From our studios in new york city, this is charlie rose. Because longevity is the defining challenge of our age, it will affect their financial security. It will affect their tax bills. Our job prospects in the future. In short, all of our future, and the future of our global economy. Larry fink is chairman and ceo of blackrock. Trillion more than 4 in assets. It is the biggest shareholder and half of the worlds 30 largest company. The home depot founder says that larry fink resides at the hub of the wheel of american capitalism. He is waging a Public Campaign to account for the future retirees. He says this challenge be the Number One National priority. I am pleased to have larry fink back at this table. Welcome. Are you like me . No matter where you go, real name is charles. Larry is ok with you. Im larry everywhere. No one is allowed to call me mr. Fink. The only person who calls me brokaw. Is tom lets talk about the economy in the market. Where are we we in january . It really says nothing. Its a couple months of market action. We have had a tremendous rally since 2009. The markets have more than doubled. In 2013, the markets were up over 30 . 2014 with atered really elevated market, and the market needed a correction. We had a correction. The problem is we had so many investors expecting the momentum of 2013 would just automatically carry through 2014, and it was just, these were false expectations. So weve had a nice correction. The greatest component has been in the emerging market world. We have had a five percent correction here in the United States and equity markets and we had a six percent increase in long treasury. between the valuation of long treasuries in equity markets. In the last few days, we have been, the market directions have turned. We have had rising equity markets and we have had a little decline in the credit markets. Were ok. The world is just, the world has many issues. And i do believe 2014 is going to be a hairier market. We will have to expect more volatility like we have had, but i do believe the net outcome of 2014 will be higher markets. But for most of our investors of the world, we should not Pay Attention to these inner movements because if you are 30using on an objective of or 40 years, these Little Market gyrations should not impact your overall needs to protect your retirement and build an outcome that will give you the nest egg i will come to retirement in a moment, but in terms of, or are we seeing any kind of shift from equities to bonds . We saw that in the fourth quarter. People made such huge profits and equities. They rebalanced into fixed income. We saw that behavior in the fourth and first quarter. Ame of it much of it is process. You are a Large Pension Fund and you have an allocation of 50 and equities and 20 in bonds. Equities rallied so much, you needed to rebalance. Keep your wanted to higher equity balance, you needed to do that rebalance. We saw quite a bit of it in the fourth quarter. This is why we were not surprised that the Market Correction in equities. What is surprising everybody is how attitudes have changed towards china and the emerging world. As i said, the developed markets more than doubled. Downeveloping markets are the last two years. So we have had a really change in attitude a real change in attitude about the prospects of the developing word and the opportunities here. Why do you think it is a good time to invest in emerging markets . If you look at the valuations of the companies within those countries, they are trading at relative to the potential growth rate am a they are inexpensive. They are trading at lower p. E. Ratios than what is happening in the United States. Have memories of what happened in 1998 when you had the revaluation, 1990 with mexico. This is a whole different world of emerging markets. Lets talk about indonesia. Indonesia, a growing economy, high gdp growth the positives about indonesia. Its debt to gdp is lower than most of europe. And so whereas europe continues to have very high debt issuance, these emerging markets have growing and stronger balance sheets. And a faster gdp than most of developing worlds. Much of this is a liquidity issue money running and, mining running out the longterm trend, indonesia is a good example of a strengthening economy and a strengthening balance sheet. When you say that, i you thinking about looking at markets there and investing in companies that will start the market there or regardless . In can find a way to invest those companies that take advantage of the gross circumstances of a particular economy in the country talk about. You can do that through index funds or etfs. You can do in emerging market index. There are many ways of investing that you have liquidity but you have the exposure in those economies. Is the essential quality of emerging markets that they have a developing, an emerging middle class with enormous consumption power . Unquestionably. That is going to be the big debate. Can these economies translate itself from and export trayvon economy t export drive economy to a domestic driven economy . So chinas economy went from the fifthlargest economy to the second largest economy in 1215 years. And it was on the back of exports. Itsnow has to translate economy. This is what the reforms that are about to happen in china is to make it a more consistent economy that is based on domestic consumption. And they also say they will allow more allowance for competition with companies that are owned by the states. We are seeing an increase in private companies growing. They are going to reduce the influence of Public Companies or state run enterprises. The future of china is going to be in the private enterprises, like ali babba. Everyone is talking about that public offering. That is the thing to watch. Ali baba is the equivalent of amazon. As laws in china are not exacting as we have here. Ali baba is playing the role of an investment firm. They are trying to sweep all of the cache of all of their enterprises and offer a money market return. Its one of the fastestgrowing portals in the world. Company, so hee is creating that atmosphere. He is creating, like a ceo should, he is creating the direction of the organization. So when you look at that, your guesses about the slowing down of chinas economy, below seven percent to . So china has a big issue in front of itself. We were all pretty influenced by the reform announcements this past november. But the reforms are pretty onerous to become pushed. They are going from a policy rented economy to a market oriented economy. First of all, they have to create the metrics. How do you understand what a market economy is . So they have a lot of work in front of them to change this enormous economy towards a marketdriven economy. I think that is going to take time. If you were a governor and some Central Province and and you were accustomed to directing through policy mandates, building a bridge, building the school to a point where where will be guided by market needs. And if you do not have the metrics to make that determination, you are going to pause. You are going to see that. You are seeing a slowing economy at the moment and that is disturbing the overall market. Noone thing great, as we watch china, they do not care about a oneyear movement. They are focusing over 10, 20 years. As investors, we need to be patient as that involves. We will see how successful they are. It is too early to determine how successful they will be. And the leadership, the most the thing they most want is stability in the thing they most fear is the absence of stability. And some kind of tension in the social fabric. And as they shift to more of a market economy, there are the kinds of concerns about unemployment and all kinds of issues that come to the fore. Absolutely. But this is not just a chinese issue. This is a brazilian, indian problem. 1 inwe talk about the 19999 this country, technology is changing the whole landscape of our job creation. A developed just economy problem. This is a developing economy issue, too. Even india, i visited one of the Largest Manufacturing Companies in india, and the ceo was telling me in their factory they once had 10,000 employees. Today they have 1200 employees here and they have 30 more output. That is because of technology and enabled gains in productivity. The one thing we do not understand is the transformation and agriculture. Technology is changing agriculture as fast as it is changing the manufacturing of electronic goods. We are creating combines today that have eyes that can visualize the quality and the freshness of the fruit. And so you have combines picking fruit and vegetables. You do not need human laborers anymore. So think about the chinaindiabrazil equation. In all those countries, you still have many people leaving the rural, agrarian environment and moving to the city. And we are seeing more per child displacement and agriculture worldwide more job displacement and agriculture worldwide than in any industry. We are seeing working in a factory in the shoes shoes. This is my black swan. The Biggest Issue is are we going to create sufficient jobs in the china and brazil and indias as this movement out of the agrarian area into the cities and into these factories, is there enough global gdp . In and you went from 12,000 jobs to 1200 jobs in this one factory in india. Technology is impacting every country. And it has less of an impact in a country like the United States or europe and japan because we have an aging economy. We do not have that migration out of the moral area like they are experiencing the rural area like they are experiencing. This social issue will be the key issue for all of these countries as they try to navigate their economies and try to bring their economies forward. They have this incredible social pressure of people moving out of areas and seeking work in the cities. Can we create enough jobs in the cities . Can we create enough global gdp to satisfy those job needs . Do you think worldwide, and maybe you have been speaking to that in part, that the idea of is going to91 be a growing issue . And income inequality becomes a growing issue . In every country i visit, and i have been in 20 countries in the last four months, every leadership i talk to is worried about job creation. And growing gap between those who have capital and those who do not. Have rising equity markets, those that have capital were able were benefited by that, and those who did not are being left behind. And that is being aggravated by this whole transformation of technology. That return quickly to how you see the u. S. Economic growth in terms of growth in gdp, just where you see, because you manage so much money. 3 for 2014 . I would say 2. 75 to 3. 25 . So it is better than last year. But i do not think it is going to be as strong. They could get to 3. 5. But i will target between three and 3. 25. Have, we still have many things to overcome. I think the weakness in europe is going to continue and maybe it has positive gdp of. 2 . So we are just not going to benefit by a lot of trade overseas, but we are the envy of the world right now. The Energy Revolution that we have in this country. And finally being recognized in europe. This is one of my big themes that europe is just being left behind because of the cost of energy. Blackrock is just going to be building a new data center in upstate new york. Its hydroelectric, its green and it will be three cents a kilowatt. Why did you choose upstate new york . We worked with the state. We were looking for something that would be socially acceptable because data centers are heavily energy use. Obviously, it is quite inexpensive. So in new york city, it is . 22. Cents isw york city 3 as low as you can find in the United States. We have a Status Center in the state of washington with that same type of cost on the columbia river. My point is if i open that data center in germany, and germany is really moving toward more green and less reliant on nuclea r, and they have not agreed on any forms of fracking. So electricity costs and germany are externally costly. So 3 cents in the United States . 46 in germany. So when you think about natural gas, although natural gas has btud from 3. 50 to 5. 00 in the u. S. It is 12. 50 in europe. So we have huge benefits, and were seeing Many Companies moving jobs into the United States, but those factories that once had 1000 people in the United States may have 200. So getting back to this whole technology boon, we are just not creating as many jobs even as we develop more and more factories. Staying with United States, having looked at my notes because i wanted to remind of this, talk aboutis, you energy, the cash the corporations have and three is ,he Banking Community has because of regulation, is firmer than it has ever been. Those are the three things that you cite in terms of the u. S. Economy and its future. The beauty of the United States. When we discover we have a problem, we generally are very cathartic nation. It. Lk about we fixed so in 2009 secretary tim geithner proposed the stress tests. We aggressively over four months raised 80 billion for these new banks. These banks. Today, they are on their third stress test and this is being run by the ecb. We are so much further along. Our banks are looking to put money to work. In europe, the banks are still deleveraging as we speak. In the United States, we need more loans. With respect to Monetary Policy, is anything remaining to be done or is that not going to be a factor as you see tapering . Len spokeoman yel today that she will carry on the policy that chairman ben reinforces concept of low Interest Rates for a long period of time. And she reaffirmed the need to reduce the bond purchases and continue with the tapering. The one thing that people forget when we talk about the tapering, everybody gets concerned about what does this mean . We went from u. S. Federal deficits of 1 trillion or more to deficits that will be around 600 billion this year. So the treasury borrowing for the last few years have fallen considerably. So when you think about the Federal Reserve buying, going from 80 billion per month purchases, if they do not start tapering rapidly, they will be buying everything that is ever issued. So when we think about taper, we should think about taper in the context of what is being issued. This is why i have been a believer that we should be even more aggressive in tapering. Ok. Finally, to retirement. As something you care deeply about and think the country needs to think about. Washington. Fiscal policy. Does any sense about to miss him there . No. I spent quite a bit of time there, and i have eternal hope that we find ways of coming to grips with Immigration Reform. We need to really address our fiscal position and there are men andability for the women on both parties to come together and do what is right for america. I had the finance minister from mexico here, and he will be on the same program with you tonight. They came in, 3 party, president. They got three parties to agree. And i thought, this will not happen in. What the president it alongside his finance minister and the central bank is really one of the more inspiring moments. This is why we are so bullish on mexico. I happened to see the finance minister yesterday, too. And we are very constructive in mexico. We think mexico is another reason why we are constructive on the u. S. The reforms the president henan et al. Has done penenetto has are, if the reforms executed properly, mexico will become a juggernaut and energy. If you think about north america and mexico, we will be the energy giants. What is the issue about retirement . What is the country need to know . What do retirees need to know . We need to educate everybody in frontave a blessing of us, and that blessing is longer life. And we need to make sure the blessing of longer life is achieved with dignity now that we can afford longer life. We spend so much time focusing on good health, focusing on exercise and eating the right thing. And so we are going to live longer. When people think about the averages of long life, people forget to talk about that many men and women past in their 20s and 30s. So statistically if you were a couple in good health at 60 years old, one of the two is going to live to 92 today. 50 of sixyearolds will live to 90 . Wow. So they need to think about what the financial demands of better. The whole issue, getting back to jobs, we have seen a huge amount of job creation him about the job creation is for the men and women over 50. Why . Because they realize they did not save enough. So they have to go get a job. They need to work longer. That is a big social issue between the young seeking jobs in the elderly staying on longer, but the reality is we of a potential of 1 3 your life left, you had better be prepared financially. This is why we have spent so much time try to educate people. Lets make longevity a blessing. How much money do you need to live with the dignity youre looking for . So what does that mean . It means you need to be prepared earlier. You need to start putting money away earlier for retirement. And it also means that you probably have to start thinking about having a more dynamic life in your 60s. It probably means that we all should stop taking about retiring at 65, because you do have a very productive life in front of you. And so it is a combination of being prepared for retirement, retirement that is done where you can have retirement with dignity, and it requires a lot of preparation, a lot of preparedness in terms of savings. And this is why we applaud president obama when he iraunced the mira, the my proposal. Although it is a very modest amount, it reinforces this need that we have to get prepared for retirement. The corporate defined contribution plans, only 50 of americans participate. And so Many Americans today are not getting prepared for retirement. And you are saying the first of you have is a recognition. How you do it may be the second step, but you have to recognize you have to have a plan. Arehis