Fink warns mar­ket risk is at 2007 lev­els

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE - Pete Schroeder

BLACK­ROCK chief ex­ec­u­tive Larry Fink has warned that fi­nan­cial mar­kets are ig­nor­ing un­der­ly­ing risks, which means there could be a “big cor­rec­tion” if a ma­jor surprise world event oc­curred.

Fink, head of the world’s largest as­set man­ager, said the amount of risk in the fi­nan­cial sys­tem is com­pa­ra­ble to 2007 lev­els. He said that con­sis­tently low volatil­ity in the stock mar­ket, as well as the over­all strength of the global econ­omy, may mean mar­kets are not ac­count­ing for that risk as much as they did in the past.

“If there is a ma­jor event, which I don’t fore­see any­thing, but if there is one, we could have a big cor­rec­tion,” he said at the an­nual meet­ing of the In­sti­tute of In­ter­na­tional Fi­nance.

All three ma­jor US stock in­dexes have been on an ex­tended rally this year, re­peat­edly set­ting new record highs, as in­vestors an­tic­i­pate ex­panded busi­ness ac­tiv­ity thanks to a lighter reg­u­la­tory road and po­ten­tial tax cuts.

Fink spoke dur­ing a panel dis­cus­sion along­side the ceos of Jpmor­gan and Mor­gan Stan­ley — Jamie Di­mon and James Gor­man. All three were gen­er­ally op­ti­mistic about the econ­omy, al­though they high­lighted sev­eral sig­nif­i­cant risks.

Fink said there is no ev­i­dent eco­nomic rea­son for a ma­jor spike in volatil­ity in the near fu­ture. “Over the long hori­zon, I think the world is a great place to be,” he said.

But all three ceos found am­ple room to crit­i­cise the White House and the US Congress for fail­ing to take any ma­jor steps to boost that na­tion’s econ­omy. Reuters

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