BlackRock CEO Laurence D. Fink, whose company is the world's largest money manager with $4.1 trillion in assets, said Federal Reserve policy is contributing to “bubble-like markets.”
“It's imperative that the Fed begins to taper,” Mr. Fink said Tuesday at a panel discussion in Chicago, referring to the central bank's $85 billion in monthly bond purchases. “We've seen real bubble-like markets again. We've had a huge increase in the equity market. We've seen corporate-debt spreads narrow dramatically.”
The Fed in September decided against reducing the bond purchases as economic growth remained muted. Following a partial U.S. government shutdown this month, policymakers probably will delay slowing the stimulus until March, according to a Bloomberg survey of economists conducted Oct. 17-18.
The Standard & Poor's 500 index has gained 24% this year, after advancing 13% in 2012. The extra yield investors demand to hold high-risk, high-yield bonds has dropped to 444 basis points from this year's high of 534 in June, according to the Bank of America Merrill Lynch U.S. High Yield index. That spread reached 440 basis points on Oct. 24, the narrowest since May 28.
“We have issues of an overzealous market again,” Mr. Fink said at the event, which was sponsored by the Paulson Institute and the University of Chicago Institute of Politics.