WHEN: TODAY, THURSDAY, April 14, 2016
WHERE: CNBC'S "SQUAWK BOX"
Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with BlackRock Chairman & CEO Larry Fink today on CNBC's "Squawk Box." Following are links to video of the interview: http://video.cnbc.com/gallery/?video=3000509609, http://video.cnbc.com/gallery/?video=3000509602, and http://video.cnbc.com/gallery/?video=3000509600.
All references must be sourced to CNBC.
FINK ON HEDGE FUNDS
UNQUESTIONABLE, A HEDGE FUND HAS HAD REDUCED RETURNS. IN SOME CASES, NEGATIVE RETURNS WITH HIGH FEES, YOU'RE SEEING A REEVALUATION AS TO HOW YOU ARE GOING TO REALLOCATE YOUR MONEY. I WOULD HAVE SAID THREE YEARS AGO, THERE'S JUST TOO MUCH MONEY PLOWING INTO HEDGE FUNDS, AND NOT ALL HEDGE FUNDS ARE GREAT.
FINK ON FINANCIALS
IF YOU THINK ABOUT WHAT HAPPENED TO THEM IN THE FIRST QUARTER. THE FIRST QUARTER, MARKETS FELL DOUBLE DIGITS IN THE FIRST ROUND. OUR AVERAGE ASSETS IN THE QUARTER WERE ACTUALLY 150 BILLION DOLLARS LOWER THAN OUR 4.7 TRILLION DOLLARS AT THE END OF THE QUARTER, AND SO YOU HAD THAT DRAG. WHEN YOU HAVE THAT TYPE OF VOLATILITY, YOU HAVE UNCERTAINTY FROM OUR CLIENTS. THE CLIENTS ARE PULLING BACK. AS YOU KNOW, YOU HAD HUGE MUTUAL FUND OUTFLOWS AS AN INDUSTRY, AND ONE OF THE KEY CHARACTERISTICS OF OURS, WE HAD 36 BILLION DOLLARS OF INFLOWS.
FINK ON EARNINGS MISS
ONE AREA THAT DRAGGED OUR EARNINGS THOUGH THAT WE HAD IN TERMS OF OUR HEDGE FUNDS WE HAD PERFORMANCE FEE AND SO THAT'S THE BIGGEST DELTA. IF YOU TAKE OUT PERFORMANCE FEES WHICH ARE CONSIDERED ONE TIME FEES, OUR RUN RATE WAS ACTUALLY HIGHER. THE STREET WAS ACTUALLY ANTICIPATING HIGHER PERFORMANCE FEES AND THAT'S WHERE THE MISS WAS
FINK ON INTEREST RATES
I JUST WROTE IN MY ANNUAL LETTER THAT I THINK NEGATIVE INTEREST RATES ARE CAUSING A SLOWDOWN IN THE WORLD. I BELIEVE…FIRST OF ALL, I BELIEVE THE CENTRAL BANKERS HAVE BEEN THE MOST BOLD LEADERS IN THE WORLD. WE HAVE BECOME TOO DEPENDENT ON CENTRAL BANKERS. WE HAVE NOT SEEN GOVT. REACTING TO IT. WHEN YOU THINK ABOUT QUANTITATIVE EASING, IT WAS SUPPOSED TO BE A TEMPORARY HEALING PROCESS. I DON'T CALL 7/8 YEARS TEMPORARY ANYMORE, AND I BELIEVE THE FIRST FEW YEARS OF QUANTITATIVE EASING, LOW AND NEGATIVE INTEREST RATES HELP CORPORATIONS REFINANCE, HOMEOWNERS REFINANCE, BUT INTO THE 7TH/8THYEAR, I DON'T SEE HOW THAT HAS A POSITIVE IMPACT ON THE ECONOMY.
FINK ON RAISING RATES
CHAIRWOMAN YELLEN HAS BASICALLY PUSHED BACK THEIR PATH OF RAISING RATES.I THINK THAT IS ANOTHER ONE OF THE REASONS THE MARKETS STARTED TURNING MID FEBRUARY AND I DO SEE THAT, BUT SINCE SHE HAS ELONGATED THE PATH, WE'VE HAD MUCH MORE STABILITY. THE DOLLAR ACTUALLY HAS WEAKENED. THERE IS LESS PRESSURE ON CHINA TO DEVALUE. SO I ACTUALLY BELIEVE THE FUNDAMENTALS ARE BETTER TODAY, BUT I DON'T BELIEVE WE CAN HAVE A PATH FOR RAISING RATES TOO MUCH PRECISELY BECAUSE OF THE DOLLAR.
FINK ON BREXIT
IF A BREXIT HAPPENS, IT WILL BE HARMFUL FOR THE UK ECONOMY. IT WOULD RAISE QUESTIONS RELATED TO THE VIABILITY OF THE EU. AND, QUITE FRANKLY MAYBE. MAYBE IT'LL FORCE THE GERMANS TO DO FISCAL POLICY
FINK ON LEW REACTION
I THINK I WAS AGAINST HOW SURPRISING IT WAS DONE. I THINK THERE SHOULD HAVE BEEN AN OPEN DIALOGUE. THERE SHOULD HAVE BEEN A NARRATIVE TO THE BUSINESSES I WOULD HAVE MUCH RATHER DIALOGUE TREASURY TO THE COMPANY AND SAY YOU KNOW BEFORE YOU CONSIDER YOU NEED TO THINK ABOUT IT WE ARE GOING TO ATTACK THIS SO I WASN'T SURPRISED AT WHAT THE US TREASURY DID. AND I DO BELIEVE WE SHOULD BE FOCUSING ON OPPORTUNITIES INSTEAD OF FOCUSING ON THESE SPECIFIC TARGETS
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