BlackRock's Larry Fink Warns That New Inflationary Pressures Could 'Shock' The Stock Market: 'It Could Be Pretty Bad'

BlackRock Inc BLK CEO Larry Fink is cautiously optimistic on the markets. He’s optimistic on growth prospects, but warned Thursday that new inflationary pressures could negatively impact stocks.

What To Know: During a CNBC interview from the World Economic Forum on “Squawk Box” Thursday morning, Fink was asked about his stance on the current state of the stock market.

"I'm cautiously optimistic,” he said. “That being said, I have scenarios where it could be pretty bad.”

The BlackRock chief pointed to U.S. President Donald Trump’s recent plans to invest up to $500 billion in AI infrastructure. Fink believes the investment will help unlock private capital and stimulate “enormous” growth. However, he also believes the growth could bring on 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,” Fink told CNBC.

The 10-year Treasury yield was hovering around 4.64% at the time of writing, according to Benzinga Pro. It’s been trending higher since mid-September when it bottomed around 3.62%.

Fink noted that there is a possibility that the 10-year could climb back above 5% and even rise as high as 5.5% if inflation begins picking up again.

“That would shock the equity market. That would not be a good scenario,” the BlackRock CEO said.

The Trump administration is trying to find growth from the private sector. Fink said he will be paying attention to how quickly the private sector is able to put money to work. At the same time, he’s keeping an eye on inflationary pressures.

“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.

BlackRock shares were up 0.51% at $1,011.45 at the time of publication, according to Benzinga Pro.

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