, the most fraught global environment since World War II,” BlackRock wrote.
Third, clean energy, the digital economy, artificial intelligence, and automation are transforming businesses, investments, and society in new and entirely uncontrollable chaotic ways.
It’s eerie to hear BlackRock talking like this.
It seems more like that guy from work who’s always telling you the end is near.
5. BlackRock & Bitcoin
BlackRock is looking to launch the first spot ETF for Bitcoin.
A spot ETF allows dad, mom, and grandma to invest with no need to worry about security risks or losing your password. Your crypto is safely stored and you can rest easy. Plus, a spot ETF of Bitcoin opens doors for 401ks, Roth IRAs, and other tax-free earnings accounts.
The SEC just cucked the competition to give approval for this ETF to BlackRock.
6. Clean Energy isn’t Good for Markets
This is one weird prediction coming from the bank once spearheading ESGs.
But they think clean energy is moving too fast.
“If high-carbon production falls faster than low-carbon alternatives are phased in, shortages could result, driving up prices and disrupting economic activity,” they wrote. “The faster the transition, the more out of sync the handoff could be — meaning more volatile inflation and economic activity.”
We’re entering an era of extreme uncertainty, and where we get our energy is just one of the many things to worry about.
7. A Fragmented World
The geopolitical cooperation and globalization that drove the economy of the past four decades is unraveling, according to BlackRock. Countries have become more protectionist, and the US-China trade war will destroy economic efficiency.
Keep an eye on new currencies like BRICS, the digital yuan, and central-backed digital currencies — these are the future.
8. How to Navigate the New Era as an Investor
Everything comes with a trade-off; the same goes for this new era of risk and uncertainty.
BlackRock thinks inflation will only come down if central banks like the Fed “crush” economies into a severe recession. That’s a brutal trade-off.
Another is that global tensions will only be solved if both sides — US/NATO and the China-Russia Alliance — swallow their pride and compromise.
If that doesn’t happen, expect a lot more volatility.
9. The Great AI Deflation Bomb
BlackRock believes inflation is here to stay for years.
They’re getting this wrong according to the charts. Inflation is cooling and it’s actually deflation expected next year from recovering semiconductor supply, AI, and energy generation surpluses increasing.
UBI may be needed to prevent too much deflation causing profits to fall.
I would guess there is not one company in Silicon Valley not in the final stages of planning an unannounced reduction in the workforce due to AI.
Takeaway
We are all doomed, but then again, we have been doomed before.
So, the big takeaway here is we’re entering a new era of risk and uncertainty, and if you’re not prepared, you could find yourself in a very bad situation.
The key is to keep your ear low to the ground; read the Financial Times, WSJ, Real Vision, Coin Desk, and NYT. Diversify your financial literacy and prepare yourself for what’s ahead.
It’ll save you a lot of anxiety in the long run.
This installment of Yard Couch is free for everyone. I send this email bi-weekly. If you like my work please consider joining 4,000+ other people and subscribing!
The only thing I find encouraging is that Bitcoin and crypto are moving along... even at a snail's pace. If the big boys are still sniffing it means there is still the sweet scent of crypto wafting through the air... the rest of us just have to hang on and catch the gusts as they blow our way.