Tags: blackrock | fink | infrastructure | privatization

FT: BlackRock's Fink Urges Privatization of Critical US Infrastructure

FT: BlackRock's Fink Urges Privatization of Critical US Infrastructure
(AP/TORU YAMANAKA)

By    |   Monday, 10 April 2017 08:22 AM

BlackRock Inc.’s Larry Fink is urging the United States to launch a major privatization of critical national infrastructure such as airports, in order to harness private capital for a sweeping revamp.

Fink, in his annual letter to BlackRock shareholders, explains that federal spending cannot fulfill the country’s investment needs.

“Substantial expertise must be dedicated to bring projects to market in a format appropriate for institutional investment,” Fink says.

“These projects must deliver competitive returns and that will often require efficiencies that can only be achieved through private ownership,” Fink said.

He cites the example of American airports which, in contrast to those in the UK, Australia and other countries, are almost all publicly owned, the Financial Times explained.

“Policymakers, workers and unions must work together to find a model that will allow private enterprise to generate the long-term returns necessary to attract capital and build a more prosperous future,” he says.

Fink has joined one of Wall Street’s other most influential CEOs -- Jamie Dimon -- in raising warning flags over the nation’s economy.

Fink also recently said that U.S. growth is slowing on concern whether the Trump administration’s agenda will get through Congress. Dimon lamented that “it is clear that something is wrong” with the nation in a letter to investors Tuesday.

Both CEOs are part of a group of business leaders that advise President Donald Trump.

Fink expressed chagrin over the pace of changes so far under the new administration. He told CNBC the U.S. economy is slowing as both consumers and businesses wait to see if the new administration can deliver on tax reform and deregulation following the failure of the health-care bill in March.

"There’s a greater worry that these proposed changes are going to be harder and harder to execute," said Fink, speaking on CNBC Thursday. "You’re seeing a slowing down of our economy."

Fink said the U.S. may be the slowest-growing economy in the first quarter among the G-7 nations. Japan, Canada and Europe are expanding faster than anticipated six months ago while the U.S. is lagging expectations. Without tax reform and deregulation, he said, the markets will suffer setbacks.

Dimon used his 45-page annual letter to list ways America is stronger than ever -- before jumping into a much longer list of problems. Since the turn of the century, the U.S. has dumped trillions of dollars into wars, piled huge debt onto students and forced legions of foreigners to leave after getting advanced degrees, he said in the letter. He called for infrastructure investment and reducing corporate taxes to lift the economy.

Fink, the head of the world’s largest asset manager, said the most crowded trade right now is that rates are going to move much higher. Instead, he said, there’s a 51 percent chance that 10-year Treasuries drop below 2 percent.

BlackRock is trying to accelerate its own growth, particularly in its struggling stock-picking business, by relying more on quants to stem the outflows from active funds.

BlackRock has announced it’s shifting $6 billion of the $201 billion run by stock pickers into offerings with lower fees where quants play a role. The firm is also firing more than 30 people in its active-equities group, including five of its 53 fundamental portfolio managers, said a person familiar last month.

Fink said on CNBC that the moves are not a substitution of humans with machines. "It is a reorientation in the large-cap area of U.S. equities," he said. "It is a recognition there are more sources of information."

The money manager is doing a lot of research on artificial intelligence, Fink said, but the idea that computers are now able to stock-pick without human input is "more of a myth than a reality."

(Newsmax wires service Bloomberg News contributed to this report).

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Larry Fink Joins Jamie Dimon in Issuing Warning on U.S. Growth
blackrock, fink, infrastructure, privatization
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2017-22-10
Monday, 10 April 2017 08:22 AM
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