Tags: BlackRock | Fink | Stocks | Setbacks | Trump | Tax | Reform

BlackRock's Fink: Stocks to Hit 'Setbacks' If Trump Tax Reform Fails


By    |   Thursday, 06 April 2017 08:32 AM

BlackRock Chairman and CEO Larry Fink warns that the stock market will hit some "setbacks" if President Donald Trump and Republican lawmakers fail to deliver on the campaign vows of sweeping tax reform and "true deregulation." 

Meanwhile, many other business leaders are "stepping back" until they see "real economic growth," Fink told CNBC.

"If you believe it will be longer for these [policies] to transpire — and we have an economy that's slowing because of uncertainty — then I would say the U.S. equity markets are probably higher than they should be," Fink said.

European stocks are a better value right now than U.S. stocks, said Fink, a member of the president's Strategy and Policy Forum, an advisory group of CEOs chaired by Blackstone's Steve Schwarzman.

Fink sees only one or two more interest rate hikes this year instead "three or four."

"There are weaknesses in this economy that are surprising people," he said. He predicts first-quarter economic growth below 1.5 percent.

"If you talk to the people in the hotel industry, there is a weakness right now" due to fewer tourists in the United States, Fink said, blaming the president's immigration policy for making people from some parts of the world feel unwelcome.

"There's [also] a drop of 20 to 40 percent of foreign applications to our universities," said Fink, chairman and CEO of BlackRock, the world's biggest money manager with $5.1 trillion in assets under management.

Gridlock in Congress — most recently evident in the recent failure of House Republicans to get enough support for their Obamacare replacement bill — is also contributing to uncertainty, Fink said.

To be sure, U.S. stocks rallied after the November presidential election, with the S&P 500 posting a string of record highs up to just recently, on bets that the pro-growth Trump agenda would be quickly pushed by a Republican Party with majorities in both chambers of Congress.

Investors, however, have been dialing back hopes that Trump will swiftly enact his agenda, Reuters reported.

The S&P 500, in its second longest bull market ever, has risen close to 10 percent since the Nov. 8 election on optimism about Trump's pro-growth agenda. With valuations at their highest in over a decade, investors have been expecting a pullback even if its catalysts haven't been clear, Reuters reported.

(Newsmax wire services contributed to this report).

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The stock market would have some "setbacks" if President Donald Trump and the Republicans on Capitol Hill are unable to deliver on the promises of broad tax reform and "true deregulation," BlackRock Chairman and CEO Larry Fink told CNBC.
BlackRock, Fink, Stocks, Setbacks, Trump, Tax, Reform
Thursday, 06 April 2017 08:32 AM
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