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BlackRock CEO cautious on Trump's fiscal policies

Xinhua, January 20, 2017 Adjust font size:

Laurence Fink, chairman and chief executive officer of BlackRock Inc., expressed caution about the ability of the incoming Trump administration of the United States to navigate global economic uncertainties in the future.

He made the remarks at the World Economic Forum in Davos, Switzerland.

The United States is holding the presidential inauguration ceremony on Friday, as Donald Trump will be sworn in as the country's 45th president.

"One of the most important components of Donald Trump's proposed policies, is less impact by monetary policy, more impact by proposed fiscal policy," Laurence Fink explained in a panel discussion on the global economic outlook for 2017. "On the other hand, we still have quite a bit of uncertainty about how we're going to pay for this."

While he judged the value of proposed policies positively, including those revolving around major infrastructure projects, Fink expressed concern about how to finance them, even as commodity-oriented companies showed market confidence.

"A trade adjustment tax, I hope that is not the policy," said the head of BlackRock, a global investment management corporation, adding, "I think that policy attacks the voters who voted for him" by raising the cost of goods sold by low-end retailers, where the market is "dominated by 80-90 percent imports."

Uncertain how the Trump administration's proposed policies would be implemented, Fink saw both optimism and fear among consumers.

"We're at a point in time now the optimism is pretty high, and from different components of our respective societies," he explained, noting automobile sales in the United States just after Donald Trump's November election as an example of growing consumer confidence.

The top banker was worried, however, that aging populations and inadequate retirement systems were adding to growing fear of having to work longer, especially in a world of increased longevity.

"This has a huge impact on issues related to youth employment and youth opportunities," he said.

A further uncertainty for Laurence Fink stemmed from a strengthening of U.S. currency, with its effects on world markets and even on American manufacturing.

"This is going to be a big essential component of the market volatilities," Fink predicted,"I do believe there's going to be a great deal of tension between the President-elect and the Federal Reserve on these issues. But we all should be aware that we're going to live in a world of a stronger dollar." Endit