Wall Street's $8 trillion man: Markets are 'tired' of Trump chaos
Posted November 18, 2020 3:40 p.m. EST
CNN — The post-election celebration on Wall Street isn't just about relief over a divided government. It's also being driven by hopes of calmer leadership after four years of chaos in Washington.
At least, that's the conclusion from one of the most powerful figures on Wall Street: BlackRock CEO Larry Fink.
"I do believe strongly that the market is in desire of more stability, of less volatility," Fink said during a pre-taped conversation airing Wednesday evening at the Bloomberg New Economy Forum.
"They're looking for a voice that moderates, not a voice that incites," the BlackRock chief said, according to a transcript viewed first by CNN Business. "I truly believe President-elect Biden can be that voice of reason."
The pro-business pillars of the Trump agenda, namely tax cuts and deregulation, helped boost markets. But Fink's comments underscore some of the downsides of the Trump era: unpredictable decision-making, firings of top officials via tweet and a deepening of political divisions.
"We're all tired. We're tired about all the volume we hear out of Washington," Fink said during the conversation with David Rubenstein, the billionaire co-founder and executive chairman of the Carlyle Group.
'A little more global harmony'
The BlackRock CEO added that he believes investors are "encouraged by having a leader now that is more inclusive, a leader that could probably bring a little more global harmony."
Fink referenced Biden's November 8 victory speech, when the president-elect pledged not to govern the blue states or red states, only the United States.
"For all those of you who voted for President Trump, I understand the disappointment tonight," Biden said. "I've lost a couple of times myself. But now, let's give each other a chance."
After stumbling the week before the election, the S&P 500 notched its best election week performance since 1932. The rally was driven by relief over the relative calm of the election itself, the emergence of a winner and hopes that Republicans' stronger-than-expected Senate performance will keep government divided in 2021. "Gridlock" in Washington means Biden likely won't be able to hike taxes or enact sweeping climate policies.
"The market likes a divided government," Fink said. "They want to make sure there's proper checks and balances."
Fink has mainly contributed money to Democrats, including Hillary Clinton during her unsuccessful 2016 bid for the presidency. At the time, Fink was mentioned as a potential Treasury secretary in a Clinton administration. But he has also backed Republicans, such as former House Speaker Paul Ryan.
Inequality is getting worse
BlackRock the world's largest asset manager, overseeing $7.8 trillion. And its iShares family of ETFs is incredibly popular, hauling in $41 billion of assets during the third quarter alone.
In fact, BlackRock is so powerful that the federal government asked for its help during each of the last two recessions. In March, the Federal Reserve made history by setting up a special purpose vehicle to buy junk bonds and other corporate debt for the first time ever. The Fed tapped BlackRock to manage the program, which helped restore confidence in financial markets.
Fink praised the Federal Reserve's response to the crisis as "nothing but amazing."
However, he warned the pandemic is worsening the divide between rich and poor.
"The poor do not own financial assets, so the divide because of the strength of the equity markets and the job losses that we've witnessed has really created even more of an income inequality," Fink said. "If we are going to try to really rebuild our economy, we need a very targeted fiscal stimulus for those who are still unemployed."
If Biden asked for his advice, Fink said, he would urge the incoming administration to focus on creating jobs through a long-overdue infrastructure package to fix crumbling roads and bridges.
"More than any other country, we need a strong infrastructure bill right now," he said. "We have $2 trillion of deferred maintenance."
Rubenstein asked the BlackRock boss if he'd consider leaving his job to become Fed chief, Treasury Secretary or another major policy job. Fink demurred, but he didn't rule it out.
"I've committed to my employees and to my board and to my family already," Fink said, "I'm staying in New York for the time being."