Larry Fink is trying his hand as television pundit, and he doesn’t like what he sees.
Fink, CEO of BlackRock, guest hosted on Bloomberg TV’s “Market Makers” on Tuesday, and noted that “95% of the people that are talking about [the fiscal cliff] have no clue,” he said, referring to pundits (and just about everyone else). He added, “I think we will find a solution.”
Fink is “very bullish” on the United States and “our corporations are in fabulous shape with $1.7 trillion in cash … I don’t believe you’re going to see that much default risk in the next few years.”
Fink on the fiscal cliff:
“I would say that 95% of the people that are talking about it have no clue … I was in Washington for a couple of days last week. I am on the phone a lot. I think we will find a solution. Republicans and Democrats understand the enormity of the issue. I actually believe that the Republicans understand–I would say that the nation’s consensus that we have to raise the upper income taxes and I think that what they are trying to do is work on a great bargain, working with the Democrats, and making sure that there is a 3 to 1, 2.5 to 1 in terms of expense savings for revenues. I actually think that the threshold of the Republican side has been determined subject to working out on the Democratic side the expense savings. I do believe that the Republicans will threaten if they can’t find those expense savings …There is still posturing going on.”
On whether there’s a buying opportunity between now and the end of the year:
“I told all my investors that any time the market had a down shaft, go buy. The market is almost creeping back up to a month high. I think that the market is saying that there will be a solution and those who were able to buy on those downdrafts, those momentary fears, did well. Once again, we spend too much time focusing on those day traders and you have to look for your point in time to be an investor and you like a stock at a certain level, you should stick with those strategies.”
On how banks can make big money going forward:
“I am quite bullish on the banking system going forward. I think banks in the United States have done a very good job of retooling its businesses. They have much more to do but their balance sheets are very strong. Much of the problems in U.S. banks are behind them.”
On how he feels about BlackRock being bigger than the Street:
“I don’t compare us and we are not the Street. This is our clients’ money. I believe the thinning of the balance sheets is what regulators wanted. Regulators basically said you will have higher capital charges and we want you to have lower balance sheets so you are not too big to fail. We want you to get into more flow business. I think at this period of time, we as investors are struggling with a lack of liquidity so I am not suggesting these are not difficult times for all investors in the market trading of bonds, specifically, but over time, I think you’ll see more products moving to exchanges. The Wall Street firms will do more flow business. This will be evolutionary and unfortunately we are now at this period of time of a real big sea change. We are historically dependent on the balance sheets as a mechanism for inventory and now we will be more dependent on flow business. That will force more business onto exchanges. I actually think this is what regulators want.”
On saying in February that investing 100% in stocks is the way to go and whether this holds true today: