Rick Rieder, Director of Investments at Global’s Blackrock Faitsud Réveno, said earlier this week that the current backdrop is the “best investment environment of all time”, citing an unusually favorable dynamic on stocks and bond markets.
Speaking on CNBC, Rieder described “extraordinary” technical conditions in shares, with billions of dollars still stationed in money market funds and redemptions of robust companies narrowing the available offer. Although assessments of the largest market technology names remain high, he noted that the growth in profits outside Tesla has helped justify the multiple. “Mag-7 growth in annual shift is like 54%,” he said, adding that the pace makes the sector difficult to ignore.
On the bond side, Rieder underlined the call for income.
Investors can always build portfolios giving between 6.5% and 7%, a level it has described as very attractive in a world where inflation has derived below 3% essentially. He argued that even if the federal reserve has room to reduce rates – potentially from September – current yields already offer solid investor yields.
“Crazy” volatility
Rieder also underlined the unusually moderate volatility today. He described the volatility of commercial actions, or “theft”, at levels close to 9.5 to 10, which he called “Crazy Fow”. The low volatility, he said, makes coverage against the risk of relatively cheap decrease, giving investors what he called an “escape hatch” if the conditions were embittered. “You don’t really have to drop the risk,” said Rieder.
However, Rieder warned that complacency is his greatest concern. With insurance on the cheap markets, he sees signs that investors can underestimate risks, especially in credit differences and other fixed income corners.
Fed interest rate
Regarding monetary policy, Rieder argued that the Fed rate increases did not do much to remove inflation, since large companies depend less borrowing to finance the investment.
The real trail, he said, has been on housing activity and low-income households that depend more on credit. Keeping too high rates, he warned, may impose excessive costs on government and households without significant disinflation gains.
He thinks that the central bank could reduce the rate of funds up to 100 base points during the coming year, a decision which he considers as little likely to revive inflation given the low structural volatility and the growing productivity of data progress, hyperscal IT and even technologies related to space.
“Something spectacular is happening around productivity,” he said, calling it a unique dynamic in generation.
For cryptographic investors, Rieder’s comments strengthen a broader story: an environment with declining rates, ample liquidity and low volatility could support renewed appetite for risk assets beyond shares. If its call turns out to be correct, the same technical tail winds that cause stocks could spread in digital assets that thrive on the excess cash and risk taking of investors.
