BlackRock Global Fixed Income CIO Rick Rieder Talks ETFs, Consumer Sentiment

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Scarlet Fu** (0:07)
So we have a lot of ETF-related things to get into. BINC, of course, just had a big birthday. But given the size of the moves that we're seeing in the market right now, let's start broad. The S&P 500 higher by nearly 2%.
The Nasdaq 100 higher by more than 3% on the heels of that peace agreement announcement. Then you take a look at the bond market. Still a big move. You did see yields drop across the curve. Coming back a little bit though, when you put it all together, you take a look at the different asset classes and you add oil in there. I mean, what's your initial read on this knee jerk?

**Rick Rieder** (0:41)
So I'd say obviously the peace agreement, and as you said, we'll see how durable it is. My senses are moving in a direction that ultimately will be quite positive. So the thing that's amazing to me, and by the way, it played out around the SpaceX transaction. There is so much cash that's sitting on the sidelines. So we get to make a number, depending on how you measure it, 8 or 9 trillion of money market funds, 19 trillion in deposits. And you know, what happened? You know, you go back a week ago and you think about this big SpaceX deal. People have to find room, though, in terms of portfolios, etc. So you create a little bit of that. And then once that has happened, all of a sudden, it unlocks this cash, particularly when you get a good piece of news and people say, gosh, I can get into the pool.
And it's pretty explosive when you see it happen. Obviously, the move, you know, after we've had a good run in the equity market has been pretty impressive today.

**Eric Balchunas** (1:33)
Thank you for for explaining that because sometimes it's, you know, when you ask a macro guy what's going on in the equity market and the bond market, you don't often get a candid response. I appreciate that. I'm curious when we link what's happened with the interim peace deal with the spate of central bank meetings this week. I believe there's more than 20 central bank decisions this week.
Was this a gift to central bankers? Maybe not in the US, where we already know that the Fed's not going to do anything one way or another, but for other central banks, this is some kind of relief for them.

**Rick Rieder** (2:04)
A hundred percent. I mean, you think about, obviously, with headline inflation, the stress is real around what those numbers end up being. I mean, we look at the core.
I would argue there is some transmission coming in, but it was interesting to see the CPI report last week. We look at core goods. Core goods, three-month moving average core goods inflation is 0.1% and six-month moving average 0.4%. You're not seeing in goods where you're seeing this latent inflation. It's quite frankly in services, things like, I mean, insurance, the number in CPI, you look at that number, education, et cetera. So it's definitely helpful. It definitely takes places like the ECB that are looking at multiple hikes and you say, gosh, now maybe they don't have to move in multiple forms. So it is a big deal. I mean, it is a big deal for all markets when you think about central banks may not have to hike as much and then you think about what does it mean for overall when you think about your NPV of owning the equity market if rates aren't going to move significantly higher.
Yeah, it's a big deal.

**Katie Greifeld** (3:03)
So the last time you were on the show, you had a clip that I put out on social media because it opened my eyes to this. I said, why would the Fed cut?
And you said, well, the reason is housing. That's why the Fed should cut. And then they had a contest for who's going to be the Fed chair.

**Rick Rieder** (3:20)
Yeah.

**Katie Greifeld** (3:21)
Kevin Warsh is the Fed chair. Yes, sir. Now in between a rock and a hard place here, because you do have some of these inflation numbers going up.

**Rick Rieder** (3:29)
Yeah.

**Katie Greifeld** (3:29)
But you do have this housing pressure, which you brought up. And since you're back and all that's happened since, I want to get your take on what you would do.

**Rick Rieder** (3:36)
I mean, what I would do? Well, I'm positioned for what they will do. And I've learned in my career, whatever I would do is interesting for my friends. But what I weigh a position is what they're going to do. Listen, I think if you take that and go back to this inflation report and you look at your break it down, the less interest-sensitive sectors are experiencing health care, education, insurance, sticky inflation. You're not really going to bring down health care costs by moving the funds, right? If you look at what happened that CPA report, used cars, automobiles, small business, low income, housing, those sectors are actually, A, not experiencing much inflation, if any at all, and B, they're in a tough spot. So it's much more complex when you think about, particularly if you have a dual mandate, and you think about my mandate is actually employment and price stability. And today, it's very hard to use the interest rate tool to manage automobile insurance. And so I think, and quite frankly, I think the new chair will use some other tools, and I think he'll look at the money supply. I'm certain he will. I'm certain he will look at the balance sheet.