Market bets on deep Fed rate cuts are 'crazy', says BlackRock's Larry Fink

By William Watts

'I don't see any landing' for strong economy, he says

'The amount of easing that's in the forward curve is crazy. I do believe there's room for easing more, but not as much as the forward curve would indicate.'Larry Fink, CEO, BlackRock Inc.

That's billionaire Larry Fink, head of BlackRock Inc. (BLK), telling Bloomberg Television that rates traders have once again gotten well ahead of themselves when it comes to how much easing the Federal Reserve is likely to deliver.

What's more, Fink contends the argument over a so-called soft landing or hard landing for the economy is misplaced amid signs of robust growth overall. "I don't see any landing," he said.

The swaps market shows traders have priced in a roughly one-in-three chance of another rate cut of 50 basis points when the Fed meets in November and around 190 basis points of cuts by the end of 2025, according to Bloomberg data.

Stocks rallied in September, defying the month's reputation for seasonal weakness, as the Fed delivered a rate cut of 50 basis points to begin a rate-cutting cycle. Fed Chair Jerome Powell, in a public appearance on Monday, indicated that policymakers weren't in a rush to cut aggressively but would watch incoming economic data.

See: Stocks, bonds up in third quarter amid 'soft landing' hopes - but gold beat both

The Dow Jones Industrial Average DJIA ended Monday at a record close, up 1.9% for the month and 12.3% in the year to date. The S&P 500 SPX also closed at a record Monday, gaining 2% in September and rising more than 20% so far in 2024.

Fink said he doubted the degree of cuts expected by the market would materialize in part because government policies overall are more inflationary than deflationary.

Read: Goldilocks stock-market rally needs jobs data that's neither too hot nor too cold

-William Watts

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10-01-24 0743ET

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