Larry Fink’s Post

Now I know why they call this the political silly season. Last week, the Washington Post factchecker awarded Robert F. Kennedy Jr. four “Pinocchios” for the misinformation he’s been peddling about BlackRock in his presidential campaign. Last night, candidates in the Republican primary debate earned a few more Pinocchios. One candidate last night claimed that BlackRock was somehow deterring American energy companies from drilling for oil. The reality: BlackRock clients have more than $170 billion invested in American energy companies and just last month, we announced a joint venture with one of America’s largest energy companies to help develop new technology. Another candidate accused BlackRock of pursuing an ideological agenda. The only agenda we have is delivering for our clients. We’ve been entrusted to manage more assets than any other company in our industry because we have a track record over more than thirty years of managing retirement savings, and we do so for 35 million Americans today. We’re proud of that record. We’re proud to be an American success story. Despite multiple claims in the debate to the contrary, I haven’t endorsed any candidate for president this year. I’ve met with at least five of the candidates in this campaign cycle. I meet with policy makers all the time to understand the implications for our clients. That’s my job. BlackRock was mentioned by some candidates in last night’s debate more than inflation or the national debt. That’s a sad commentary on the state of American politics. But I remain an optimist that our political process will ultimately tackle some of the real issues facing the country like: how can we drive the sustained economic growth we need to deal with our ballooning national debt. Now more than ever, America needs fewer Pinocchios and more Honest Abes.

Now I know why they call this the political silly season. Last week, the Washington Post factchecker awarded Robert F. Kennedy Jr. four “Pinocchios” for the misinformation he’s been peddling about BlackRock in his presidential campaign. Last night, candidates in the Republican primary debate earned a few more Pinocchios. One candidate last night claimed that BlackRock was somehow deterring American energy companies from drilling for oil. The reality: BlackRock clients have more than $170 billion invested in American energy companies and just last month, we announced a joint venture with one of America’s largest energy companies to help develop new technology. Another candidate accused BlackRock of pursuing an ideological agenda. The only agenda we have is delivering for our clients. We’ve been entrusted to manage more assets than any other company in our industry because we have a track record over more than thirty years of managing retirement savings, and we do so for 35 million Americans today. We’re proud of that record. We’re proud to be an American success story. Despite multiple claims in the debate to the contrary, I haven’t endorsed any candidate for president this year. I’ve met with at least five of the candidates in this campaign cycle. I meet with policy makers all the time to understand the implications for our clients. That’s my job. BlackRock was mentioned by some candidates in last night’s debate more than inflation or the national debt. That’s a sad commentary on the state of American politics. But I remain an optimist that our political process will ultimately tackle some of the real issues facing the country like: how can we drive the sustained economic growth we need to deal with our ballooning national debt. Now more than ever, America needs fewer Pinocchios and more Honest Abes.

Now I know why they call this the political silly season. Last week, the Washington Post factchecker awarded Robert F. Kennedy Jr. four “Pinocchios” for the misinformation he’s been peddling about BlackRock in his presidential campaign. Last night, candidates in the Republican primary debate earned a few more Pinocchios. One candidate last night claimed that BlackRock was somehow deterring American energy companies from drilling for oil. The reality: BlackRock clients have more than $170 billion invested in American energy companies and just last month, we announced a joint venture with one of America’s largest energy companies to help develop new technology. Another candidate accused BlackRock of pursuing an ideological agenda. The only agenda we have is delivering for our clients. We’ve been entrusted to manage more assets than any other company in our industry because we have a track record over more than thirty years of managing retirement savings, and we do so for 35 million Americans today. We’re proud of that record. We’re proud to be an American success story. Despite multiple claims in the debate to the contrary, I haven’t endorsed any candidate for president this year. I’ve met with at least five of the candidates in this campaign cycle. I meet with policy makers all the time to understand the implications for our clients. That’s my job. BlackRock was mentioned by some candidates in last night’s debate more than inflation or the national debt. That’s a sad commentary on the state of American politics. But I remain an optimist that our political process will ultimately tackle some of the real issues facing the country like: how can we drive the sustained economic growth we need to deal with our ballooning national debt. Now more than ever, America needs fewer Pinocchios and more Honest Abes.

Where the great internal conflict is after the debate: It appears to me that now that President Biden's condition is widely known by the electorate, the Democrats will either lose the election or replace Biden as their candidate and, in the process of replacing Biden, will make clear whether the Democratic side will be of the soft or hard left. While it is now clear that the Red Team/Republican side will consist of players from the hard right (i.e., dictatorial capitalists like fascists), we will soon find out if the Blue Team/Democrats will be from the soft left (socialists with liberal values) or hard left (closer to communists). While you might justifiably react to my using controversially stark words like “fascists,” “socialists,” and “communists” to describe the alternatives, I think these are relatively small exaggerations of what’s happening and seeing things through this relatively stark lens is better than seeing it in a more nuanced and blurred way. I hope you know what I'm trying to get at, which is we are looking at a classic clash between the hard right and either the soft or hard left.   As for the markets, to understand their relationship with politics, you need to understand that markets prefer capitalists--i.e. markets are all valued on the basis of the present value of their expected after-tax future cash flows, so whichever side supports these cash flows will support the markets. At this time, investors from all over the world are asking themselves 1) where can they be most confident that these cash flows will be best and 2) where are these capitalist values most strongly held and protected. This assessment will increasingly drive markets.    To simplify, what I'm saying is that we should be thinking about 1) the choice being between the right or left and how far right or left they are, and the facts that 2) the Red Team will field a leader and team that is from the hard right (strongly capitalist, nationalist, isolationist with deeply conservative values), 3) over the next few months, we will learn how far left the leader and players on the Democratic team will be, 4) the markets will prefer those on the right over those on the left, and 5) unfortunately, those of the bipartisan middle (i.e. those who respect civil rules of engagement and cooperate to create bipartisan leadership, which would be best) are pretty much out of the picture. Of course, personalities and competencies also matter some—unfortunately, personality will matter much more than competence. As a result of all this, we are in the part of the cycle in which the choice is likely to be between extremists, so you will have to pick a side and fight for it, keep your head down, or flee (see below). This leaves us with a pretty disturbing domestic picture in a world in which the other four big forces (debt/money/economics, international great power conflict, acts of nature/climate, and new technologies) will likely also be disruptive to the existing world order. 

Where the great internal conflict is after the debate: It appears to me that now that President Biden's condition is widely known by the electorate, the Democrats will either lose the election or replace Biden as their candidate and, in the process of replacing Biden, will make clear whether the Democratic side will be of the soft or hard left. While it is now clear that the Red Team/Republican side will consist of players from the hard right (i.e., dictatorial capitalists like fascists), we will soon find out if the Blue Team/Democrats will be from the soft left (socialists with liberal values) or hard left (closer to communists). While you might justifiably react to my using controversially stark words like “fascists,” “socialists,” and “communists” to describe the alternatives, I think these are relatively small exaggerations of what’s happening and seeing things through this relatively stark lens is better than seeing it in a more nuanced and blurred way. I hope you know what I'm trying to get at, which is we are looking at a classic clash between the hard right and either the soft or hard left.   As for the markets, to understand their relationship with politics, you need to understand that markets prefer capitalists--i.e. markets are all valued on the basis of the present value of their expected after-tax future cash flows, so whichever side supports these cash flows will support the markets. At this time, investors from all over the world are asking themselves 1) where can they be most confident that these cash flows will be best and 2) where are these capitalist values most strongly held and protected. This assessment will increasingly drive markets.    To simplify, what I'm saying is that we should be thinking about 1) the choice being between the right or left and how far right or left they are, and the facts that 2) the Red Team will field a leader and team that is from the hard right (strongly capitalist, nationalist, isolationist with deeply conservative values), 3) over the next few months, we will learn how far left the leader and players on the Democratic team will be, 4) the markets will prefer those on the right over those on the left, and 5) unfortunately, those of the bipartisan middle (i.e. those who respect civil rules of engagement and cooperate to create bipartisan leadership, which would be best) are pretty much out of the picture. Of course, personalities and competencies also matter some—unfortunately, personality will matter much more than competence. As a result of all this, we are in the part of the cycle in which the choice is likely to be between extremists, so you will have to pick a side and fight for it, keep your head down, or flee (see below). This leaves us with a pretty disturbing domestic picture in a world in which the other four big forces (debt/money/economics, international great power conflict, acts of nature/climate, and new technologies) will likely also be disruptive to the existing world order.