BlackRock CEO Larry Fink tells a 'tale of two parts of the economy'

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While recognizing many investors tend to live and work in the short term, BlackRock CEO Larry Fink chose a long-term perspective to explain the economy’s “tale of two parts.”

“If you look at the credit markets today, you do not see companies being stretched too much. Now, in some of the private credit areas, you’re seeing more and more small companies, and I think this is a tale of two parts of the economy,” the leader of the world’s largest money management firm told FOX Business’ Liz Claman on Wednesday, adding that “the big, large-cap companies that are part of the S&P are doing quite well overall.”

U.S. stocks — including the S&P 500 and Dow Jones Industrial Average — rose to fresh record highs one month ago, while the tech-heavy Nasdaq flirted with its first record close since November 2021.

More recently, the S&P 500 has spiked due to the recent IPO success of social platform Reddit (RDDT) and former President Donald Trump’s media and technology group (DJT). But according to Fink, this doesn’t look like bubble territory.

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“I don’t think it’s a bubble. I think we’re seeing more validation with stock prices, we’re seeing earnings momentum,” the CEO said. “That’s starting to tell you there’s more breadth in the marketplace. Historically, we looked at so much of the gains in seven stocks. But actually, the breadth of the market is expanding. To me, that gives me a good sign.”

“When I talk to CEOs and businesses,” he continued, “probably 80% of the companies that I’m talking to are seeing upward momentum.”

However, turning to predictions around the Federal Reserve rate trajectory, Fink claimed “probably two more” rate hikes are coming amid economic uncertainty and that it won’t have any deleterious impact on markets.

“Most of the viewers who own homes, they own homes with a 30-year mortgage, they’re not impacted by higher rates. And so the transmission of high rates in America are much more elongated because the average homeowner is not impacted. In most places in the world, homeownership is [an] adjustable mortgage of some sort, and it resets all the time,” Fink explained.

“It brings down the volatility dramatically,” he added. “As I said now for over two years, inflation is going to be stickier. I still believe inflation could be stickier. But I do believe the Federal Reserve will have room to test the economy, to test the markets.”

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FOX Business’ Suzanne O’Halloran contributed to this report.

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