The CEO of BlackRock, Larry Fink, said that The U.S. stock market should not be trading at record highs because the data on fund flows don't support the bearish trend at the moment.
I don't think we have enough evidence to justify these levels in the equity market at this moment," Fink added.
He said the recent rally has been supported by institutional investors covering shorts, or bets that stocks would fall, and not individual investors feeling bullish.
Since Brexit, we've seen ETF flows almost at record levels, around $18 billion of inflows," Fink said. "However, in the mutual fund area, we're continuing to see outflows."
What that tells you is retail investors are pulling out, he said. Right now we are witnessing institutions who were short going into Brexit and all now rushing in to re-calibrate their portfolios."
Besides the stock mutual fund outflows, Fink said he's been seeing huge inflows in fixed-income products. "So you're seeing a risk-off trade, as we call it, around the world."
Moreover, Fink added that there is a tendency for liquidity increase by major institutions due to the 55 trillion cash on the sidelines and extraordinary central bank asset purchases has been inflating stocks prices.
Finally BlackRock says that they are looking forward to corporate data, as they will show whether these record levels are justified
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not directed at residents of the United States or Belgium and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.