In an interview with the WSJ this morning Larry Fink, the CEO of BlackRock, is sounding quite bullish. Attached are his thoughts from the interview, courtesy of the WSJ:
On the stock market:
“A record amount of cash is being put to work,” said Fink. “We’ve seen huge flows, even into hedge funds. Money is migrating to different categories.”I think you could buy equities today and feel somewhat safe.”
On his firm’s issues with commercial real estate:
“We probably had an overzealous view of where commercial real estate was going to go.”
On the U.S. dollar:
“I don’t think it’s going to fall that far.”
The big issue for 2010:“Where will the capital come to finance America next year? I haven’t seen the issue debated, but one of the biggest issues in America right now is the loss of the Fed’s purchasing power [of mortgages] in April.”
On private capital staying out of the market:
“I hope the private sector will come in. Loan modification is frightening away lenders. They are reluctant to buy mortgage securities because of uncertainty around first lien. Investors are worried about contract law.”
Is there another bubble forming as the Fed continues to buy up mortgage securities, while propping up other aspects of the economy?
“Bubbles don’t occur when you’re talking about…There are too many articles about it…In my mind it would mean we’re going to have a more significant [economic] decline. I don’t see that.”
Interesting comments, but pieces of his macro outlook appear to be at odds. He is concerned about America’s financing in 2010 and the private sector, but remains a stock market bull? Meanwhile, he says the dollar doesn’t have too far to decline. Dollar bull, equity bull, worried about funding, concerned about the private sector, sees markets awash in liquidity, but doesn’t see the chance of any bubbles….Hmm. He is either hedging himself or extremely confused.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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