There is rampant speculation over who will succeed Timothy Geithner as Treasury Secretary. Larry Summers, Sheila Bair and even Mitt Romney have been discussed as possible replacements, but one of Geithner’s ‘best friends’ may  also be on the short list of potential successors — Larry Fink, CEO of BlackRock.

Wednesday, Reuters' Robert Wolf interviewed Fink, who he claimed is “always mentioned as THE person from the private sector” amidst speculation on who will step into Geithner’s shoes.

You can check out the video below and see that Fink looked elated when asked what he’d do if President Obama asked for his services.

He said that he would “certainly take the call and I would be a good listener." He also took care to mention that he loves his current job and sees exciting opportunities in the future for BlackRock. If appointed, Fink would be able to sell his stock positions tax-free like Henry Paulson -- a move which might very well save him millions.

We’ll see if Fink gets “the call” from Obama anytime soon.

Video from the relevant excerpt below:

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Treasury Secretary Timothy Geithner is expected to leave his post and now President Obama will have to pick his replacement. 

We've put together a rundown of some of the names being tossed around for the next Treasury Secretary. 

The next Treasury Secretary will be continuing our long slog to recovery after the financial crisis. And then there's China. And Europe...

Would you want that job?

Jack Lew

Current Job: Current White House Chief of Staff

Resume: Most of Lew's career has been spent as a public servant working in various positions from the State Department to the Clinton Administration. He also did a stint at Citi. Before becoming White House Chief of Staff, Lew was the director of the Office of Management and Budget.

Why He's Right For The Job: Noted economist Nouriel Roubini Tweeted that Lew is likely to be the next Treasury Secretary. As the director of the Office of Management and Budget, he's experienced with fiscal matters and he would be easy to confirm by the senate, CNBC's Steve Liesman reports.  However, he doesn't have the international experience or the banking experience even though he worked at Citi, according to Liesman's report.

Source: CNBC

Lael Brainard

Current Job: United States Under Secretary of the Treasury for International Affairs

Resume: Brainard is a Harvard grad who grew up as an American expat in Communist Poland. Before becoming one of the country's top financial diplomats, Brainard was an associate professor of Applied Economics at MIT. She also served as Deputy National Economic Adviser and Chair of the Deputy Secretaries Committee on International Economics during the Clinton Administration and spent time at McKinsey.

Why She's Right For The Job: She already works at the Treasury Department.  She also has the international experience such as the Basel bank regulations and the G-20. However, Nouriel Roubini Tweeted that he sees her likely becoming the Deputy Treasury Secretary.

Neal Wolin

Current Job:United States Deputy Secretary of the Treasury

Resume: Wolin graduated from Yale law school and has a masters in Development Economics from Oxford. Much of his career has been spent in public service from serving as General Counsel of the U.S. Department of the Treasury under Secretary Larry Summers to serving as Deputy Legal Advisor to the National Security Council during the Clinton Administration.  He was the president and COO of insurance giant The Hartford Financial Services Group. 

Why He's Right For The Job: CNBC's Steve Liesman reports that Geithner supports Wolin.  Liesman points out that he has the financial experience from The Hartford Financial Services Group and experience within the Obama administration.  

Source: Treasury.gov

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Tim Geithner is leaving at the end of Obama's first term so the speculation for who will be the next Treasury Secretary is running hot.

Billionaire Warren Buffett has just thrown his pick out. He told TV host Charlie Rose that JP Morgan CEO Jamie Dimon would be the best man for the job.

From Bloomberg:

“If we did run into problems in markets, I think he would actually be the best person you could have in the job,” Buffett said in response to a question about Dimon from Charlie Rose, according to the transcript of an interview that was scheduled to air yesterday on PBS. “World leaders would have confidence in him....”

And about that $6 billion trading lost JP Morgan suffered earlier this year... Buffett thinks it shows Dimon knows how to handle intense pressure.

“Obviously, you know, there was a failure of control,” Buffett, 82, said to Rose about the trading loss. “If you run an army, if you run a church, if you run a government, any large institution, people will go off the reservation sometimes.”

People have been throwing out names left and right for who could/should fill the job. Erskin Bowels has already taken himself out, but other names like former FDIC Chair Sheila Bair and White House Chief of Staff Jack Lew are still red hot.

In terms of Wall Streeters, Jamie Dimon's name hasn't really been mentioned. The ones we're hearing are Evercore founder Roger Altman (he has Treasury experience) and BlackRock CEO Larry Fink.

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Larry Fink, the CEO of BlackRock was on Bloomberg Television today, to discuss everything from the economy to BlackRock's businesses.

Fink is "very bullish" on the economy and he thinks "95%" of people who talk about the fiscal cliff don't know what they're talking about.

Here's a transcript of some of Fink's appearence from Bloomberg Television:

Fink on the fiscal cliff:

"I would say that 95% of the people that are talking about it have no clue…I was in Washington for a couple of days last week. I am on the phone a lot. I think we will find a solution. Republicans and Democrats understand the enormity of the issue. I actually believe that the Republicans understand--I would say that the nation's consensus that we have to raise the upper income taxes and I think that what they are trying to do is work on a great bargain, working with the Democrats, and making sure that there is a 3 to 1, 2.5 to 1 in terms of expense savings for revenues. I actually think that the threshold of the Republican side has been determined subject to working out on the Democratic side the expense savings. I do believe that the Republicans will threaten if they can't find those expense savings...There is still posturing going on."

On whether there's a buying opportunity between now and the end of the year:

"I told all my investors that any time the market had a down shaft, go buy. The market is almost creeping back up to a month high. I think that the market is saying that there will be a solution and those who were able to buy on those downdrafts, those momentary fears, did well. Once again, we spend too much time focusing on those day traders and you have to look for your point in time to be an investor and you like a stock at a certain level, you should stick with those strategies."

On how banks can make big money going forward:

"I am quite bullish on the banking system going forward. I think banks in the United States have done a very good job of retooling its businesses. They have much more to do but their balance sheets are very strong. Much of the problems in U.S. banks are behind them."

On how he feels about BlackRock being bigger than the Street:

"I don't compare us and we are not the Street. This is our clients' money. I believe the thinning of the balance sheets is what regulators wanted. Regulators basically said you will have higher capital charges and we want you to have lower balance sheets so you are not too big to fail. We want you to get into more flow business. I think at this period of time, we as investors are struggling with a lack of liquidity so I am not suggesting these are not difficult times for all investors in the market trading of bonds, specifically, but over time, I think you'll see more products moving to exchanges. The Wall Street firms will do more flow business. This will be evolutionary and unfortunately we are now at this period of time of a real big sea change. We are historically dependent on the balance sheets as a mechanism for inventory and now we will be more dependent on flow business. That will force more business onto exchanges. I actually think this is what regulators want."

On saying in February that investing 100% in stocks is the way to go and whether this holds true today:

"I would speak more cautionary until we see what happens in Washington. If you are a long-term investor and thinking about retirement or your pension plan, you have no other choice but to be in equities. If you are not in equities now, you need to start layering in and starting to buy but I would not do it all at once."

On whether he's surprised that mortgages have had such a great run this year:

"No, when the Federal Reserve buys as much as they do, you are certainly not surprised at the performance of certain items. Operation Twist and QE3 buying all the mortgages really didn't help the mortgage market. At the same time we also started to see stability in housing markets and rising housing prices for the first time and when you put that together, you had a good year. But where is S&P up? 13% this year. Some of the European stocks dropped over 20% so I am happy with my prognostication and I would live by it going forward."

"I am very bullish on the United States over a cyclical period of time. With that in mind, it is hard for me to see how bonds will continue--at this rate--continue to have that kind of performance. Way too many people are investing in bonds with all the volatility that is embedded in bonds now with their duration…a 30-year treasury today is at a record low, around 3.5%. Excuse me, 2.5%. If you look at the CBO estimates over a 10-year cycle, the U.S. government says 10-year Treasuries in a number of years will be at 5%. Let's assume the spread between 10 and 30 years is another 100 basis points so they are suggesting that 30 year will be at 6%. With a duration of 16, that means that if the CBO, our government's accounting, is correct, you will lose 45% of your principal in bonds…I think this is the big mistake that people don't understand now. Bonds don't possess that risk-free return in this low rate environment. I am using what our government is projecting out for interest rates. When we talk about budgets, it is the U.S. government's belief that 10-year treasuries will be of 5% out in another five years."

On whether searching for yields and going for corporates is a mistake:

"As I said, I am bullish on the United States. If you're going to take a risk in bonds, I believe you will have a higher return in corporate bonds. I don't believe you'll see that much default risk in the next few years. Our corporations are in fabulous shape with $1.7 trillion in cash. They are using some of that cash at the moment for special dividends and stock repurchases, so they are not using it in the one best way for bondholders, but if you're going to invest in fixed income you will need higher return assets and that will be in corporates."

On what happens to pension funds that are investing in corporations and high yield:

"The pension issue is bigger than just bonds. In fact, bonds are only a component of all the risks they are sitting with. I visited a couple of large pension plans in the United States last week and they are assuming they will earn 7.5% return."

"If you believe that the world can grow 3% per year--that is lower than we have seen in the last 10 years--if you assume we can grow by 3% per year in world growth and assume you can buy stocks that have a dividend of 3.5%, if there is an improvement in margins, you will see you can make a 7-7.5% return over 10 years in equities. You will have to be a patient investor and not worry about the intraday volatility. This is the reason why I like equities even though everybody is running away."

On whether BlackRock investors have been harmed by LIBOR:

It's too early for me to tell. We are doing a full review of all of the trading activities. We don't know yet. In most cases, we are learning that they artificially lowered the LIBOR rates. That is very harmful for the investors because we had an artificially low rate. I think we are discovering also that there are moments in time--and I think this is where the investigators are really looking into it--where there was some form of malfeasance at a specific day because they had many clients money that was going to be reset and they raised the price. Until you understand how their behavior was or if there was a series of money for the artificially lowered the rates, we as an investor have been harmed. There are other cases where we saw evidence that they possibly raised the rate and those issuers were then harmed. This is not an easy thing to determine. We are doing a full and exhaustive review and many of our clients have asked what we are doing on behalf of them.

SEE ALSO: The Ultimate Guide To The Fiscal Cliff

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(Reuters) - BlackRock Inc <BLK.N> Chief Executive Laurence Fink has warned top U.S. companies not to emphasize dividends or share buybacks if they come at the expense of future growth.

Many top corporations have faced pressure from Wall Street analysts, activist investors and others to increase their dividends, buy back shares or take other steps to return capital to investors sooner rather than later.

Fink, in a March 21 letter to the leaders of companies in the S&P 500, acknowledged the pressure for near-term performance but reminded companies that they must focus on the longer term. With $4.3 trillion under management at December 31, BlackRock of New York wields much influence over the boards of top corporations.

"It concerns us that, in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies," he wrote in the letter, a copy of which was obtained by Reuters.

"Too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks," he added.

"We certainly believe that returning cash to shareholders should be part of a balanced capital strategy; however, when done for the wrong reasons and at the expense of capital investment, it can jeopardize a company's ability to generate sustainable long-term returns," Fink wrote.

Fink's letter was first reported by The Wall Street Journal.

(Reporting by Ross Kerber; Editing by Miral Fahmy)

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(Reuters) - BlackRock Inc <BLK.N> Chief Executive Officer Larry Fink said on Wednesday that leveraged exchange-traded funds contain structural problems that could "blow up" the whole industry one day.

Fink runs a company that oversees more than $4 trillion in client assets, including nearly $1 trillion in ETF assets.

"We'd never do one (a leveraged ETF)," Fink said at Deutsche Bank investment conference in New York. "They have a structural problem that could blow up the whole industry one day."

Fink spoke during a conversation with Deutsche Bank co-CEO Anshu Jain in a broader discussion about regulating financial companies.

Leveraged ETFs account for 1.2 percent of the $2.5 trillion in global ETF assets under management. At the end of April, there were nearly 270 ETF funds with $30.3 billion in assets, said Deborah Fuhr, managing partner of ETF research firm ETFGI LLP.

A leveraged ETF uses financial derivatives and debt to amplify the returns of an underlying index.

Fink said he believes regulators should focus on the structure of financial products.

"If you want to create a safer and sounder marketplace, it has to be at the product level," Fink said.

Leveraged ETFs are allowed, but staff at the U.S. Securities and Exchange Commission has issued warnings about them. Leveraged ETFs seek to deliver multiples of the performance of the index or benchmark they track.

Regulators say individual investors may not realize that the investment products are designed to achieve their performance objectives on a daily basis rather than over the long term.

In one real-life example given by the SEC, an unnamed leveraged ETF seeking to deliver twice the daily return of an index fell by 6 percent, even though that index gained 2 percent over a 5-month period.

(Reporting By Tim McLaughlin; Editing by David Gregorio and Tom Brown)

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Cable TV. Social media. Even newspapers. With all the information swirling around us, it’s easy to get obsessed with watching the market’s gyrations. And it’s tempting to think you can outperform everyone else if you just listen closely enough. The truth is, most of what’s out there is just noise.

Daily ups and downs are a fact of the markets. But you’re not investing for one day. Most people are investing to realize goals that are years, if not decades, down the road. And getting too wrapped up in how the markets will react to what’s going on in Ukraine at the moment, or the latest news out of Washington, is going to distract you from your life goals—like saving for your kids’ college fund or planning for retirement.

Does this mean you should set up your portfolio one day and never look at it again? Of course not. It means that your focus when investing should be on what you’re trying to achieve.

If you’re saving for a down payment on a home, you might have a timeframe of just a few years and need one strategy. Saving for your child’s college costs is another timeframe—10 to 20 years. And retirement takes a whole other level of thinking. Young people today are looking at a timeline of more than half a century.

Imagine your money is like an employee: you want it to work for you. Are you going to stand over your money’s shoulder, micromanaging and questioning every single thing—and ruining its productivity? Or are you going to put it on a solid path and give it the room to succeed?

But you shouldn’t have to do this alone. Those of us in asset management need to take this conversation beyond the ticker tape. Yes, investors want sophisticated analysis and carefully managed funds—but what’s most important to people is getting the products (and the advice) that will take them to the finish line.

So when you think about what to do with your money, don’t think about what’s on the news. Don’t think about what’s important to talking heads or the Twitterati. Think about what’s important to you, and what your goals are. And remember just how long it takes to achieve each of them.

The opinions expressed are current as of May 2014, and are subject to change. Reliance upon information in this article is at the sole discretion of the reader.

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(Reuters) - BlackRock Inc Chief Executive Larry Fink this week dropped a stink bomb on a small corner of the $2.5 trillion global market for exchange-traded funds.

Fink, who runs the world's largest asset manager and ETF provider, said structural problems with leveraged ETFs have the potential to "blow up the whole industry one day." Sponsors of leveraged ETFs and related products, which make up only about $60 billion of global industry assets, called his remarks an exaggeration.

Leveraged ETFs use derivatives and debt in an attempt to enhance returns - often by two or three times - that an investor would receive from putting money in stocks, bonds or other financial instruments. The only problem: if the underlying securities or indexes drop, the losses can be fast and heavy.

Fink, who was speaking at a Deutsche Bank conference in New York, drew parallels between the embedded leverage in some ETFs and two obscure Bear Stearns hedge funds that collapsed in 2007. That ignited an initial wave of panic over Wall Street's exposure to sketchy mortgages - a warning of much worse to come in the 2008 financial crisis.

A systemic risk could emerge from packaging inherently hard-to-trade securities, such as leveraged bank loans, into ETFs. The value of the ETF could collapse if the market for the underlying assets freezes up. That could touch off a rout within the ETF industry if skittish investors decide that many other funds are too dangerous for them.

Fink’s pointed remarks on Wednesday also raised questions about whether too many risky financial products are entering the marketplace.

In the aftermath of the financial crisis, a growing number of complicated and risky products are being aimed at Main Street investors. Hedge funds are making some of their strategies available to Mom and Pop investors willing to come up with as little as $1,000. Part of the pitch is that they need to look beyond plain vanilla investments if they want to have enough money to retire – the downside is that they could lose their shirts if markets take a sharp turn.

FED WARNED

Last month, top money managers aired their concerns during a meeting with New York Federal Reserve President William Dudley.

The group, including hedge fund manager David Tepper of Appaloosa Management LP, worried aloud that investors may be stretching too far for returns in a low volatility, low interest rate environment, prompting "some market participants to take on additional leverage to meet investment targets," according to recently released minutes from the April 10 meeting of the Fed’s Investor Advisory Committee on Financial Markets.

Fink on Wednesday suggested there's systemic risk lurking in leveraged ETFs, in comments that resonated with some other investors.

"I agree with the notion that the leveraged ETFs have the potential to possibly be very upsetting to the market. It is the leverage that concerns me." said Dan Fuss, vice chairman of Loomis Sayles.

Fink said U.S. and European regulators, including the U.S. Securities and Exchange Commission, don't pay enough attention to individual financial products hitting the market.

The SEC in 2012 stopped giving new applicants permission to launch leveraged ETFs, because it was concerned about such funds. However, two fund sponsors – ProShares and Direxion – are still launching leveraged ETFs, using exemptive relief issued by the securities watchdog earlier. The SEC declined to comment on what Fink said.

Fink, whose firm oversees $4.4 trillion in client assets, declined to comment for this story.

BlackRock's iShares ETFs owned 39 percent of the global ETF market with $953 billion in assets at the end of April. State Street Corp was a distant No. 2 with $409 billion in assets, followed by No. 3 Vanguard Group's $368 billion.

None of those three offer leveraged ETFs. Vanguard and State Street executives said they don't share Fink's view that the products pose a systemic risk.

Dave Mazza, head of ETF research for State Street Global Advisors, said, "This is an extreme example of buyer beware." He said it is possible a leveraged ETF meltdown could disrupt industry-wide compound annual growth rates that have topped 25 percent in recent years.

“These products work as advertised,” said Joel Dickson, Vanguard’s senior ETF strategist. “Now, whether investors understand how they work is an education issue.”

Meanwhile, top leveraged ETF providers denounced Fink's comments.

"Direxion Investments completely reject his contention that leveraged ETFs pose a systemic risk," the company said in a statement. As of this week, the gross assets in 140 leveraged ETFs run by Direxion and rival ProShares totaled $22 billion.

The Direxion Daily Gold Miners Bull 3X Shares fund is one of the hottest leveraged ETFs on the market, attracting $1.07 billion in net flows from investors over the past 12 months, according to Lipper Inc, a unit of Thomson Reuters.

A three times leveraged ETF like Direxion's gold miners fund has $2 of leverage for every $1 of capital invested in the product. The ETF is rebalanced daily to maintain the same ratio of capital to exposure each day. This means, as Direxion explained, that leveraged ETFs respond to losses by reducing exposure.

"It is hard to understand how Mr. Fink could conclude that a relatively small, highly liquid, completely transparent suite of products, which systematically reduce risk in response to losses, could generate systemic risk," Direxion said.

But Fink said this week that an inherently illiquid asset doesn't become more liquid because it is wrapped inside a leveraged ETF fund.

"We will not do a bank loan ETF," Fink said at the Deutsche Bank conference. "Why? We believe that the underlying asset is far less liquid than daily liquidity of an ETF. And you know as a banker, sometimes a bank loan market freezes."

(Reporting By Tim McLaughlin; Additional reporting by Douwe Miedema; Editing by Richard Valdmanis and Martin Howell)

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A couple of weeks ago, I visited Mexico City—one of my favorite cities in the world. It’s a remarkable place, not least because of the food, the museums, and the culture, but also because of the incredible economic changes taking place in Mexico right now—both in the capital and all around the country.

Every time I visit, I think the same thing: if I were starting my career, especially if I lived in a nation where I couldn’t explore my full potential, I’d try my luck in Mexico. Why? Because Mexico is finally beginning to unlock its true potential as an economic powerhouse.

At the heart of this potential lies a sweeping set of reforms. These initiatives include significant changes to move more businesses out of the informal economy, lower the cost of borrowing and modernize the financial sector, educate and train Mexico’s young workforce, and reduce corruption. Perhaps the most important initiative, a key priority of President Enrique Peña Nieto, has been reforms to the energy sector.

For decades, Mexico’s energy sector has been a national monopoly. The policies now working their way through Mexico’s Congress will kill the monopoly and open development  to foreign investment. It’s difficult to underestimate the importance of this reform. Mexico has huge energy reserves, but hasn’t had the ability to truly capitalize on them. The important thing to remember is that for all of Mexico’s problems, it is a functioning democracy, and the capital from energy investment will flow to other sectors of the economy far more effectively than in an autocratic oil state.

What sets Mexico apart from many other emerging economies is that it has the combination of some key factors for success: a diverse set of resources and industries, its proximity to the world’s largest economy, a relatively stable currency, and—critically—a proactive, democratic government.

To be clear, I remain bullish on the U.S., and the May jobs numbers are further proof that the U.S. economy is on the right track. But we could learn a thing or two from our neighbors—in particular, the Mexican government’s willingness to take bold steps in order to foster long-term growth.

My enthusiasm about Mexico isn’t without reservations—the government has yet to actually put many of these reforms in place, the drop in GDP growth from 2012 to 2013 is cause for concern, and from an investment perspective, Mexico is a less sure bet in the medium term than some Asian economies.

But ultimately this comes down to potential. Over the next few decades, capital is going to flow more effectively in Mexico, the workforce will become better trained, and it will be easier and easier to do business. It’s the ideal environment for both entrepreneurs and established companies.

So if you’re beginning your career, do you want to make a mark?  Do you want to be part of something exciting, dynamic, and big?  Ve a México.

The opinions expressed are current as of June 2014, and are subject to change.  Reliance upon information in this article is at the sole discretion of the reader.

A version of this post first appeared on Larry’s LinkedIn Influencer page. For more from Larry, click here. 

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Have you ever driven up I-95 on a weekend?  Tried living in Los Angeles without a car?  Taken a train directly to JFK airport?  Oh, wait—you couldn’t even do that last one, because it doesn’t exist.  Infrastructure in the U.S. is dismal—whether it’s crumbling roads, underfunded public transportation networks, or less visible things like power grids and sewer systems.

A lot of time when we’re stuck in traffic or our internet is running slowly, it feels like a nuisance.  But it’s actually something much more serious: an obstacle to economic growth.  Last year, the American Society of Civil Engineers estimated that by 2020, “aging and unreliable” infrastructure will cost American businesses $1.2 trillion.

Needless waste is not an efficient way to run a business—or a household balance sheet.  We shouldn’t have workers diverting their retirement savings into gas tanks and businesses bleeding cash for their shipments and workers to sit in traffic.

With such obvious drawbacks, why can’t we get our act together?

Part of the problem is an increasingly prevalent short-term mentality, combined with a historic level of political paralysis.  As we saw earlier this year, Congress couldn’t even pass a transportation bill that gets us past next May, and had to resort to budget gimmicks to do it.  There’s no question that we have much to do to reduce our deficits, and that there are a lot of difficult choices to make, but infrastructure investment—designed in such a way to attract private sector participation—is absolutely crucial to long-term economic health.

Infrastructure helps to solve both long-term and short-term economic problems.  In the short-term, infrastructure investment helps provide jobs for low skilled workers, who are struggling with the long-term impacts of the financial crisis as well as the increasing impact of technology on the job market.

In the long-term, infrastructure has a wide range of benefits.  A pipe manufacturer will be able to produce and distribute its goods more effectively and cheaply.  A technology company will pay a better price to power its servers.  A school district will be able to use water more efficiently.  A commuter won’t see a day’s pay disappear at the pump.

Business will be able to use the money they save to invest in new equipment and technologies, create jobs, and help control prices.  Governments will be able to make better use of tax dollars (and potentially even cut taxes).  And individuals will be able to put money towards a college fund or simply spend their extra cash.

This may sound a bit blue-sky.  But these are achievable outcomes.  The question is, with stretched budgets and an unproductive atmosphere in Washington, how do we get there?

Private sector participation is going to be crucial to the future of infrastructure investment, both in the United States and around the world.  There is a natural partnership here: most governments simply don’t have enough cash for the projects they need, and investors are looking for new sources of return in increasingly difficult and correlated financial markets.

Local governments will also need to work together to attract investment.  One of the most effective strategies is to aggregate projects.  Whereas investors might not want to invest in—or even know about—a single wastewater treatment facility, they might be quite attracted to a large-scale, multi-site project across region.  Aggregation also helps lower costs by consolidating materials and labor, and by fostering a more competitive bidding process, which will help save governments and increase returns to investors.

I participated yesterday in the Treasury Department’s Infrastructure Investment Summit, where we discussed a range of ideas for how to help jumpstart infrastructure investment.  The summit is part of the President’s recently announced Build America Investment Initiative, which is taking some important steps to connect investors with infrastructure projects, and working to improve access to federal credit programs.  Credit programs—where government funding is leveraged to fund many multiples of private investment—are key to increasing private investments.

These are important initiatives—but investors should push Washington to do more.  An infrastructure bank, which would use a core federal investment of perhaps $50 billion, would be able to leverage several hundred billion more in private investment.  It’s a bipartisan idea that has sadly withered in today’s Washington atmosphere.  But we can’t let it die.  It’s this sort of big and bold initiative—and act of confidence by the government—that investors want and need, and which can help unleash the power of private dollars to help propel our economy for the next hundred years.

The opinions expressed are current as of September 2014, and are subject to change.  Reliance upon information in this article is at the sole discretion of the reader.

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PARIS (Reuters) - BlackRock Inc Chief Executive Larry Fink said on Friday it was essential for policymakers to consider how economies are being affected by the behavior of savers, who have cut back on consumption because of low yields.

Speaking at a conference hosted by the Bank of France, Fink said a failure to generate decent returns meant savers were not making enough gains to support themselves in retirement.

"This gap we estimate of having all this money in the short-term area is about a trillion dollars in terms of what (savers) need to invest and support themselves in retirement," Fink said.

"In our view that is why we are seeing a flattening of the yield curve, and in fact we may see an inverted yield curve in the future if we don't start seeing some recognition in terms of the short end for savers."

(Reporting by Leigh Thomas and David Milliken, writing by Andy Bruc; editing by William Schomberg)

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BlackRock CEO Larry Fink said he was just in the Middle East and left it feeling more bearish on oil prices. 

"I was in Saudi Arabia yesterday and Kuwait yesterday, and I'm back here today. So I've been in the Middle East the last four days," Fink said at the Dealbook Conference on Thursday afternoon in New York.

"I probably came away from the Middle East more bearish on energy— more bearish that prices can go down lower — more bullish on the world because this is good for the world." 

Fink later said he didn't know where oil prices would go. He also said that after spending time with four governments on his recent trip it was clear that they didn't know where prices were going either. 

Overall, though, lower oil is a good thing, he said. 

"But the most important thing ... this is a massive tax cut for the world. This is really good stuff for the world." 

Oil prices fell below $60 on Thursday. Oil is trading at $59.08 per barrel. 

Watch the full interview below:  

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$100. $90. $80. $70. $60. All the way down to $48. The drop in oil prices over the past several months has been astounding. It’s thrown pundits, traders, and oil producers into a frenzy — but what does it mean for consumers?

In short, it’s a massive tax cut. And we should be delighted by it.

Take a driver in the LA area — where I grew up — who has a typically long LA commute to work every day. Over the course of the year, he might save about $1000 due to cheaper gas prices. A lot of that money is going to go right back into the economy (and hopefully some of it saved for retirement).

We already know from past experience that tax cuts of this size have a measurable stimulative effect — and we shouldn’t look at this any differently. It means more cash in the pockets of consumers and lowered costs for businesses. And this isn’t just in the US but all around the world.

Raghuram Rajan, the head of India’s central bank, told me he thinks that lower oil prices will increase Indian GDP by more than 1%. Earlier this month when I spoke to leaders in China, they were very enthusiastic about the positive impact of energy prices. This is particularly important given that a slowdown in China has been a major (if overblown) worry for markets over the past year.

Overall, it might prove to be one of the most significant redistributions of wealth we’ve seen in a century. (The less money you make, the larger the share of your income you spend on essentials like transportation.) That’s something we should welcome at a time when wages are stagnating and income inequality is continuing to increase.

Eventually, prices will equalize a bit: As higher-cost production methods like fracking feel the pressure from low prices, supply will start to slow and prices will rise marginally. But I think we are likely to see sustained lower prices, in part because the technological transformations in the industry (which took the oil oligopoly by surprise) are here to stay, and are only going to become more efficient — more refined.

Of course, there’s always a catch — in this case, deflation. I spent last week in Davos, and one of the main concerns that we discussed was the risk of deflation, which was a key factor in the ECB’s important decision to begin a robust asset purchase program.

I would call lower oil prices “good deflation"— they’ll help reduce the costs of things that consumers are somewhat locked into paying for, like the gas for their cars or the heat in their homes. But technology, particularly the “sharing economy,” can also help drive more traditional deflation, as it causes significant changes in behavior for consumers and capital expenditures for businesses. I’ll be discussing that more in my next post.

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It looks like BlackRock CEO Larry Fink is about to give a big warning about the strong US dollar. 

In a report on Monday, The Financial Times' Stephen Foley writes that Fink will express his concerns about how the strong dollar could be undermining business confidence in the US, potentially sending the world's largest economy into a slowdown, as part of a foreword to BlackRock's annual report, due out next week. 

From Foley's report: 

"While the US economy as a whole is not overly exposed to exports, many of our largest and most influential companies are," Mr Fink has written.

"We believe that this will lead to an erosion in confidence on the part of CEOs with the potential to slow both investment decisions and future growth in the US."

Foley notes that these comments "stand in contrast" to Fink's earlier statements about the state of global markets and economy, which Foley characterized as "sanguine." 

This report comes as markets were higher on Monday, though investors were still working to digest the latest jobs report, which missed expectations as the US added 126,000 jobs last month, well below expectations for job gains of 245,000. 

Since last summer, the broad trade-weighted US dollar is up about 25% against other major currencies, the dollar's biggest rally in decades. 

Read the full report at FT.com here »

SEE ALSO: Larry Summers has a major warnings for the US economy, and everyone should be paying attention

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The letter by Larry Fink, Chairman and Chief Executive Officer of BlackRock, was sent to S&P 500 CEOs in the U.S. and to the largest companies in EMEA and APAC that BlackRock invests in on behalf of its clients.

Over the past several years at BlackRock, we have engaged extensively with companies, clients, regulators and others on the importance of taking a long-term approach to creating value. We have done so in response to the acute pressure, growing with every quarter, for companies to meet short-term financial goals at the expense of building long-term value. This pressure originates from a number of sources—the proliferation of activist shareholders seeking immediate returns, the ever-increasing velocity of capital, a media landscape defined by the 24/7 news cycle and a shrinking attention span, and public policy that fails to encourage truly long-term investment.

As I am sure you recognize, the effects of the short-termist phenomenon are troubling both to those seeking to save for long-term goals such as retirement and for our broader economy. In the face of these pressures, more and more corporate leaders have responded with actions that can deliver immediate returns to shareholders, such as buybacks or dividend increases, while underinvesting in innovation, skilled workforces or essential capital expenditures necessary to sustain long-term growth.

In 2014, dividends and buybacks in the U.S. alone totaled more than $900 billion, according to Standard & Poor’s—the highest level on record. With interest rates approaching zero, returning excessive amounts of capital to investors—who will enjoy comparatively meager benefits from it in this environment—sends a discouraging message about a company’s ability to use its resources wisely and develop a coherent plan to create value over the long term.

There is nothing inherently wrong with returning capital to shareholders in a measured fashion, as part of a broader growth strategy—indeed, it can be a vital part of a responsible capital strategy. Nor are the demands of activists necessarily at odds with the interests of other shareholders; some activist investors take a longterm view and have pushed companies and their boards to make productive changes.

It is critical, however, to understand that corporate leaders’ duty of care and loyalty is not to every investor or trader who owns their companies’ shares at any moment in time, but to the company and its long-term owners. Successfully fulfilling that duty requires that corporate leaders engage with a company’s long-term providers of capital; that they resist the pressure of short-term shareholders to extract value from the company if it would compromise value creation for long-term owners; and, most importantly, that they clearly and effectively articulate their strategy for sustainable long-term growth. Corporate leaders and their companies who follow this model can expect our support.

We fully appreciate that the business ecosystem has evolved significantly and presents a daunting challenge for companies working to resist short-term market pressures. But a clear, effective articulation of long-term strategy and goals will help your company explain to shareholders the short-term accommodations that businesses invariably do need to make at times to adapt to a changing environment. Overall, companies’ ability to resist short-term pressures—and attract long-term stakeholders—will rest on their ability to both develop and communicate their plans for future growth.

Companies should not have to fight this battle alone. We believe that government leaders around the world—with a concerted push from both investors and companies—must act to address public policy that fosters long-term behavior. We believe that U.S. tax policy, as it stands, incentivizes short-term behavior. For tax purposes, the U.S. currently defines a long-term investment as one held for one year. Since when was one year considered a long-term investment? A more effective structure would be to grant long-term treatment only after three years, and then to decrease the tax rate for each year of ownership beyond that, potentially dropping to zero after 10 years. This would create a profound incentive for more long-term holdings and could be designed to be revenue neutral. In short, tax reform that promotes long-term investment will benefit both the companies who rely on capital markets and the hundreds of millions of people saving for retirement.

Asset managers like BlackRock also have an important role to play, which is why we engage actively with companies on the key governance factors that in our experience support long-term, sustainable, financial performance. Chief among these is board leadership—in our view, the board is management’s first line of defense against short-term pressures. Our starting point is to support management, particularly during periods where performance has deviated from the long-term trajectory. But this is more difficult to do where management has not articulated a clear long-term vision, strategic direction and credible metrics against which to assess performance. In such cases, we will take action to ensure that the owners’ interests are effectively served.

To that end, we have revised our proxy voting guidelines this year to make clear our expectations of boards and set out when we may vote against directors, such as instances where we see evidence of board entrenchment or other signs of ineffective governance. But we also believe that engagement by firms such as ours should not be overly concentrated on proxy season or around earnings reports—rather, it should be consistent and sustained, and cover issues broader and deeper than board elections or earnings per share.

Throughout 2015, BlackRock will continue to focus on these issues, because we recognize that although much of the financial and business community is in agreement on the need for a more long-term atmosphere, more concrete steps must be taken to achieve it. We urge you to join us and with your fellow corporate leaders to invest in the future and thereby lay the foundation for stronger, more sustainable, and more stable economic growth.

Yours sincerely,

Laurence D. Fink

Chairman& CEO

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BlackRock CEO Larry Fink is out with a letter to some of the world's biggest business leaders on Tuesday, arguing that short-term thinking is getting in the way of long-term business growth. 

Fink makes a number of points about the current business and regulatory environment, which he argues makes it harder for companies to develop and execute a long-term business plans. 

But the most important point Fink makes is that while the leaders of publicly-traded companies have a fiduciary duty to their shareholders, this duty doesn't require that they accede to the demands of every large shareholder: just the right ones. 

Here's Fink:

It is critical, however, to understand that corporate leaders’ duty of care and loyalty is not to every investor or trader who owns their companies’ shares at any moment in time, but to the company and its long-term owners. Successfully fulfilling that duty requires that corporate leaders engage with a company’s long-term providers of capital; that they resist the pressure of short-term shareholders to extract value from the company if it would compromise value creation for long-term owners; and, most importantly, that they clearly and effectively articulate their strategy for sustainable long-term growth.

Fink is writing in part in response to the proliferation of activist investors, who have purchased large stakes in companies and then agitated for change. Prominent examples of these investors include hedge fund managers Carl Icahn, Bill Ackman, and Nelson Peltz, who have sought change at companies including Apple, Target, JC Penney, Pepsi, and Du Pont, among others.

Some of these plays have been successful and a win for shareholders, others haven't worked out as well. But the point Fink advances is not that activist investors are bad; just that some of them are. 

The growing popularity of activist investors has garnered considerable media attention from outlets like Business Insider as well as many others. And in a recent talk to students at the Ivey Business School in February, legendary investor Warren Buffett said that the trend in activist investing hasn't peaked yet because people are still making money doing it. 

Buffett even quipped that if he were starting out in money management today, he'd call himself an activist investor.

Andrew Ross Sorkin at the New York Times, who on Monday night first reported that Fink's letter would be sent around Tuesday morning, noted in his piece that to some extent Fink is talking BlackRock's book. BlackRock is enormous (it has $4 trillion in assets under management), and their size basically requires that they hold investments for an extended period of time.

And so with this style and size, of course BlackRock is going to want to encourage long-term thinking among the world's major business leaders. Depending on your view, this may or may not water-down Fink's broader message, which is that leaders must make the best decisions for their business, and trust that these strategies will be long-term wins for shareholders. 

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SINGAPORE (Reuters) - The chief executive of BlackRock Inc, the world's largest money manager, said on Tuesday that China will need to continue to reform its capital markets to avert what he called boom and bust scenarios.

"It is our strong belief that China needs more robust capital markets," CEO Larry Fink said at a Credit Suisse conference in Singapore.

"And by having a more robust capital market, it will mean we'll have less boom bust. Right now, we are experiencing typical boom bust. Let's hope it doesn't end poorly."

Chinese stocks struck seven-year highs on Monday, but have retreated from those levels on concerns that regulators want to cool a market that has already gained more than 80 percent since late November, thanks in large part to borrowed money.

"China needs to expand its capital markets. It needs more IPOs, better underwriting standards," Fink added.

(Reporting by Saeed Azhar and Anshuman Daga; Editing by Edwina Gibbs)

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BlackRock CEO Larry Fink says contemporary art and luxury apartments are the new gold.

A report from Bloomberg on Tuesday cites comments from Fink at a recent conference in Singapore where the executive said: "The two greatest stores of wealth internationally today is contemporary art ... and I don’t mean that as a joke, I mean that as a serious asset class. And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London."

Fink added: "Historically gold was a great instrument for storing of wealth ... Gold has lost its luster, and there's other mechanisms in which you can store wealth that are inflation-adjusted."

So, brutal news for gold bugs.

Since the world has mostly abandoned currencies backed by gold or other metals, gold bugs — the enthusiastic supporters of the precious metal — have seen owning gold as a hedge against inflation (or hyperinflation). Buying gold became a particularly popular trade after the financial crisis and policies by the central bank that many feared would lead to hyperinflation.

This, so far, has not been the case.

Gold prices have been under pressure over the past couple of years, with some analysts saying gold is at the end of its commodity "supercycle" and could fall to $660 an ounce.

On Tuesday morning, gold cost about $1,200 an ounce.

Read the full report at Bloomberg »

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Art has no intrinsic value. It cannot be regularly marked to some market price. It has zero cash flow. And five years from now, it's much more likely to be worth less than it is to be worth more than what you paid for it. 

You've probably heard otherwise. This week, Larry Fink, the CEO of BlackRock told Bloomberg: "The two greatest stores of wealth internationally today is contemporary art... and I don’t mean that as a joke, I mean that as a serious asset class. And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London."

If you are Larry Fink, or Steve Cohen, or one of a couple dozen megarich collectors around the world who have the resources to gamble millions at a contemporary evening sale, sit on a work for a few years either at their fourth vacation house in the Hamptons or in a secret storage facility at a freeport in Geneva or Singapore, then yes. 

If you have $50 million or so that you can afford to lose, by all means. Might I suggest the Mark Rothko being sold at Sotheby's later this month?  

But if you're not worth hundreds of millions of dollars...

For everyone else: Buying art is gambling in an illiquid and shady realm dominated by a handful of players who are almost guaranteed to know more than you. And that's cool, if that's what you want to do. If you're as rich as Larry Fink or BlackRock's richest clients, you'll buy impressive, historically important work you can afford to hold for years, which is unlikely to have lost value when you decide to sell it. If you aren't, good luck getting your money back.

This is sort of a rough sketch of what happens when you buy a work of art: 

You may want to pay an art advisor to let you know what's hot (and/or likely to maintain its value). Their fee will likely be a percentage of the value of whatever you purchase.

If you buy at auction, you have to pay a fee, known as the buyer's premium, to the auction house. These are usually calculated on a sliding scale depending on how much you spend, and will range from about 10-25% of what your final bid is. If you are a big client, you might be able to negotiate that down, but if you are reading this, frequent flyer status at the major auction houses probably does not apply to you.

If you buy from a dealer, there will be a markup from what the auction price would be, because that's how the dealer pays rent.

You have to arrange shipping, and insurance, installation, and maybe framing. Also taxes. Don't forget taxes. 

You'll need to make sure you have title to the work, and you know the provenance, if you are not the first owner of the work. If you plan to resell it, you need to have a pretty good idea of where it's been since it was made, so you can prove to the next owner that it's not stolen. A good provenance adds to the value of the work (hint: recognizeable names = $$$).

If it's been through a few owners, you might want to have an expert look at it to make sure that it's actually by the artist you think it is. That also costs money.

And then you wait. Your money literally hangs on the wall doing nothing but costing you insurance money (and maybe giving you some pleasure!). You hope that you don't put your elbow through the work. A few years down the line, you hope that the artist you chose is still popular — popular enough that the value of the work has gone up not only higher than you bought it for, but high enough to cover all of the costs you incurred since you bought the work, plus some. Unless you bought the work of an artist that's already in history books, determining whether they will still be trendy a few years down the line is basically flipping a coin.

There's no way of knowing what it's worth at any given moment

During the time you hold the work, you can't really mark it to market. In other words, you can't know how much it'd be priced at based on an actual transaction between a buyer and a seller.

You can look at the handful of auction results for other works by the same artist and sort of guess (with the help of a dealer or auction house, which may also cost you money). But is your work of the same quality? Does it have a similar provenance? Has that particularly period of the artist's work gone out of fashion? Are there too many works by the same artist already being sold this season? 

If the work goes to the auction block and doesn't get a high enough bid to meet the minimum required by the house, then it's known as "burned" and probably can't be sold at all for another couple of years. Or you hand it off to a dealer to unload for a discount.

This isn't necessarily the fate of all works that are bought and sold as an "investment," but the downsides risks are much more prevalent than anyone in the industry wants to let on.

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It doesn't sound very sexy, but stock buybacks could become the next big issue in Congress – and on the Street.

Some Democratic senators have started pointing to buybacks, in which publicly traded companies repurchase some of their stock from shareholders, as a new rallying point in the populist wing's ongoing battle to bolster bank regulation.

Here's what Sen. Tammy Baldwin (D-Wis.) wrote in a letter to SEC chair Mary Jo White earlier this week, urging her to start regulating buybacks:

Stock buybacks use profits to purchase a company's own stock instead of investing in the worker training, research, or innovation necessary to promote long-term growth. ... In the past, this money went to productive investments in the form of higher wages, research and development, training, or new equipment. Today, cash is being extracted from companies and placed on the sidelines. Buybacks are now undermining the stock market's role in capital formation.

In writing the letter, Baldwin reportedly partnered with a University of Massachusetts, Lowell, researcher named William Lazonick, whose work has also been cited by – you guessed it – Elizabeth Warren.

Here's Sen. Warren referencing Lazonick in a speech about income inequality last year (via the International Business Times):

But leftist senators are not the only ones talking about buybacks.

Earlier this month, BlackRock CEO Larry Fink sent a letter to all the CEOs of S&P 500 companies, asking them to put an end to stock buybacks and dividend payments.

"Corporate leaders’ duty of care and loyalty is not to every investor or trader who owns their companies’ shares at any moment in time, but to the company and its long-term owners," wrote Fink, who proposed taxing any investments held for less than three years as regular income instead of at the long-term capital gains rate in order to shift investor focus from short-term to long-term investments.

(Remember that BlackRock tends to hold investments for years – sometimes decades. So Fink has a direct interest in shifting tax policy to favor longer-term investments.)

Fink and others argue that buybacks are becoming so common (a record $1 trillion was returned to shareholders last year via buybacks and dividends, according to The New York Times) because of shareholder activists who use their clout to bully and push for capital returns.

As for Congress, it's unclear what exactly sparked the sudden interest in buybacks, but for Elizabeth Warren it could prove a more fruitful pursuit — one where she could actually team up with some of Wall Street and the business community — than other recent battles.

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