WHEN: Today, Monday, July 15, 2024
WHERE: CNBC’s “Squawk on the Street”
Following is the unofficial transcript of a CNBC interview with BlackRock Chairman & CEO Larry Fink on CNBC’s “Squawk on the Street” (M-F, 9AM-11AM ET) today, Monday, July 15. Following are links to video on CNBC.com: https://www.cnbc.com/video/2024/07/15/blackrock-ceo-larry-fink-we-need-unfettered-businesses-growth-from-the-private-sector.html and https://www.cnbc.com/video/2024/07/15/blackrock-ceo-larry-fink-i-believe-bitcoin-is-a-legit-financial-instrument.html.
All references must be sourced to CNBC.
JIM CRAMER: Larry Fink, thank you so much for joining us.
LARRY FINK: Hi guys.
CRAMER: I felt that of your quarters, this is the one I felt most lift — optimistic and lifting because it’s very clear you favor growth.
FINK: Yeah.
CRAMER: It’s very clear that the acquisition, by the way, which I wish you would let individuals in, Global Industrial Part — I tried to get into it and they said no. And I didn’t want to call you and so I went in. But you are someone who I believe that growth could get us out of this jam in this country.
FINK: Well, growth is probably the most important component for all countries in the world today. I spoke at the G7 recently. I did an editorial. We need to find new ways of growth, you know, especially in front of an election right now. Both candidates need to talk about growth. We need to find ways of creating optimism and creating opportunities for growth. Growth is not going to come from tax cuts. That’s too short term. Growth is not going to come from tax increases. We need to be building America. We need to be reducing the extensive process of permitting. We have an infrastructure boom that is necessary, whether it is for digitization, decarbonization. We can — we are blessed by having energy efficiency here in this country. And we can do so much as a country right now. But we’re inhibited by our controls and we need to be growing out of this. And this is my message not just to the U.S., but to every country right now. We have rising deficits. No one is spending enough time talking about deficits. The U.S. deficits are the largest in the world, growing at the fastest rate in the world. And we need to be finding ways of minimizing the role of the deficits on the economy, on interest rates, on inflation. And so we need to grow. And if we can’t grow out of this, these deficits are going to become a big burden. And we’re going to be really putting on the backs of our children, our grandchildren, a real burden of these massive, massive spends that we can’t afford.
CRAMER: I think it’s important to point out you did not say one candidate is more pro-spend than another.
FINK: It’s all pro-spend.
CRAMER: But — but I do think it’s important also that President Trump has been adamant that there’s been way too much regulation under President Biden. So I have to believe that you would say that the business would be more — business would be unfettered. And if they’re unfettered, that could help the growth, which would therefore lower the deficit.
FINK: We need unfettered businesses right now. We need growth. And we’re going to get growth from the private sector. We can’t rely on public deficits anymore. The public deficits are just growing too fast as a percent of GDP. As a perspective, our deficits were only $8 trillion in 2020. They’re going to be at $26 trillion — $36 trillion. We grew our deficits more than a trillion dollars a year over the last 24 years. This is unheard of. It is at an unsustainable level. Yet we have the most dynamic, capitalistic system in the world. We have great companies. We have great ingenuity, great technology. Let it unbound. Let it go. Create great jobs. Create opportunities. And we’ll have a rising equity market that will really fuel this opportunity.
CARL QUINTANILLA: Is that a playbook that you think a President Trump would deliver? And what are your thoughts about what happened over the weekend?
FINK: I believe both political candidates need to be playing that playbook. So let’s start there. What happened this weekend is a tragedy. It is a statement of America today, though. We need to create hope. All of us have a responsibility, every political candidate, every leader, every pastor, minister, rabbi. We all have a responsibility of bringing our community together to bring hope. And that’s what we are here for, to bring hope, to provide a better future.
QUINTANILLA: You came on a couple of quarters ago, and we talked about how American policy gets processed versus, say, Europe’s. And your point then was, yeah, our conversations are often loud and messy, but we do —
FINK: We get it done.
QUINTANILLA: We get it done.
FINK: Absolutely.
QUINTANILLA: Is this weekend a threat to that?
FINK: No, by no means. This week is a — look, this week — this weekend is a wake-up call to the rising hatred. At the same time, it’s a wake-up call that we must change and I think that wake-up call allows us to change. We need a fair and just system. So let’s be clear. We need to have ways of having conversations about opportunity. There’s too much conversation about the negatives. We need to have conversations about the opportunity and the positives. And we need to inform more people that there’s real opportunity ahead. But we need to be — we need to be helping people who are struggling in this path. But I travel the world. I’ve traveled the world the last few months. There is no more opportunity here in the United States than any other place in the world. And I say that with pride, and I say that with sheer strength in my conviction that we are a place of growth. And I believe that is going to be the opportunity for companies like BlackRock to show that and to prove that and to provide that. You know, we announced LifePath Paycheck to give more hope for retirement. We — you know, we’re about to close our GIP transaction right now. And so we believe the opportunity for infrastructure investing to invest, a great new job, better job, bigger job, we have that opportunity. You know, at BlackRock, we had an amazing quarter where we had the biggest quarter in our history of $150 billion of flows in ETFs. No other quarter ever, a $150 billion of flows. And so we’re in a position now of having these conversations, whether it’s the conversations that we’re having related to ETFs or what we’re having through infrastructure or Rick Rieder’s funds or what we’re doing in AI and investing in our quantitative systematic equity teams. We’ve had great performance. You know, in the last quarter, we had 12% revenue — 12% operating income growth. We had — we had 160 base points in margin increase, which — which tells you we have two trillion dollars more in assets today than we did a year ago and the same amount of employees. OK, $2 trillion dollars more in assets, the same amount of employees. That is technology at work.
CRAMER: That is — that is just remarkable leverage, not the debt kind, the kind you want. Now, one of the things that I felt was really terrific, Larry, I got an understanding that maybe the people who invest are willing to take on a little more risk.
FINK: They are.
CRAMER: And that was fantastic to hear.
FINK: Yeah.
CRAMER: Because doesn’t that mean optimism?
FINK: There — there is growing optimism worldwide. A lot of the optimism is on investing. I mean, I said in my calls this morning, the optimism we’re seeing in investing in power, data, AI. We’re talking about trillions of dollars, the opportunity to rebuild our infrastructure, the opportunity today to build out data centers that are not a part of the grid, but using our gas supply and our wind and solar. And maybe one day we’ll have nuclear. These are trillions of dollars investments. I think we have a wake-up call in Houston right now with the — with the — with the real shock of how many homes are still out without power. We — this is — I look at this as an opportunity, though. We’re here to invest. We’re here to build out. We’re here to make it more resilient. And those are the opportunities.
CRAMER: I think it’s important to point out the Global Infrastructure Partners what this acquisition meant. After you came on “Mad Money,” I did a lot of work on these guys.
FINK: Right.
CRAMER: This is the number one fund, if you believe in it, in infrastructure, but also higher yield. This is a great opportunity.
FINK: Yeah. It’s unbelievable.
CRAMER: And I wish you could just talk about how this is something that is the future because we all know infrastructure is the way to go.
FINK: So I believe the need for infrastructure worldwide is great. The need for investors to look at this as an asset class. We’re talking about doesn’t have the risk of high of — of private equity. It is less risky than most equity, but it has a higher return than most fixed income. And it has inflation to protect it. And in most high-quality infrastructure investments, you’re going to earn low double-digit returns, 11 to 15%, 20-year type of long duration maturities. So it’s perfect for any retiree. And we announced this Preqin transaction whereby we’re going to find ways to democratize private markets like infrastructure so more retail investors can invest in it. You know, with our Aladdin system, which is the biggest investment system in the world alongside our platform that we have for private markets with eFront. And now with our Preqin acquisition, it is our desire to build better data and analytics and then benchmarking privates. And so all investors can take advantage of infrastructure investing, can take advantage of more things and be a part of it. You know, we saw a revolution in ETFs. You know, when we bought iShares, iShares had just over 300 billion dollars in ETFs. Today, we’re crossing four trillion dollars. OK, that’s in 14 years, 15 years. You know, so I believe if we could create the same type of indexation data and analytics, we’re going to have — we’re going to be able to create ETFs in private markets. But importantly, we’re going to be able to create more transparency. So all of our investors, you know, every individual can be a part of this great, wonderful opportunity to invest in infrastructure in America to make our country strong, vibrant and the power of growth in the future.
QUINTANILLA: We’ve talked a lot about your shareholder letter about retirement crisis in this country.
FINK: Yeah.
QUINTANILLA: The risk appetite you’re talking about and the opportunities. Is that a satisfying — going in the right direction?
FINK: Oh gosh, Carl, we’ve had — I think we had when we started 14 companies that are going to be on like — companies that are going to be on LifePath Paycheck. We are having more amazing conversations. As I said I think the last quarter, I think LifePath Paycheck basically annuitizing the back end of the payment. So instead of getting a lump sum as a retiree, you’re getting a monthly paycheck. By doing that I think it gives more hope. And so I actually believe it will become the dominant form of IRAs in America in the next 10 years. And I’m willing to put my reputation on it. The dominant form of — for defying contribution, for 401(k) investing. I believe it will transform it. It lifts up hope. It gives people more certainty, and that’s what we need.
CRAMER: I think the people have to understand, when you’re talking about individual investment, this is great. Now I don’t mean to — to give you a hard time, but I think this is a big mistake, that I did immediately go into — to your company and I said, look, I want to put money in Global Infrastructure, because I think it’s really right.
FINK: Yes.
CRAMER: And they informed me, listen, it’s not a retail product. And I accepted that.
FINK: Not at the moment but it will.
CRAMER: But it sounds like that is very exciting to people. Now also what you talked about IRA, this is something where you have said over and over again, we want this current generation to feel like they can be wealthier in the future. This is something they can put $6,500 right now if they’re — if they are in a job.
FINK: Right.
CRAMER: This would be remarkable in terms of the compounding factor with some of the products you have.
FINK: But if more and more people do that, think about the amount of money that’s going to go into our capital markets. And that is the differentiation thing about America. When I go around the world, everybody just marvels at our capital markets. No country in the world has our capital markets. We have the strongest banking system in the world and we have the strongest capital markets in the world. No country in the world has that. This is — we’re getting back to politics, both of our political candidates need to embrace this. We need to embrace the capital markets, our banking systems. We need to be growing there, provide capital to small and medium business, provide capital to large capitalized companies. To do more R&D investing, to do more investing in venture capital. That’s the power of capitalism, but that’s the power of how we can take control of our own destiny by investing in America’s tomorrow and enjoy that growth rate. We need more and more Americans who enjoy this upswing that America is going to have. Our upswing because we’re the dominant country in the world in technology. We are the dominant country in so many different areas, in health care. This is it. This is an opportunity, and this is why I remain to be very optimistic.
QUINTANILLA: And you think that over — that supersedes all of the political divisions that I’m sure get talked about in the countries you visit?
FINK: I think the political conversations are sometimes frightening, they’re sometimes angry, but we need to talk about the divisions. We do come from different extremes and different ideas. But through conversation, let’s hope we can find unity. And that’s what America was, through conversation, through fighting we create unity. We create a direction. We need that direction. We need that unity. I mean, I remember what Ronald Reagan did, and he created this economic boom by providing that hope. We need that type of hope again. And I’m very optimistic. I mean, this weekend is frightening, but this weekend is also a statement for me to say that there’s huge opportunities for America. And we have to be focusing on the opportunity. But let’s be clear, we’re going to hear the convention this week a lot of negatives. We’re going to hear the convention in a couple of weeks a lot of negatives. That’s the political discourse. That should not dissuade people. That should be giving people hope because we’re talking about problems, we’re talking about the differences. I worry about when we don’t talk about the differences. I worry about when we don’t talk about the divisions. I worry about when there’s a problem that we all know about that we’re putting our — we’re not responding to it. And so hopefully — I mean, before the attempted assassination on President Trump, we were all worried about the hatred in America. That wasn’t changed. We’re all worried about guns in America and the misuse by some people of guns. This doesn’t identify anything new, but it’s horrifying to see. And so that could be that cathartic thing that allows us to say we need to do better. We can do better.
CRAMER: Now, I know you have been a leader in willing to embrace crypto.
FINK: Yes.
CRAMER: You have made it so that people can be in bitcoin. We hear that you are thinking about Ethereum. These are incredible things. Now BlackRock is not known as a gunslinger by any means. So you obviously must believe that this may be is an alternative. Is this an alternative in order to be — because of the deficit? Maybe something long term people should have?
FINK: Absolutely. As you know, I was a skeptic.
CRAMER: Yes.
FINK: I — you know, I was a proud skeptic. And I studied it, learned about it, and I came away saying, OK, you know, my opinion five years ago was wrong, here’s my opinion today. This is what I believe in today. I believe in the opportunity today. I believe Bitcoin is legitimate. I’m not trying to say there’s not misuses like everything else, but it is a legitimate financial instrument that allows you to have maybe uncorrelated, non-correlated type of returns. I believe it is an instrument that you invest in when you’re more frightened, though. It is an instrument when you believe that countries are debasing their currency, debasing their currency by excess deficits. And some countries are. I believe we have countries where you’re frightened of your everyday existence. And give you an opportunity to invest in something that is outside your country’s, you know, control. Then you can have more financial control. And so, I’m a major believer that there is a role for Bitcoin in portfolios. I believe you’re going to see that as one of the asset classes that we all look at. I look at it as digital gold, as I said before. And I do believe there’s a real need for everyone to look at it as one alternative to I would say the optimism that I have in the world. If you want to hedge hope, Bitcoin is not a — an instrument for hope unless you’re hopeful you’re going to make a lot of money on it. But I look at it as a vehicle in which you’re expressing your financial acumen in something that you’re more frightened of the world, you’re more frightened of your existence. And I believe there’s a great industrial use for it. And I think a lot of people are missing that.
CRAMER: I couldn’t agree more. I changed my mind about it when you did. You have been my thinking, I was like, you don’t believe it, so I can’t believe it. And I want to thank Larry Fink for the message of optimism.
FINK: Thanks.
CRAMER: And also for a great quarter. Larry Fink is the co-founder and chairman and CEO of BlackRock. I think the most important investment company in the world.
FINK: Thanks, guys. Carl.
QUINTANILLA: Good to see you.
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