Larry Fink On Cyprus: "I Don't Really Care"
Blackrocks's Larry Fink "doesn't really care" about Cyprus, "it's really not something of concern," he tells Bloomberg TV. While gesturing that he can't really discuss specifics as Blackrock is an adviser to Cyprus, he then goes to explain how European and US markets have it all wrong and that "It has some symbolism impact on Europe, but it’s not a really major economic issue." This dip is "just clients taking some chips off the table and reaping some gains from the huge rally," he goes on, dismissing the interviewer's question as nonsense, "this is temporary," and adding that he "is hyperbullish on the US economy," and that "global markets will be up 20% this year." However, what is most fun to watch is his arrogant dismissal of the interviewers question over US depositor fears, there are two reasons that is foolish, he notes "a) we have insurance, so that will not happen; [ZH: umm, so did Cyprus]; and b) we have always prioritized the liabilities [ZH: umm, except for GM]." So all good then, storm in a teacup. Carry On - though he has some stern words for the French and for the Russians.
Perhaps our favorite line:
"Many of the depositors in Cyprus are not EU members - maybe a little east and north of Cyprus - and therefore bearing the cost on depositors is an indication that "we're fine with bailing out EU members and EU depositors, but this is quite a bit different"
BBG: What did you make of the Cyprus situation?
"I really don't care."
"Cyprus is a $10bn problem. It is really not something of concern"
“It has some symbolism impact on Europe, but it’s not a really major economic issue,”
"It does remind us of the frailties of Europe; it does remind us that the European fix will be multiple years, but the essence of Cyprus is more symbolic...
Blackrock is representing the Cyprus government so I am not permitted to talk too much about the specifics
Many of the depositors in Cyprus are not EU members - maybe a little east and north of Cyprus - and therefore bearing the cost on depositors is an indication that "we're fine with bailing out EU members and EU depositors, but this is quite a bit different"
So you dont care about Cyprus but the market did...
This is just clients taking some chips off the table and reaping some gains from the huge rally.
This is temporary
Cyprus is just one of the elements that is being used as an excuse
Were u shocked at them trying to tax bank deposits?
Smugly (2:28) Fink initially ignores the question, smiles a wry smile, and doesn;t answer...
BBG: Well even people in America were questioning that...
A) we have insurance, so that will not happen; (SO DID CYPRUS)
B) we have always prioritized the liabilities (EXCEPT for GM)
Where are we in the European credit crisis? Are we close to the end?
We're in the third inning. This is a long process, the work done in Spain and Italy over the last year is very good (Spain now has a current account surplus). So there has been much improvement and yet there is a lot more to do...
you still have the instability of finances in France that we cannot underestimate how severe that could become
The OMT was designed to firewall Spain and maybe Italy but there's not enough money in Europe if France continues down the path of having huge deficits and huge imbalances of productivity
France is just not as competitive as Germany and that remains a big issue
We are going to have 6 more innings of evolving uncertainty
At 5:00, Are we in a correction?
FINK: We are definitely in a pause. Inflows have flattened and most of that money came in from cash - not a rotation from bonds. It was really people putting money to work and now some people are taking them money off
Depending the macro data, we could see a 5% correction or a prolonged 1-2 month pause
At 6:00, but by year end equity markets will be a lot higher with a potentiality for global markets to be up over 20% by year end.... markets are improving, economic conditions are improving, the changes in Japan is a net positive, China is not as weak as we feared, and the US is going from strength to strength to strength - and that is the dominant story in 2013
I am hyperbullish on the US economy