Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: I'm delighted to be joined by the one and only
Speaker 2: Larry Fink of Blackrock. Larry, thank you so much for
Speaker 2: joining us. First of all, happy anniversary. There was that prospective.
Speaker 2: So first of October nineteen ninety nine, we're Blackrock Republic.
Speaker 1: So you're twenty five years young.
Speaker 3: That's great reading, wasn't it. Yeah, it's a really good
Speaker 3: day for us. It's our twenty fifth anniversary. It's our
Speaker 3: day that we are closing GIP and right around this
Speaker 3: time we're going to have our thirtieth anniversary here in Germany,
Speaker 3: so it's a good day. I'm very pleased that our
Speaker 3: stock performance is up close to eleven of thousand percent
Speaker 3: over over that time, actually twenty times greater than the
Speaker 3: S and P.
Speaker 1: So the market has changed so much in that time,
Speaker 1: and it's amazing.
Speaker 2: In twenty five years, you know, there's a lot more
Speaker 2: private there's a lot more credits, you're gone into infrastructure.
Speaker 2: I'm not going to ask you twenty five years to come,
Speaker 2: we'll bring But what are you most optimistic about in
Speaker 2: the next three years.
Speaker 3: Well, I think one of the reasons why our stock
Speaker 3: has done so well is I think we understood that
Speaker 3: more and more of the global economy will be moving
Speaker 3: to the capital markets. And I think all those things
Speaker 3: you suggested is just an indication of all the movements
Speaker 3: towards the capital markets. And I think this is going
Speaker 3: to be broadly a world event. We're seeing more and
Speaker 3: more countries focusing on their capital markets. A great economy
Speaker 3: is an economy that has a strong capital markets and
Speaker 3: a strong banking system. We've seen here in Europe historically
Speaker 3: a strong banking system and a weak capital markets. That's
Speaker 3: changing right now here in Europe, but in other countries
Speaker 3: like Japan, you had the Kashia government doubling down their
Speaker 3: retirement tax deductibility for a product that they have a
Speaker 3: desire to building out their capital markets. In India, Prime
Speaker 3: Minister Modi is focusing on retirement to building out their
Speaker 3: capital markets to broaden their entire economy. And I think
Speaker 3: that's the movement for the next twenty five years in
Speaker 3: front of us, a further broadening of the global capital markets,
Speaker 3: whether that is private debt, infrastructure debt, private equity, venture capital.
Speaker 4: And I think this is important.
Speaker 3: And if I look back over the twenty five years,
Speaker 3: one of the strengths that I see is because of
Speaker 3: the strengths of the US capital markets. The US influence
Speaker 3: in the world has become broader and greater than it
Speaker 3: was twenty five years ago. And that is because of
Speaker 3: the depth of the capital markets.
Speaker 2: In all of this, there where do you find the
Speaker 2: best deal? So, for example, infrastructure, if you look at
Speaker 2: the closure of GIP It's today.
Speaker 1: This is a massive play. What does it mean for integration?
Speaker 2: What does it mean for actually have fundraising for infrastructure?
Speaker 3: Well, GIPS in the midst of closing a twenty five
Speaker 3: billion dollar infrastructure product, the old Blackrock, our infra team
Speaker 3: is going to be raising another ten billion dollars, and
Speaker 3: then we announce a partnership with Microsoft, Navidia and MGX.
Speaker 3: We have aspirations of raising thirty billion dollars of equity
Speaker 3: and then beyond that more debt associated when we build
Speaker 3: out these AI data. So to me, this is the
Speaker 3: dawning of infrastructure. When I look around the world today,
Speaker 3: I see the inadequacies of infrastructure in almost every country.
Speaker 3: So we need to be decarbonizing, we need to be digitizing,
Speaker 3: we need to be moving forward. We need to be
Speaker 3: building out more and more. And I think this is
Speaker 3: one of the big issues. As I wrote in an
Speaker 3: editorial a few months back, to the FT and I
Speaker 3: spoke of the G seven. I spoke about every economy
Speaker 3: needs to focus on growth. There's too much focus on
Speaker 3: should we lower taxes, should we raise taxes?
Speaker 4: Not enough how do we stimulate growth?
Speaker 3: And I think infrastructure is a major component of how
Speaker 3: we stimulate growth, and we don't because of the breath
Speaker 3: of the capital market. We don't have to rely on
Speaker 3: federal spending or state spending. There is enough capital in
Speaker 3: the private sector that we'll be able to fund these
Speaker 3: new projects. And so to me, this is the dawning
Speaker 3: of the new reality that we're going to see broadening
Speaker 3: of public and private investing for infrastructure.
Speaker 2: Is there a worry that it becomes quite political? So
Speaker 2: there are a couple of projects Malaysia and Minnesota that
Speaker 2: have been politicized.
Speaker 1: Is there a danger that infrastructure becomes a new ESG.
Speaker 3: I see a very different outcome of that. This is
Speaker 3: helping government build out their infrastructure. There is no question
Speaker 3: there may be one project or another project that may
Speaker 3: be politicized for one reason or another, but overall, in
Speaker 3: my conversations with politicians worldwide. They know they're in need
Speaker 3: of more private capital. So I dearly hope it's not politicized.
Speaker 3: If it's politicized in one location, it means money's going
Speaker 3: to seek another safer spot, and so you always have
Speaker 3: those type of risks. But capital is free moving and
Speaker 3: capital is going to be seeking a safe, sound investment.
Speaker 3: We are the largest retirement manager in the world. Our
Speaker 3: job is to try to be finding investments on behalf
Speaker 3: of our retirees, to find safe outcomes over a long
Speaker 3: period of time.
Speaker 4: So if there is an event that.
Speaker 3: Politicizes that money will leave and money will seek another destination.
Speaker 2: Where does the smart money stay away from? Is writ
Speaker 2: anywhere in the markets where either something price perfection or
Speaker 2: it's too risky.
Speaker 1: I know we talk about commercial real estate.
Speaker 4: Markets move up and down. You always see you mentioned
Speaker 4: like commercial real estate.
Speaker 3: You see too much money moving in one to one area,
Speaker 3: then then it runs away from it.
Speaker 4: I think that's that's what markets do.
Speaker 3: We test the outer boundaries of pricing and it becomes
Speaker 3: maybe a level in which that we don't find it's
Speaker 3: a great outcome for a long term investing it, and
Speaker 3: then money moves to another destination. I think that's a
Speaker 3: natural movement, so I'm not worried about one area versus
Speaker 3: another area. Then one other thing that I think everybody
Speaker 3: asked me, is you know, is a market so pricey
Speaker 3: and yet all this geopolitical issues. I would argue today,
Speaker 3: because of the expansion of the global capital markets, we're
Speaker 3: diffusing more risk than everything. There is actually less systemic
Speaker 3: risks today than ever before.
Speaker 4: You mentioned private credit.
Speaker 3: Private credit is chiefly matching a liability and an ass together.
Speaker 3: It's not leveraging eight to one like in a banking system.
Speaker 3: That's a good example of diffusing some systemic risk. But
Speaker 3: as more and more capitals broadening out how they invest
Speaker 3: where they invest, that actually reduces less concentration in one area.
Speaker 3: Of course, we've seen, especially in cities, a decline in
Speaker 3: commercial real estate, but that's a natural process, but there's
Speaker 3: nothing systemic about it. You may lose money on one building,
Speaker 3: but you're moving into other destinations like data centers. You're
Speaker 3: moving into different cities that may have rising population growth.
Speaker 3: But you know, you can't fight demographics. So there's some
Speaker 3: cities that are shrinking. Obviously, commercial real estate in those
Speaker 3: cities are going to be declining with that declining population, lar.
Speaker 2: What's your play in private credit? How much bigger do
Speaker 2: you want to? How much do you want to?
Speaker 3: We have large aspirations, as we wrote about it last year,
Speaker 3: and we continue to be building out a private credit
Speaker 3: area and there's more to come. We're very excited about
Speaker 3: our position. If you just think about the role of
Speaker 3: infrastructure debt. If you think about what we announced with
Speaker 3: MGX and Microsoft raising thirty billion dollars equity, but we're
Speaker 3: going to have to We're going to raise one hundred
Speaker 3: to one hundred and twenty billion dollars of debt associated
Speaker 3: with those data centers. So I actually believe as we
Speaker 3: move out in building out more and more infrastructure investing,
Speaker 3: you're going to see more infrastructure or private credit associated
Speaker 3: with that. And so that will also represent a great,
Speaker 3: great opportunity that you have a hyperscaler like a Meta,
Speaker 3: like a Microsoft, like an Amazon, that you have their
Speaker 3: credit that you're going to be able to leverage it
Speaker 3: up and provide returns, stable returns over fifteen twenty years,
Speaker 3: because that's what those leases will be these data centers,
Speaker 3: and so you have a great opportunity for long term.
Speaker 2: Investing US economy, and we talked about US exceptionalism. Do
Speaker 2: you worry that Actually there are two very different outcomes
Speaker 2: with the US election that could bring the economy in
Speaker 2: different ways.
Speaker 3: Both candidates have in many cases very similar views on
Speaker 3: making the US even stronger. Both candidates and their interpretation
Speaker 3: how that they happen, it may differ. Our job is
Speaker 3: to work with any political position. Our job is to
Speaker 3: be working with the US government, like we're here in Germany.
Speaker 3: We're working with the German government. There's going to be
Speaker 3: election here next year too. Our job is to be
Speaker 3: working with societies and building a platform together. And so
Speaker 3: we're not trying to make any judgments.
Speaker 2: But you deploy capital differently under President Trumps and under
Speaker 2: President Harris.
Speaker 3: On a margin that much, No, I think we over
Speaker 3: conflate what it means. I mean, I don't think the
Speaker 3: US is going to be pivoting that much depending on
Speaker 3: one outcome. You know, we're not focusing on the day
Speaker 3: to day movements of markets from focus on is a
Speaker 3: US and exceptional place to invest for five years, ten years,
Speaker 3: twenty years.
Speaker 4: That's what we're focusing on.
Speaker 3: Yes, there may be moments where you could have a
Speaker 3: ten percent or even a fifteen or twenty percent downdraft,
Speaker 3: Does that represent a major shift or does that represent
Speaker 3: an opportunity?
Speaker 4: And so you have to look at it that way.
Speaker 3: In most cases, over the last thirty years, anytime you
Speaker 3: had a ten or twenty percent downdraft, you wanted to
Speaker 3: be there standing by and buying, and those who ran
Speaker 3: away over a twenty year horizon have lost a lot
Speaker 3: of possible return.
Speaker 1: Are you optimistic about Europe?
Speaker 2: So you're one of the biggest shareholders and unit credit,
Speaker 2: you're one of the biggest shareholders in the commerce bank. Yes,
Speaker 2: does a combination needs you know? Does it make a
Speaker 2: bit of impetus for Europe? Does it make sense?
Speaker 3: I am a very large believer on a banking and
Speaker 3: a capital markets union. I think that's the strength of
Speaker 3: the United States. Europe needs to do that. I've read
Speaker 3: a Droggy report because we are large sareholders and both.
Speaker 3: I don't talk about any any activity about one organization
Speaker 3: versus another, but technically I look at the strength of
Speaker 3: the United States and much of the strength is because
Speaker 3: of the strength of our capital markets and our banking system.
Speaker 3: Europe needs a stronger capital market system, and it needs
Speaker 3: a more unified banking system, and I think that's going
Speaker 3: to be urgently necessary for Europe to go to the
Speaker 3: next step.
Speaker 1: So as a shareholder, you don't get involved. Have you
Speaker 1: spoken to the chief executives?
Speaker 3: I talk about it. And two, I don't do any
Speaker 3: of the voting at Blackrock myself. That's not my responsibility.
Speaker 3: Let me just say I speak to a lot of
Speaker 3: executives on this. I speaks a lot of politicians on
Speaker 3: these matters, and that's between me and the politicians.
Speaker 1: What's your take on China right now?
Speaker 3: I would have said before these Chinese actions of last week,
Speaker 3: in terms of the massive fiscal and monetary policy shifts,
Speaker 3: China was going from bad to worse. I think they
Speaker 3: recognize now that their economy was, you know, descending quite rapidly.
Speaker 3: There was a lack of confidence and I think we're
Speaker 3: gonna have to wait and see is this enough to
Speaker 3: stabilize the I would say the failings of confidence. And
Speaker 3: as I spoke to more and more executives in China,
Speaker 3: there was a fear that, you know, we haven't found
Speaker 3: the bottom yet.
Speaker 4: Could this be the bottom for China?
Speaker 3: You know, I think systematically, you're going to see more
Speaker 3: and more companies diversifying their supply chains, and you're seeing that.
Speaker 3: You're seeing India is a great destination. You're seeing Philippines
Speaker 3: and Vietnam as great destinations. Closer to the United States,
Speaker 3: Mexico has been an incredible destination for more and more.
Speaker 4: Manufacturing, and so that's not going to change.
Speaker 3: We are going to see a systematic change in how
Speaker 3: we manage supply chains. I think COVID taught us a
Speaker 3: lot of lessons on two larger dependencies. With all the
Speaker 3: disruptions and supply chains that everybody's waking up to, we
Speaker 3: need to.
Speaker 4: Have more resilient supply chain.
Speaker 3: Just before COVID, we talked about we need we need,
Speaker 3: you know, the most efficient supply chain. When you have
Speaker 3: those issues, efficiencies didn't work and we had real big disruptions.
Speaker 3: And every company's focusing on a more a broadening, a
Speaker 3: more diversified supply chain so you don't have these tuff
Speaker 3: of disruption and that's the fit that's going to.
Speaker 4: Be a down draft for China. So that's not that
Speaker 4: will be continuing.
Speaker 2: You seem very bullish about I guess the next two
Speaker 2: to three years.
Speaker 1: But there's a lot of.
Speaker 2: You know, there's China, there's a lot of unsettled politics.
Speaker 2: There's AI, which I know you're playing through Microsoft and
Speaker 2: data centers. Is there anything that unsettles you that the
Speaker 2: world is moving through.
Speaker 4: Look, I think every moment it's unsettling.
Speaker 3: The war in Ukraine, which we haven't talked about, is
Speaker 3: incredibly unsettling and very destabilizing for Europe. The war in
Speaker 3: the Middle East right now with Lebanon and Gaza is
Speaker 3: very unsettling. At the same time, as I said, we
Speaker 3: are broadening the capital markets. Even with these type of disruptions.
Speaker 3: We're not seeing disruption in the energy market, and we're
Speaker 3: not We're seeing more diversification, and so the markets are
Speaker 3: able to overcome some of these. Now, if they create
Speaker 3: more supply chain disruptions, they create supply chain disruptions for
Speaker 3: energy that changes the whole ecosystem.
Speaker 4: But right now, I don't see.
Speaker 3: Anything that really, to me, is going to be disrupting
Speaker 3: this tremendous momentum. The amount of trillions of dollars that
Speaker 3: are going to be necessary for infrastructure investing is going
Speaker 3: to be vital to uplift the economies worldwide. And this
Speaker 3: is why I'm still urging more and more economies to
Speaker 3: focus on growth, focus on how to build out their
Speaker 3: infrastructure that will lift up the economy and create great jobs.
Speaker 2: When you look at the US E commy, you're not
Speaker 2: you're expecting a soft landing or is there danger actually
Speaker 2: that we get?
Speaker 4: I don't see any landing.
Speaker 3: The economy is going to continue to grow at two
Speaker 3: plus three percent.
Speaker 4: I don't even know why we use a landing.
Speaker 3: Landing last time means it goes to zero, it goes
Speaker 3: you know, I don't, I know we use those words.
Speaker 3: It's really fun to talk about. I've been very consistent.
Speaker 3: We are not We're not going to have a hard landing.
Speaker 3: But I don't want to see a soft land We're
Speaker 3: going to continue we continuing to move and navigate it.
Speaker 4: That is.
Speaker 3: But despite all that, there are segments of the economy
Speaker 3: that are struggling. There are segments of the economy that
Speaker 3: are doing really well. We are you know, we spend
Speaker 3: so much time focusing on the segments that are doing poorly.
Speaker 3: And I'm not trying to suggest that's not the right
Speaker 3: thing to do, but we're not looking at in the
Speaker 3: holistic way that other parts of the economy are doing
Speaker 3: really really well. Look at corporate earnings overall, they've been
Speaker 3: very strong, and I think they're going to continue to
Speaker 3: be very strong. We have, you know, we we do
Speaker 3: have segments of the economy that are very strong. And
Speaker 3: I think that's why. I don't know why we talk
Speaker 3: about a harder soft line and we're continuing. We're going
Speaker 3: to grow it two to three percent.
Speaker 1: It's the FED watchers.
Speaker 2: Blame the FED watchers because they're all who are they?
Speaker 3: I don't follow them, By the way, let me just
Speaker 3: tell you why to the right.
Speaker 4: Let me just tell you. I think the forward curve
Speaker 4: is wrong.
Speaker 3: We're not going to see and I think the Chairman
Speaker 3: Palace said that yesterday. You know, we're going to be
Speaker 3: patient as we I think the amount of easing that's
Speaker 3: in the forward curve is crazy. I mean, I do
Speaker 3: believe there's there's there's room for easing more, but not
Speaker 3: as much as a forward curve would indicate.
Speaker 1: And this is what a flaw in the markets. A
Speaker 1: flawns markets.
Speaker 3: Markets move, they have to readjust and I think yesterday
Speaker 3: was a small readjustment. I mean, I don't look at
Speaker 3: this as a problem. You're talking about the TikTok on
Speaker 3: the market. I don't spend any time on the TikTok
Speaker 3: on the market. I'm aware of it, but I'm not
Speaker 3: you know, whether it's you know, the consideras are tightened,
Speaker 3: I mean, ease is another one hundred, one hundred and fifty.
Speaker 4: We'll see, we'll see. I mean, you know, I think
Speaker 4: we are.
Speaker 3: I see more policies by more government that tend to
Speaker 3: be more inflation ay than deflationary. And so with that
Speaker 3: in mind, it's hard for me to see another two
Speaker 3: hundred base of points of decline insure rates.
Speaker 1: I'm gonna use that.
Speaker 2: You know, the TikTok of the market is fine, but
Speaker 2: secondary Larry, as always, thank you so much for joining us.
Speaker 1: Larry Fink, Black Rock Chairman,