Blackrock has dubbed its 10 best investing ideas for 2014 "The List" — which just sounds definitive.
The firm predicts moderately stronger growth in the coming year, slightly higher interest rates, and the Federal Reserve to taper.
"Many of the conditions of the last few years— slow growth, low interest rates, and very low inflation—are likely to persist," Blackrock writes. "Not an ideal environment, but one that should support further gains in stocks, and perhaps hints at a virtuous cycle of global growth that could be possible if the stars align."
Here are three key stories Blackrock highlights:1. Inflation — which has been low due to slow wage growth, excess capacity, and reduced lending activity — will continue that trend
"Some developed regions, notably Europe and Japan, will continue to flirt with outright deflation. None of this suggests that inflation won’t eventually increase. But for now, conditions indicate inflation is likely to remain low, at least for the next year or so."
2. Interest rates will tick slightly higher
"Modestly stronger growth should lead to slightly higher interest rates—but we do not expect a sharp or rapid acceleration," Blackrock writes. "As the Federal Reserve begins to slow its extraordinary bond-buying program, we believe the 10-year treasury yield will modestly climb around 0.5% by the end of 2014."
3. Stocks had a huge 2013, and the good times will roll
"Stocks are no longer cheap, but are not in a bubble. there are some areas of the market that we believe are unjustifiably expensive (U.S. small caps are a chief example), but overall we think prices still can go higher," they write. "It is important to remember that stocks still represent a better value than cash and bonds. In short, we would remain overweight equities."Here's Blackrock's graphic. See their full report here.
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