Larry Fink doesn’t see a full recovery this year
- The stock market will not fully rebound in the second half of 2022, according to BlackRock CEO Larry Fink.
- Indeed, inflation will remain elevated for years amid supply chain issues, he told Bloomberg TV.
- He also said the Federal Reserve lacked the tools to properly fight inflation.
The stock market is unlikely to post a full rebound later this year as inflation remains elevated, BlackRock CEO Larry Fink said.
When asked on Thursday night on Bloomberg TV if markets can recoup second-half losses, he said “probably not — not totally.”
He noted that markets were recalibrating towards tighter monetary policy, with growth stocks bearing the bulk of the downside. Meanwhile, soaring energy and commodity stocks are masking some of the weakness in the indices, he added.
“So if you look at the
in the market and the gap between winners and losers, it’s pretty wide this year,” Fink said.
The COVID-related gains from the start of the pandemic are reversing, and now there is more recognition that high inflation is likely to persist “for several years,” he said.
He added that the
is ill-equipped to properly handle the highest inflation in 40 years, as most of the problems stem from policy frameworks and supply shocks.
“I think inflation is based on big macro policy changes that had good intentions, but the unintended consequences are more inflationary,” Fink said.
The comments come as the Fed tries to fight inflation with an aggressive tightening schedule. Fed Vice Chairman Lael Brainard told CNBC on Thursday that there was no pause in rate hikes anytime soon.
But BlackRock’s chief executive didn’t fully echo the sentiments of JPMorgan CEO Jamie Dimon, who warned of a “hurricane” on the horizon for the markets. Instead, Fink thinks, Wall Street faces a mix of scenarios and could end up maintaining the current status quo of poor performance until 2023.
“I could also see a scenario where we’re going to manage for the next two years at this level,” Fink said. “The one thing I will say with complete certainty is that we are going to live with more uncertainty.”