When Larry Fink gets worried, there’s usually something to watch out for. BlackRock’s (NYSE:BLK) CEO took a look at the macroeconomic environment and is now gravely concerned about its overall fate. More “dominoes” might start to fall, Fink advises, and that’s got a lot of potential investors on edge. Even BlackRock’s own investors are concerned, as illustrated by the dip BlackRock took in Wednesday afternoon’s trading.
Fink castigated the government—and not any one particular administration, either—for years of easy money that is now producing “…cracks in the financial system.” The recent losses at Silicon Valley Bank (NASDAQ:SIVB) and a growing list of others led Fink to not only assess further damage to the system but also to suggest that inflation would remain a growing issue. Fink projects that inflation will run between 3.5% and 4% for the next several years. The reason? Securing supply chains will help bolster national security but will also keep prices high.
Fink also detailed just what caused the problems we’re seeing today: extremely loose monetary policy. The policies at the Federal Reserve, which kept interest rates at or near zero for years, are coming back to haunt the collective economy, Fink noted. Of course, Fink also asserted that it’s too soon to tell just how far the damage goes, especially with only two banks failing and Silicon Valley Bank closing. However, with Credit Suisse’s (NYSE:CS) recent troubles, Fink’s projections may be more reasonable than anyone expected or hoped.
Meanwhile, analyst consensus calls BlackRock stock a Moderate Buy with 25.11% upside potential thanks to its average price target of $782.67 per share.