"Monetary Policy and the "Great Rotation" Debate, Demystifying Capital Reallocation"
Original Report by Rick Rieder of BlackRock Investment Institute
- While still mired in recession, both the Eurozone and Japan are showing signs of economic stabilization and market performance improvement; however, we believe these short-term gains mask longer-term troubles that cannot be ignored.
- The US has also exhibited shorter-term economic gains, despite the headwinds faced by consumers in the form of higher taxes and policy uncertainty, but improvement in structurally challenged labor markets should continue to be slow.
- The weak labor market recovery holds meaningful implications for monetary policy in the years ahead, which in turn has helped fuel debates over secular capital reallocation trends, but we view the seeming consensus on this issue as misguided.