BlackRock's Fink expects poor 4Q on debt talks

The fund giant's top executive said the U.S. will have a “very poor” fourth quarter even if lawmakers reach a compromise and extend the nation's borrowing authority.
OCT 24, 2013
Laurence D. Fink, whose BlackRock Inc. is the largest shareholder in companies from Apple Inc. to General Electric Co., said the United States will have a “very poor” fourth quarter even if lawmakers reach a compromise and extend the nation's borrowing authority. “It will hurt retail sales and American CEOs in terms of how they deal with their quarter,” Mr. Fink, who is BlackRock's chief executive officer, said Friday at the 2013 Institute of International Finance annual membership meeting in Washington. The political uncertainty, coupled with the focus of many CEOs on short-term results, means companies won't invest in research, development and technology, said Fink, whose firm is the world's largest money manager with $3.86 trillion in assets. Consumer sentiment in the U.S. fell in October to a nine- month low, and jobless claims rose to the highest level in six months, reports this week showed, as the government's partial shutdown and the debt-ceiling debate weighed on the world's largest economy. House Speaker John Boehner yesterday proposed a short-term debt limit increase to postpone a potential U.S. default. Failure by the world's largest borrower to pay its debt -- unprecedented in modern history -- would devastate global markets, money managers including Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., have said. 'Unacceptable Conversation' “I think this is why it should be understood in this country by the men and women we put in our office that this is just an unacceptable conversation,” Mr. Fink said Friday. The Thomson Reuters/University of Michigan preliminary consumer sentiment index decreased to 75.2 this month from 77.5 in September, a report today showed. Economists in a Bloomberg survey projected a drop to 75.3, according to the median estimate. Applications for unemployment benefits jumped by 66,000 in the week ended Oct. 5 to 374,000, the Labor Department said yesterday. President Barack Obama and House Republican leaders are discussing a potential agreement even as Senate Majority Leader Harry Reid said he doesn't like the idea of extending the deadline for a potential default. Reid said today he is open to hearing Republican proposals. Job Creation The most important thing countries need to focus on is job creation for the middle class as technology replaces workers who earn lower wages, said Mr. Fink. “Everywhere in the world we are beginning to see a hollowing out of job creation,” he said. “I do believe it's structural.” BlackRock, co-founded in 1988 by Mr. Fink, 60, was largely a fixed-income manager until the mid-2000s. That's when it acquired State Street Research & Management Co. and Merrill Lynch & Co.'s investment unit to add stocks and other assets. BlackRock's 2009 purchase of Barclays Plc's investment division gave it iShares, the world's biggest provider of exchange-traded funds. As of January 2012, the firm held at least 5 percent of the shares of 2,400 companies worldwide.

Latest News

SEC Says Game Service Roblox Part of ‘Active Investigation’
SEC Says Game Service Roblox Part of ‘Active Investigation’

Short sellers previously said the company was under investigation, though Roblox denied allegations.

Musk’s DOGE descends on CFPB with intention to shut it down
Musk’s DOGE descends on CFPB with intention to shut it down

The Consumer Financial Protection Bureau is in the crosshairs of the Republican group that is widely attempting to dismantle government agencies.

Advisor fighting Finra banishment loses $17.7 million dispute with old firm
Advisor fighting Finra banishment loses $17.7 million dispute with old firm

National Securities Corp. sued the advisor in 2020, alleging breach of contract and unjust enrichment.

Job numbers, inflation leaving room for Fed to hold rates
Job numbers, inflation leaving room for Fed to hold rates

Recent data support a measured pace by the Federal Reserve for the year ahead.

Private assets remain hot despite surging stock market
Private assets remain hot despite surging stock market

Financial advisors are still adding alternatives despite the surge in publicly traded stock prices

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.