BlackRock CEO Larry Fink on US Economy, Trump Vs. Harris, Geopolitical Risks (Full Interview)

Summary

The transcript features a discussion on BlackRock's 25th anniversary, its impressive stock performance, and the evolution of global capital markets. Larry Fink, CEO of BlackRock, highlights the significance of private credit, infrastructure investment, and the role of capital markets in economic growth. He discusses emerging opportunities in global markets like Japan, India, and Europe while addressing challenges such as geopolitical tensions and economic instability in China. Fink remains optimistic about continued growth in the U.S. economy, driven by infrastructure projects and a broadening of capital markets, despite global uncertainties.

Takeaways

• 🎉 BlackRock celebrates its 25th anniversary of going public, marking significant growth over the years.
• 📈 The company’s stock performance has increased by nearly 11,000%, far outpacing the S&P 500 index.
• 🌍 Global capital markets are expanding, with countries like Japan and India focusing on growing their capital markets to enhance their economies.
• 🏗️ Infrastructure development, including decarbonization and digitization, is seen as key to stimulating global economic growth.
• 💼 Private sector investment, rather than government funding, is increasingly vital for building new infrastructure projects.
• 🔋 BlackRock is raising significant capital for projects like data centers in partnership with companies such as Microsoft and NVIDIA.
• 💡 Private credit and infrastructure debt are seen as critical investment areas for the future, helping diversify and diffuse systemic risk.
• 🌐 China’s recent fiscal and monetary policy shifts could stabilize its economy, but companies are diversifying their supply chains to other regions like India and Mexico.
• 📊 Despite political uncertainties, BlackRock remains optimistic about long-term investments, seeing opportunities even in market downturns.
• 🚀 The U.S. economy is expected to continue growing at a steady pace, with no significant ‘landing’ or crash in sight, driven by strong corporate earnings.

Q & A

What is the significance of the 25th anniversary mentioned in the transcript?

The 25th anniversary marks the date when BlackRock went public on October 1, 1999. The speaker highlights the company's success, particularly noting an 11,000% increase in stock performance over that time, far outpacing the S&P 500.

How has the global economy evolved in relation to capital markets over the past 25 years?

The speaker mentions that one of the reasons for BlackRock's success is the growing role of capital markets in the global economy. Countries around the world are increasingly focusing on building out their capital markets to strengthen their economies, and this trend is expected to continue.

What are some of the infrastructure projects BlackRock is involved in?

BlackRock is actively involved in raising capital for infrastructure projects, such as a $25 billion infrastructure product and another $30 billion equity partnership with Microsoft, NVIDIA, and MGM. These projects involve building data centers and aim to address global inadequacies in infrastructure.

What is the speaker's view on the politicization of infrastructure projects?

While some infrastructure projects may become politicized, the speaker emphasizes that governments recognize the need for private capital to build out their infrastructure. If a project becomes too politicized, capital will move to safer, more stable locations.

What role does private credit play in reducing systemic risk?

Private credit, which involves matching liabilities and assets, is seen as reducing systemic risk compared to the banking system, which traditionally involves more leverage. As capital markets broaden globally, this diffusion of risk is viewed as positive for overall stability.

How does BlackRock view investment opportunities in commercial real estate?

The speaker acknowledges the natural cycles in commercial real estate, with some areas experiencing declines. However, they do not see systemic risk in the sector. Instead, they highlight opportunities in areas like data centers and cities with rising population growth.

What is BlackRock's approach to private credit and infrastructure investing?

BlackRock is expanding its private credit offerings, particularly in conjunction with infrastructure projects. They plan to raise significant amounts of equity and debt for projects like data centers, which offer long-term investment opportunities with stable returns.

How does BlackRock navigate political changes in the U.S. and other regions?

The speaker downplays the impact of political changes on long-term investing, noting that BlackRock works with governments regardless of political affiliation. They focus on long-term opportunities in markets like the U.S., where they expect continued growth despite short-term political shifts.

What is BlackRock's outlook on the future of the U.S. and European economies?

The speaker is optimistic about the U.S. economy, expecting continued growth of 2-3%. They also emphasize the importance of Europe strengthening its capital markets and banking system to enhance its economic prospects.

How does the speaker view China's economic situation and its impact on global supply chains?

The speaker acknowledges China's recent fiscal and monetary policy shifts but notes that there is still uncertainty about the country's economic stability. They predict a broader diversification of global supply chains, with countries like India, Vietnam, and Mexico benefiting from this trend.

Outlines

00:00

🎉 Celebrating 25 Years of BlackRock's Success

In this section, the speaker celebrates BlackRock’s 25th anniversary since going public on October 1, 1999. The company has achieved tremendous stock growth, outperforming the S&P by 20 times. The speaker expresses optimism about the future, highlighting how BlackRock’s early recognition of the shift towards capital markets contributed to its success. They point to countries like Japan and India, which are bolstering their capital markets as an indicator of the global movement towards broader financial markets in the next 25 years.

05:01

🏗️ The Dawn of Infrastructure Investment

The speaker discusses the importance of infrastructure investments, noting a $25 billion project by JP and BlackRock’s role in raising $30 billion in equity alongside major partners like Microsoft, NVIDIA, and MGM. Infrastructure, including data centers and decarbonization efforts, is viewed as a significant opportunity for growth. The speaker stresses the importance of private sector capital in funding these projects, asserting that infrastructure investments are critical for stimulating economic growth without relying on federal or state spending.

10:01

🏦 Europe's Banking and Capital Market Union

The focus shifts to Europe, where the speaker underscores the need for stronger capital markets and a more unified banking system to enhance economic growth. They avoid discussing specific conversations with executives or political figures but emphasize that BlackRock's role is to work with various governments to improve financial systems. The speaker also touches on China's recent fiscal and monetary policy changes, suggesting that while there are concerns, China is working to stabilize its economy amid global shifts in supply chains.

15:03

📉 Market Volatility and Economic Growth

Here, the speaker addresses concerns about geopolitical instability, mentioning the war in Ukraine and conflicts in the Middle East. Despite these challenges, they remain optimistic about global markets, emphasizing the resilience of capital markets and the importance of infrastructure investments. The speaker dismisses the idea of a ‘landing’ for the U.S. economy, projecting continued growth at a steady pace of 2-3%, with corporate earnings remaining strong. They also stress the importance of maintaining a long-term perspective in investing, rather than reacting to short-term market movements.

Keywords

💡Capital Markets

Capital markets refer to financial markets where long-term debt or equity-backed securities are bought and sold. In the video, the speaker emphasizes the global shift toward capital markets as a key driver of economic growth. The speaker highlights how strong capital markets have contributed to the success of the U.S. economy, and that other countries like Japan and India are focusing on building their own capital markets to strengthen their economies.

💡Infrastructure

Infrastructure refers to the fundamental systems and facilities serving a country, such as transportation, communication, and utilities. The video highlights a growing need for global infrastructure development, particularly in areas like decarbonization and digitization. The speaker describes infrastructure as a major component for economic growth, pointing out that large-scale investments in infrastructure will uplift economies worldwide, creating jobs and promoting growth.

💡Private Credit

Private credit involves non-bank loans provided to companies or individuals, typically outside of the public capital markets. In the video, private credit is mentioned as a growing sector that plays a key role in matching liabilities with assets, thereby reducing systemic risk. The speaker views private credit as a critical avenue for long-term investments, particularly in infrastructure projects.

💡Systemic Risk

Systemic risk refers to the potential for the failure of one entity or market to trigger the collapse of an entire financial system. The speaker suggests that the broadening of global capital markets has actually reduced systemic risk. By diversifying investments across various sectors like private credit, infrastructure, and different geographies, systemic risks are diffused, making the global financial system more resilient.

💡Decarbonization

Decarbonization is the process of reducing carbon dioxide emissions through the use of low-carbon power sources and practices. The speaker emphasizes the need for decarbonization as a key focus for infrastructure development. This is framed as part of the broader goal to combat climate change while modernizing infrastructure, thereby creating economic opportunities through green energy projects.

💡Digitization

Digitization refers to the process of converting information and systems into digital formats. The video highlights the role of digitization in infrastructure investments, particularly with the growing demand for data centers and technology-driven projects. The speaker mentions partnerships with companies like Microsoft and NVIDIA to develop data centers, which are critical for the ongoing digital transformation of the global economy.

💡Supply Chains

Supply chains refer to the networks between a company and its suppliers needed to produce and distribute products. The speaker discusses the disruption of global supply chains, especially due to the COVID-19 pandemic, and how companies are now diversifying their supply chains to reduce dependency on any single region. This diversification is viewed as essential for future economic resilience, particularly in the face of geopolitical risks.

💡Geopolitical Risk

Geopolitical risk refers to the impact of political events, such as wars or shifts in government policies, on global markets and investments. In the video, the speaker acknowledges ongoing geopolitical tensions, such as the war in Ukraine and conflicts in the Middle East, as sources of uncertainty. However, the speaker is optimistic that the expanding capital markets and infrastructure investments will help mitigate the negative impact of such risks on the global economy.

💡US Exceptionalism

US exceptionalism refers to the belief that the United States is inherently different and superior, especially in terms of its economic and political systems. The speaker in the video touches on this concept by highlighting the strength of the U.S. economy and its capital markets, which have driven its global influence over the past 25 years. The speaker believes that despite political differences, the U.S. will continue to be a dominant player in the global economy.

💡Commercial Real Estate

Commercial real estate refers to properties used for business purposes, such as office buildings, warehouses, and retail spaces. The speaker addresses concerns about the fluctuating nature of commercial real estate markets, noting that while some areas are experiencing declines, other sectors, such as data centers, are thriving. This reflects the natural shifts in market dynamics driven by factors like population changes and technology.

Highlights

BlackRock celebrates its 25th anniversary since going public on October 1, 1999.

BlackRock's stock performance has increased nearly 11,000% over 25 years, significantly outperforming the S&P 500.

The market has evolved with more private credit and infrastructure investments.

BlackRock's understanding of the global economy's shift towards capital markets contributed to its success.

Countries like Japan and India are focusing on building their capital markets to strengthen their economies.

The U.S. influence in the world has increased due to the depth of its capital markets.

BlackRock is involved in a $25 billion infrastructure project with plans for more substantial investments.

The company has partnerships with Microsoft, NVIDIA, and MGM to raise $30 billion for data centers.

Infrastructure investments are seen as crucial for economic growth and job creation.

Private capital is expected to play a significant role in funding new infrastructure projects.

BlackRock's role in the private credit space is expanding with a focus on long-term stable returns.

The global economy is seeing a diversification of supply chains, with countries like India and Mexico becoming key destinations.

Despite geopolitical issues, the broadening of capital markets is reducing systemic risk.

BlackRock remains optimistic about continued economic growth, with no expectation of a significant downturn.

The company's strategy involves working with governments and societies worldwide, regardless of political changes.

Transcripts

Happy anniversary. There was that prospectus the 1st of

October 1999 where BlackRock went public.

So you're 25 years young. That's great reading, wasn't it?

Yeah, it's a really good day for us. It's our 25th anniversary.

It's our day that we are closing the gap.

And right around this time we're going to have our 30th anniversary here in

Germany. So it's it's a good day.

I'm very pleased that our stock performance is up, you know, close to

11,000% over over that time, actually 20 times greater than the S&P.

So the market has changed so much in that time.

And it's amazing, 25 years, you know, there's a lot more private there's a lot

more credits. You're gone into infrastructure.

I'm not going to ask you 25 years to come will bring.

But what are you most optimistic about in the next three years?

Well, I think one of the reasons why our stock has done so well is I think we we

understood that more and more of the global economy would be moving to the

capital markets. And I think all the things you suggested

is just an indication of all the movements towards the capital markets.

And I think this is going to be broadly a world event.

We're seeing more and more countries focusing on their capital markets.

A great economy is a economy that has a strong capital markets and a strong

banking system. We've seen here in Europe historically a

strong banking system and a weak capital markets.

That's changing right now here in Europe.

But in other countries like Japan, you had the conservative government doubling

down their retirement up tax deductibility for for our product, that

they have a desire to building out their capital markets.

In India, Prime Minister Modi is focusing on retirement to build out

their capital markets, to broaden their entire economy.

And I think that's that's the movement for the next 25 years in front of us, a

further broadening of the global capital markets, whether that is private debt,

infrastructure debt, private equity, venture capital.

And I think this is important. And if I look back over the 25 years,

one of the strengths that I see is because of the strength of the US

capital markets, the US influence in the world has become broader and greater

than it was 25 years ago. And that is because of the depth of the

capital markets in all of this. Larry, where where do you find the best

deal? So, for example, in infrastructure, if

you look at the closure of JP, it's today, this massive play.

What does it mean for integration? What does it mean for actually

fundraising for infrastructure? Well, JP is in the midst of closing a

$25 billion infrastructure product the old BlackRock are in for a team is going

to be raising another 0 billion. And then we announce a partnership with

Microsoft, NVIDIA and MGM. We have aspirations of raising $30

billion of equity and then beyond that, more debt associated when we built out

these air data centers. So so to me, this is the dawning of

infrastructure. When I look around the world today, I

see the inadequacies of infrastructure in almost every country.

So we need to be decarbonized and we need to be digitizing, We need to be

moving forward. We need to be building out more and

more. And I think this is one of the big

issues. As I wrote in an editorial a few months

back in the FTA and I spoke with the G7, I spoke about every economy needs to

focus on growth. There's too much focus on should we

lower taxes, should we raise taxes, not enough?

How do we stimulate growth? And I think infrastructure is a major

component of how we stimulate growth. And we don't because of the breadth of

the capital market, we don't have to rely on federal spending or state

spending. There is enough capital in the private

sector that will be able to fund these new projects.

And so to me, this is the dawning of the new reality that we're going to see

broader broadening of public and private investing for infrastructure.

Is there a worry that it becomes quite political?

So there are a couple of projects, Malaysia and Minnesota, that have been

politicized. Is there a danger that infrastructure

becomes a new ESG? I see a very different outcome.

This is helping government build out their infrastructure.

There is no question there may be one project or another project that may be

politicized for one reason or another. But overall, in my conversations with

politicians worldwide, they know they're in need of more private capital.

So I dearly hope it's not politicized. If it's politicized in one location, it

means money going to seek another safer spot.

And so you always have those type of risk.

But capital is free moving and capital is going to be seeking a safe, sound

investment. You know, we are the largest retirement

manager in the world. Our job is of try to be finding

investments on behalf of our retirees to find safe outcomes over a long period of

time. So if there is a an event that

politicized, that money will leave and many will seek another destination.

Where does the smart money stay away from?

Is there anywhere in the markets where either price to perfection or it's too

risky? I know we talk about commercial real

estate markets move up and down. You always see you mentioned like

commercial real estate. You see too much money moving in 1 to 1

area. Then it then it runs away from it.

I think that's that's what markets do. They we test the outer boundaries of

pricing and it becomes maybe a level in which that we don't find it's a great

outcome for a long term investing. And then money moves to another another

destination. I think that's a natural movement.

So I'm not worried about one area versus another.

The one other thing that I think everybody asks me is, you know, is a

market so pricey and yet all this geopolitical issues,

I would argue today because of the the expansion of the global capital markets,

we're diffusing more risk than ever. There is actually less systemic risk

today than ever before. You mentioned private credit.

Private credit is chiefly matching a liability and an asset together.

It's not leveraging 8 to 1 like in a banking system.

That's a good example of diffusing some systemic risk.

But as more and more capitals broadening out how they invest, where they invest,

that actually reduces less concentration in one area.

Of course, we've seen in especially in cities, a decline in commercial real

estate. But that's a natural process.

And and but there's nothing systemic about it.

You may lose money on one building, but you're moving into other destinations

like data centers. You're moving into different cities that

may have rising population growth, but, you know, you can't fight demographics.

So there are some cities that are shrinking.

Obviously, commercial real estate in those cities are going to be declining

with a declining population. All right.

What's your your your play in private credit?

How much bigger do you want to. How much do you want in the space?

We have large aspirations as we wrote about it last year, and we continue to

be building out our private credit area. And there's more to come.

We're very excited about our position. If you just think about the role of

infrastructure and debt. If you think about what we announced

with MGM and Microsoft raising $30 billion of equity, but we're going to

have to we're going to raise 100 to 20 billion of debt associated with those

datacenters. So I actually believe as we move out and

building out more and more infrastructure investing, you're going

to see more infrastructure or private credit associated with that.

And so that will also represent a great, great opportunity.

You know, you have a hyperscale or like a metro, like a microsoft, like Amazon,

that you have their credit that you're going to be able to leverage it up and

provide returns, stable returns over 15, 20 years, because that's what those

leases will be, these data centers. And so you have a great opportunity for

long term investing. Larry, on the U.S.

economy and we talked about U.S. exceptionalism.

Do you worry that actually there are two very different outcomes with the US

election that could bring the economy in different ways?

Both candidates have in many cases very similar views on making the U.S.

even stronger. Both candidates, in their interpretation

of how that may happen, may differ. Our job is to work with any political

position. Our job is to be working with the U.S.

government like we're here in Germany, we're working with the German

government. There's going to be election here next

year, too. Our job is to be working with societies

and building a platform together. And so we're not trying to make any

judgments. But but you deploy capital differently.

Under President Trump and under President Harris, A, the margin not that

much. I think we over conflate what it means.

I mean, I don't think the U.S. is going to be pivoting that much

depending on what outcome. You know, we're not focusing on the day

to day movements of markets for folks who are is the U.S.

an exceptional place to invest for five years, ten years, 20 years?

That's what we're focusing on. Yes.

There may be moments where you can have a 10% or even 15 or 20% downdraft.

Does that represent a major shift or does it represent an opportunity?

And so you have to look at it that way. In most cases over the last 30 years,

any time you had a ten or 20% downdraft, you wanted to be there standing by and

buying. And those who ran away over a 20 year

horizon who have lost a lot of possible return.

Are you optimistic about Europe? So you're one of the biggest

shareholders in UniCredit. You're one of the biggest shareholder in

Commerzbank. Yes.

Does a combination needs you know, does it make a bit of impetus for Europe?

Does it make sense? I am a very large believer.

On a banking and a capital markets union.

I think that's the strength of the United States.

Europe needs to do that. I've read the Draghi report because we

are large shareholders and both I don't talk about any any any activity about

one organization versus another. But tactically, I look at the strength

of the United States, and much of the strength is because of the strength of

our capital markets and our banking system.

Europe needs a stronger capital market system and it needs a more unified

banking system. And I think that's going to be urgently

necessary for Europe to go to the next step.

So as a shareholder, you don't get involved.

Have you spoken to the chief executives? I, I don't talk about it.

And too I don't do any of the voting at BlackRock, but myself.

That's not my responsibility. Let me just say, I speak to a lot of

executives on this. I speak to a lot of politicians on these

matters, and that's between me and the politicians.

What's your take on China right now? I would've said before these Chinese

actions of last week in terms of the massive fiscal and monetary policy

shifts in China was going from bad to worse.

I think they recognize now that their economy was, you know, descending quite

rapidly. There was a lack of confidence.

And I think we're going to have to wait and see.

Is this enough to stabilize the I would say, the failings of of confidence.

And as I spoke to more and more executives in China, there was a fear

that, you know, we haven't found a bottom yet.

Could this be the bottom for China? You know, I think systematically you're

going to see more and more companies diversifying their supply chains.

And you're seeing that you're seeing India as a great destination.

You're seeing Philippines and Vietnam as great destinations closer to the United

States. Mexico has been an incredible

destination for more and more manufacturing.

And so that's not going to change. We are going to see a systematic change

in how we manage supply chains. I think it taught us a lot of lessons on

too large a dependencies. And with all the disruption in the

supply chains that everybody's waking up to, we need to have a more resilient

supply chain. Just before COVID, we talked about we

need we need to, you know, the most efficient supply chain when you have

those issues. Efficiencies didn't work and we had real

big disruptions. And every company is focusing on a more

a broadening, a more diversified supply chain so you don't have these type of

disruption. And that's a fit that's going to be a

downdraft for China. So that's not that will be continuing.

You seem very bullish about, I guess, the next 2 to 3 years.

But there's a lot of you know, there's China, there's a lot of unsettled

politics. There's a I, which I know you're playing

through Microsoft and data centers. Is there anything that unsettles you

that the world is living through? Look, I think every moment it's

unsettling. The war in Ukraine, which we haven't

talked about, is incredibly unsettling and very destabilizing for Europe.

The war in the Middle East right now with Lebanon and Gaza is very

unsettling. At the same time, as I said, we are

broadening the capital markets. And even with these type of disruptions,

we're not seeing disruption in the energy market

and we're not we're seeing more diversification.

And so the markets are able to overcome some of these.

Now, if they create more supply chain disruptions, they create supply chain

disruptions for energy. That changes a whole ecosystem.

But right now, I don't see anything that really, to me is going to be disrupting

this tremendous momentum. The amount of trillions of dollars that

are going to be necessary for infrastructure investing is going to be

vital to uplift the economies worldwide. And this is why I'm still, you know,

urging more and more economy to focus on growth, focus on how to build out their

infrastructure that will lift up the economy and create great jobs.

When you look at the US economy, you're not you're expecting a soft landing.

Or is there a danger actually that that we get?

I don't see any landing. The economy is going to continue to grow

two plus 3%. I don't even know why we use a landing.

Landing last time means it goes to zero. It goes.

You know, I don't I know we use those words.

It's really fun to talk about going to crash.

I have. I've been very consistent.

We are not we're not going to have a hard landing.

But I don't see a soft landing. We're going to continue we're continuing

to move and navigate it, that is. But despite all that, there are segments

of the economy that are struggling. There are segments of the economy that

are doing really well. We are you know, we spend so much time

focusing on the segments that are doing poorly.

And I'm not trying to suggest that's not the right thing to do, but we're not

looking at in the holistic way that other parts of the economy are doing

really, really well. Look at corporate earnings overall.

They've been very strong and I think they're going to continue to be very

strong. We have you know, we do have segments of

the economy that are very strong. And I think that's why I don't know why

we talk about a hard or soft landing. We're continuing.

We're going to grow at 2 to 3%. It's the Fed watchers blame the Fed

watchers because they're all who are they?

I don't follow them, by the way I look, let me just tell you

one thing. Right.

Let me just tell you, I think the forward curve is wrong.

We're not going to see and I think Chairman Powell said that yesterday.

You know, we're going to be patient as we I think the amount of easing that's

in the forward curve is crazy. I mean, I do believe there's there's

there's room for easing more, but not as much as a forward curve would indicate.

And this is what a flaw in the markets. It's the markets.

Markets move. They have to readjust.

And I think yesterday was a small readjustment.

I mean, I don't look at this as a problem.

You're talking about the tick tock on the market.

I don't spend any time on the tick tock of the market.

I'm aware of it, but I'm not you know, whether it's you know, the Federal

Reserve tightened I mean, eases another 150.

We'll see. We'll see.

I mean, you know, I think we're I see more policies by more government that

tend to be more inflationary than deflationary.

And so with that in mind, it's hard for me to see another 200 basis points of

decline in short rates.