A Stock Market “Melt Up is Coming”

A Stock Market “Melt Up is Coming”

$DIA, $SPY, $QQQ, $RUTX, $VXX, $BLK

BlackRock Inc.’s (NYSE:BLK) CEO Larry Fink said most investors are under invested in the stock markets globally.

The world’s largest asset manager has seen clients put money to work by moving from cash to fixed income, Mr. Fink said in an interview Tuesday after his company reported earnings.

‘We are seeing huge excitement in fixed income,” he said. But investors are not rushing into stocks.

“We have a risk of a melt-up, not a meltdown here. Despite where the markets are in equities, we have not seen money being put to work,” Mr. Fink, the head of the largest asset manager in the world, said in the TV interview.

“We have record amounts of money in cash. We still see outflows in retail in equities and in institutions,” he said.

“Many people thought we were going to be in a period of rising rates. We were not and we saw huge under-investment and people had to rush into fixed income, we have not seen that in equities yet,” he said.

He added that, with central banks being “more Dovish than ever … there is a shortage of good assets” for investors, which could ignite the melt-up in the global equity market.

The world’s largest asset manager saw $65-B in net inflows in Q-1, the strongest total since Y 2017. The results Tuesday helped lift the New York-based company’s assets under management above $6-T again after a drop in the market into the end of Y 2018.

BlackRock saw clients put money to work, moving from cash to fixed income, Mr. Fink said in the interview after the earnings report.

BlackRock’s fixed income products took in $80-B in Q-1, driving the company’s $59-B in long-term net flows. Investors have shown renewed interest in bonds since the Fed officials signaled that an increase in rates is on hold. The pause came after many traders were instead positioning for the next run of hikes.

The strength in BlackRock’s fixed income business and $6.8-B in alternatives flows helped mute the impact of investors pulling $26-B out of BlackRock’s equity products in the frame.

Mr. Fink declared that investors have not rushed back into equities even as the stock market bounced back this year and are again approaching record highs.

“There are huge pools of money sitting on the sidelines,” Mr. Fink said on an earnings conference call later Tuesday.

BlackRock’s iShares division is the largest global issuer of ETFs (exchange-traded funds) and a Key piece of its business.

The asset manager often points to fixed-income ETFs as a source of future growth for the industry. Its fixed-income exchange-traded products brought in $32-B in Q-1, offsetting $1.6-B in outflows from its equity ETFs. iShares saw flows of $30.7-B overall in the frame, down from a record $81-B in Q-4.

BlackRock is recovering from Y 2018, when the firm saw its share price drop about 24% and confronted 3 straight Quarters of institutional outflows. In Q-1, the company reversed that trend and gathered institutional inflows of $29.1-B.

It reported EPS of $6.61, beating estimates of $6.13/share, according to analysts surveyed. Revenue of $3.3-B fell 7% from the same frame a year earlier, and was in line with analyst estimates.

“We’ve had a significantly better market tone than we saw in the second half of the year,” said CFO Gary Shedlin. Quarterly net flows were driven by Key businesses the company’s invested in, he said.

“We feel those investments are paying off,” Mr. Shedlin added.

BlackRocks’ shares finished at: 466.54+14.68 (+3.25%) At close: 4:02p EDT

HeffX-LTN’s overall technical analysis for BLK is Neutral to Bullish with 2 of our Key indicators at Very Bullish Tuesday.

Tuesday, the major US stock market indexes finished at: DJIA +67.89 at 26452.66, NAS Comp +24.21 at 8000.22, S&P 500 +1.48 at 2907.06

Volume: Trade on the NYSE came in at 760-M/shares exchanged.

  • NAS Comp +20.6% YTD
  • Russell 2000 +17.4% YTD
  • S&P 500 +16.0% YTD
  • DJIA +13.4% YTD

HeffX-LTN’s overall technical analysis for the major US stock market indexes Bullish in here.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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