BlackRock CEO Larry Fink said Thursday he is optimistic about financial markets as the economy seeks to recover from the coronavirus pandemic.
“I’m incredibly clumsy in the markets,” Fink said in an interview on CNBC’s “Squawk Box,” adding that he has long-term concerns about the implications of government deficits.
“Is it worrying me at the moment? No,” he added.
A number of factors are likely to drive higher markets soon, Fink said, even though the S&P 500 and Dow Jones Industrial Average are already close to record levels.
“I believe because of monetary stimulus, fiscal stimulus, the cash on the sidelines, the earnings, the markets are OK. Markets are going to stay stronger,” said the co-founder and chairman of the world’s largest asset manager.
There are short-term risks for the market, he warns. He said the advent of coronavirus variants that dramatically reduce the effectiveness of Covid vaccines is currently the biggest.
In contrast, Fink said the government deficit – which increased as the US Congress implemented trillions of dollars in pandemic stimulus to support the economy – posed a long-term threat.
“Deficits are not a big issue right now, and that’s what the markets are saying,” Fink argued. “It’s not a big problem, because the amount of money that is on the sidelines, the amount of capital that is being tried to work.”
However, Fink said the strength of the economy could change its outlook in the coming years.
‘If we do not have sustainable economic growth for the next ten years – and I say economic growth above 3%’, our deficits will matter, and it will raise interest rates at some point. he said.
Fink’s comments come Thursday after BlackRock reported first-quarter results that beat Wall Street expectations. The company’s assets under management also increased to just over $ 9 trillion, up 39% from $ 6.47 trillion in the same quarter a year ago.