Yahoo Finance All Market Summit – New York City – February 8th, 2017

For investors, institutional and individual, big and small how to map out your portfolio in the current year 2017

1. Chairman & CEO of Blackrock – Larry Fink interviewed by Andy Serwer, Editor-in-Chief, Yahoo Finance

1. USA has spent $6 Trillion on wars so far
2. We have a deficit of $3.6 T in infrastructure spending, much of it is due to deferred spending in maintenance
3. Infrastructure spending is impeded by personal liabilities such as pension liability so only $180 B has been spent so far
4. Consumer confidence and the S&P 500 are high right now – people should be selling not buying
5. Given Brexit, Trump and anti-globalization initiative how do we proceed?
6. How do we explain the bipolar behavior of the current market with energy sector down and technology sector up with such a divergence?
7. We have been rewarding the debtor nations and the debtors so far, with negative interest rates. There is too much uncertainty and Janet Yellen is cautious. With one or two tightenings (interest rate increases) by the Feds this year, combined with the loose monetary policies of ECB (European Central Bank) and BOJ (Bank of Japan), dollar will get strong. This will affect our manufacturing platform
8. Is Blackrock with $5+ T assets under management too big to fail? Is there a systemic risk across the board? We have a strong banking system with Citibank, JP Morgan and Bank of America. We have strongest investment banks, such as Goldman Sachs and Morgan Stanley and strong asset management companies, Fidelity, Vanguard and Blackrock capital group. We have the strongest capital markets in the world. With some form of reduced regulation it gets even better, whereas  the European and Asian capital markets are weaker by comparison. Therefore the rebounding will be stronger in US than any other country

1. Jen Rogers of Yahoo Finance interviewing Goldman Sachs and Charles Schwab Investment Advisors

1. The market is ‘bipolar’ as the energy and technical sector would have you believe – are there any more shoes to drop? Uncertainties linger, but the labor market is doing well, unemployment is under 5% and the recession has ended in 2009. Profits are growing
2. Now, everything depends on US trading partners, tax cuts, infrastructure spending and regulations. Tax code and affordable care act replacement plan are in Congress’ hands.
3. Rising yields affect fixed income securities, not good for bond market; however, trade policies can cause deflation leading to lower yields
4. With bipolar, risk-on, risk-off, Trump-on, Trump-off trading, the cancelled effect resulted in less than 1% move in the market for sustained periods of time
5. Equity market is mostly domestic whereas the treasury market is non-American. This has to do with the US$ being the world’s reserve currency
6. Trade flows can cause risk – imports are 15% of the GDP – even the imports are originating in the USA! For the exporter the situation is not good with the rising dollar
7. Trade war is a lose-lose proposition. But only 12% of the jobs are trade related. Remaining 88% has to do with automation and technology
8. We have a secular bull market (major bull market with minor bear markets in between) since the end of recession in 2009. Sectors to look forward to are Healthcare, selected Industrials and Technology

1. Rick Newman of Yahoo Finance, interviewing David Perdue, Senator from Georgia

1. Tax reform, to level the playing field so to speak involves, individual tax, corporate tax, repatriation tax and adjustment or border tax. The border tax is the one going to pay for the reduction in other taxes
2. The repeal of the Dodd-Frank act in the banking industry is to reduce the regulation in the banking industry and to help smaller commercial neighborhood banks
3. GDP depends on population growth and productivity; but the population growth has to be the right kind. Only 1 in 16 are skilled workers. We have to have a work-based Visa program, like H1B Visa to bring in the skilled workers
4. The travel ban does not affect 89% of Muslims. It is only temporary until the review process is fixed for extreme vetting. People have to be protected.
5. Washington does not work with the business pace. It works with government pace. Only 4 confirmation of the Cabinet so far!
6. For the infrastructure spending of $1T, $550B has to come from private investments
7. Manufacturing jobs in the USA – government has to be supportive, like infrastructure spending. We need public-private partnership. We need educational system to support re-education and re-training the workforce. Read “Hillbilly Elegy” by JD Vance (Klaus Kleinfeld, CEO Arconic)

1. Julia LaRoche of Yahoo Finance interviewing Morgan Stanley and Merrill Lynch Investment Directors on Impact Investing

1. Impact investing is to do good and make money at the same time; investing with a purpose or with a central theme; environmental and social governance issues (ESG)
2. Have a financial goal and balance the portfolio with ESG – the theme could be Cybersecurity, Renewable Energy, Climate Change, Health, Water, Affordable Housing
3. Investing with Goals, Values and Exclusions
4. The portfolio could be ETFs, Mutual Funds, Bonds
5. On the individual investor’s side, women and millennials are leading the way
6. Colleges and Universities have impact; persistent demand continues to grow and the clients’ interest is up by 58%
7. Is there a trade-off in terms of a low return? Historically true, but in the last 10 to 15 years it has changed and investing with a purpose is performing competitively