BlackRock Inc. (BLK) Chief Executive Officer Laurence D. Fink, who last year said he would invest 100 percent of his personal wealth in equities, said stock markets may decline as a result of the political debate over the debt ceiling.
“I’m much more worried about the U.S.,” Fink, who as head of the world’s biggest money manager oversees $4.1 trillion in assets, said today on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle. “We are going to see a lower equity market and a longer period of lower rates” if corporate earnings start to deteriorate in the fourth quarter following the stalemate in Washington, he said.
Fink said last week the U.S. would have a “very poor” fourth quarter even if lawmakers reached a compromise and extended the nation’s borrowing authority because retail sales will suffer and uncertainty has led executives to avoid investing in research, technology and development. Standard & Poor’s Ratings Services said yesterday the impasse had shaved at least 0.6 percent off of fourth-quarter growth, taking $24 billion out of the economy. The ratings company forecast 2 percent annualized growth in the fourth quarter, down from the 3 percent seen last month.
Fink has said in the past he’s bullish on the U.S. over the longer term, citing a strong banking system, an improving housing market and the nation’s large supply of natural gas. In January, he said he had lowered his expectations for the stock market in the first quarter after being disappointed by the bill U.S. lawmakers passed to avert spending cuts and tax increases.
The government shutdown and debt-ceiling debate prompted Fitch Ratings to put the U.S. on watch for a possible credit downgrade on Oct. 15. The debt-ceiling debate has dissuaded foreign investors from putting money in U.S. debt, Fink said during today’s interview.
“Many of our foreign investors have had conversations with me and many at BlackRock about how should they think about investing in U.S. debt over the next two years,” Fink said.
BlackRock, co-founded in 1988 by Fink, 60, was largely a fixed-income manager until the mid-2000s. The firm diversified beyond bonds through acquisitions including that of State Street Research & Management Co. and Merrill Lynch & Co.’s investment unit to add stocks and other assets. BlackRock’s 2009 purchase of Barclays Plc’s investment division gave it iShares, the world’s biggest provider of exchange-traded funds.
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