BlackRock weekly investment commentary O c to b e r 2 8 , 2 0 1 3








“Sarcasm helps keep you from telling people what you really think of them. “




Slow Growth and Low Rates Drive Markets Higher

The U.S. still appears to be growing at a sluggish rate of around 2%, with little evidence that we’ll be seeing a pickup any time soon. For stocks to continue to make gains, we likely need to see a continuation of the not-too-hot, not-too-cold “Goldilocks” economy that provides for modest growth, high profit margins, and an accommodative Fed.

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Markets Breathe a Sigh of Relief

With the government shutdown ended and the threat of debt default avoided (for

now, at least), markets were able to digest corporate earnings releases and some

delayed economic reports. While the tone of the data was less than upbeat, investors

have been adopting a relatively optimistic stance and appear to be focusing on the

likelihood that slow economic growth will mean the Federal Reserve will keep

monetary policy accommodative for longer than previously expected.

This backdrop helped stocks rise for yet another week. For the week, the Dow Jones

Industrial Average advanced 1.1% to 15,570, the S&P 500 Index rose 0.9% to 1,759

and the Nasdaq Composite climbed 0.7% to 3,943. In fixed income markets, Treasury

yields continued to fall (as prices correspondingly rose), with the yield on the

10-year Treasury declining from 2.59% to 2.51%.

U.S. Economy Remains Stuck in Second Gear

With government agencies back to work, a bottleneck of economic data was released,

providing investors with some important clues as to how the U.S. economy will fare

as we head into the final months of 2013. The summary conclusion that can be

drawn from the data is that the U.S. still appears to be growing at a sluggish rate of

around 2%, with little evidence that we’ll be seeing a pickup any time soon.

The most important data set that was released was the delayed and long-awaited

September jobs report. The headline numbers were a bit disappointing, as the U.S.

created only 148,000 net new jobs, well below expectations and below the average

of around 180,000 from the first nine months of the year. The other data included

in the report also failed to show much in the way of improvement. Hourly earnings

are still growing at around 2%, well below the long-term average, while labor force

participation remains at 63.2%, a multi-decade low. The lone bright spot was the

unemployment rate, which fell to 7.2%, its lowest level since late 2008.

Other measures of economic activity painted a similar picture of anemic growth.

While durable goods orders for September saw a dramatic increase of nearly 4%, it

was skewed by a sharp rise in aircraft orders. In many sectors, capital goods

orders have been quite weak—a trend confirmed by last week’s announcement by

Caterpillar, the largest manufacturer of construction and mining equipment, that it

was cutting its 2013 sales forecasts.

While the U.S. economy is not currently in danger of slipping back into recession,

neither is it accelerating. The government shutdown and budget battles certainly

did not help matters. The drama undermined business confidence, which in turn

dampens hiring, and we also saw consumer confidence drop to a nine-month low.

Fed Accommodation Likely to Persist

Interestingly, the trend of weak economic data does not appear to be bothering

investors, who are continuing to bid stock prices higher. Flows into stock funds

jumped last week, with significant inflows moving into U.S. funds.

As we alluded to earlier, much of this optimism can be attributed to the fact that

investors are expecting the Federal Reserve to hold off on tightening monetary

policy. Specifically, investors and economists are pushing back expectations for

when the Fed will begin to taper (i.e., when the central bank will begin to reduce

its asset purchases), as well as the likely date when the Fed will begin to increase

short-term rates. This has also had the effect of reducing longer-term expectations

for interest rates. As recently as a few months ago, many were expecting rates to

rise dramatically late this year and early next year, but those expectations have

since been softened.

Stocks Can See Further Gains in a Slow Growth/Low Rates World

For investors, there are a couple of takeaways from all of this. The first is that

interest rates are likely to remain range-bound for the coming months (or at least

until economic data surprises to the upside). The second is that while a more

benign rates environment should be good news for stocks, equity markets will

have to manage a delicate balancing act. If the economy stalls further, corporate

earnings estimates will likely be reduced, which would hurt stocks. In contrast,

however, an acceleration in economic growth would reignite concerns over the

potential for interest rate increases.

Put another way, for stocks to continue to make gains, we likely need to see a

continuation of the not-too-hot, not-too-cold “Goldilocks” economy that provides

for modest growth, high profit margins, and an accommodative Fed.


This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of October 28, 2013, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves

additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.




BlackRock – weekley investment commentary October 28- 2013






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I am a successful Commercial Investment Real Estate Broker in Arizona now for 15 years and I worked with banks and their commercial REO properties for 3 years. I am also a commercial landspecialist in Phoenix and a Landspecialist in Arizona.





we are at on the a rise of the cycle in Commercial Real Estate.  so there is only one way and it’s called we are going up and now is the time for you to expand, upgrade or invest in Commercial Properties in Phoenix.  The prices on deals I may get you will not be around forever.



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