BlackRock CEO Larry Fink Said In his annual letter to investors, he outlines what he claims are the most urgent and rapidly changing developments in cryptocurrencies and traditional finance.
The 9,000-word document, published March 16, touches on everything from geopolitical crises and the war in Ukraine, to long-term growth strategies and digital assets, to broader trends in investment and market research.
Last year was one of the most difficult market conditions in history. both Equity and bond markets fell for the first time in decades, and the challenge will persist through 2023, Fink said at the beginning of the document.
“You can see the division between regions, including the US and Europe, especially in the US, even within the region,” he said of the regulatory department, noting that BlackRock has more than any other company. He added that it offers more than 1,300 ETFS.
Inflation, Fed Rates, Bank Bailouts
“It remains to be seen whether the consequences of easy money and regulatory changes will have ripple effects,” the CEO added, referring specifically to the ongoing situation involving the US community banking sector, adding that “more seizures and closures are coming.” Let’s go,” he predicted.
With inflation still high, Fink expects the Federal Reserve to remain focused on fighting inflation and continue to raise interest rates.
“I believe inflation will persist and will be more difficult for central bank officials to contain in the long term. ,” Fink wrote to investors.
Longer term, however, Fink believes the current banking crisis will make the role of capital markets more important.
“We expect banks to seek more funding from the capital markets as bank lending may become more constrained or as customers become aware of these asset-liability mismatches.”
In the letter, Fink also emphasized the impact of global macroeconomic factors shaping investment. For example, he noted that interest payments on U.S. government debt surged to a record $213 billion in the fourth quarter of 2022, up $63 billion from the previous year. In addition, Fink noted that the big, unimplemented tax cuts announced in the UK led to a sharp drop in sows last fall.
“Public and private sector leaders are essentially trading off efficiency and low cost for resilience and national security … This trade-off between price and security is likely to continue if inflation persists. And that’s one of the reasons I believe it will be harder for central banks to keep inflation under control,” Fink said of his outlook for the next few years.
On the growth of new technologies and digital assets
As for the growth of digital assets, Fink praised emerging markets.
“Beyond headlines and media obsession with Bitcoin, there are some very interesting developments happening in the digital asset space.”
“Many emerging markets, such as India, Brazil and parts of Africa, have seen dramatic progress in digital payments, reducing costs and increasing financial inclusion. Developed markets have lagged behind innovation, and payment costs remain much higher.”
Fink is also optimistic about future developments stemming from computer chips and AI, predicting that North America will be the winner in high-end manufacturing, where advanced hardware and software are required at the same time.
“Public policy has helped keep chip manufacturing in the US, and the latest innovations in AI have become a new concern,” says Fink.
Ultimately, Fink believes that assets under management and companies are important global players, whether in green energy or in more integrated global finance, for the key changes that underpin democracy in 2023 and beyond. We are continuing to work to see it move towards migration.