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Benedicte Gravrand, Opalesque Geneva:

According to BlackRock’s Annual Investment Outlook for 2017, we should expect US-led reflation (rising nominal growth, wages and inflation) to accelerate, and fiscal expansion to gradually replace monetary policy as an economic growth and market driver around the world.

Here are the key findings of the outlook:

• Reflation implications: BlackRock sees reflation taking root and believe global bond yields have bottomed. As a result, the firm prefers equities over fixed income and credit over government bonds. It expects higher yields and steeper curves, and favours short- over long-duration bonds and value shares over bond-like equities.
• Low returns ahead: structural factors such as ageing societies and weak productivity growth have led to a drop in economic growth potential. These factors are limiting how high real yields. There will be rewards for taking risk in equities, emerging market (EM) assets and alternatives in private markets.
• Dispersion: the firm believes the gap between equity winners and losers is widening. A more unstable relationship between bonds and equities signals a regime change that challenges traditional diversification.
• Risks: political and policy risks abound. There is uncertainty about US President-elect Donald Trump’s agenda, its implementation and the timing. French and German elections will test Europe's cohesion amid a forest fire of ......................

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