Larry Fink: Global Uncertainty And “Punishing” Interest Rates

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Global Uncertainty And “Punishing” Interest Rates by Larry Fink, BlackRock

Today, I released my annual shareholder letter. Here’s a quick look at some of the issues I feel are critical for investors, policymakers and business leaders to consider as they navigate the profound uncertainty in today’s markets and global economy. You can read my full letter at

Investors today are facing tremendous uncertainty fueled by slowing economic growth, technological disruption and social and geopolitical instability. Particularly worrying is the adoption of negative interest rates by central banks attempting to spark economic growth. Their actions are severely punishing the world’s savers and creating incentives to reach for yield, pushing investors into less liquid asset classes and increased levels of risk, with potentially dangerous financial and economic consequences.

Markets are also still digesting the dramatic shift in the cost of energy as a mix of technology and geopolitics has transformed supply. Beyond its effect on energy prices, technology continues to disrupt many industries and even societies as it reshapes global employment markets. In China, growth is slowing, with global effects. In the U.S., the quality of corporate earnings is deteriorating, with record share repurchases in 2015 driving valuations — an indication of companies succumbing to the pressures of short-termism in place of constructive, long-term strategies. Finally, electoral politics is contributing to market uncertainty around the globe. Polarizing elections in the U.S. and Germany; government transitions in Spain, Taiwan and Canada; political and economic crises in Brazil; and the UK vote in June on whether to leave the European Union will all continue to drive volatility.

In such a hostile landscape, our mission for investors has never been more vital, nor the responsibility we feel to clients stronger. We believe the trust that clients place in us must be earned every day, and that’s why we remain committed to constant improvement and reinvention.

In a letter I sent earlier this year to CEOs of companies in which we invest on behalf of our clients, I asked every CEO to lay out for their shareholders a strategic framework for long-term value creation — one that provides a perspective on the future, articulates the impact of the ecosystem on their strategy, explains how changes in that ecosystem might force the company to change course and identifies metrics that support a framework for long-term sustainability. In my annual shareholder letter, it is my goal to do the same.

Read the rest of my letter at

Interest Rates

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