22 Oct Larry Fink: It Just Doesn’t Matter
According to Larry Fink, the CEO of the largest asset management firm in the world, your vote doesn’t matter. It is, in the grand scheme of things, totally irrelevant. Or at least that’s what he’s said twice in the last couple of weeks:
BlackRock CEO Larry Fink downplayed the significance of the upcoming US presidential election for financial markets, stating that the outcome “really doesn’t matter” in the long run.
Speaking at a conference hosted by the Securities Industry and Financial Markets Association on October 21, Fink expressed his frustration with the overemphasis placed on elections, according to the Financial Times.
“I’m tired of hearing this is the biggest election in your lifetime. The reality is over time, it doesn’t matter,” Fink said during the conference….
On October 1, Fink shared similar views at the Berlin Global Dialogue 2024 conference. During a panel discussion, he reiterated that elections tend to generate media buzz but have limited long-term effects on markets, per a report in Bloomberg.
“We see repeatedly every year, every four years, when we have an election, everyone says that it’s going to have a dramatic change in the market, and over time it doesn’t,” Fink said during the event, as quoted by Bloomberg. He explained that markets adapt and continue to function beyond the outcome of any single election.
There are, I think, three different ways to interpret what Fink is indicating here.
First, Fink may be telling you – surreptitiously, of course – that the fix is in. Markets are largely rigged. Between the Fed’s new-ish (if officially unstated) mandate to ensure that the stocks are never allowed to “correct” for long and the permanent financialization of the American economy and markets, investors can count on their investments going up forever. Until they don’t, that is. As Fink sees it, though, that point is a long way off yet. Therefore, people should continue giving him their money to “manage” for the foreseeable future, regardless of the election outcome.
A second interpretation is that Larry Fink is a historical materialist. Fink – like Marx and Engels before him – rejects Carlyle’s theory of the “great man” in history, the belief that “the history of the world is nothing but the biography of great men.” Fink thinks that this is dramatic nonsense, that world events are largely molded by predetermined economic realities that are mostly immune to human intervention.
Of course it doesn’t matter whether Trump or Kamala wins. Just as it didn’t matter that Lincoln beat Douglas (and Breckinridge) or that Roosevelt beat Hoover or that Obama beat McCain. None of it mattered. Inevitable economic forces determined the end of slavery, the implementation of the New Deal, and the response to the Great Financial Crisis. Oh sure, those reactions may have been marginally different and might have taken slightly different directions. But “over time,” everything would have worked out as it did, regardless of the winner of those elections – or any others, for that matter. Voting, like all the rest of human behavior, is just nonsensical and ineffectual posturing in the face of immutable forces.
The third possibility – and, I think, the most likely – is that Fink has given up. He has determined that Donald Trump is going to win the election and that it’s time to “get right” with the inevitable victor.
Like most of Wall Street these days, Fink is a cultural leftist, someone who thinks that the Republican base is rather grotesque and contemptible. He would much rather Harris win, and not just because he sees himself as the next Treasury Secretary. She is clearly more his style.
At the same time, Fink is also a realist, and he’s not about to encourage the former and future president to see him as an adversary. Fink’s personal history with Trump is both friendly and professionally successful, yet he knows that much of the next administration will be staffed by people who have spent the last half-dozen years exposing his broad efforts to impose his leftist cultural and corporatist economic principles on capital markets. He is engaging in preemptive reconciliation now, in the expectation that it will be necessary.
Interestingly, if this third interpretation is correct, and if Fink is, indeed, anticipating a Trump victory, then he is hardy alone, even on Wall Street:
Some large hedge funds and money managers, sensing a potential shift in momentum, are getting behind trades that could pay out if Donald Trump beats Kamala Harris in the presidential election.
While most polling still shows a tight race, that shift has rippled across markets in recent weeks, boosting assets seen as likely to benefit from a Republican victory. For instance, private-prison operator GEO Group is up 20% in October, on pace for its best month since 2022, while bitcoin miner Riot Platforms has risen 31%.
Well-known hedge-fund manager Dan Loeb reckons a Trump victory has gotten more likely, he said this month. His $11 billion firm, Third Point, has added to positions that could benefit, by buying stocks and options, and shifted away from companies that won’t….
Mark Dowding, chief investment officer of RBC BlueBay Fixed Income at RBC BlueBay Asset Management, has ramped up trades tied to a Trump victory since the end of September. Dowding, whose group oversees $130 billion in assets, has concentrated on interest rates and currencies….
Last week, Dowding flew from London to the U.S. to meet policymakers and lobbyists, and said he was “struck by the fact that Republicans are feeling more confident than I expected.”
As I’ve noted before, there is no guarantee about anything until all the votes are counted. And even then, Gaia only knows what could happen before the election is certified in January. That said, I am increasingly confident that the election is Trump’s to lose.
I’m pretty sure Larry Fink thinks so as well. He probably does think (know?) that the markets are largely rigged, and he may well be a historical materialist. But more than anything else, he thinks it’s all over but the shouting.