Donald Trump’s Liberation Day speech didn’t take long to free the market bears, sparking chaos across global equity and debt markets for days.
Larry Fink, chief executive of BlackRock, the world’s largest asset manager, was on a flight from Amsterdam to Dublin on his Gulfstream private jet on the evening of April 2nd, when Trump took to the White House Rose Garden to unveil a raft of “reciprocal tariffs” on the rest of the world and railed about how “foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once beautiful American dream”.
Fink, whose firm’s $11.6 trillion (€10.5 trillion) of assets under management as of December made it greater than the German, French and Italian economies combined, met me the following morning in the Merrion Hotel, fresh from having delivered a speech at an event held by the State’s Ireland Strategic Investment Fund (ISIF) and a meeting earlier with Taoiseach Micheál Martin.
Did he manage to capture any of the speech live?
“I didn’t,” he said, adding that while he expected the tariffs to affect the markets for a number of days, “over a year or so, we’ll work it out”. Still, he said he saw the likelihood of a US recession as “not insignificant” over the next few months.
In the days following the interview, Fink told the Economic Club of New York that most CEOs he talks to were saying the world’s largest economy is probably already in recession.
But the 72-year-old, a lifelong Democrat supporter, was reticent when asked whether he agreed with Trump’s tariff policy, which the president sensationally largely paused on Wednesday for 90 days – except for China – after the sell-off of stocks and US government bonds became too much.
“It’s not for me to agree,” Fink said. “But I understand the logic behind it.”
“When I think about economic policy post-World War II, so much of the US trade policies were related to lifting more countries throughout the world, knowing that that would be good for the US and US exporters. The world’s changed quite considerably now. Does there need to be asymmetry in trading agreements? How can we make more symmetry between nations? That’s what he said.”
[ BlackRock chief sees risk of brief recession in US amid Trump tariffsOpens in new window ]
Fink may have drawn the ire of Republicans in recent years for being seen as a key player in the environment, social and governance (ESG) movement – or, as some would call it, “woke capital” – but his latest annual letter to shareholders, released last week, is more in tune with the sensibilities of a party that now controls the White House and both chambers of the Congress.
Those who ran away from the financial crisis here in Ireland, or because of the fear of Brexit and what it means for Ireland, or because of the fear of what Covid meant for Ireland ... they were harmed
It omits any reference to climate change, or even diversity, equity and inclusion (DEI) – in stark contrast to his 2020 letter in which he famously suggested that “climate risk is investment risk” and was a factor worth evaluating in investment decisions.
Trump, meanwhile, personally hailed BlackRock for leading a consortium that agreed last month to buy a ports holding company from Hong Kong-based CK Hutchison Holding for $22.8 billion, which would give the US investment giant control of two ports at either end of the Panama Canal. It came at a time when Trump had been railing against what he saw as China’s influence and control over the crucial canal.
Fink rejects the notion that the deal was in any way politically motivated.
“If I ever did that, I should be fired. Okay? Fired,” he says. “Our job is to be providing each and every client a fine, long-term investment return. If I ever overlay political concerns or political realities – that I’m doing something for political reasons – then [I] should be fired. It’s not my money.”
Much of that money is based in Irish-based funds. Over $1 trillion of BlackRock’s global assets under management are invested in the group’s 550-plus Irish domiciled funds. It opened an office in Dublin, home to one of the world’s largest funds hubs, in 2011, at the height of the financial crisis, and has subsequently grown its headcount to more than 140 employees.
He uses Ireland as an example to illustrate how investors should ignore the “noise” of what’s driving financial markets from one week to the next – and how investors should remain focused on the long term.
“Everybody’s worried about tariffs at the moment. But the moment doesn’t matter. The biggest problem that I see in the developed world today is all the uncertainty around whether people have adequacy in savings. Can they retire with dignity? That’s not a today problem. If the market goes down 3 per cent today or up 3 per cent today, it doesn’t matter. How do you give people more hope that they can invest over the long run and have a pool of money so they can live in retirement with dignity?
“For those who ran away from the financial crisis here in Ireland, or because of the fear of Brexit and what it means for Ireland, or because of the fear of what Covid meant for Ireland ... they were harmed. The most important thing is staying in the market, being optimistic over the long run. Yes, there’s going to be a lot of noise. But for those who remained in the market over the last 15 years, they made a lot of money.”
“We’re caught up the ups and downs of markets. We’re caught up in the noise. We’re caught up in the politicisation of everything. But for investors who are focusing on investing for retirement, for the long term, the most important thing is to stay in the market.”
While about 60 per cent of Americans are invested in shares or the wider capital markets, only a third of Europeans have such exposure. Fink says the Irish figure is below 20 per cent. There are many reasons, such as the lack of a capital markets union (despite the European Commission pushing for this for the past decade), and the fact that many investors – including hundreds of thousands in Ireland – bear the scars from investing in the privatisation of European telecoms just before the dotcom bubble burst in 2000.
“I think it’s more systematic than that,” says Fink. “I think Europeans tend to be more short-term than Americans. I think it’s a function of having two world wars.”
“You could argue that Americans are always too optimistic. But that optimism has created the dynamism of America, it’s created more entrepreneurialism. You have so many young people [in America] who want to start their own companies and believe that they have an opportunity to do that. But that is not as broad here in Europe.
“If you don’t take risks, you will never make a return.”
He sees his own career as capturing that American spirit.
Having graduated from University of California, Los Angeles (UCLA), with a master’s in business administration in 1976, the LA native went to work in the storied Wall Street investment bank First Boston, where he rose over the following decade to become a star mortgage-backed securities trader. However, his department made a disastrous unhedged bet in 1986 on the direction of interest rates, a move that would cost the firm $100 million and mark the beginning of the end of his career with the institution.
Fink left First Boston in 1988. The bank let it be known at the time that he was fired. He co-established BlackRock as a bond shop the same year with seven other executives under the umbrella Blackstone, the then fledgling private equity firm. Blackstone was led then, as now, by Steve Schwarzman.
“The ashes of my failure at First Bost were the fertiliser, or the foundation, of BlackRock,” says Fink. It taught him the lesson that risk management is absolutely essential.
Blackstone exited its BlackRock investment in 1994 following tension between Fink and Schwarzman over employee compensation. BlackRock’s first big break came the same year, when it was hired by US conglomerate General Electric to sell off its then Kidder Peabody stockbroking unit’s portfolio of mortgage-backed securities. It floated on the New York Stock Exchange in 1999.
In 2006, BlackRock bought Merrill Lynch Investment Management. It doubled the group’s assets under management to almost $1 trillion and gave the investment bank a 45.8 per cent stake in the business.
BlackRock’s financial solutions advisory business landed a host of gigs advising governments and investment banks around the globe during the financial crisis – starting with playing a key role in helping the Federal Reserve Bank of New York put figures on hard-to-value assets in Bear Stearns as it faltered, paving the way for a government-led rescue and sale of the faltering investment bank to JP Morgan.
In Ireland, BlackRock was involved in an assessment of loans in the banks in the wake of the State’s international bailout, to help determine the ultimate size of the black hole on their books – and how much taxpayers would ultimately need to inject into the system to keep it afloat. The final bill came to €64 billion.
BlackRock also took advantage of Barclay’s need to boost its capital levels in 2009 by acquiring the UK banking giant’s asset management arm, including its exchange traded funds (ETFs) business, iShares, for about £4 billion (€4.6 billion) and an almost 20 per cent stake in the group. The masterstroke made the business the world’s biggest asset manager and Fink the king of Wall Street. Merrill, now part of Bank of America, and Barclays have long since sold their stakes.
Last year, BlackRock went on its biggest deals spree ever, starting off by paying $12.5 billion for Global Infrastructure Partners (GIP), a large infrastructure fund manager whose investments includes data centres, airports, railroads and water and waste management companies. It followed up by buying Preqin, one of the world’s leading data firms in private markets, for $3.2 billion, and spending $12 billion on HPS Investment Partners, a private-credit firm.
GIP was a key part of the ports deal agreed last month.
In his latest annual letter to shareholders, Fink took aim at the 73-year-old modern investment portfolio strategy developed by Nobel Prize-winning economists Harry Markowitz and William Sharp, which allocates roughly 60 per cent of assets to shares and 40 per cent to bonds. In future, he said, the standard portfolio may look more like 50/30/20 – stocks, bonds and private market assets such as real estate, infrastructure and private credit.
“Assets that will define the future – data centres, ports, power grids, the world’s fastest-growing private companies – aren’t available to most investors. They’re in private markets, locked behind high walls, with gates that open only for the wealthiest or largest market participants,” he wrote.
“Private markets don’t have to be as risky. Or opaque. Or out of reach. Not if the investment industry is willing to innovate – and that’s exactly what we’ve spent the past year doing at BlackRock.”
The letter also suggests now is the time to be more “bullish about Europe”. It was a conclusion he seems to have come to at the World Economic Forum in Davos in January, when he detected a pessimism like never before among delegates about the outlook for the continent, following a decade and a half of low growth and a perception that business is being over-regulated.
“I had lunch with 14 European CEOs [at Davos] and the pessimism, you could cut it with a knife,” he says. “It was so palpable and it just was so obvious to me that the pessimism was overdone. But the pessimism was loud enough that I think finally the Europeans were waking up and saying, ‘we got to change’.”
A political agreement reached in Germany last month to shift from the country’s stringent debt rules after years of underinvestment is a game changer for the EU’s largest economy, he says. It saw the country’s chancellor-in-waiting Friedrich Merz secure backing in parliament to ramp up investment – expected to reach €1 trillion over the next decade – in the country’s infrastructure, green energy and military, justifying the move by pointing to the breakdown of transatlantic relationships, growing geopolitical instability and the need for more defence spending.
Fink says that conversations with European CEOs in recent months suggests there has been a broader change in attitude among European leaders and regulators.
“They’re starting to focus on a growth agenda,” he says, “not a control agenda.”
CV
Name: Larry Fink
Job: Chief executive of BlackRock, the world’s largest asset manager
Lives: On a farm in North Salem in upstate New York, though he is mainly based on weekdays in his pad in Manhattan.
Family: Married to Lori Weider, his high-school sweetheart, since 1974. They have three children and seven grandchildren.
Hobbies: Fly-fishing, hiking (he owns a house in Aspen, Colorado) and nature
Something you might expect: He typically starts working on his annual letter to shareholders months before it’s published.
Something that might surprise: He is an avid collector of weather vanes, which are kept in a barn on his North Salem farm
