Larry Fink on the rising dollar

Larry Fink leads BlackRock, the world economy’s largest asset management firm. Today’s FT home page features Fink making a critical case against US dollar appreciation, given the negative impact a rising dollar has on exports. I don’t disagree. But at the moment a stronger dollar could benefit the US consumer by providing greater purchasing power in lieu of higher nominal wages, and therefore putting much-needed upward pressure on aggregate demand and economic growth.

But that debate aside, I admire Fink’s ability to employ parts/whole logic. See the passage below. Exports are not central to the economy as a whole, he admits, but they impact certain parts of the economy. And these particular parts employ unique social power, evidenced by Fink’s getting the home page. Here’s my favorite bit of the text:

Larry Fink, chief executive of BlackRock, plans to express his concerns in a foreword to the company’s annual report, due out next week. The warning comes against the backdrop of the 25 per cent rise in the dollar versus a basket of other currencies in the nine months from last June to March. …

“While the US economy as a whole is not overly exposed to exports, many of our largest and most influential companies are,” Mr Fink has written.

“We believe that this will lead to an erosion in confidence on the part of CEOs with the potential to slow both investment decisions and future growth in the US.”

Other executives at BlackRock, which controls $4.7tn of assets in global financial markets, have also expressed concern about the effect of the strong dollar, which they say is hurting the US economy.

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