Blackrock CEO Larry Fink: Election outcome makes for 'very good time' to manage money
World’s largest money manager says the political process showing its 'resiliency.'
One of Wall Street’s most prominent executives is optimistic that the current election results--divided government—will be good for investors, FOX Business has learned.
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Larry Fink, the chief executive of BlackRock, the world’s largest money manager with $7.4 trillion under management, gave this post-election analysis to the firm's 16,000 employees in a virtual Town Hall Wednesday, according to people with direct knowledge of the matter.
In it, Fink also expressed optimism that a coronavirus vaccine should be ready sometime early next year, and that advances in treatment have significantly lowered the death rate for people who contract the virus, which will also be a benefit to markets and the economy.
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The Wall Street veteran's comments on the financial markets are important not just because he's among the world's top corporate executives. He's also a significant player in national Democratic Party politics. As a result, he is often placed on a shortlist to become Treasury Secretary if a Democrat is elected president, as it looks to be the case with former Vice President Joe Biden moving closer to gaining the necessary Electoral College delegates to defeat President Trump.
Fink's remarks also underscore a broader view among corporate elites that with the GOP poised to keep control of the U.S. Senate, Biden's grandiose plans for $2 trillion in spending and massive tax increases could be thwarted. Even if the senate moves close to a 50-50 split (two Georgia senate seats are leaning toward the GOP but remain up for grabs) with a vice president Kamala Harris acting as a tie-breaker on some legislation, Biden may be forced to adopt a more centrist governing approach that should be good for the economy and the markets as evidenced by the post-election bounce in stocks.
Since Election Day, the Dow Jones Industrial average has increased over 900 points or 3.3% putting it about 4% shy of its all-time record. Meanwhile, the S&P 500 and Nasdaq are less than 2% away from reclaiming September’s record levels.
“Obviously, the market is rallying with a little more certainty now that we will have most probably some form of divided government. I think the markets obviously like a divided government,” Fink said during the Town Hall in remarks that have yet to be reported.
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While Senate Majority Leader Mitch McConnell, R-Ky., holding on to his seat and still leading the likely GOP controlled senate when the new Congress begins in January, Fink said Biden's pending proposals will be more modest and targeted to industries that need it the most, these people add
"First of all there is no blue wave. Let's start there," Fink said, pointing to the pre-Tuesday predictions among Democrats and many in the media that Democrats wouldn't just win the presidency, but also take the Senate and add to their majority in the House.
In the House, Democrats lost seats making it more difficult for Speaker Nancy Pelosi to demand higher taxes and more spending. Meanwhile, President Trump made the presidential race close, garnering nearly 48% of the popular vote to Biden's 50% tally and barely losing several key battleground states that brought him a victory in 2016.
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“I’m extremely optimistic that we are showing the resiliency in our financial markets," Fink said. "Our political process is showing this resiliency."
In terms of Blackrock clients, he added that they are looking to put money to work buying stocks in a decent investment environment that features the benefits of divided government and low-interest rates from the Federal Reserve. On Thursday the Fed kept rates near zero and Chairman Jay Powell vowed that policymakers will maintain the policy that supports economic recovery.
A BlackRock spokesman confirmed Fink’s remarks but had no further comment.
Fink’s positive assessment of the election, as it relates to the economy and markets, have been echoed by other corporate leaders in recent days as well as stock and bond prices.
Bond yields move in the opposite direction of prices, have dipped after the election. These yields reflect investor sentiment that a GOP Congress will likely put a halt to Biden’s spending plans that will increase the budget deficit, thus the need for less borrowing.
Fink also made positive comments about when the country can hope to overcome the coronavirus pandemic. As the world's largest investor, Blackrock has significant stakes in drug companies that are rushing to produce COVID-19 treatments and a vaccine.
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Fink told employees that treatments are getting better and that the country is learning to live with the virus as death rates drop. He said that he expects an effective vaccine could come as early as the 2nd quarter of next year. Having a vaccine could help the U.S. economy open more broadly and boost stock prices and of course the overall economy.
"We are going to have anti-virals and we are going to have therapies that work," Fink said. "I am confident that we will have a medical solution."