Why BlackRock's Rick Rieder feels 'a bit more relaxed' about AI bull market than dotcom era
Rick Rieder oversees roughly $2.4 trillion in assets for BlackRock. He has been at the world's biggest money manager for close to two decades now
Rick Rieder oversees roughly $2.4 trillion in assets for BlackRock. He has been at the world's biggest money manager for close to two decades now, and he has seen a lot take place in the market. But, he says, nothing like this. "I think we're going through an extraordinary period of time. I don't think we've ever seen anything like this," he told CNBC's Scott Wapner at the CNBC CEO Council Summit in Washington, D.C., on Tuesday. Faced with the choice between "a lot of uncertainty" and a market that continues to push higher, Rieder concludes, "I think you gotta, you gotta stay in it." This view is not new for Rieder. He told Wapner in August of last year that this was the best investing environment he had ever seen.
But nothing has changed his view to the contrary since, even as the mega-cap tech stocks spend more and more on AI and concerns rise about a dotcom-bubble like environment. His view of the stock market is not necessarily for outsize gains from here. A market that is doing "extremely well," he said, "will probably continue to do okay." But Rieder says the trends are in place, both structurally and technically, to believe the bull market has more room to run. For one, the cash keeps coming in. "There's a tremendous amount of cash," he said. "Even with the IPO calendar, which is large. There is still a tremendous amount of buyback going on, so I think 'the technicals' are good," he said. Part of the bullish story coming from the cash is related to central bank rates in developed markets that are going to remain elevated, he said, and maybe even go "a bit higher." The income streams being created from higher-yield portfolios — 6% to 7% in the current market without a lot of risk, Rieder said — benefit from the compounding effect, for one, and that also allows investors to ultimately "buy some volatility," he added.
Whether the longer-term risk in stocks is still worth it relative to the opportunity for yield in bonds has become a more pressing question among investors. But Rieder, who is chief investment officer of global fixed income as well as head of the global allocation investment team at BlackRock, says the cash keeps wanting to be redeployed in stocks, in his view, due to trading multiples and earnings growth forecasts that are more reasonable than investors may assume. "First, strip out semis and tech and look at what the equity market is doing. Not terribly spectacular," he said. "Six percent." "Are there some days that I look at some of those equities and say 'okay, that's a bit much?'" Rieder said. The answer is yes, and those kinds of days have become more frequent lately with individual stocks up 20%, even 30%-plus, like Snowflake, Micron Technology, Dell, and Hewlett Packard Enterprise.
On Tuesday, shares of Marvell Technology rose 31% after Nvidia CEO Jensen Huang said it may be the next trillion-dollar company. "Then I go back and look at the multiple... you can get your arms around this," he said.
The BriefWire