After months of anticipation, Larry Fink ('76) and Bill Gross ('71) sat down with Bloomberg's Erik Schatzker (that's him in the screen shot above) last night at the Beverly Wilshire Hotel for a candid conversation about the world's financial market outlook and the pair delivered in spectacular fashion.
The conversation -- which will air Monday night on Bloomberg Television -- ranged from the implication of the nation's debt burden to the country's need for a policy of investment and much more. In the clip above, Fink and Gross discuss how economic problems in Euroland are among the greatest threats to the U.S. economy.
In the clip found here on the Bloomberg TV website, Schatzker asks the duo how they feel about the Occupy Wall Street movement. In a surpise, both of the financial titans expressed their sympathy with the OWS movement.
Bloomberg also recapped the event here. In a story authored by Sree Vidya Bhaktavatsalam and Erik Schatzker, Bloomberg emphasized the European threat.:
Bill Gross, manager of the world’s largest mutual fund, said Europe poses the biggest risk to the U.S. economy.
BlackRock Inc. (BLK)’s Laurence Fink said Germany is playing a “dangerous” game letting markets push debt-laden European nations to fiscal discipline.
The agreement among the two biggest fixed-income managers, who spoke yesterday during an alumni event hosted by the UCLA Anderson School of Management and Bloomberg Television, highlights the increasing investor unease over Europe’s failure to end its sovereign-debt crisis.
As holders of Greek debt begin talks in Athens on structuring a 50 percent write-off that was the cornerstone of a deal pieced together last month, government borrowing costs in some core European economies have soared to euro-era records amid resistance from German Chancellor Angela Merkel to use the European Central Bankas a lender of last resort.
“It is a very dangerous stake Germany’s playing,” Fink, who runs the world’s biggest asset manager, said at the event at the Beverly Hilton Hotel in Beverly Hills, California. “And many people would not play these stakes because the outcomes can be black or white.”
The article also focuses on some areas of disagreement.:
The two managers, both alumni of the Anderson School, also diverged in their view of Treasuries, which Gross eliminated from his main fund at the start of this year, only to reverse course after he missed the biggest quarterly rally in Treasuries since 2008. Fink said in March that he’s a “big buyer” of the U.S. dollar.
Gross’s $244 billion Pimco Total Return Fund has returned 2.5 percent this year, trailing 75 percent of peers. The fund has risen an average of 7.7 percent over the past five years to beat 97 percent of rivals, according to data compiled by Bloomberg. Unlike Gross, Fink doesn’t manage a bond fund.
Gross has criticized the Federal Reserve for keeping interest ratesartificially low by purchasing Treasuries. While Fink said that he had welcomed the first two rounds of the so- called quantitative easing, both agreed last night that the Federal Reserve by now has run out of monetary tools to stimulate the economy.
This is just a taste of what you'll see on Monday night. We'll have more coverage of the Fink-Gross candid conversation next week on the UCLA Anderson blog.
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