BlackRock: "Super Week" results are out, how should investments align with the trend?

According to the Zhitong Finance APP, BlackRock's think tank stated that it currently maintains an overweight view on U.S. stocks, favoring opportunities in the U.S. market over the European market. At the same time, it holds a neutral view on U.S. long-term government bonds, preferring medium-term bonds and high-quality credit bonds. However, as investors' risk premiums for holding bonds increase, it is expected that bond yields will further rise over time. After Trump's victory, the U.S. may implement tax cuts, deregulation, and tough trade policies. For the Republican Party, gaining control of the House of Representatives will be crucial. BlackRock will closely monitor developments in U.S. fiscal, trade, immigration, energy, and regulatory policies, and anticipates significant changes in the foreign policy of the Trump administration. In the long term, an expanding budget deficit may push up U.S. inflation and long-term government bond yields. In the short term, BlackRock believes that the U.S. stock market will continue to be supported by robust economic and corporate earnings growth, a clearer political environment, and interest rate cuts by the Federal Reserve. In the long term, market performance will largely depend on the actual implementation of Trump's policies. BlackRock believes that the energy, financial, and technology sectors may benefit from deregulation, and it expects that restrictive factors, including labor shortages due to an aging population, will keep inflation at pre-pandemic levels. Persistently high inflation and policy interest rates may ultimately affect market risk sentiment. Impact on the Chinese Market Macroeconomic Aspects: The decision by the Standing Committee of the National People's Congress on November 8 marks the first time since the policy adjustment began in September that quantifiable details of fiscal policy have been implemented on a large scale. This debt swap policy has three main effects: (1) it standardizes local government financing behavior; (2) it controls systemic risk; (3) it will have a substantial impact on economic growth. It is noteworthy that the policy details disclosed in this decision are a further announcement of policies already mentioned and approved at the Ministry of Finance's press conference in October, rather than a comprehensive fiscal policy. The Minister of Finance has clearly stated that multiple fiscal measures will be rolled out in the future. BlackRock believes that in the short term, the level of policy support may meet market expectations. However, in the long term, the sustainability of policy support is expected to exceed general market expectations. Meanwhile, the PMI data from October has already shown signs of economic recovery, with upstream prices also rising, indicating that the effects of the policies are beginning to show. Equity Market Aspects: Looking back at the market in October, market activity significantly increased after the policy shift. Although the third-quarter performance reports of listed companies caused some disturbances in the market, they did not change the optimistic expectations. High-end manufacturing, technology, the accelerated promotion of the 14th Five-Year Plan projects, and the noticeable recovery in trading volume in non-bank financials have all received positive attention from the market. Looking ahead to November, with overseas elections concluded and the Standing Committee of the National People's Congress approving a package of debt reduction policies, the trend of steady economic improvement has been solidified. The outlook is positive for: (1) assets benefiting from debt reduction; (2) high-end manufacturing that is self-controllable; (3) sub-sectors expected to accelerate investment in the restart of the 14th Five-Year Plan projects; (4) stable growth sectors that are likely to see valuation switches In addition, BlackRock believes that the outcome of the U.S. election is expected to have a profound impact on the future trends of global asset classes. The Republican Party's significant victory in this election means that the constraints on Trump's policy agenda during this presidential term will be reduced. In the near future, the core member selections of the Trump administration, Trump's main policy directions, and the pace of implementation—especially regarding domestic tax cuts, increased tariffs abroad, and immigration restrictions—are likely to have a far-reaching impact on the global economy. Regarding domestic policies in China, the market generally believes that the decision-making body may counter the potential shocks from U.S. isolationist policies through stronger economic stabilization measures and a higher degree of openness. In this new geopolitical landscape, expectations for the global equity market trends, inflation levels, U.S. dollar exchange rates, crude oil prices, gold prices, and cryptocurrencies are all expected to change. For a considerable time after Trump's inauguration, BlackRock anticipates that the issue of trade protectionism will continue to ferment, and concerns over tariff risks will trouble companies that export, especially those with a relatively high proportion of exports to the U.S. Stimulating domestic demand and national security may become more promising investment directions. Nevertheless, considering that the economic fundamentals are likely to be in a phase of strong expectations and weak realities during the next 1-2 quarters, investment opportunities related to domestic demand may face a tug-of-war between expectations and realities, leading to market volatility and generating structural investment opportunities. In this process, the trajectory of economic fundamentals will ultimately determine whether this bull market is a liquidity-driven bull market or a fundamentals-driven bull market