Three BlackRock scenarios for 2025 – bitcoin, gold and biotech

BlackRock considered 5 scenarios for 2024. Could the company, which owns the lion's share of the stock market, be satisfied with one of the three scenarios, including a fall in index quotations? The answer is obvious.

Traditionally, Democrats come to power when things are not good in the US, because the basis of the Democratic Party is the idea of social justice, i.e. helping the poor at the expense of the rich; taxes and regulation, which is not very favourable for business. They are elected when the markets are already declining: on the graph, the Democrats win - blue vertical lines, the Republicans win - red lines (they are elected when everything is not bad in principle, and social support is not the main idea for the next years).

So, for BlackRock, the most favourable scenario came true, when stocks were growing in 2024, while bond yields started to decline, but the bonds with the highest yields are NOW in the portfolios.

Another dominant theme in Outlook 2024 is artificial intelligence. Inside the description of the conclusions on this topic, one can clearly discern a bet on exactly the scenario that has been realised in 2024. 

‘AI will evolve, and that's key. AI relies on massive computing power, which is why some of the big tech firms are racing to invest in data centres to lock in this capability.’

At BlackRock, scenarios never diverge from real-world action. In September 2024, news broke that BlackRock, together with Microsoft and an Abu Dhabi-based investment firm, would launch a $30bn fund of equity investments, with an additional $70bn through debt financing. It will be one of the largest investment vehicles on Wall Street of all time (the FT writes about it). The new fund will invest in the construction of data centres and energy projects that will have to meet the needs for the production of products with artificial intelligence.

As of 31 March 2024, BlackRock has invested $225 billion in US energy companies, including pipelines and power generation facilities. Additionally, in October 2024, it was reported that BlackRock completed a $500 million acquisition of a stake in Recurrent Energy. The company received a 20 per cent stake in Recurrent Energy, with Canadian Solar retaining a controlling interest.

Another phrase concerning the rates clearly corresponds to the final development of events, although initially the market was much more positive and expected a more dynamic rate cut by the regulator: ‘The current budget is increasing sustained inflationary pressures and our view is that the Federal Reserve will keep rates higher and longer’.

I think there are enough arguments to assess the effectiveness of BlackRock's forecasts.