Speaker 1: Larry, where should we begin? There is as we were
Speaker 1: just discussing a lot of history in this club, there's
Speaker 1: a lot of history in this building.
Speaker 2: So where are you going with this?
Speaker 1: How would you characterize?
Speaker 2: How would you characterize this moment in American history?
Speaker 3: It's no different than anything else. We're fine. I mean,
Speaker 3: you know, look at in our thirty seven years of
Speaker 3: running Black Rock were not focused on the day to day.
Speaker 3: We try to consistently talk with a narrative about long
Speaker 3: termsm working with clients in the long run. I mean,
Speaker 3: obviously things when you see a twenty percent market decline
Speaker 3: in three days, obviously it has significant impacts. And the
Speaker 3: ripple effects of of the potential of teriffs is going
Speaker 3: to be longstanding. And so our job right now is
Speaker 3: to just be We're having more conversation with clients. Probably
Speaker 3: the last time we had this many client conversations that
Speaker 3: Blackrocks was right when we closed our economy in March
Speaker 3: of twenty twenty. And this is a type of time
Speaker 3: where we really try to connect. We manage money for
Speaker 3: people in one hundred and six different countries. We have
Speaker 3: offices in thirty six countries. So what we need to
Speaker 3: be doing every moment is bringing all this global information
Speaker 3: that we gather with eleven plus trillion dollars of money
Speaker 3: and hearing and paying attention to the flows and where
Speaker 3: the money is going. But the magic sauce of Blackrock
Speaker 3: is the last twenty percent of being local and being
Speaker 3: really connected to each and every client worldwide and try
Speaker 3: to really add to them. So we're bringing all this
Speaker 3: global information, but we really try to be local in
Speaker 3: every community where we operate and work. And as a fiduciary,
Speaker 3: our job is to be helping Canadians right now. Our
Speaker 3: jobs are helping Europeans now. Our job is to be
Speaker 3: helping Americans now. And so you know, obviously markets are
Speaker 3: down twenty percent, some stocks are down over thirty forty
Speaker 3: percent from their high water marks of just from January.
Speaker 3: But in the long run, I would say, in the
Speaker 3: long run, this is more of a buying opportunity than
Speaker 3: a selling opportunity. That doesn't mean we can't follow another
Speaker 3: twenty percent from here too, But I do believe over
Speaker 3: the long run the vitality of the United States will persist,
Speaker 3: and I do and I'm still proud in terms of
Speaker 3: working with every investor worldwide.
Speaker 2: When you just said.
Speaker 1: It doesn't mean that the market can't drop another twenty percent.
Speaker 2: Yeah, bit of a gas go through the audience.
Speaker 3: I won't like it, but it's not gonna you know,
Speaker 3: and and and but but unlike most like let's say
Speaker 3: eight to o nine, I don't you don't see the
Speaker 3: leverage in the system. You see, you don't see systemic risk.
Speaker 3: You see. This is more geopolitical issues. Look, the fundamental
Speaker 3: issue that that we're all trying to recognize. Post World
Speaker 3: War Two, the United States was a global stabilizer. And
Speaker 3: I've been now you know, in July will be my
Speaker 3: forty ninth year in finance here in New York City,
Speaker 3: and that's been one of the foundational tenets of of
Speaker 3: I would say the financial community that you know, we
Speaker 3: we we live and work and grow with our economy.
Speaker 3: And one of the main foundations in the US that
Speaker 3: we are a global stabilizer. Obviously, in the last week
Speaker 3: we have not been a global stabilizer, and I think
Speaker 3: that is something that we Is this going to persist?
Speaker 3: Are they going to be new global stabilizers in the world. Well,
Speaker 3: if there are new global stabilizers in the world, and
Speaker 3: I'm not suggesting there will be. These are questions that
Speaker 3: that must be asked. You know, what is the role
Speaker 3: of the dollar in that in that ecosystem. So there's
Speaker 3: a lot of questions that we need to be asking yourselves.
Speaker 3: But you know, eighty days ago in Davos, the phrase
Speaker 3: was American exceptionalism. You heard everywhere. I would say, probably
Speaker 3: every meeting I went to everyone who's focusing on how
Speaker 3: to do more in the United States. And obviously that's
Speaker 3: been thrown out right now. Obviously you could look back
Speaker 3: and say that was, you know, just irrational exuberance of
Speaker 3: too much related to the US. And so that we
Speaker 3: are seeing a recalibrations. You know, seventy five percent of
Speaker 3: the market value, this would before the last few days,
Speaker 3: seventy five percent of the market value of the global
Speaker 3: capital market was here in the United States. Can there
Speaker 3: be a re ordering of that in the short run,
Speaker 3: maybe in the middle, medium term? Sure, And so all
Speaker 3: of this this is the type of questions. Clients have
Speaker 3: historically underweighted Europe. Okay, so far this year that's been
Speaker 3: a bad trade. Should clients be reorienting themselves back into Europe?
Speaker 3: Should to be reoriented into more of a a more
Speaker 3: broadening of a portfolio. So all these questions are being asked,
Speaker 3: and I don't have a good answer yet. But I
Speaker 3: am troubled by that we are not the stabilizer as
Speaker 3: a country. We are destabilizing. And I think this is
Speaker 3: what the financial markets are trying to grapple with.
Speaker 1: There are, let's say, at least a couple of competing narratives.
Speaker 1: One of those narratives is from President Trump himself. He
Speaker 1: says that the tariffs he rolled at last Wednesday in
Speaker 1: the Rose Garden will create an economic renaissance and make
Speaker 1: America wealthy like never before. And then the other narrative
Speaker 1: is the public market narrative. That's the one that's telling
Speaker 1: us something altogether different, that the tariffs are an economic
Speaker 1: train wreck in the making, and if anything, they'll make
Speaker 1: not only the US but perhaps other countries a lot poorer.
Speaker 2: Which of those narratives is right?
Speaker 3: There's probably something in between. But you know, as a
Speaker 3: market partsis what I'm more in the market narrative. So
Speaker 3: let's be clear. In the United States right now, eight
Speaker 3: percent of workers who are in manufacturing eight percent, eight
Speaker 3: eight So how much more should it be sixteen percent?
Speaker 3: I don't know. But it's not I don't think you know.
Speaker 3: I looked up what they are. The new entry level
Speaker 3: of an automotive worker is today. It's about twenty five
Speaker 3: dollars an hour. Twenty five to twenty eight dollars an hour.
Speaker 3: That's not that's not a great job versus today. And
Speaker 3: and Brad Smith, the president of Microsoft, talked about this
Speaker 3: last Monday, stating that we have we're going to have
Speaker 3: a shortage as large as five hundred thousand electricians in
Speaker 3: this country. Electricians today are paid over one hundred and
Speaker 3: fifty thousand dollars a year, especially to the advanced electricians
Speaker 3: are doing AI and all that. So there are you know,
Speaker 3: there are many ways where we could create great jobs
Speaker 3: instead of this whole reordering. And so I'm I'm I
Speaker 3: believe the markets. I've always believed in the markets, and
Speaker 3: I believe the markets are telling you the real story.
Speaker 3: And the markets are telling it that story right now.
Speaker 3: Could the story be a little too negative? Now? Maybe?
Speaker 3: Could it be not negative? Not? Maybe too I'm not
Speaker 3: here to suggest we're over this pathway. We'll have to
Speaker 3: see how this plays out, you know. And so we're
Speaker 3: going to have to see how this plays out. But
Speaker 3: let me step back and respond to another statement you said.
Speaker 3: Let me just reiterate, seventy five percent of the global
Speaker 3: capital markets rested here in the United States. I would
Speaker 3: say that means the United States is fabulously successful when
Speaker 3: you have that. That being said, and I wrote this
Speaker 3: with my CEO letter that came out a week ago today,
Speaker 3: the biggest issue we have in capitalism, the biggest difference
Speaker 3: that we have today is we have not seen a
Speaker 3: broadening of the economy as much as we need to.
Speaker 3: And I think this is what President Trump is trying
Speaker 3: to do. How can we brought in the economy that
Speaker 3: we can have more opportunity for more I mean, like
Speaker 3: I said, I think we need more more you know,
Speaker 3: more schools that helped men and women in the trades
Speaker 3: like electricians and other where we know we have a
Speaker 3: severe shortage right now. And the other thing I would say,
Speaker 3: if you look across the different manufacturer expectum, there's a
Speaker 3: lot of job openings. My biggest issue is all of this,
Speaker 3: and this is where the market is not focusing on enough.
Speaker 3: All of this, in my mind, is much more inflationary
Speaker 3: than the market is expecting right now. How much more
Speaker 3: inflationty Well, the market is talking about all the recessionary pressures,
Speaker 3: which obviously will mute down prices. But if all the terrats,
Speaker 3: and I'm not saying they're going to be put into place,
Speaker 3: if all the terrafts would be it would be put
Speaker 3: in place. Almost so many items are going to be
Speaker 3: much more elevated, two more expensive, much, yes, more expensive.
Speaker 3: We have we have so many needs for jobs already
Speaker 3: and we only have we're you know, we're at four
Speaker 3: percent of employment. When I started in walterd in nineteen
Speaker 3: seventy six, full employment was considered six percent, and you know,
Speaker 3: we evaluate it and now we say, maybe what is
Speaker 3: full employment three or four? I don't know if they
Speaker 3: even to use that term anymore. But you know, you know,
Speaker 3: we have shortages of workers, and we're going to have
Speaker 3: even more shortage of workers. And if you overlay a
Speaker 3: part of the reason why we had American exceptionalism eighty
Speaker 3: days ago and AI, the need to build out infrastructures
Speaker 3: just as great today. And my biggest fear as we
Speaker 3: roll out AI in the United States, building these data centers,
Speaker 3: building our electricity grids, building out America, building out our infrastructure,
Speaker 3: we don't have enough workers already. All of this is
Speaker 3: going to lead to higher elevated wages, which is in
Speaker 3: some respect a good thing, but a lot of it
Speaker 3: is going to be elevated inflation. So this notion that
Speaker 3: the federal Reserve is going to tighten, I mean, see
Speaker 3: the ease four times this year. I see zero chance
Speaker 3: of that. I mean, I'm much more worried that, you know,
Speaker 3: we could have a we could have an you know,
Speaker 3: elevated inflation that's going to bring rates up much higher
Speaker 3: than they are today.
Speaker 1: Zero chance of four or five FED cuts, depending on
Speaker 1: what what what moment we're looking at futures prices, or
Speaker 1: zero chance of any cuts whatsoever.
Speaker 3: That's not an unrealistic idea because and I think the
Speaker 3: Chairman Paul said that last week, but he said we
Speaker 3: need to have more information, right you know, I don't
Speaker 3: see any reason to cut right now. And that's how
Speaker 3: I interpret his comments last week.
Speaker 1: So you're concerned about inflation, you briefly, but.
Speaker 3: Can I interruptxcuse me? Sure, I'm concerned about inflation if
Speaker 3: all the proposed terrorists truly go into place at the
Speaker 3: same time, at the same time, you have you know,
Speaker 3: the you know, as if the president is successful and
Speaker 3: changing the behaviors of other countries by bringing down the terrafs,
Speaker 3: you know, we could actually the end result could be
Speaker 3: lower terraffs across the board. And I think that's what
Speaker 3: they're when he talks about reciprocal terrafts. He's talking about
Speaker 3: I'm going to match your terraces and if we both
Speaker 3: you bring him down, I'm going to bring him back down.
Speaker 3: And so there is some value to that to read.
Speaker 3: Our terrace system was founded post World War two, post
Speaker 3: Korean War, where we believe that if we could lift
Speaker 3: these other countries posts, these crisises American business, that would
Speaker 3: be the biggest beneficiary. And we have not changed how
Speaker 3: these asymmetric tariffs that we've created over the last eighty years.
Speaker 3: And you know, is it is it is there a
Speaker 3: value today to relook at how we have terrafts today
Speaker 3: and how to try to make it more symmetrical. Sure,
Speaker 3: and so see how this all plays out the But
Speaker 3: the uh, my former partner rough lost time.
Speaker 1: So you've touched on this idea, Larry, that perhaps there's
Speaker 1: some justification for a change in.
Speaker 3: Yeah, I mean, look at I was with a senator
Speaker 3: today and he talked about we import twenty nine million tons,
Speaker 3: which seems like a lot of beef from Australia. Yeah,
Speaker 3: and yet our beef cannot go to Australia. Okay, there's
Speaker 3: something that sounds like a legitimacy.
Speaker 1: So that's that's one of the justifications that President's sites,
Speaker 1: right fairness, yeah, right, other countries are, in his words,
Speaker 1: ripping us off.
Speaker 3: The second, I'm not going to go talk about that, Okay.
Speaker 1: The second is revenue taxing imports will raise trillions of
Speaker 1: dollars to pay down the federal debt.
Speaker 3: At who's costs, So no, that's never the same.
Speaker 1: Then there's a third, right, rein industrialization that companies will
Speaker 1: bring jobs and factories back to America. Which of those
Speaker 1: is that a package of arguments that makes sense?
Speaker 3: I believe there are in some areas where we need
Speaker 3: to bring back manufacturing for national security areas. I don't
Speaker 3: think Barbie dolls is something that we're gonna or Swiss
Speaker 3: watches or anything like that that we have to have
Speaker 3: or or or shrimp from this from Vietnam. I mean
Speaker 3: all these different things there are. I'm you know, there
Speaker 3: are some industries where having a more control of your
Speaker 3: supply chains is probably very.
Speaker 1: You're making the case from much more calibrated, But that's
Speaker 1: why I am.
Speaker 3: I'm always a little more balanced in the center.
Speaker 1: Yes, what about the the theory that these retaliatory tariffs
Speaker 1: are part of a Nixonian grand strategy like dropping the
Speaker 1: gold standard was to solve America's debt problem by four
Speaker 1: seeing down treasury yields and weakening the dollar.
Speaker 2: That's a theory that has some purchase right now.
Speaker 3: Well, I do believe the dollar will be weakened. I mean,
Speaker 3: most political theory is, or economic theory is tear us
Speaker 3: raise the value of the currency. I think it's going
Speaker 3: to weaken the dollar. And look, one thing I would
Speaker 3: say with certain you know, the economy is weakening as
Speaker 3: we speak, and so the need for the administration to
Speaker 3: focus on these pro growth agendas, which was much of
Speaker 3: what the President campaigned on. We have to get that going,
Speaker 3: whatever it's the tax cut. We need to be deregulating,
Speaker 3: we need to be streamlining, permitting exactly all the things
Speaker 3: I've been writing about where we need to get the
Speaker 3: private capital, private markets to start investing in the United States.
Speaker 3: We need to you know, and I think right now
Speaker 3: the market is not focusing on all these We forgot
Speaker 3: about the power of AI, the power of all these
Speaker 3: different changes. We're focusing on the market, But the macro
Speaker 3: trends of AI, the macro trends of rebuilding our infrastructure,
Speaker 3: these macro and if the President is successful in deregulating,
Speaker 3: if he's successful in streamlining permitting, then you know, we
Speaker 3: could go back to this view that we have a
Speaker 3: major growth agenda in front of us. The President has
Speaker 3: been focusing on right now areas that in my mind,
Speaker 3: in the short run, are very inflationary and destabilizing the economy.
Speaker 3: And that's what we've been talking about. But if we
Speaker 3: can find ways of rebuilding, rebuilding growth through these agendas,
Speaker 3: and then you know, as I said at the beginning,
Speaker 3: these the market declines, we're going to look back and say,
Speaker 3: this might be a good entry level. Did we get
Speaker 3: back into the market. Are we.
Speaker 2: Headed for recession? Are we inter recession?
Speaker 3: You know, most CEOs I talked to I would say
Speaker 3: we are probably in a recession right now, right now,
Speaker 3: right now. A couple of airline CEOs told me. One
Speaker 3: COO specifically said, you know, the airline industry is like
Speaker 3: a proverbial bird in a coal mine, canary in the
Speaker 3: coal mine, and I was told that the canary is
Speaker 3: sick already. If you look at what's going on in
Speaker 3: air traffic, and how people are changing, and how so
Speaker 3: many people who like Canadians, who are not coming to
Speaker 3: the United States, we're seeing in very different sectors are
Speaker 3: real downturn.
Speaker 1: I have no doubt that people in this room and
Speaker 1: elsewhere are encouraged by this idea of yours, that there
Speaker 1: are opportunities to seize. And it doesn't surprise me to
Speaker 1: hear you say that, because in the sixteen years that
Speaker 1: we've known one another, you've always found a way to
Speaker 1: think constructively about the future, to make a case for
Speaker 1: taking risk, to make a case for staying invested.
Speaker 2: So explain that case right now.
Speaker 1: If, as you say, there's the possibility that at the
Speaker 1: very least, equity prices continue to go down, what should
Speaker 1: people do?
Speaker 2: Where are these opportunities?
Speaker 1: I can see why there might be opportunities for a
Speaker 1: firm like black Rock, but what does everybody else do?
Speaker 1: Do you stay invested, do you take risk, do you
Speaker 1: take money off the table?
Speaker 3: What do you do well? I would not be taking
Speaker 3: money off the table right here. I think that we've
Speaker 3: had enough, you know, from the high water point of January,
Speaker 3: which may have been excessive. You know, I think rolling
Speaker 3: one year average S and P is down about seven percent. Now, yeah,
Speaker 3: could it be down, as I said, could it be
Speaker 3: down seventeen percent from rolling one year average? Sure, that's
Speaker 3: that would be. That would be about forty percent from
Speaker 3: the high water mark.
Speaker 2: That's a lot.
Speaker 3: That's a lot, and it's a great entry level of
Speaker 3: getting because I think the macro trends are not are
Speaker 3: not going to change the need for the United States
Speaker 3: to rapidly build out AI as imperative today as it
Speaker 3: was three months ago. Our need to invest in our
Speaker 3: infrastructures as great as today as ever before. And so
Speaker 3: some of the big macro trendsors have not changed. The
Speaker 3: narrative that has changed. We're not talking about it. But
Speaker 3: I think if you spent time right now with the
Speaker 3: CEOs of the Hyperscalers and this, the Navidia and other players,
Speaker 3: they would say the need is just as great today
Speaker 3: as there was three months ago. And I think some
Speaker 3: of the big macword trends are just are still in place.
Speaker 1: Do you believe in in a Trump put who Trump put?
Speaker 1: What is that if the market's weakened too much that
Speaker 1: he'll reverse course, oh on policy tariffs for example, or
Speaker 1: somehow engineer a combination of stimulative measures to bail them out.
Speaker 3: That's what I said, if you know, I do believe
Speaker 3: the president is going to be focusing on these pro
Speaker 3: growth agendas, and so we'll see how that offsets on.
Speaker 1: Front though, that's something that he's been promising the whole
Speaker 1: way along, correct, and so Trump put would be effectively
Speaker 1: about the president getting scared.
Speaker 3: I don't know how to value that.
Speaker 1: Tariffs, Larry, are just one piece of a much more
Speaker 1: comprehensive policy agenda. Since the inauguration, we've seen major initiatives
Speaker 1: on everything from immigration and the border to rolling back DEI.
Speaker 2: I could go on.
Speaker 1: There's a lot, most of it by executive order. Again,
Speaker 1: trying to take a step back from the burning question
Speaker 1: of tariffs, which are occupying the markets of the moment.
Speaker 1: How would you evaluate these first eleven weeks of Trump
Speaker 1: two point zero.
Speaker 3: A lot of volatility, a lot of change, and I
Speaker 3: think even before the tariffs there is so much change,
Speaker 3: so much volatility. I think this is one of the
Speaker 3: reasons why even four or five weeks ago, most CEOs
Speaker 3: were telling me businesses incrementally getting worse. I think, whether
Speaker 3: it was a threat of terrorists, whether it's just all
Speaker 3: these changes. I think more and more people were pausing
Speaker 3: and slowing down consumption as we speak, and I think
Speaker 3: all of this is just going to slow down consumption.
Speaker 3: One interesting fact that I wrote about this in my
Speaker 3: CEO letter this here. You know, there was always this
Speaker 3: notion that Main Street was different than Wall Street, and
Speaker 3: we always, you know that you had it was it
Speaker 3: was good political statements about you know, Wall Street is
Speaker 3: here and Main streets here. Well, the reality is sixty
Speaker 3: two percent of Americans now invest in equities. So the
Speaker 3: market impact is impacting Main Street. And so even before
Speaker 3: this market setback you had, you were starting to see
Speaker 3: more and more I would say trepidation by consumers more
Speaker 3: and more slowing down on their purchases, slowing down theirifacation plans,
Speaker 3: and all of this. I would imagine now where the
Speaker 3: market setback is going to freeze more and more consumption,
Speaker 3: and I think we're going to start seeing that really quickly.
Speaker 3: So there's you know, and so I do believe that
Speaker 3: in the coming months, we're going to we're going to
Speaker 3: see more evidence of a slowdown in this economy, and.
Speaker 1: Investors are going to have to continue pricing that in,
Speaker 1: whether that's question on economic growth, whether it's whether less
Speaker 1: consumption leads to.
Speaker 3: But we're going to also see how companies navigate these
Speaker 3: these tariffs. Are they going to navigate the terrafs by
Speaker 3: trying to jam it down the manufacturers and lowering prices.
Speaker 3: We've already heard a couple of US retailers going back
Speaker 3: to their place and manufacturing and telling you got to
Speaker 3: lower your prices. So that's one point. One point is
Speaker 3: are they going to absorb the terraffs in their in
Speaker 3: their margins that's not good for the equity mark mar
Speaker 3: or are they going to just pass it all the
Speaker 3: way on to the consumer and elevate prices. It's probably
Speaker 3: going to be a combination of all three. But so
Speaker 3: until we see how this all plays out, and then
Speaker 3: two how much of these tariffs are going to be
Speaker 3: actually implemented, we'll see. But I think most of America
Speaker 3: does not understand the extent of these TIFFs. What is
Speaker 3: it eighty six percent of toys are manufactured in China.
Speaker 3: So there's what a sixty seven percent cumulative tariffs Now
Speaker 3: in China, those are going to be expensive barbie dolls,
Speaker 3: they are and mean, But across the board, you know,
Speaker 3: the terraffs across the board, everything we're talking about is
Speaker 3: just going to be you know, I'm not saying one
Speaker 3: hundred percent is going to be passed on in terms
Speaker 3: of the final purchase price, but a lot of it
Speaker 3: can be passed in and then the cumulative effect of that.
Speaker 3: So just think about there are more American jobs in
Speaker 3: the fabrication of steel and aluminum there than there is
Speaker 3: an in making steel in aluminum. So we now have
Speaker 3: these aluminum and steal terrorists in place. What does that
Speaker 3: impact in the demand of the fabricated products? So all
Speaker 3: these things have major ripple effects that we have. Nope,
Speaker 3: and this is why the market's down because it just
Speaker 3: creates this vast amount of uncertainty how this will all play.
Speaker 1: Out, and uncertainty means paralysis right in the boardroom in
Speaker 1: the c suite for how long?
Speaker 3: How long?
Speaker 1: This is the question that management teams are asking themselves
Speaker 1: right now. You know, how do we move forward? Well,
Speaker 1: is there a way to move forward? Yet or do
Speaker 1: you as you said, do you have to wait and see.
Speaker 3: I think in most cases you're going to have to
Speaker 3: wait and see. But look at it. If you're if
Speaker 3: you're in a boardroom looking at acquiring a company, well
Speaker 3: it's cheaper now, a lot cheaper.
Speaker 2: Now, but you also may have less currency.
Speaker 3: Okay, fine, But if you're doing one hundred percent, equity
Speaker 3: doesn't really matter. So I you know, I don't it's
Speaker 3: not a binary decision. I don't think it's going to
Speaker 3: defer all these decisions. I mean, obviously, already we saw
Speaker 3: a number of IPOs pausing, and probably for a good reason.
Speaker 3: But it's not like it's over. We're going to reassess itself.
Speaker 3: Maybe some of the evaluations of these companies that we're
Speaker 3: going to go public are going to be down twenty percent.
Speaker 3: In the long run, if they have a vital, strong
Speaker 3: business proposition, their stock will be fine. Yes, so sell
Speaker 3: a little less secondary shares, sell all primary and it
Speaker 3: really doesn't matter. Larry, what are.
Speaker 1: Foreign leaders telling you about these big shifts in US
Speaker 1: posture and policies.
Speaker 3: I saw a couple of foreign leaders last week in Europe.
Speaker 3: You're asking my opinion, So I am too. They're pretty shocked.
Speaker 3: They're questioning, they're not. They're also also willing to think about, Okay,
Speaker 3: where is there asymmetry in the trading agreements with the US,
Speaker 3: and is there means in ways that we could be,
Speaker 3: you know, managing this more successfully that we can move forward. Uh,
Speaker 3: someone are going to be adapting. Someone are going to
Speaker 3: be retaliatory like what China did.
Speaker 1: What do you think is the right approach to stand
Speaker 1: up to President Trump like Mark Karney is doing in
Speaker 1: Canada and the Europeans might get around to doing, or
Speaker 1: be more non confrontational like the UK or Mexico.
Speaker 3: I don't think Mark has been one hundred percent confrontational.
Speaker 3: I mean, I think it's talking a good game. Look,
Speaker 3: all right, everybody's job is to try to solve problems
Speaker 3: and try to move forward. If you truly believe in
Speaker 3: your country situation that you've got to be confronational, see
Speaker 3: how that works. I don't. I don't think there's one
Speaker 3: shoe that fits all, and so I think we're all
Speaker 3: going to have to play this out right. Look, I
Speaker 3: do believe the issues that we had with Mexico were
Speaker 3: more with less related in most trade it had much
Speaker 3: more to how to do with immigrants and fentanyl, and
Speaker 3: I think the government of Mexico has mitigated much of
Speaker 3: that in the short run. So we'll see how that
Speaker 3: all plays out. So that came to a better outcome,
Speaker 3: better outcome for America too.
Speaker 1: Will it be harder to operate as an American company
Speaker 1: outside the US.
Speaker 3: I'm hearing worries and concerns, But if you know, whether
Speaker 3: the US is put in a put on a pedestal,
Speaker 3: or knocked off a pedestal, each in every country, each
Speaker 3: and every company has a responsibility to prove every day
Speaker 3: that your fiduciary in each every country. So if you
Speaker 3: if you were a company that was not proving each
Speaker 3: day that you're trying to be working on behalf of
Speaker 3: your clients in Italy or your on behalf of your
Speaker 3: clients in Korea or Australia or Canada or Mexico, You're
Speaker 3: not going to be serving your clients in the long run.
Speaker 3: And so you know to me, this is why I
Speaker 3: started off this conversation. Today, we're in one hundred and
Speaker 3: six different countries. We have offices in thirty six countries.
Speaker 3: Our job is to prove every day that we are
Speaker 3: working on behalf of each and every client, and so
Speaker 3: of eleven plus trillion dollars that we manage is zero,
Speaker 3: is our money zero. So we don't prove every day
Speaker 3: that we are working on behalf of each and every
Speaker 3: client and helping them, then we're going to fail anyway.
Speaker 3: Will there'd be some negative overhang maybe, but I don't
Speaker 3: believe that's going to be translating into into I would say,
Speaker 3: a direct impact on the future of our business.
Speaker 1: There is obviously no small, small I should say, no
Speaker 1: small amount of risk in running a foul of the president.
Speaker 1: He has shown himself to be willing to inflict a
Speaker 1: lot of economic pain on his critics and his opponents.
Speaker 1: Do corporate leaders have to choose their words carefully?
Speaker 3: I think corporate leaders have to choose their words carefully
Speaker 3: with every government, it doesn't matter who's in who's in office.
Speaker 3: I think our job is to as a leader, you know,
Speaker 3: as a leader of Blackrock, my job is to be
Speaker 3: working on behalf of each in every country as best
Speaker 3: as we can. Our job is to provide the best
Speaker 3: advice that you can. And when you can can give
Speaker 3: advice that it's held in private, you can do it
Speaker 3: one on one or in a small group of people.
Speaker 3: You know, your job is to be earnest and forthright
Speaker 3: and not to bs anybody. And so I have made
Speaker 3: my career around not telling political leaders what they want
Speaker 3: to hear. But I've led my professional career in telling
Speaker 3: political leaders what I think they should hear.
Speaker 1: When I used the term economic pain, I had one
Speaker 1: thing in mind. A lot of people, including many people
Speaker 1: here in this room, have been following the president's attacks
Speaker 1: on law firms affiliated with attorneys who prosecuted him, and
Speaker 1: some including Paul Weiss and Scatten and Wilkie Farr, have
Speaker 1: cut deals to save their businesses.
Speaker 2: Others are fighting the president in court. What do you
Speaker 2: make of that? That use of presidential power.
Speaker 3: I let's move on. I mean, honestly, you.
Speaker 2: Know, I could rephrase.
Speaker 1: I could rephrase if the president threatened to bar Blackrock
Speaker 1: from federal business like managing money for civil servents, what
Speaker 1: you do and warned your clients they might.
Speaker 2: Lose federal contracts? How would you handle that?
Speaker 3: I would look at what the issues are at large,
Speaker 3: and what what the the administration is asking, and I
Speaker 3: would make a judgment on what is the value of that?
Speaker 3: And am I standing up to the principles that I
Speaker 3: tell every employee at the firm that we're Are we
Speaker 3: living those principles every day? Are we doing what we
Speaker 3: need to be doing, or or you know, is there
Speaker 3: you know, is there something that in my past that
Speaker 3: we needed to mitigate. So I don't know the circumstances
Speaker 3: a bout any of the law law firms, you know
Speaker 3: Blackrock has has. You know, our job is to be
Speaker 3: working on behalf of everybody. Last year, clients were rewarded
Speaker 3: US six hundred and thirty one billion dollars of new
Speaker 3: money on Friday. Well, that was our first quarter. You know.
Speaker 3: Our job is to prove every day that we're doing
Speaker 3: we're working for our acid owners. And so I could
Speaker 3: answer that question how we I would play it.
Speaker 1: You were at the White House last month to see
Speaker 1: the President after Blackrock clinched a multi billion dollar deal
Speaker 1: to buy the port operations from a Hong Kong company,
Speaker 1: C J.
Speaker 2: Hutchison.
Speaker 3: I'm glad you said Hong Kong. It's important right.
Speaker 1: That deal was important because it included two ports in
Speaker 1: Panama that the President had accused of being controlled by China.
Speaker 1: Gd Evans was at this meeting Mark Waltz was at
Speaker 1: this meeting. Elon Musk was at this meeting. What did
Speaker 1: you learn from them?
Speaker 3: I'm not going to talk about the meeting. Let me
Speaker 3: just go back on the TikTok of the deal. Hutchison
Speaker 3: has been talking about for two three years on the
Speaker 3: idea possibly entertaining an idea of selling their ports. If
Speaker 3: you look at their stock price, their stock from our
Speaker 3: our evaluation was trading at thirty percent of book. It
Speaker 3: was trading around a twenty six billion market cap at
Speaker 3: that time, and they saw the valuation of the ports
Speaker 3: to be worth at least twenty two billion of it.
Speaker 3: And they have many more enterprises within the whole complex.
Speaker 3: So they went out and spoke to dozens of different
Speaker 3: potential investors. Because of our acquisition at GIP, we already
Speaker 3: had a large position in ports, having over fifty ports
Speaker 3: alongside our partners MSc and their port business till and
Speaker 3: we coveted the opportunity of adding on the Hutchinson's ports
Speaker 3: to the port business that we have on it already,
Speaker 3: and all the who's who of New York private equity
Speaker 3: was bidding on it. Every major shipping company was put
Speaker 3: a bit in it. And so this is a pretty
Speaker 3: sought after asset, and I believe our consortium with MSc
Speaker 3: until just gave us an overwhelming position. And the one
Speaker 3: thing I would tell this audience of the investment was
Speaker 3: done as a profit opportunity on behalf of our investors.
Speaker 3: There was not a kernel of decision making related to
Speaker 3: any geopolitical considerations at that time. That being said, once
Speaker 3: we started into an exclusive conversation in locking down the
Speaker 3: deal with the seller, I did reach out to members
Speaker 3: of both parties, not just one part PARTI. I did
Speaker 3: have conversations with the administration and I and we had
Speaker 3: conversations with some of the countries where the ports were located.
Speaker 3: So so we we you know, I don't think I
Speaker 3: would have done anything differently. We were trying to be
Speaker 3: a fiduciary in everything we were doing. Now, obviously it
Speaker 3: became much larger because if you read ninety percent, maybe
Speaker 3: one hundred percent of all the papers, it said Blackrock
Speaker 3: bought Panama. I mean, and.
Speaker 1: It's not a done deal yet. Chinese raised some concerns.
Speaker 1: What happens now.
Speaker 3: I think this is going to be a very interesting
Speaker 3: thing to watch for geopolitical purposes and China is just
Speaker 3: you know, China is going to be reviewing this just
Speaker 3: like every other MSAction. We would have to go to
Speaker 3: fifty different jurisdictions for anti competitive reasons. In China because
Speaker 3: one of the big users of all the ports, none
Speaker 3: of the ports, we're inch on it, that'll be one
Speaker 3: of the jurisdictions that will will review the transaction. And
Speaker 3: so that's the only way actually China can stop it.
Speaker 1: Well, is there a greater risk now because of last
Speaker 1: week's tariff announcement that it does actually move to.
Speaker 2: Block it from taking place?
Speaker 3: Of course it can, but it's going to be nine
Speaker 3: months of regulatory review. So we'll see how this all
Speaker 3: plays out. I'm actually pretty optimistic that we will find
Speaker 3: a solution because if you look at it, everything was
Speaker 3: done in the right order. It was not done politically
Speaker 3: despite all the narrative. It was done.
Speaker 1: A solution with or without the Panamanian ports.
Speaker 3: I'm pretty confident would be the Panamic ports. Will he
Speaker 3: represent four or five percent of the total valuation of
Speaker 3: the whole enterprise. You know there are six there's six
Speaker 3: port concessions at the Suez Canal that no one has
Speaker 3: ever talked about. So I just give you, you know,
Speaker 3: some of the color. I mean, the port of Rotterdam,
Speaker 3: the biggest port in Europe, is one of the concessions there.
Speaker 3: It's going to be reviewed as one transaction.
Speaker 2: You're confident.
Speaker 3: Yeah, well, yea as of the moment.
Speaker 1: Yeah, is this kind of thing going to become a trend,
Speaker 1: big ticket m and a especially if critical infrastructure driven
Speaker 1: by geopolitical risks.
Speaker 3: Well, let's be clear, two years ago, no one would
Speaker 3: you even care about a port. It would have been
Speaker 3: on page forty of financial press. I mean, there was
Speaker 3: a lot of poor transactions in the last two years
Speaker 3: that no one cared about. Yeah. I think, I think
Speaker 3: this is a new reality today that countries are going
Speaker 3: to be looking at all these different geopolitical issues. That
Speaker 3: being said, you know, Blackrock last year announced three mergers.
Speaker 3: There were three acquisitions, two of them are closed. In
Speaker 3: the first two we were hung up by one jurisdiction
Speaker 3: for crazy reasons. The g IP deal was closed because
Speaker 3: one of the assets, one of the infrastructures they had,
Speaker 3: and our prequent technology transaction was held up by for
Speaker 3: five months by one jurisdiction. But they both closed and
Speaker 3: so it just requires conversation, and we're mostly through the
Speaker 3: regulatory review of HPS and we have already said it
Speaker 3: should close early second quarter. Excuse me, this is early
Speaker 3: third quarter or no, late the second quarter. I got
Speaker 3: to get my quarters right. And we're on track. But yeah,
Speaker 3: I do believe there's going to be a little more review,
Speaker 3: but we saw that already a year in the last year.
Speaker 1: And the more review, yes, for sure, more activity, more
Speaker 1: M and A activity because of geopolitical risks.
Speaker 3: Oh no, if the geopolitical risk creates economic opportunities, yes,
Speaker 3: but M and A is not going to because of
Speaker 3: geopolitical issues, because you know, if geopolitical issues creates opportunities, good,
Speaker 3: you know, I think there's gonna be more M and
Speaker 3: A opportunities as we deregulate