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tv   Closing Bell  CNBC  October 1, 2009 3:00pm-4:00pm EDT

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jobs at fortune 500 companies. really, it pairs market needs very well. it trains these students and gives the fortune 500 companies like usa, continent ideal airlines, reliant energy, a reasonably-priced work force. it is a different way about going about the recruiting process. this company, genesis works moved into the twin cities. they will do this in chicago next year. it's just a unique way of meeting the needs of the students and of these companies. >> thank you very much. a really creative story, too. thanks for sharing it with us. one thing we want to make sure you know about is an all-new biography here on cnbc. it uncovers the mysterious life of enzo ferrari. the full story is tonight on cnbc 10:00 p.m. will the bears win?
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you'll find out. let's hand it off to "closing bell." general motors sales fell 47 last month. ford saw a modest 9% drop. that follows the end of cash for clunkers. merrill lynch broker resolved a contract dispute with bank of americaened is a now free to take another job. microsoft shares of internet search dropped last month since it launched its bing service. that's stock news. there is a live picture of the floor of the new york stock exchange. here we are entering the final hour of trading. wall street kicking off the fourth quarter on a down note. we see losses on the heels of disappointing labor and manufacturing reports today. we are entering the final and most important hour of trading today.
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welcome to "the closing bell" i'm maria bartiromo coming to you live from blackrock's trading floor. it is an unprecedented opportunity and how we are kicking off our weekly series "exchange," where we go to the top floors on "wall street journal." larry fink will join me the next two hours breaking down the keys on wall street as well as rob capito. let's look where we are here as we enter the final stretch. take a look at the markness. we have seen weakness across the board. dow jones industrial average down 148 on the session, about 1.50%. a steady scenario for much of the day today. now at 9,560 on the blue chip average. check the nasdaq and we are seeing losses. substantial actually on the nasdaq, given the big run-up in technology year-to-date. the nasdaq chart, a decline better than 50 points on the nasdaq. 52 points lower on the nasdaq,
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2.5% on the day. 2,069. s&p 500 down 21 points. 1,036 last trade on standard and poors. our team is covering the markets. the nasdaq, nymex and the cbot in chicago. bob, what do you know? >> good to see you. poor start to the fourth quarter. the major indices are not weak, but other key sectors are starting to show signs of weakness off their highs. we hit our highs for the year a few weeks ago. while home builders are notably on the weak side here, look at that down 14%. airlines weak and transportation index. all the big cyclical names have been weakened including materials names. s&p 500 only down 3% from its closing highs for the year. what's the story today? strong dollar, weaker stocks. mr. bernanke said the dollor could be at risk if we didn't control the budget gap.
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that might meep higher rates, which would be positive for the dollar. what got hurt? you know what happened. commodity stocks are the ones that get hurt the most. today we are seeing 4%, 5%, 6% in big names like steel, copper and potash as well as the energy group. brian shactman, nasdaq getting any lift? >> no. it's a broad-based sell-off. we've been down more than 2% since jason on the east coast. i get like this on red days. i want to start with something green. talecris, one of the biggest ipos of the year, up 15%. a lot of inquiries with me in terms of comcast stock. the speculation about nbc universal, down 6.6%. we have cisco down 1.6%. they bought tanberg, the
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norwegian teleconferencing company. the weakest of the weak, clearly the chips. philly semiconductor index down 4.2%, qualcomm 4.4%, broadcom hammered, 5.9%. microsoft, there is a report out there saying bing lost market share since last month. oracle is down 1.8%. ebay 2.3% and yahoo 2.5%. rimm and dell outperforming research in motion. on a day like this, that's almost like being up. sharon at the nymex. >> oil prices ended the day higher but have weakened since the close. we are looking at prices above the $70 mark. we are following closely the headlines from the talks in geneva between iran and the major powers. president obama will brief the country about those talks later. headlines out of the white house says u.s. warns of sanctions if
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iran uses talks to delay. we've seen oil prices rally the last half hour of trading. natural gas taking a steep plunge today after inventories have swelled now to record levels. we are also looking at a weak demand picture. that's highlighted today by the ism manufacturing index, as well as jobless claims being higher than expected, and traders bracing themselves for tomorrow for perhaps higher unemployment rate. the dollar rising a factor in the weakening of commodity prices across the board. metal is lower, gold down $8 and copper falling 3%. the most important data point for tomorrow for all the markets will be that jobs report. to rick in chicago. >> thank you very much. it's kind of ironic that the dollar, the orphan currency, had one break today. that break, the lower prices in a quick fashion was right around 10:00 eastern when it was being discussed, as everybody's been talking about, between the
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committee, several members, and the fed chairman regarding hey, who is going to take care of this guy? fiscal discipline seemed to be the answer. i don't know if either side is going to go farther than that. the dollar was strong. look at the intraday chart, the one month chart. we are close to a one-month high close. a lot of technicians last week got a bottoming dollar and thought a reversal to the down side in equities might be possible. we had a boat load of action, speckly treasury options. in lieu of tomorrow's big jobs report and the deterioration of equities. 30-year bond yield the lowest since the end of april. let's go back to maria bartiromo. >> thanks very much. today is the tenth anniversary since block rock went public october 1, 1999. since then the stock generated a huge return for investors. talking about a 1600% return
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since then. annualized 32% a year. how has the financial landscape changed in the past decade and where is blackrock seeing opportunities now? i'm joined with larry fink, ceo of blackrock and our guest host and robert capito. thank you for having us here at your trading floor. >> welcome, welcome. >> wow, ten years, larry. congratulations to you. we have seen so much. things have changed. look back for us. tell us. >> well, when we went public, we went public during the dot-com rage. we were a boring dot. no one wanted to buy it. >> you were >> yes. we continued to perform for investors. most importantly because we continued to perform for our clients. so we did quite well. much has changed. i think the whole landscape has changed certainly in the last few years.
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it accelerated with the changes in our security industry and the banking industry. before that we were starting to see that change of companies, small companies were becoming large like blackrock. the expansion of wall street and the power of wall street. it went from a cottage industry in the 1970s to a major influential industry. now we are trying to be restabilized. lots have happened. i think the most important trend is globalization. cnbc spends as much time talking about global markets today as it does domestic markets. we are talking about not just stocks, we are talking about commodities, talking about metals. so the expansion of our capital markets worldwide are huge. the growth of the global capital markets are probably the fundamental changes. >> we've got a lot of time to talk about what's going on here and how the environment feels to you right now, which i want to get into, but here we are on the
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fixed income or one of the fixed incomes in trading for us. tell us what goes on here. >> you have 78 portfolio managers. what they are doing is acting as a feduciary on behalf of thousands of institutional clients which represent millions of people, whether it be pension plans or insurance companies or mutual funds. they do about 50,000 trades a day here on behalf of these clients. that accounts for about $20 billion of assets around the globe. so their responsibility every day is to look for value, to be stewards for all of our clients and come up with solutions for their portfolio needs. >> what do you see in the markets today, rob? how are you looking at the environment right now after a market that has been up as much as it's been up? and you are seeing the volume, obviously, active. what can you tell us about what the environment looks like? >> i look at everything as we do at blackrock through a client's
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eyes. a client never remembers when they made money, but they remember every single time they lost money. our job is to protect their principle and get them value in the marketplace today. we do that from being on top of the markets. we do that from bringing them technology. blackrock was the first to bring the technology of the sell side to the buy side of the market. today we act as a steward for over $7 trillion, actually, of assets we advise. and $1.5 billion or $1.5 trillion of assets we actually manage. through our acquisition of bgi, it will be $3 trillion of assets. it's a very big responsibility, but it's always focused on the client as to what value can we bring that particular client. clients today used to have 20 different managers, the big institutional clients. if they didn't work, they are looking for clients that have a broader, a firm that has a broader plate of products. they are looking for a firm that is financially stable. and they are looking for firms
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that are bringing them solutions to their problems. so that said, we really have focused all our efforts around the firm. the other thing interesting about block rock, we are only in one business. we are in the asset managing business. so every day, everyone out here and we hope you'll walk around and talk to some of them, are focused every day finding that value for their clients. in fact, we are one of the few firms in the business that have no conflicts because we are only in one business. we don't trade anything for ourselves. it's only on behalf of our clients. it's unique. >> larry, do you worry you are about to have close to $3 trillion under management at a time when people are worried about the possibility that we have more down drafts for the economy and an upset in the markets? you've got commercial real estate looming in 2010, unemployment expecting to worsen. how are you feeling going into this period knowing that you've got to put money to work? >> first of all, i'm neurotic
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every day. managing $3 trillion is a huge responsibility. i'm worried about our economy in the future. i think it will be much lower than many people think. it's going to be positive, but slower. i am not as worried about commercial real estate as some people though. we know the problem. it's not a hidden problem. as long as we have time, this will be addressed. you are starting to see that in some of the spreads. they've come in dramatically. if interest rates remain close to zero, i think blanks are going to be inclined to start focusing on restructuring some of these commercial loans. i'm always frightened of the things that i don't see. commercial real estate we certainly see it. we see a huge problem ahead of us. i think a lot of that problem can be mitigated. i do believe the president's
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administration is working on that. what i'm worried about are things that are underappreciated. one of the big things to me are the financial instabilities of state and local government. i'm concerned high taxation states like where we are in new york and in california where we are going to have a big operation, the taxes are so high, the elasticity to raise taxes will be hard. we'll have forward pressures on labor. we may have a stabilization in the corporate area where we may see some hiring and some of the reports are starting to see a bottoming there. we'll have a persistent problem with state and local governments that's going to be aggravating our economies for some time. >> are you hearing these concerns from investors? >> we are hearing these concerns from most of our clients.
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there are more specific concerns how to asset allocate and deal with these concerns. i think people are a little concerned that the market is gone quickly but the underlying development has been slower than people think. they are looking to ask us solutions how to set up their portfolios going forward to take advantage of this opportunity. then again, get good returns, but protect their principle. >> we'll leave it there. we'll take a short break and come back. we are thrilled to be here at the blackrock trading floor with larry fink the next two hours. we have about 45 minutes before the closing bell sounds for the day and the dow jones industrials down. up next, we'll ask the man who oversees more than $500 billion in traditional fixed income how he sees the market. and we'll talk to marvin odum. national car rental knows i'm picky.
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we are joined by scott amare here at blackrock. nice to have you on the program. thanks for joining us. you want to tell us what's going on around us? >> yes. welcome to the blackrock fixed income trading floor. i know you've been to the new york stock exchange. this is different. we are an investment manager. it's an investment management trading floor. you don't see a lot of people jumping up and down, yelling and screaming and a lot of activity, trades being done across the desk. >> actually, you don't see that at the new york stock exchange anymore, for different reasons. >> yes. you see people -- there are two groups of people on the floor. people on a portfolio team and they are thinking about top down investment themes, portfolio construction. they talk to clients a lot. there are people on investment teams, corporate bonds, u.s. rates, high yield, and they are
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thinking about they are doing research and doing execution of trading and they own the bottom up security exchange. >> i want to ask you when you see on a day when the bond market is strong and you see a nice rally going on like today, what do you do in that case? give me your sense, the sense of the day. you know the m isarketout to rally. >> yeah. our style is we are very focused on the markets. we are what we call relative value manager. we are doing lots of research. it's all about getting an edge in the markets through product dge knled research. we follow the market. we hava view which way it's going to go, what bernanke is going to do with rates, but we are not making a big bet on the direction of interest rates. market being up today doesn't affect us because we are pretty neutral. >> what about tomorrow? we have the jobs numbers coming out, a lot of worry things are going to worsen. i've got to make a bet somewhere, right? >> yes. we have bets on the shape of the
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yield curve, which we don't have a big one today. then on different sectors of the market we place bigger bets, corporate bonds versus mortgage bonds versus government bonds. that's where we try to make most of our money for clients, being at the right sectors at the right time. within each sector, more than any other manager, doing more research and finding the cheap bonds. >> what can you tell us about the market today? >> today is a big rally in the treasury market. maybe we can go to my head of interest rates sitting right here. >> i'll give you the updates today. there's been quite a rally. government bond yields and 12 basis points lower across the curve. weaker data kicked that off. you had jobless claims worse than expected. you had the ism come in worse than expected. one thing we were focused on was actually new orders, a component of ism and kind of feared this, but it seems like it peaked short term.
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that could be disconcerting to investors. >> why do you think it's peaked? what gives you that indication? >> we have just seen slowing down in general of a lot of the demand side variables we've been looking at. addition yeah expectations have run so high. even though that's peak, that's not a problem. it's just expectations may have run too far ahead. we have economic surprise and many point to negative surprise, big risk, short term. >> great. we'll leave it there. thanks so much. we really appreciate it. let's get to the breaking news. >> thank you very much. what an interesting program you've got going here. here is an interesting deal that may get going. it is reported by "wall street journal" that mexico's femsa, their big brewer, apparently in talks with rivals over a beer deal. this is right up my alley, baby. possible inquirers include sab miller and heineken.
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could be worth something on the order of $9 billion. the company apparently has about $4 billion in annual sales. that once again, femsa in talks over rivals with a possible beer deal. back to you all now. >> thanks very much. we are going to take a short break. charley gasparino yesterday broke the news ken lewis will step down by the end of the year. he will be back after the break. first today is the tenth anniversary of block rock's ipo. here is a shot of larry fink and the rest of the blackrock executives ringing the opening bell october 1st, 1999. people are on sprint milln mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email...
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- on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access 100 years of engineering excellence is right on time. it's gmc truck month. shop sierra 1500 slt with the 403 horsepower 6.2 liter v8. it's the most powerful half ton v8 in its class. step up to the best. it's gmc truck month. get 0% apr for 60 months on 2009 gmc sierra or get $6,000 total cash back on the president is speaking in the diplomatic room of the white house. >> on behalf of the american people, i want to once again extend my deepest condolences to the people of american samoa for
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the terrible loss of life. i've spoken to the governor and delegate from american samoa and we continue to provide the full support for relief efforts there. i have also directed the state department to provide the assistance necessary to help samoa recover, as well. we are also deeply moved by the suffering and loss of life that's been caused by the recent earthquake in west sumatra. my administration has been in the touch with the government of indonesia to make it clear that the united states stands ready to help in this time of leave and ordered my administration to coordinate with the ongoing relief and recovery efforts there. indonesia is an extraordinary country that has known extraordinary hardship from national disasters. i know first hand the indonesian people are strong and resilient and have the spirit to overcome this enormous challenge. as they do, they need to know america will be their friend and
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partner. today in geneva, the united states, along with our fellow permanent members of the united nations security council, namely russia, china, france and the united kingdom, as well as germany, held talks with the islamic republic of iran. these meetings came after several months of intense diplomatic effort. upon taking office, i made it clear that the united states was prepared to join our partners as a full participant in talks with iran. i extended the offer of meaningful engagement to the iranian government. i committed the united states to a comprehensive effort to strengthen the nuclear non-proliferation treaty so that all nations had the right to peaceful nuclear power, provided that they live up to their international obligations. we have engaged in intensive bilateral and multilateral diplomacy with our p-5 plus 1 partners and with nations around the world to reenforce this
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point, including a historic u.n. security council resolution that was passed unanimously last week. the result is clear. the p 5 plus 1 is united and we have an international community that has reaffirmed its commitment to non-proliferation and disarmament. that's why the iranian government heard a clear and unified message from the international community in geneva. iran must demonstrate through concrete steps that it will live up to its responsibilities with regard to its nuclear program. in pursuit of that goal, today's meeting was a constructive beginning, but it must be followed with constructive action by the iranian government. first, iran must demonstrate its commitment to transparency. earlier this month, we presented clear evidence that iran has been building a covert nuclear facility in qom.
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since iran agreed to cooperate fully and immediately with the international atomic energy agency, it must grant unfettereded access to iaea inspectors within two weeks. i've been in close touch with the head of the iaea, muhammed al barida. second, iran must take concrete steps to build confidence that its nuclear program will serve peaceful purposes, steps that meets iran's obligations under multiple u.n. security council resolutions. the iaea proposal that was agreed to in principle today, with regard to the tehran research reactor, is a confidence-building step that is consistent with that objective, provided that it transfers iran's loan-enriched uranium to
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a third country. we support iran's right to peaceful nuclear power. taking the step of transferring its low enriched uranium to a third country would be a step towards building confidence that iran's program is, in fact, peaceful. going forward, we expect to see swift action. we are committed to serious and meaningful engagement, but we are not interested in talking for the sake of talking. if iran does not take steps in the near future to live up to its obligations, then the united states will not continue to negotiate indefinitely, and we are prepared to move toward increased pressure. if iran takes concrete steps and lives up to its obligations, there is a path towards a better relationship with the united states, increased integration for iran within the international community, and a better future for all iranians. let me reiterate. this is a constructive beginning, but hard work lies
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ahead. we entered a phase of intensive international negotiations, and talk is no substitute for action. pledgees of cooperation must be fulfilled. we made it clear that we will do our part to engage the iranian government on the basis of mutual interest and pout ul respect, but our patience is not unlimited. this is not about singling out iran, not about creating double standards, this is about the global non-proliferation regime and iran's right to peaceful nuclear energy, just as all nations have it, but with that right comes responsibilities. the burden of meeting these responsibilities lies with the iranian government, and they are now the ones that need to make that choice. thank you very much. president obama making his first comments on iran after the
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important meeting we've been talking about. we will get back to the president if he has any other important comments detailing the speech and conversation with iran. in the meantime, charley gasparino is up next to talk about ken lewis who might be his successor at end of the year when he steps down. tdd#: 1-800-345-2550
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welcome back to "the closing bell." we have finally heard from auto dad of the research firm which calculates monthly auto sales. the sales pace for the month of september 9.22 million, roughly in line with estimates, but still when you consider last month was 14.09, a big drop from cash for clunkers august. sales rates for the month of september 9.22 million. maria? >> thanks, phil lebeau. that auto sector continues under
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pressure. meanwhile, he was the first to break the news of ken lewis' retirement from bank of america though charley gasparino says it may not be retirement. author of the upcoming book, "the sellout." yesterday you mentioned internal candidates to replace ken lewis. are they still in the running or are you looking at outsiders or what? >> we just reported on "power lunch" exclusively, i have more detail on it, is that they are still in the running, no doubt about it. from what i understand and this is what the board members are saying and what government officials are saying. remember, bank of america is still a t.a.r.p. bank. they still have, the government has say here. they don't believe that those six people are right for the job. remember, this is a huge job. this is one of the biggest banks in the world doing a lot of different things, not just commercial banking, running a huge brokerage firm, the old merrill lynches. those six people and there are three of the names right there.
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montag, brian moynihan, head of the consumer division. the feeling internally and from the government they do not have the chops to run this massive thing. they need seasoning and that you bring in someone to do this for a year. the names i keep hearing are these two guys. they are on the board. they are older so you can see they are probably not going to be there long term. charles gifford, former head of -- i believe that's wrong. he is the former head of fleetboston, charles gifford. and a by named billboardman, former number two, i believe, of banc one. those are the two names i hear that are likely to step in during this interim period. there is a theory that is the way to go. they step in and you bring maybe one the of the six in or you bring someone from the outside. here is an interesting name that keeps popping up, bob steel,
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former u.s. undersecretary of treasury, long-time goldman sachs executive, was running wachovia for a while before it obviously imploded and was sold to wells. from what i understand, he's been lobbying for this job for a while. talking to board members about this job. that's a possibility. he's got a lot of experience. the one knock on him, as you know, maria, i believe he came on jim cramer's show and said everything was hunky-dorey with wachovia when it wasn't. i saw one of jim's messages, i believe, got an e-mail from him that steel still might be under investigation from the s.e.c. because of that. that's where we are right now. it's a murky situation. clearly, internally they are talking about an interim ceo. i hear those interim names, it would go about a year.
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i hear the names most likely are those two board members. then everybody fights it out, the internal candidates and you possibly go outside. >> fascinating stuff. charley, thanks very much. charley gasparino on ken lewis. let me ask you, larry fink. what about everything that went down with ken lewis? i know it's not being pushed out. everybody said, we didn't ask him to leave, but he must have at some point said, i want out. because of all the pressure. >> i'm close with ken. i saw him most recently for breakfast. i think ken was tired. i think he's a very proud man. i think he respects that the institution is much more important than he is. i think he felt he was going to become a hindrance to the institution. i think -- i was hoping that he was going to stay on another
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year, but i think he believed that the institution is back on its feet, the institution will be able to find a successor, whether it's interim and having a more long-term appropriate search there. so i think he believed the institution can move on without him. i think he chose to spend more time with family. i think it's that simple. >> do you think did he a good job. >> i think ken was one of the greatest builders of the retail bank franchise that we've ever seen. b of a through all its mergers and success became the dominant deposit gathering institution in the united states, with, i think, 11% deposits. so they touch 11% of americans, which is special. they expanded quite rapidly in the last few years. >> he got fingered for that. >> i think some of them are going to say they were done too early.
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lasalle bank, countrywide. >> fleet. >> fleet was a tremendous success. >> it was expensive. >> but i think expensive that turned out to be a good execution and a really great added platform. >> countrywide? >> countrywide then merrill lynch. no question merrill lynch is making quite, a large sum of money now. there is a huge debate looking backwards. they waited a day when merrill lynch's stock went much lower. >> that was the point to do it then, right? >> and i think he believed that the combination of merrill with countrywide, with 11% deposits can truly create a unique institution. unfortunately when you are looked upon, are you a good ceo or not, much has to do with your last few transactions. the last few transactions, one could argue the timings were maybe premature. but i think history will show
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merrill lynch was a great acquisition. countrywide is going to be a great acquisition. b of a will perform incredibly well when the consumer starts stabilizing. unfortunately, b of a is so large and so connected to the american consumer, they are almost an indicator, their health is a direct result of the country. >> larry, your most recent acquisition, barclays, investors took managers. too big to fail. we'll talk with that. an international strategy session with global allocation fund and talk about how they are allocating money around the world. find out what regions and sectors he believes will outperform into next year.
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welcome back. blackrock's global allocation fund celebrated its birthday
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this year with $32 billion in assets. joining myself and blackrock chairman and ceo laurence fink, tennis stattman is with us. nice to have you on the program. >> great to be here. >> tell me first what you're looking at in your portfolio. it's the world, right? tell me asset classes and going fris. . >> sure. blackrock global allocation fund, we have the ability to go anywhere in the world where there are opportunities. regardless of asset class, geography, economic sectors. we have a balanced portfolio that's about 60% stock and about 33% fixed income and 7% cash. we have a significant amount of convertible securities. that's one of our ways to get some exposure to the equity market while managing our risk. >> this fund has done incredibly
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well. >> it's been one of the fastest growing mutual funds in america. under dennis and his team's wing, three years ago when dennis became part of blackrock, the team managed about $23 billion and today the team is managing $54 billion. >> the convertible, is that still a story working today? how have things changed given the run-up we've seen in the market since the lows in march. >> we think convertibles are still a good place to be as a balance of risk and reward, compared to either stocks or straight bonds. they are not the give-away they were last autumn when the convert arbitrage hedge funds were liquidating, but we think they offer good value today. if we get into a period where we have a less robust equity market, we can still get paid from the fixed income side. if the equity market continues to do well, we'll participate
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with converts. >> is where the growth in terms of geography? larry, you are traveling all the time. is this part of what you are doing to see which companies are doing best or which geographies are growing versus not growing in terms of investing? >> fortunately for dennis, i have nothing to do with his investing. if i did, his performance might be worse. no. obviously, dennis and his team are doing that work, traveling throughout the world. >> you are doing as much traveling as larry? >> mostly my team, fortunately. >> where is the growth around the world? >> it's clearly in asia, by far and away. europe and the u.s. are lagging some what. we think they are going to see some improvement in europe and in u.s. the improvement is already there in asia. in china, car sales are booming, for example. they are at record levels. >> people are debating that though, whether the growth in china is real. how do we know that that's
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actually, you know, happening on the ground? you are seeing that kind of vibrancy? >> there may be a special reaction here to a lot of government stimulus in china. especially the monetary stimulus was very much front loaded in the first half of this year. china possesses enormous productive capacity. financial resources and it has a population with significant unmet needs. those needs are starting to express themselves in a slower savings rate and more consumption. >> what would turn this story around? you know what, there is a red flag, i have to take a step back from putting so much money into asia? >> we are very diversified. we don't have a huge bet in any single place. we are betting on asian growth, but also betting on some of the more defensive and high quality sectors of the equity market.
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we think there is excellent value in the telecommunications sector today. there is excellent value in health care. you've got dividend yields on some of these stocks that are 200, 250 basis points above treasuries and growing earnings strength. >> great to have you on the program, dennis. thank you very much. dennis stattman joining us. the appetite risk is returning in a big way. we'll check on that given the risk aversion situation. eeeè9
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there is a live picture of the floor of the new york stock exchange. dow down 162 points. broad-based sell-off after a good run-up year-to-date. technology, financial services among the stocks leading the market lower on the heels of weaker than expected economic data. it is no secret the markets have seen a huge rebound hitting their lows back in march. and stock prices moved higher,
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and so has demand for risk among investors. to give us a truly global perspective and shed light on blackrock's clients and what they are doing is block rock's vice chairman and head of the firm's account management group. nice to have you on the program. do you see people once again having the appetite for risk? >> i think we have a fantastic position to give you a view on this question. if you think about blackrock present in all the markets around the world, both retail and institutional clients, pension funds, wealth funds, what we've seen is absolutely this being the moving away from rickless assets, capital preservation, types of investments into equities, into high-risk fixed income. >> for a long time people were investing in, for example, private equity and doing lots of alternatives. we've seen that kind of risk being taken again? >> that risk is -- >> not so soon. >> creeping back.
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we are seeing some movement there. particularly in hedge funds. as you know, we've seen some of the world's leading hedge funds close again. that wasn't the case over the last 18 months. we are seeing money into our hedge fund platform. money creeping back into private equity. where the real movement is is out of cash into equities and fixed income. that it's big move we've seen. >> out of cash into equities, and of course the market performance reflects that. we are worsening right here. i guess you have to expect some kind of pullback after the performance we've seen. >> it's not going to be a straight shot. it's going to be quite lumpy. i think the market is taking a breather. it's the beginning of the fourth quarter. we ran up dramatically in the fourth quarter. we had marginally more disappointing news. if you remember in march, what started the market improvement was marginally improving news. we now ratchet up our expectations for more and
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increasingly better news and we had a decreasing amount of good news. so the market is recalibrating itself and that's okay. >> i wonder if during the height of the alternatives, when we saw even the pension fund managers saying, look, i want to get into private equity and you saw endowments getting into hedge funds, was that a little crazy? did we all get a little too euphoric in retrospect? >> there is no question people underappreciated liquidity. >> that is a good point. >> we saw pension plans going from a 60/40 allocation from equities, alternatives, real estate and 40% fixed income and cash to as wide as 85% equities, fixed and alternatives and real estate and 15% cash in fixed income. that was clearly out of range, out of balance. it was speculative portfolios.
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lack of appreciation for liquidities. we are now reorienting ourselves and recalibrating to a more conservative, more liquid orientation. >> looking at today's investor and the mentality shift we have seen, where would you say are the places people are gravitating to? you are saying the risk they are taking is out of cash into equities. is it a quality business with operations around the world? >> it's all those things but some of the new instruments that have become more mainstream. i think you've seen the real arrival and growth of the etf markets providing easy access, quick access to emerging markets, which are obviously doing well. there is no substitute of what you saw earlier with dennis stattman and the work he is doing, fundamental research, buying the best companies in the world we think will thrive again
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as the economy begins to recover. >> now that you have such an enormous amount of assets, i want to ask you about that when we come back about etfs and do you need that kind of research as it relates to etfs the way do you with equities? thank you so much. we appreciate you joining us today. we've got the closing countdown next and the closing bell after this break. after the bell, bob daal will downus gig us his take where we are in terms of the market action. ll will downus gig us his take where we are in terms of the market action. l will downus gig us his take where we are in terms of the market action. will downus gig us his take where we are in terms of the market action. will downus gig us his take where we are in terms of the market action. ol will downus gig us his take where we are in terms of the market action. l will downus gig us his take where we are in terms of the market action.
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