BlackRock CEO Larry Fink estimates that inflation will remain at a high level for several years, mainly because of the uncertainty in global supply chains.
“It has been exacerbated by the corona plague and closures around the world,” Fink told Bloomberg last Thursday. “Inflation is more driven by supply.”
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The world’s largest investment fund, which manages about $ 10 trillion as of the end of March, is navigating a world full of rising inflation, rising interest rates and geopolitical upheavals. Fink has previously said that the war in Ukraine has created profound changes in the global economy, forcing companies and governments to reconsider their dependence on foreign markets and spend more money to increase their capabilities in their domestic market.
The Federal Reserve does not have the tools itself to fix supply problems, Fink said in an interview, predicting market volatility will continue. Inflation is also expected to remain high as the economy shifts to the use of green energy sources, he said. Inflation in the United States today is almost at a peak of 40 years, and stood at 8.3% in April.
“We are going to deal with fear attacks” which will lead to more turmoil in the markets, Fink said. However, he cautioned that “we have not witnessed huge changes in property allocation by our investors.”
Pink is not the only one who predicts blacks in the economy. Yesterday, Tesla CEO and founder Elon Musk said he has a “super bad feeling” about the economy, and that the electric car maker needs to cut around 10% in the workforce.
Meanwhile, JP Morgan CEO Jamie Damon warned this week of an “economic hurricane” that is expected to arrive. “An economic hurricane is on its way to us and investors need to prepare. “Today the sun is still shining and conditions are still relatively good in the economy, but that is going to change soon,” Damon said.
According to Damon, the storm will come mainly because of two main factors: the reduction of the Fed’s balance sheet and the war in Ukraine. “The Fed must reduce its huge balance sheet in order to reduce the huge liquidity in the economy. At the same time, other central banks will probably reduce their balance sheets in the coming years. This is an event that has never been before and could cause serious shocks in the markets.”