Connect with us

Finance

BlackRock’s Fink says that the bond market will tell us where we’re going

Published

on

Larry Fink at the 2016 World Economic Forum in Davos, Switzerland.

David A. Grogan | CNBC

BlackRock CEO Larry Fink said President Donald Trump’s efforts to unleash capital in the private sector could have unintended consequences that would hurt the stock market.

“I’m cautiously optimistic. That being said, I have scenarios where it could be pretty bad,” Fink said on CNBC’s “Squawk Box” from the World Economic Forum in Davos, Switzerland. “I believe if it’ll unlock all this private capital, we’re going to have enormous growth. At the same time, some of this is going to create new inflationary pressures. I do believe that’s probably the risk that is not factored into the markets. I think the bond market is going to tell us where we’re going.”

The 72-year-old chief of the world’s largest asset manager said much will depend on how quickly the private sector can put capital to work. Trump has already touted massive private-sector promises to spend in the U.S., the latest example being the Stargate joint venture, where SoftBank, OpenAI and Oracle would invest $100 billion immediately for artificial intelligence infrastructure in the country. Plans call for the project to eventually invest a total of $500 billion.

“There are some very large inflationary pressures that we all have to be aware of,” Fink said. “And depending on how this plays out, there is a scenario where we’re going to have much more elevated interest rates because of inflation. And that’s going to have a very negative impact on the equity market.”

Fink said there is a possibility that the 10-year Treasury yield could retest the 5% level and even reach 5.5% if inflation re-accelerates in a meaningful way. If that happens, Fink said it would “shock” the equity market.

The benchmark 10-year note yield last traded at 4.62%.

Continue Reading

Finance

TMUS, GOOGL, TSLA, INTC and more

Published

on

Continue Reading

Finance

META, INTC, GOOGL and more

Published

on

Continue Reading

Finance

T. Rowe Price likes stock picking now

Published

on

One of the largest active ETF managers on leveraging fund tactics in new ways

It appears T. Rowe Price is benefitting from the record growth in actively managed exchange traded funds.

Tim Coyne, the firm’s head of ETFs, reports the firm is seeing significant growth in the area — listing the T. Rowe Price Capital Appreciation Equity ETF (TCAF) and T. Rowe Price U.S. Equity Research ETF (TSPA) as two established strategies that can satisfy investor demand.

“I think having that professionally managed portfolio is really beneficial to clients,” Coyne told CNBC’s “ETF Edge” this week. “We’re seeing just… greater volatility [and] uncertainty across both the equity and fixed income markets.

According to Coyne, the T. Rowe Price Capital Appreciation Equity ETF suits investors who are looking for long-term growth.

“The objective of the fund is to outperform the S&P 500 with lower volatility and greater tax efficiency,” he said. “It’s also a more concentrated portfolio, typically holding around a hundred names.”

As of April 24, the fund’s top holdings include Microsoft, Amazon, and Apple according to the T. Rowe Price website. But it’s not all Big Tech. The ETF also features smaller positions in companies like Becton Dickinson and Roper Technologies.

The T. Rowe Price Capital Appreciation Equity ETF is down about 5% so far this year while the S&P 500 is off about 7% However, the ETF is up close to 8% over the past year — roughly identical to the S&P 500’s performance.

Coyne notes the T. Rowe Price U.S. Equity Research ETF follows a similar strategy, but with a heavier weighting in top tech stocks.

“This is more of a large-cap growth product [T Rowe Price U.S. Equity Research ETF],” he said. “There are components of characteristics of both passive and active here. This fund is actually managed by our North American directors of research. So again, strong fundamental research is going into the stock selection.”

Both the T. Rowe Price U.S. Equity Research ETF and S&P 500 are down around 7% since the beginning of the year. Meanwhile, the fund is up almost 9% over the past year. That’s less than one percent better than the S&P 500’s performance.

Stock Chart IconStock chart icon

hide content

T. Rowe Price U.S. Equity Research ETF vs. S&P 500

‘Some form of bear market’

Strategas Securities’ Todd Sohn thinks investment demand for active managers will continue to be strong.

“This is the type of the environment where it [active management] can actually shine,” the firm’s senior ETF and technical strategist said. “We are in some form of bear market. This is where the active manager really can come into hand and offer their solution they are doing right.”

Continue Reading

Trending