Experts predict that key US stock indices will continue to edge up, even though they are already hovering near record highs. One of these optimists is BlackRock CEO Larry Fink. The head of the world's largest investment management company sees a bright future for the US economy.
“I am incredibly bullish on the markets,” Fink said in an interview.
He believes that there are a few factors that could drag markets further up. Firstly, growth could be spurred by the US government's massive fiscal stimulus measures, in particular the recently adopted $1.9 trillion rescue package and the Fed’s ongoing quantitative easing program. Secondly, consumers from developed countries, including the United States, have made considerable savings thanks to support measures and direct relief payments amid the coronavirus crisis. This may encourage many Americans to enter the market rather than just to stuff money into bank accounts.
At the same time, there are long-term risks to equity markets. The BlackRock CEO warns that a surge in government deficit, which may result in higher taxes and rising borrowing costs, poses a serious threat to the US stock market. In addition, the possibility remains that vaccines could be ineffective in combating new virus strains. This may force investors to dump equities and switch to the bond market.
