Speaking on CNBC, the chairman and CEO of BlackRock, Larry Fink, stated that the stock market has plenty more headroom. Fink pointed to some of the recent better-than-expected earnings from leading U.S. corporations and the expected interest rate cut from the Federal Reserve as reasons for the continued equities boom.
“People are underinvested in equities … with the change of tone of central bank behavior and you’re starting to see corporate earnings coming in pretty well. We are still constructive on the world.”
Better companies = best world’s best stock market
Fink attributed the stellar performance of the U.S. stock market to the U.S. having “better companies” than other regions, adding that “we deserve it.” Fink also pointed out that a larger proportion of American savings was invested in the stock market compared to Asia and Europe. This was also responsible for the relatively higher price-to-earnings ratios of U.S. stocks.
Fink’s expectation of a rate cut has been bolstered by Federal Reserve Chairman Jerome Powell who earlier this week repeated a dovish pledge.