Tags: Fink | stocks | CPI | Fed

BlackRock's Fink: Stocks Will Continue to Rise

By    |   Thursday, 19 June 2014 12:18 PM

Don't worry about talk that stocks are too expensive, says BlackRock CEO Larry Fink.

Stocks will continue rising, Fink tells CNBC.

U.S. equities are fairly priced, he notes, predicting that stocks will be higher 12 months from now. Corporate earnings must improve, he adds, in order for stocks to achieve large gains.

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Actions by the Federal Reserve and other central banks around the world have been key to rising stock markets, he says.

"Rates are going to remain low for many years. That's a great foundation to be in higher-yielding fixed-income and . . . equities."

The Fed Reserve announced plans to reduce its monthly bond purchases from $45 billion to $35 billion in July. As expected, it held short-term interest rates low, saying inflation currently poses no threat.

"I don't think there is that much inflation within the economy," Fink agrees, noting that the absence of inflation will allow the Fed to keep rates low longer.

However, others see signs of inflation. The consumer price index (CPI) rose 2.1 percent during the past 12 months, the largest 12-month increase since June 2012, the Labor Department announced Tuesday. Core CPI inflation, which excludes volatile energy and food prices, rose 2 percent.

The CPI increased 0.4 percent in May from April, while core prices rose 0.3 percent, the most since August 2011. Energy costs rose 0.9 percent in May, and food prices rose 0.5 percent.

Although the CPI is above the Fed's inflation target of 2 percent, the Commerce Department's price index for personal consumption expenditures (PCE), which Fed officials believe is a more reliable indicator, rose just 1.6 percent in April. The PCE, typically about half a percentage point below the CPI, ahs has also been gaining speed, The Wall Street Journal notes.

"We have an unemployment rate that's been falling faster than the Fed expected and now we've got an inflation rate that's been rising more than the Fed expected," John Ryding, chief economist at RDQ Economics, tells The Journal.

"It raises some interesting questions for those at the Fed who've argued that there's so much slack in the labor market. It really brings into question how much slack there is."

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StreetTalk
Don't worry about talk that stocks are too expensive, says BlackRock CEO Larry Fink.
Fink, stocks, CPI, Fed
385
2014-18-19
Thursday, 19 June 2014 12:18 PM
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