Blackrock CEO Larry Fink said in an interview on Friday that he does not foresee a “great recession” in the United States. However, he believes that “inflation is going to be stickier for longer.” In contrast to the US central bank’s 2% target, Fink predicts that “we’re going to have a floor 4 on inflation.”
Blackrock clients reduce risk in portfolios as inflation concerns persist
Larry Fink, Chairman and CEO of Blackrock (NYSE: BLACK), the asset manager with more than $9 trillion in assets under management (AUM), predicts that inflation in the US will persist for a considerable period of time. fink was interviewed on Friday by the hosts of CNBC’s “Squawk on the Street” and said he does not anticipate a major economic downturn in the country.
“I don’t expect a major recession in (the United States),” Fink told the broadcast hosts. He also stressed that the significant fiscal stimulus injected into the country must be “compensated.”
While acknowledging that some sectors of the economy are “weakening,” Fink asserted that “other sectors, because of these tremendous fiscal stimuli, will make up for some of that.” The Blackrock executive also referred to inflation, stressing that he believes that “it’s going to be harder for longer. In other words, I think we are going to have a floor of 4 in inflation”.
Regarding a possible recession in 2023, he stated that he is “not sure that we are going to have a recession” and suggested that it could happen in 2024. Fink also voiced baffled at the reaction to the fall of Silvergate Bank, Silicon Valley Bank and Signature Bank.
Finck said:
This is not a systemic problem, this is not a problem that is going to have an impact. As we saw today, our big banks had great quarters — with really good performance. So I think this is just one example of, you know, when the sea or the tide goes out, some people are going to stay there.
In mid-March, Fink shared his views on the banking industry following the collapse of three banks, saying that “we will probably see stricter capital standards for banks.” Fink’s latest assessment, shared with CNBC hosts on Friday, matches recent comments by Blackrock’s Global Fixed Income Investment Director, Rick Rieder.
Rieder anticipates the US Federal Reserve will raise the benchmark rate to 6% this year and keep it at that level for an extended period to ease inflationary pressures. During his interview, Fink also told CNBC that Blackrock’s clients are reducing the risk in their portfolios.
“We are seeing more and more clients who want to reduce risk while maintaining a more holistic and resilient portfolio by establishing a stronger foundation of bonds and equities,” Fink explained.
In addition, the Blackrock CEO touted the company’s success over the past five years, boasting of “growing $1.8 billion in net revenue.” Despite “all this pessimism,” he stressed that Blackrock grew up “more in this first quarter than in the first quarter of 22”.
What do you think Larry Fink’s predictions mean for the future of the US economy? Do you agree or disagree with the Blackrock CEO’s assessment of the inflationary environment and the probability of no recession in 2023? Share your thoughts from him in the comments below.
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