BlackRock CEO Larry Fink says President Donald Trump’s efforts to release capital into the private sector could have unintended consequences that negatively impact stock markets. Ta.
“I’m cautiously optimistic,” Fink said on CNBC’s “Squawk Box” at the World Economic Forum in Davos, Switzerland. There is,” he said. “If this frees up all that private capital, I believe we will have significant growth. At the same time, some of it will create new inflationary pressures. I believe it’s an unpriced risk.”I think the bond market will tell us where we’re going. ”
The 72-year-old head of the world’s largest asset manager said much will depend on how quickly the private sector can mobilize capital. President Trump has already touted promises of huge private sector spending to the United States, the latest example being the Stargate joint venture, in which SoftBank, OpenAI, and Oracle will immediately commit $100 billion to domestic artificial intelligence infrastructure. I plan to invest. The plan is to eventually invest a total of $500 billion in the project.
“There are tremendous inflationary pressures that we all have to recognize,” Fink said. “And depending on how this plays out, there is a scenario where interest rates rise further due to inflation. And that would have a very negative impact on the stock market.”
If inflation picks up again in a meaningful way, the 10-year Treasury yield could test the 5% level again, or even reach 5.5%, Fink said. That would send a “shock” to the stock market, Fink said.
The yield on the benchmark 10-year Treasury note last traded at 4.62%.
