Fed Cuts, AI Spend Support a Pro-Risk View, Says BlackRock's Wei Li

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Transcript

00:00Those who are skittish about this market would say we've pulled forward flows that we would normally see during an easing cycle.

00:06Now, one of the pillars that your thesis rests on is that this easing cycle will keep these flows coming.

00:13But if those flows are being pulled forward, well, that won't happen, will it?

00:18Actually, there's a nuance to our pro-risk thesis.

00:21So right now, we do think that the Fed has macro cover to continue cutting.

00:28And by macro cover, I mean the weak labor market monthly job creation, especially in the absence of the release of NFP.

00:38We're having to rely on some of the private market payroll, ADP and jobless claims and all of that.

00:45But the big picture very much shows that we're still in this no hiring, no firing status.

00:53And that actually supports the Fed to continue cutting rates.

00:58So this year, markets are looking at two more cuts.

01:00We agree.

01:02But the nuance here is that markets are taking policy rates to 3 percent by the end of next year.

01:08That I am not sure about, given the inflationary pressure from the service part of the basket.

01:15But also think about feed through from tariffs as well.

01:19But for now, I would say the combination of Fed cards continuing and AI momentum continuing supports our pro-risk view.