1/19/2021 BlackRock’s CEO says a leading investor is flagging worries about valuations and inflation - MarketWatch

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BlackRock’s CEO says a leading investor is agging

worries about valuations and in ation
Last Updated: Jan. 19, 2021 at 1:20 p.m. ET
First Published: Jan. 19, 2021 at 5:35 a.m. ET

By Steve Goldstein

BlackRock Chair and Chief Executive Laurence D. Fink attends a session at the World Economic Forum annual meeting
in Davos, Switzerland on Jan. 23, 2020.
FABRICE COFFRINI/AGENCE FRANCE-PRESSE/GETTY IMAGES

BLK 0.81% SPX 0.86% COMP 1.38%

BlackRock Chief Executive Larry Fink on Tuesday said a leading investor agged to him concerns about
stock market valuations and the possibility of in ation breaking out.

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1/19/2021 BlackRock’s CEO says a leading investor is flagging worries about valuations and inflation - MarketWatch

Fink, speaking on a webinar presenting the fund manager’s 2021 outlook, said he had a conversation
with “one of the largest investors in Asia,” which he did not identify.

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“They’re worried about some of the equity valuations right now, but they’re also somewhat concerned
about the impact of rising in ation,” said Fink, who heads the world’s largest asset manager BLK, 0.81%
with $8.7 trillion in assets under management. “Should interest rates go higher before they jump back
into xed income?”

Federal Reserve Chair Jerome Powell last week said it is way too early to talk about making any changes
to the central bank’s easy monetary policy stance, including its $120 billion a month bond-buying
program. “There is plenty of slack in the labor market and it’s unlikely that wages pressures are going to
be reaching a level that would create and support higher in ation,” the Fed chair said.

Fink doesn’t sound so sure.

“Right now the bond market is starting to say we’re going to start seeing rising in ation, we’re going to
have a more robust economy in six to 12 months,” said Fink. “And if the forward curve of the bond market
is correct, one could expect in nine months or 12 months at the very least, the Federal Reserve and other
central banks starting to re-evaluate their monetary policy.”

As for valuations, Fink said “there are parts of the equity markets that are probably mispriced” with
“ridiculous” price-to-earnings ratios. “These are just giant momentum trades. We see this time and time
again.”

He did point out that over the last 12 months, there was a lot more money going into bonds, and as a
result, most investors are still underweighted equities.

U.S. stocks weren’t showing any bubble concerns in early action on Tuesday, with the S&P 500
SPX, 0.86% and tech-heavy Nasdaq Composite COMP, 1.38% each advancing.

As for his own business, Fink says increasing data analytics will allow for the creation of more
customized portfolios using sustainable or social attributes. “If you haven’t focused on what
sustainability means for your portfolio, I would urge you to start thinking about it rapidly, because this is
happening.”

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1/19/2021 BlackRock’s CEO says a leading investor is flagging worries about valuations and inflation - MarketWatch

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Steve Goldstein
Steven Goldstein is based in London and responsible for MarketWatch's coverage of nancial
markets in Europe, with a particular focus on global macro and commodities. Previously, he
was Washington bureau chief, directing MarketWatch's economic, political and regulatory
coverage. Follow Steve on Twitter: @MKTWgoldstein.

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