Christopher Goodney/Bloomberg News
Laurence Fink, CEO of BlackRock Inc., said the lackluster growth of the U.S. economy and uncertainty around the Trump administration’s ability to quickly pass key reforms pose a risk to markets.
“There are some warning signs that are getting darker,” said Fink, in an interview April 20 on Bloomberg Television. Fink, who runs the world’s largest money manager, mentioned a pullback in car sales and a slowdown in merger and acquisition activity as indications that uncertainty is rising. The slowest economy among the G-7 nations is the U.S., he said.
The stock market needs validation that U.S. corporate earnings will stay strong and that the policies of President Donald Trump regarding taxes, regulation and infrastructure will advance in Congress in order to move higher, Fink said.
"If we don’t have earnings validated in these higher P/Es we could adjust downward 5 or 10% from here," Fink said. "If the administration does succeed on some of these items then the market will then reassert itself going higher."
BlackRock reported first-quarter results earlier April 20 that beat analysts’ estimates on earnings while missing on revenue.
Outside the U.S., Fink said he’s taking a "wait-and-see" approach to Brexit because it’s unclear what the change will mean for the United Kingdom. He also said the markets are pricing in a more centrist outcome in the upcoming French elections starting later this month.
While Fink sees hints of a slowdown in the United States, he’s still "bullish" for investors in the markets. "There are headwinds but they can be worked out," he said.