BlackRock Global fixed income Chief Investment Officer: it's too late for US stocks to hit record highs to make sense for the Fed to tighten policy.

Rick Rieder, chief investment officer for global fixed income at BlackRock (935.88,-3.64,-0.39%), said on Thursday that strong earnings and cash flow from major companies meant that US stocks should be able to maintain record highs.

Rieder says he is not worried about the level of the stock market after a dramatic rise over the past year and a half.

"in fact, I don't think the stock market is high at all. I mean, if you look at some companies, the rate of return on free cash flow is very high, "he said.

Rieder points out that strong earnings from retailers and profit margins at technology companies prove that returns on many stocks are attractive even if the index hits an all-time high. Some stocks are indeed too high, but not the market as a whole, he says.

Rieder added: "this is not to say that if the Fed takes a hawkish stance, we cannot reprice, but the market will recover immediately."

For overvalued assets, the area that really needs to be focused on is the fixed income sector, especially lower-quality debt, says Rieder.

Federal Reserve Chairman Colin Powell will speak at the annual meeting of the central bank in Jackson Hole on Friday. The market is watching closely to see if it will reveal when the Fed will start cutting back on asset purchases. Rieder said he thought it was too late for the Fed to tighten monetary policy and should try to speed up the pace of interest rate hikes. At present, many investors believe that the rate hike will happen in 2023.