(Bloomberg) - BlackRock Inc. Chief Executive Officer Larry Fink said investors are too quick to conclude that high inflation is over, raising the prospect that bond yields will rise along with steeper prices.
“The biggest risk we have worldwide today is the world believes we are past the high point of inflation,” Fink told Bloomberg Wednesday on the sidelines of the World Economic Forum in Davos, Switzerland, noting that his view conflicts with what market forces are saying. “I could truly see a scenario where we are going to have elevated inflation.”
During a discussion on artificial intelligence investments, Fink said building data centers will require massive levels of financing from the private sector. BlackRock is raising a $30 billion fund with Microsoft Corp., among others, and Fink said that the private market needs to pay special attention to how the data centers are powered.
“In the short run, let’s be clear, it’s going to be heavily powered by gas, natural gas in the United States,” Fink said, adding that the power demands should start discussions about the role that nuclear energy plays in the future.
He also pointed out the need to consider local residents.
“The data center has to be good for the locality,” Fink said. “It can’t be drawing power away from the average consumer.”
Separately, Fink said that as he learned more about cryptocurrency markets in recent years, he has concluded it’s a “currency of fear” and can be used as a hedge. Investors who fear the debasement of their currencies “could have an internationally based instrument called bitcoin that will overcome those local fears,” he said.
Speaking more broadly about the economy, Fink said he’s “never seen such pessimism” in Europe — making him think it makes sense to invest in the region now.
“Always go against Davos and you’ll make a lot of money,” he said. “It almost feels like a nice counter-trade.”
By Silla Brush
