Blackrock CEO Larry Fink said earnings increased in 2020 with the world’s largest wealth manager’s savings and increased investment, worsening the impending retirement crisis in the US.
Three reasons are lower interest rates, lower savings rates, and more part-time and self-employed people in the economy. Partly because of the low US domestic savings rate, Fink said he believed the US needed more fiscal stimulus than Europe.
In the first quarter of 2020, the savings rate in Europe was about 15.6% in the US, versus 8.3% in March.
“I’m worried about the silent crisis of retirement,” Fink said in an interview Baron’s. “The big problem is a high percentage [of people in U.S.] Self-employed in part-time work or without retirement funding. “While those working for large companies have retirement savings, many companies do not adequately teach financial literacy.
“The reason America needs more fiscal stimulus than European economies is Americans don’t have enough savings,” Fink continued. “When you have a crisis like an epidemic, Europe is better prepared because of wider, deeper savings” and a stronger safety net. “America is less prepared than Europe in terms of financial support to families because we are not a savers’ society.”
Separately, Fink’s outlook on the stock market remains positive due to the persistence of low interest rates, and because he believes that coronovirus vaccines will be “fully publicized” in the second quarter, herd immunity in the third quarter. Will produce This will revive the parts of the economy that have fallen flat and lay the foundation for better growth later in the year.
“I do not expect [the market] As it happened in 2020, but I believe the foundations of the markets will be fine. This does not mean it will be legible: Fink also said that he expects a 5% to 10% improvement during the year.
Finally, Fink said that even as the US restricts investment in China, Blackrock saw record earnings of Chinese investment from global investors.
“Be clear: Many large US companies are very active in China and selling goods, so our trade deficit with China has never been greater,” he said. “We stand by our country’s wishes and we will do whatever is necessary, but we see global investors running away from China towards China.”
He said he welcomed the possibility of discussing the need for a multilateral approach to China with the Biden administration. “There is a need to have multilateralism to negotiate the number 2 and number 1 markets and create a better world,” he said.
Fink also said that Blackrock is reviewing his political spending following last week’s rebellion by supporters of President Donald Trump by trying to block the certification of President-elect Joe Biden’s victory. The company has halted political spending.
Earlier, BlackRock reported that 2020 earnings were $ 4.9 billion, or $ 31.85 per share, on revenue of $ 16.2 billion. This is compared with a profit of $ 4.5 billion or $ 28.43 per share and revenue of $ 14.5 billion in 2019. Net inflow of funds into Blackrock products was $ 390.8 billion in 2020, down from $ 428.7 billion in 2019.
The results were much higher than analysts had expected, wrote Craig Seigenthaler of Credit Suisse.
The assets under management were $ 8.67 trillion, versus $ 7.43 trillion a year ago. “Strong market, good performance and the depth and depth of Blackrock’s platform should produce more of the same,” Glenn Schorr of Evercore ISI wrote.
Blackrock’s Aladdin division, a provider of risk-management and technology solutions, was particularly strong. Revenue in the fourth quarter grew 11% compared to a year earlier, exceeding the annual total for 2020 by $ 1 billion.
Edward Jones expects Aladdin to deliver mid-term revenue growth over the long term. Kyle Sanders of Edward Jones wrote, “We see a long runway for demand, as wealth management companies are turning to Blackrock’s best-in-class technology.”
Blackrock stock fell 4.1% to $ 747.91 in the mid-afternoon. The stock rose 22% in the three months ended Wednesday, versus 9.2%
Write Leslie P. Norton at [email protected]