Stocks could surge 12% this year - and a recession isn't imminent, BlackRock's Rick Rieder says

• BlackRock's Rick Rieder predicted stocks would soar between 8% and 12% this year.
• The elite investor hailed tech stocks and touted beaten-down value stocks as potential big winners.
• Rieder said he doesn't see an imminent recession given the US economy's resilient growth.

Stocks could surge as much as 12% this year, and a recession isn't around the corner, Rick Rieder said.

The CIO of global fixed income at BlackRock, the world's largest asset manager, issued the positive outlook for markets and the US economy during the latest episode of The Meb Faber Show, recorded late last year.

"I think equities will do 8% to 10% to 12%," Rieder said. His forecast suggested the S&P 500, which is hovering close to its all-time high of about 4,800 points, could exceed 5,300 points by the end of December this year.

The veteran investor said he planned to maintain a classic 60-40 balance of stocks and bonds in his personal portfolio this year and next. He trumpeted the fact that some investment-grade debt securities were yielding over 6% at the time.

Rieder touted Big Tech companies for their strong revenue growth, robust cash generation, and the potentially massive return from their large investments in artificial intelligence and microchips. But investors might consider shifting some funds into more staid sectors like healthcare and defense, as stocks there trade at a modest 14 to 15 times forward earnings, and promise to earn a healthy 10% on equity a year thanks to a robust economic backdrop, he said.

"The multiple is not stifling," he said. "Moving the needle a bit makes a bunch of sense today."

Still, Rieder emphasized that holding a balanced portfolio of stocks and bonds won't always be smooth sailing.

"I've done this too long not to realize it's not going to be a straight line to Nirvana, but I think you can have a pretty good go," he said.

Separately, the Wall Street heavyweight said he doesn't expect a recession. Fears of a prolonged downturn have been fueled by the Federal Reserve hiking interest rates from nearly zero to over 5% to bring down inflation, and red flags such as the inverted yield curve and sustained declines in leading economic indicators.

"I still don't think we're going into recession, although I think we're slowing," Rieder said. "I think people underestimate the extraordinary resilience the US has — technology, service economy etc. "

Rieder also made the case that asset prices and rates haven't climbed enough for there to be a severe slump ahead. "You can't make a big splash until the diving board is really high," he said.