Larry Fink Turns Bearish: Sees Slowing Economy, “Dark Shadows” In The Market
by Tyler Durden
ZeroHedge.com
Feb 8, 2017
Speaking at the Yahoo! Finance All Markets Summit on Wednesday, an unexpectedly bearish BlackRock CEO Larry Fink joined the likes of Bill Gross, Jeffrey Gundlach and Ray Dalio who have similarly turned downbeat in recent weeks, and cautioned that the U.S. economy is in the midst of a slowdown and financial markets could see a significant setback, for the same reason the Trumpflation trade has fizzled out in recent months: uncertainty over global trade and the Trump administration’s plan to cut taxes.
“I see a lot of dark shadows,” Fink said at the Yahoo event quoted by Reuters. “The markets are probably ahead of themselves.”
Fink should know: Blackrock is the world’s biggest asset manager, with control of over $5.1 trillion in assets; he said investors are caught up in the potential for a restructuring of U.S. tax policy, which may not take place until 2018, something we warned about last December.
In the meantime, “disruptions to trade are a possibility.” Trump has called for tax cuts as well as a wide set of changes to trade policy, including a renegotiation of the North American Free Trade Agreement with Canada and Mexico.
He added that “we’re living in a bipolar world right now,” and as a result speculated that the benchmark 10-year Treasury yield could fall below 2% or, conversely, rise above 4% ; however he sees a greater probability of rates falling as deflationary risks remain due to technological advances and rising protectionism. Still, he does not see the Fed reversing course course, at least not yet, and expects the Federal Reserve to raise rates in June and possibly again once more in the year.
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