BlackRock CEO Larry Fink said on Thursday that he is optimistic about the financial markets as the economy tries to recover from the coronavirus pandemic.
“I am incredibly optimistic about the markets,” Fink said in an interview on CNBC’s “Squawk Box.” He noted that many factors are likely to stimulate markets in the near term, even as the S&P 500 and Dow Jones Industrial Average are swaying near record levels.
“I believe that because of monetary stimulus, fiscal stimulus, sideline cash, earnings, markets are okay. Markets will remain stronger,” said the co-founder and chairman of the world’s largest asset manager.
However, he cautioned that there are short-term risks to the market. Fink said the advent of coronavirus variants drastically reducing the effectiveness of Covid vaccines is the biggest.
In the long run, Fink said the government deficit – which has grown as the U.S. Congress passed trillions of dollars in pandemic stimulus measures to support the economy – poses a bigger threat.
“Shortages are not a big problem at the moment, and that’s what the markets are saying,” said Fink. “They’re not a big deal because the amount of money that’s on the sidelines, the amount of capital that’s trying to be put to work.”
However, Fink said the strength of the economy could change his outlook in the coming years.
“If we don’t have sustained economic growth over the next 10 years – and I say economic growth of more than 3% – then our deficits will matter, and they will increase interest rates at some point,” he said.
Fink’s comments came after BlackRock reported first-quarter results that exceeded Wall Street’s 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.