BlackRock Chairman and CEO Larry Fink told CNBC on Wednesday his greatest fear is an aggressive Federal Reserve tightening that could put the bond market out of wack and hurt stocks.
Fink also said the global economic recovery is motivating investors to put more money to work.
He appeared on CNBC’s “Squawk Box” Wednesday shortly after the world’s largest money manager reported better-than-expectedquarterly earnings and revenue. BlackRock’s total assets under management for the third-quarter hit nearly $6 trillion.
At a time when the stock market seems to just hit record after record high, investors are hoping for a strong earnings season and tax reform out of Washington to keep the rally going and to mute any drag from an expected Federal Reserve interest rate hike coming in December, the third one this year.
The Dow Jones industrial average posted another record close on Tuesday, while the S&P 500 and the Nasdaq touched all-time intraday highs during the session.
On the promise of business-friendly policies from President Donald Trump, such as a corporate tax cut, the Dow and Nasdaq — based on Tuesday’s close — are up 25.4 percent and 26.8 percent, respectively, since the November election. The S&P gained 19.2 percent over the same period.
Earlier this month, Fink said in a Bloomberg interview that a corporate rate as high as 27 percent would provide U.S. businesses with enough tax relief while avoiding an increase in the federal deficit. The current federal tax rate for American corporations is 35 percent.
The Republican tax plan unveiled last month calls for cutting the corporate rate to 20 percent from the current level of 35 percent, which many multinationals already avoid paying by taking advantage of abundant tax loopholes. The GOP proposal also aims to cut personal income taxes.
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— Reuters contributed to this report.
