BlackRock Chief Executive Larry Fink said President Donald Trump’s efforts to unlock capital to the private sector could have unintended consequences that hurt the stock market.
“I’m cautiously optimistic,” Fink told CNBC. “That being said, I think it could be very bad.”scream box” from world economic forum In Davos, Switzerland. “I believe if it can unlock all this private capital, we’re going to have tremendous growth. And at the same time, some of it is going to create new inflationary pressures. I do believe that’s probably a risk that’s not factored in and I think the bond market will Tell us the way forward.
The 72-year-old chief executive of the world’s largest asset manager said much depends on how quickly the private sector commits capital. Trump has touted private sector commitments to invest huge sums of money in the United States, the latest example being the Stargate joint venture, in which SoftbankOpenAI and Oracle $100 billion will be invested immediately in the country’s artificial intelligence infrastructure. The plan calls for an eventual total investment of $500 billion in the project.
“We all have to be aware of some very significant inflationary pressures,” Fink said. “Depending on how things unfold, our interest rates are going to rise significantly because of inflation. That’s going to have a very negative impact on the stock market.”
Fink said that if inflation resumes accelerating in a meaningful way, the 10-year Treasury yield could retest the 5% level or even reach 5.5%. Fink said it would “shock” the stock market if that happened.
The benchmark 10-year Treasury yield last traded at 4.62%.
