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Here’s what BlackRock’s Larry Fink says will be powering the stock market for years to come
Larry Fink, CEO of BlackRock, says high interest rates don’t slow the economy as they used to. - Getty Images
Some huge names early on Tuesday were speaking in Saudi Arabia, which given the bloodshed all over the globe, is no longer an embarrasing place for corporate titans to be seen seven years after the assassination of Jamal Khashoggi.
It was the annual Future Investment Initiative Institute, run by Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, with $925 billion in assets under management.
A slice of that $925 billion is parked in BlackRock, which earlier in the year established a Riyadh-based investment arm, so it was no surprise that BlackRock CEO Larry Fink was among the speakers.
Fink spoke of the amount of capital required to digitize and decarbonize. He pointed to Walmart as an example of a company using artificial intelligence to manage its retailing space.
“There’s $9 trillion sitting in money markets. In addition [to] the tremendous need to build out this infrastructure, it’s just going to be an investment blossoming, and I really do believe this is going to be powering the equity market for the coming years,” he said.
Granted, he said, price-to-earnings ratios are at “extreme” levels. But maybe not so extreme. “We’re seeing earnings catch up to the P/Es,” he said.
Another point Fink made was that the notion that higher interest rates will slow down the U.S. economy may not be true any longer. “I think the playbook of higher interest rates can slow down an economy has to be relooked upon because of the aging of our population,” Fink said, since older people save more money.
He also pointed out that since the overwhelmingly percentage of Americans that own homes have 30-year fixed-rate mortgages, the transmission of higher interest rates takes many more years.
Another big name, Citadel CEO Ken Griffin, said the reduction of uncertainty after the election will boost markets. “The reduction in uncertainty is almost always positive for asset prices, and we’re at that moment of peak uncertainty in a race that Trump is favored to win but it’s almost a coin toss, so I would say that post election we’ll generally see a risk-on environment as people come to adapt and adopt a new regime whether it’s a Harris regime or a Trump regime, this uncertainty will be behind us.”
U.S. stock index futures ES00 NQ00 were flat to lower early Tuesday as Treasury yields BX:TMUBMUSD10Y edged higher. Bitcoin BTCUSD was trading above $71,000.
Key asset performance
Last
5d
1m
YTD
1y
S&P 500
5823.52
-0.52%
1.06%
22.09%
39.76%
Nasdaq Composite
18,567.19
0.15%
2.08%
23.69%
45.18%
10-year Treasury
4.305
9.10
56.80
42.41
-62.89
Gold
2761.9
1.00%
3.97%
33.31%
37.70%
Oil
68.02
-2.52%
-0.40%
-4.64%
-17.64%
Data: MarketWatch. Treasury yields change expressed in basis points
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