- BlackRock Global Chief Investment Officer of Fixed Income Rick Rieder shared his biggest market fear with Business Insider as part of a wide-ranging discussion.
- Rieder has concerns over complacency creeping into global markets.
If you ask 10 different money managers for their biggest market fear, you might get 10 different answers.
That’s not necessarily because some large reckoning is on the horizon. It’s more a reflection of how difficult it is to pinpoint the next big disruption.
That said, Rick Rieder, the chief investment officer of fixed income at BlackRock, who oversees $1.7 trillion, is probably someone whose advice you should heed. Having worked at the highest level of money management for multiple decades, Rieder has seen it all through tough market cycles in 1990, 1994, 1998 and 2002.
In an interview with Business Insider, Rieder shared his biggest market-related worry. He also gave his thoughts on the Federal Reserve’s next steps, the GOP tax plan, the equity and bond markets, and the rise of exchange-traded funds.
It was part of a wide-ranging discussion that also included a deep dive into Rieder’s hectic daily schedule, which you can read about here.
Here’s what Rieder had to say (emphasis ours):
“Complacency. Some areas of the financing market are too high. Central banks flooded the system with liquidity, and now they should pull back. If you don’t have that normal give and take that markets generally calibrate to, prices end up being too high for too long, or yields too low, and you get a complacency that’s not good.
That’s my biggest fear going forward. The longer you don’t recalibrate — and build up volatility in the markets — that can create a bad outcome with real reverberations. It could adversely affect the lending dynamics in the country and shut down companies from investing.
I think what the Fed is doing now is the exact right thing, but I think the ECB and BOJ should start moving as well. Central banks need to pull back and reach some equilibrium.
Geopolitical risk also keeps me up at night, but I don’t sleep much anyway, and that will always be there.”