During the September 6, 2023 Walker Webcast, Blackrock’s Managing Director/Head of Thematic Strategy Kate Moore and Walker & Dunlop’s Chairman and CEO Willy Walker shared their insights on the economy. Moore expressed optimism compared to other experts.
Fast-forward nine months to June 5, 2024 when Moore returned as a guest on the webcast. Her earlier optimism was justified.
Moore recalled that during the September webcast there were concerns about a “rolling earnings recession” across various industries. However, data showed strong corporate earnings in Q1 of 2024. This positive trend has continued with market confidence in avoiding a recession and potential impacts on interest rates.
Consumer spending remains healthy according to Blackrock’s observations of household debt service payments as well as consumer debt ratios being below historical averages. However, inflationary pressures have caused some challenges for low-end consumers who are cutting back on discretionary spending such as travel and dining out.
On interest rates, Moore predicts two cuts by year end but acknowledges that consistent data trends will be necessary for Federal Reserve action beyond this summer period in order for rate cuts to make an impact into early next decade.
The Fed also faces limitations with its “blunt interest rate tool” which cannot address areas such insurance premiums or food prices impacted by weather events or geopolitical issues outside their control.
In January of this year Blackrock acquired Global Infrastructure Partners which led host Willy Walker inquire about AI derivative investments based around artificial intelligence technology advancements.
While there is much discussion around data centers’ growing need for capacity along with cooling equipment needs within these facilities; software solutions supporting cloud services are equally important components driving demand growth alongside AI technologies whose full scope remains unknown at present time despite expectations it will be transformational across industries.
Cybersecurity companies remain favored investment opportunities especially those offering interconnected solutions given increasing importance placed upon safeguarding proprietary company information from hacking threats.
Looking ahead to this year’s presidential election and congressional races, Moore anticipates equity markets will end higher regardless of outcome. She also notes that while the president can issue executive orders; real structural changes require support from Congress which has a larger impact on businesses and markets. Certainty is preferred by equity investors who may not agree with policies but appreciate operating within a known framework.
Replays of the June 5 Walker Webcast are available through various channels including YouTube, Spotify, and Apple Podcasts. Subscribe for future episodes featuring industry experts discussing current economic trends, investment opportunities, and other relevant topics in commercial real estate.
