BlackRock is perhaps the ‘patient zero’ of woke corporatism. Stemming from social policies pushed by CEO Larry Fink in conjunction with the neo-Malthusians like Paul Ehrlich and other UNSDG types who have been predicting a population bomb – leading to the overblown climate hysteria for years; the ESG push seems to be rearing its ugly head and underperforming major ETF growth metrics. That is not stopping companies associated with BlackRock from continuing to push the “ESG – Woke Corporatist” agenda and failing miserably. Just look at the backlash against Anheuser-Busch via Bud Light who lost close to $5B in market cap after the Dylan Mulvaney fiasco.

According to MarketShare, BlackRock owns but a small portion of Anheuser-Busch’s parent company InBev, but BlackRock is not the only company pushing ESG – Woke Corporatism. All the top Asset Management groups from Vanguard, Swiss UBS, State Street, Morgan Stanley, and JPMorgan Chase all follow the ESG trend; and although this is speculation, to say that the rest don’t take their cues from Assets Under Management (AUM) giant BlackRock – I have ocean front property in Nebraska to sell you.

In my preparation for this piece, I would think that things are humming along just fine in the world of asset behemoth, but some interesting articles have shown up surrounding the news of BlackRock.

What is to say about this information? Well, BlackRock is still the largest asset owner in the world, and if it is a collapse of the Wall Street giant, it will not happen overnight. Something could be said that we are seeing anxiety in the housing market because of BlackRock’s recent decline. Now, of course, the regular neolib screeds from the Atlantic and Vox say it is not BlackRock’s fault, rather it is the government’s fault, or it is your fault because of NIMBY-ism and that you’re an oppressor because you don’t want devaluation of your single-family unit. Something can be said about landlords and driving up prices based on supply and demand, but the Wall Street giants buying homes at high asking price sets a precedent in the market driving the supply and demand ceiling price higher up is the problem here, not the home owners who want increased value from their property, and not live next to dilapidated homes.

For example, as an owner of a football team, I of course want to pay the least amount of money to every player I can, when some other owner breaks a contract record in the open market for a quarterback. That infuriates me because it sets a precedent to pay a higher price tag for every quarterback, including back-ups. On top of that, say the team can use borrowed money to pay for that player at an extremely low-interest rate year-over-year. That is exactly the benefit BlackRock has – given they are an institution – can finance the purchase of homes at 1.4%, as opposed to individuals who have to finance at 3-4%. This allows BlackRock, and spin-off companies like Blackstone, to push the bid for homes 20-50% above the asking price, massively outbidding individuals. We are still feeling the outcomes of ridiculous covid policies, such as high-interest rates and inflation – so BlackRock is not the sole culprit of a “potential” housing bubble burst, but their actions do not help.

I wrote before about how BlackRock were avid champions of the ESG Movement, even if that is turning around on them after they have been called out for promoting and funding so-called non-green organizations and non-social justice organizations. For the record, I support fossil fuel drilling, it’s the hypocrisy I don’t like. Another issue plaguing BlackRock is the bank failures of Signature and SVB, for which the company recently sold off $114B to stop the bleeding. To say many things circulating BlackRock are going bad, is a collapse the right word to use at this juncture?

Will BlackRock Collapse?

If you were to bet on a full BlackRock collapse, I would hesitate before making a bold move as such. As you see they have unloaded stocks from failing banks and turbulent businesses (woke businesses) — meaning they are still doing their job, as in, acting as a fiduciary responsibility to their shareholders, and not capitulating to the social stakeholders (see my May 2022 piece Shareholders > Stakeholders: Could Disney and Twitter Reflect the Beginning of the End for the Narrative around ESG?). Remember, BlackRock’s AUM is around $9 Trillion meaning they are still heavy hitters on Wall Street. Even with a 5.1% YTD drop in stock price, investors and fund managers still put their faith in BlackRock.

What might be an indicator of BlackRock’s collapse? If there is one indicator for a potential collapse of BlackRock, don’t look at the companies who bow out — follow the pension funds, healthcare and hospital systems, endowments, and future generation funds. Notably, organizations like the California Public Employees’ Retirement System (CalPERS), California State Teachers’ Retirement System (CalSTRS), New York State Common Retirement Fund, Teacher Retirement System of Texas, and the Canada Pension Plan Investment Board (CPPIB) all have money invested in BlackRock. Both CalPERS and CalSTRS combined have over 3 million members, and the CPPIB is a crown corporation (i.e. run by the Government of Canada) that manages the assets of 21 Million Canadians (55% share of the population). One thing to note about the CPPIB is that the CPP is an entitlement to all seniors in Canada at the age of 65, failure here could result in financial trouble for almost 6.2 Million seniors in Canada. The CPPIB manages all of the CPP money for these seniors.

Unfortunately, we have been seeing this as of recent years where the state of Missouri has pulled close to $500 Million out of BlackRock and Florida has removed close to $2 Billion due to its ESG investing. Furthermore, 19 Attorney Generals have taken aim at BlackRock which could cost BlackRock billions every year. I think what we are seeing here is a battle between the public and BlackRock on who will cave first. Will the public win out and BlackRock have to move away from its ESG goals to avoid collapse, or is BlackRock too big to fail and the public is taking a massive gamble on their funds. If I were to give a guess on what is going to happen next, I see some big adjustments happening at BlackRock, due to public pressure.

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Published by cbabich26

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