The head of the world’s largest investor thinks the stock market is overvalued

Miami /
Apr.April 06, 2017 12:45 PM

Larry Fink, the chief executive at BlackRock, which with $5.1 trillion is the world’s largest investor, is sounding the alarm over the US stock market.

Since President Donald Trump’s victory in November, US equities have reached new heights thanks in part to the optimism that has swept much of Wall Street.

The S&P 500 is up 10.9% since November 8, Election Day.

The S&P 500 financial sector index has gained 18.9%, buoyed by the president’s proposals for tax reform, deregulation, and fiscal stimulus.

In an interview with CNBC Thursday morning, Fink said the high price of US equities does not match up with current economic and market conditions.

“We don’t have the tax reform that we’re expecting. If we don’t see a true deregulation, I think the markets would have some setbacks there,” Fink said.

He added that the US economy is slowing down, and would probably grow less than 1.5%. “In fact, I think the first quarter, the U.S. may be the slowest economy in the G7,” he said.

“If you believe that it would be longer for these to transpire and we have an economy that is slower because of uncertainty, then I would say the market is, the U.S. equity markets are probably higher than they should be,” Fink added.

He’s not the only one who thinks the stock market is too expensive. The minutes from the March meeting of the Federal Open Market Committee released Wednesday showed that many Fed leaders are concerned that the US equities are overpriced.

From the minutes:

“Broad US equity price indexes increased over the intermeeting period, and some measures of valuations, such as price-to-earnings ratios, rose further above historical norms. A standard measure of the equity risk premium edged lower, declining into the lower quartile of its historical distribution of the previous three decades. Stock prices rose across most industries, and equity prices for financial firms outperformed broader indexes.”


Related Articles

arrow_forward_ios
Blink’s Michael Farkas and Lionstone’s Diego Lowenstein with 605 Lincoln Road (Google Maps)
Blink buys office condo on Miami Beach’s Lincoln Road for new HQ
Blink buys office condo on Miami Beach’s Lincoln Road for new HQ
Photo courtesy of David Iglesias
Boca Beach House condo project scores $43M construction loan
Boca Beach House condo project scores $43M construction loan
Nick Rojo and Jeff Burns (Affiliated, iStock)
Affiliated Development launches $125M workforce housing fund
Affiliated Development launches $125M workforce housing fund
Tom Cabrerizo and 6790-6880 Southwest 80th Street (Google Maps)
Developers score $15M construction loan for Miami townhouse development
Developers score $15M construction loan for Miami townhouse development
Triton Center (iStock)
Questions surround $50M in EB-5 investments tied to former INS building: lawsuit
Questions surround $50M in EB-5 investments tied to former INS building: lawsuit
Michael S. Liebowitz and Russell Galbut (Linkedin)
Russell Galbut and partner launch blank check company, plan to raise $100M
Russell Galbut and partner launch blank check company, plan to raise $100M
Southland Mall, 20505 South Dixie Highway in Cutler Bay with JLL's Tom Hall and Danny Finkle (Google Maps, JLL)
Southland Mall’s troubled $65M CMBS loan for sale
Southland Mall’s troubled $65M CMBS loan for sale
Alan Ojeda and 8894 NW 44 Street in Sunrise (Google Maps)
Rilea Group scores $46M construction loan for Sunrise apartments
Rilea Group scores $46M construction loan for Sunrise apartments
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...