Jean Boivin – Head of BlackRock Investment Institute together with Wei Li – Global Chief Investment strategist, Glenn Purves – Global Head of Macro and Vivek Paul – Global Head of Portfolio Research all forming part of the BlackRock Investment Institute share their insights on global economy, markets and geopolitics. Their views are theirs alone and are not intended to be construed as investment advice.
Key Points
AI top of mind : At our internal 2026 Forum last week, the AI buildout ran through the debate among our portfolio managers along with other key topics such as stablecoins.
Market backdrop : The Nasdaq Composite dropped 4% – its worst weekly drop since the April tariff announcement – led by a rout in technology shares. The S&P 500 lost 1.5%.
Week ahead : The longest-ever U.S. government shutdown will likely delay October CPI and retail sales data. A reopening could allow for the release of backlogged data.
The AI theme has powered stocks to new highs this year. Over the course of our 2026 Outlook Forum last week, the AI buildout – its scale and potential constraints, notably energy – ran through the discussion. Our fund managers also focused on AI’s key role in the strategic competition between the U.S. and China. The rise of stablecoins and the blurring of boundaries between public and private were also hot topics on how the future of finance mega force is quickly evolving.
The AI theme took center stage at our 2026 Outlook Forum last week. The AI buildout’s scale and its implications were a major part of the discussion over the Forum’s two days as estimates of capital spending over the next five years and beyond keep getting revised higher. Anchoring that debate was also a focus on the physical constraints facing the buildout: compute, materials and especially energy. Estimates of future power demand from AI data centers and chips are huge – and vary dramatically, highlighting the uncertainty. See the chart. Yet it’s unclear how that demand will be met, especially in the U.S. That made power grids and energy a key part of the debate about the AI outlook – and tied into the discussion about U.S.-China strategic competition given the ambitions of each on AI and how they can meet the required energy needs.
Our fund managers also commented on how useful mega forces – our framework launched a few years ago for the big structural changes driving economic transformation – are in a world where the macro environment is no longer your friend. We see the geopolitical fragmentation mega force at work in the ongoing strategic competition between the U.S. and China on AI and other fronts. The recent trade truce came in part because China imposed strict export controls on rare earths – essential in a wide variety of products from electric vehicles to AI infrastructure. After a sharp U.S. response, a one-year deal emerged. Our portfolio managers discussed over what timeframe the U.S. could wean itself off its dependency on China for rare earths, reflected in a deal with Australia aimed at delivering an $8.5 billion pipeline of critical minerals projects.
The fast-evolving future of finance
The fast-evolving future of finance mega force was also a hot topic of discussion, centering on two key themes. First: stablecoins – digital tokens pegged to a fiat currency, typically U.S. dollars, and backed by reserve assets – which have seen adoption skyrocket since 2020 and were given a regulatory framework in the U.S. with the passage of the Genius Act earlier this year. Stablecoins fuse the frictionless transfer of cryptocurrencies with the perceived stability of fiat currency. Our discussion focused on their disruptive potential via their possible adoption in emerging markets and the implications for demand of U.S. Treasuries as well their potential impact on banks. Second: the increased blurring of public and private markets with a particular focus on private credit – both the risks and opportunities. This is how capital markets themselves are transforming to finance this intersection of mega forces, in our view.
More broadly, the discussion also focused on how public credit markets have proved resilient for a while now, with credit spreads near historic lows even as growth has slowed. And elevated equity valuations were a particular focus in assessing how to think about what those valuations mean in this unique environment where mega cap tech companies are expanding the financing of the AI buildout, as seen with recent bond sales.
Our bottom line
The AI buildout was front and center at our 2026 Outlook Forum last week. Our fund managers also highlighted the importance of mega forces as an investment lens. Look for more out 2026 Outlook on Dec. 3.
Market backdrop
The Nasdaq slid 4%– its largest weekly drop since the April reciprocal tariff announcement – led by tech stocks tied to the AI theme. The S&P 500 fell 1%. Some of the drop was tied to the ADP jobs report showed a soft labor market. Even with the pullback in stocks, U.S. 10-year Treasury yields were flat around 4.10% – showing they are proving less effective as portfolio ballast at times. Gold prices steadied near $4,000 after a two-week retreat.
The ongoing U.S. government shutdown – the longest in history – will likely prevent the release of CPI and retail sales data, though if the government reopens, backlogged data will start to be released. We note that U.S. initial jobless claims, released last week, suggest that the current “no hiring, no firing stasis” persists. In China, we look for signs of softer October activity after a strong September and track the impact of a new central bank lending tool on credit growth.
Week Ahead
Nov. 10-17 : China total social financing
Nov. 11 : Japan total trade balance; UK unemployment
Nov. 13 : U.S. CPI (scheduled); UK GDP
Nov. 14 : U.S. retail sales (scheduled); China unemployment
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