BlackRock CEO Sees Great Rotation Within Bond Market

The long-discussed “Great Rotation” won’t be from bonds to stocks, but will be within the bond market, BlackRock Chairman and CEO Larry Fink told CNBC on Thursday, as the investment firm reported better-than-expected earnings.

Fink said in a “Squawk Box” interview that he’s seeing a rotation into high-yield, short duration bonds, as investors try to avoid interest rate risk.

“If you believe interest rates are going higher, [the core bond index] is going to be a painful index to be sitting in,” he said. “We are seeing a rotation from core index into low duration, into high yield.”

In a higher rate scenario, he added, if the stock market also continues to move higher, “you will see rebalancing into fixed income,” as investors take their profits and seek the safety of bonds.

On Thursday, BlackRock said it earned $4.92 a share, excluding one-time items, in the fourth quarter. Analysts had expected the company to report profit of $4.33 a share. Revenue beat estimates, as well, coming in at $2.78 billion.

BlackRock also raised its quarterly dividend by 15 percent to $1.93 from $1.68 a share.

On the economic front, Fink said, “The U.S. is going to get stronger primarily because we more rapidly fixed our banking system.”

“We’re getting better because our companies are sitting on a lot of cash. And I believe the outlook in the United States is stronger, so you’re going to see more investing in capital expenditures in 2014 than you have in 2013 and 2012,” he added.

“Most importantly, our energy sector is so transformational,” he continued. “The cost of electricity, the cost of natural gas is so much cheaper here than Europe.”

via CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.