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Larry Fink: Market Accepting Virus Despite 'Real Tragedies' for Small Businesses

Larry Fink: Market Accepting Virus Despite 'Real Tragedies' for Small Businesses
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By    |   Friday, 26 June 2020 09:16 AM

BlackRock CEO Larry Fink believes the world is becoming much more accepting of rising coronavirus cases.

And given the relative recovery of financial markets compared to their dramatic plunge in March, the billionaire fund manager thinks markets may not be reflecting the extent of the current crisis.

“I think psychologically the world has changed in the last few months. The world has changed from a compassionate world to more of a pragmatic world,” Fink, who heads the world’s largest asset management fund overseeing more than $7 trillion in assets, told CNBC.

“Right now we are seeing rising infection rates, but ... it’s very apparent to me that the world is accepting higher diseases, higher infection rates … and markets are still pretty stable,” he said.

“So we are trying to navigate this and we’ve decided compassionate societies are actually too expensive, and I think every democracy is trying to navigate this ‘compassionate versus pragmatic’ (dilemma),” Fink said.

“And we’ll see in the next two to five weeks: is pragmatism right or wrong?”

 “I think the market is probably a little ahead of itself at this time, because I still believe we are witnessing real tragedies in the small and medium businesses,” Fink said. “And if we have to go back to a more compassionate society, if we have to do more lockdowns, then I believe it’s going to require larger fiscal stimulus, which has all its intended problems in the future.”

 “What’s remarkable is there are more human beings being affected by the disease today than on March 21 when markets were 40% lower,” Fink said. “That just tells you the psychological transformation — people do want to go out!”

Meanwhile, the resilience of a months-long rebound in U.S. stocks is being put to the test as a long-feared resurgence in coronavirus infections weighs on hopes of a sharp economic recovery in the United States, Reuters said.

Investors have for weeks flagged a potential rise in coronavirus infections as a possible stumbling block to the rally in U.S. stocks. That threat increasingly appears to be materializing, with California, Texas and other U.S. states notching big jumps in coronavirus infections this week, even as other areas like New York appear to have curbed their infection rates.

For now, many market participants believe that hard-hit U.S. states are unlikely to reinstate the economically devastating lockdown measures implemented earlier this year. Still, the increase in cases threatens to slow economic activity and undercut the case for a “V-shaped" recovery that has helped extend the massive spring rally in stocks. The S&P 500 is up 36% from its late-March low while the Nasdaq made its most recent record high on Tuesday.

"All this week, we've been hearing how it’s going to get worse. The facts seem to be supporting that narrative," said Brian Battle, director of trading at Performance Trust Capital Partners, referring to the virus.

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BlackRock CEO Larry Fink believes the world is becoming much more accepting of rising coronavirus cases.
larry fink, market, virus, small businesses
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2020-16-26
Friday, 26 June 2020 09:16 AM
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