Contrarian Market Predictions: BlackRock's Kate Moore Shares

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Today's guest is Kate Moore. Kate is a member of the Global Allocation investment team and Head of Thematic Strategy.
In this episode, Kate talks about the resilience of the U.S. economy. She talks about the concentration of market leadership, the upcoming election's potential effects on policy and markets, the potential for a momentum reversal, and the role of AI in investing.
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(2:36) Kate's view of the US economy
(5:34) Expectations for the Federal Reserve
(8:10) Equity market leadership and sector performance analysis
(13:25) Small cap insights
(22:23) Historical perspective on interest rates and inflation
(24:17) Global market cap trends and investment opportunities in Asia
(34:42) Addressing investment biases
(39:02) The role of AI in investing
(44:18) Book recommendations
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[@HectorYague]

22:00: "The prices for loans and mortgages are not that outrageous". While rates are indeed at their historical average, the cost of the avrg home compared to median salary is at historical max. That is what the average citizen complains about: their relative purchasing power has gone down the loo. We'd need a massive deflationary shock for relative prices (avrg prices vs avrg salary) to match pre-pandemic levels.

[@petereastwood7868]

I wonder if she realizes how often she contradicts herself. For example, if the economy overall is as great as she says it is, then why does she expect a Fed cut in September, and why are small cap earnings so poor, and small cap debt loads so onerous?

[@kpduffy]

BlackRock manages $10.6 trillion. They ARE the market. To maintain that size, you have to tell people what they want to hear, i.e. logical consistency is always a minor consideration.

[@justinbridgez]

at 36:00 ...welll, we just got it. we all felt coming

[@jays9870]

Great conversation; thanks so much for bringing her back on. The book should be great & serve as a reminder to investors that the impetus is never known, maybe something like Catalysts and Conversions ;-)

[@darrenritsick4219]

really rich lady from one of the evil empires of investing calling in from her mountain retreat home explains that inflation not really that bad

[@evanwilliams8495]

With regards to the comments on recency bias, I don't believe people are frustrated by the sole variable of higher interest rates. They are viewing a housing market where housing prices are up significantly since 2020 at the same time as mortgage rates have gone from 3% to 7-8%; two trends which in conjunction have driven housing affordability to historic lows for the approximately 50 years of good data on the housing market that we have available.

[@kpduffy]

Contrarian? By account of their size alone, firms like Blackrock ($10.6T AUM) and Vanguard by definition are mainstream. Any card-carrying contrarian these days is bearish on the economy, concentration, big tech, large cap growth, India and American exceptionalism (MSCI USA is 60% of the MSCI World Index), bullish on small cap value, emerging markets, China, fossil fuels, gold mining and active investing. Kate Moore, predictably, wanted no part of this. Meb rightly pointed out that the Equal Weighted S&P 500 was having its third worst year vs. the S&P 500 of the past 100 years. Moore basically said not to worry. Since this interview (2 weeks ago?), the RSP has trounced the SPX.

[@fredatlas4396]

What's RSP & SPX

[@kpduffy]

@@fredatlas4396 SPX = S&P 500, RSP = Equal-Wtd S&P 500