Is a New World Monetary Order Emerging? BlackRock CEO Larry Fink Believes So.

Under these conditions, it is out of the question to leave aside the hydrocarbon companies.

The world order that has been in place since the end of the Cold War is over for Larry Fink the CEO of BlackRock. Here is what Larry Fink said in his annual letter sent to BlackRock shareholders, which was published on March 24, 2022:

“The Russian invasion of Ukraine has ended the globalization we have experienced over the past three decades.”

Less political in early 2022 in his traditional missive to business leaders, the CEO of the world's largest asset manager returns to his solemn style. After the Covid crisis, the impact of war “will ripple out into the decades ahead in ways we cannot yet predict,” he believes. With possible impacts on BlackRock itself, born thirty-four years ago at the beginning of the globalization of the economy and capital markets. The American group is one of the main players, with 10,000 billion dollars of assets under management on behalf of its clients at the end of 2021.

Western sanctions against Moscow, whose stock market reopened late last week after more than three weeks of closure, have been echoed by many U.S. companies, “in keeping with their core values”. The measures taken by the private sector demonstrate the power of the financial markets for Larry Fink.

Russia's pariah status has already cost BlackRock funds exposed to the country $17 billion. The impact is limited at the group level, but the repercussions of the war on global markets have caused the management company's share price to plunge by 20% since the beginning of 2022!

According to Larry Fink, the geopolitical situation could accelerate the development of digital currencies, especially among central banks. And like Covid, it could push the relocation of certain activities “to Mexico, Brazil, the United States or the manufacturing centers of Southeast Asia”. This movement will continue to fuel inflation, which is already high for raw materials, with oil prices likely to exceed $200 per barrel by 2022.

While Westerners want to be less dependent on Russian oil and gas, “energy security has joined the energy transition as a global priority” for Larry Fink. The climate can wait, since the United States wants to increase its “oil and gas supply” and Europe and Asia “their coal consumption”.

The return in force of the most polluting energies but at “affordable” prices would legitimize BlackRock's desire to “continue to work with hydrocarbon companies”. The group remains silent on its climate plan, while a growing number of companies, asset managers, and institutional investors are unveiling their roadmap towards carbon neutrality in 2050.

A year ago, BlackRock signed the Net Zero Asset Managers Initiative and was supposed to publish its commitments to reduce greenhouse gas emissions by the end of March 2022. Like Fidelity and the other members of the Spring 2021 wave, it has been granted a reprieve until April 12, 2022. Time for the international coalition to refine its methodology.

In any case, current events will completely reshuffle the deck with the birth of a Bretton Woods III before our eyes that will be backed by outside money. Gold, commodities, and Bitcoin will be the kings of the new world monetary order that is taking shape.

Larry Fink shares this view and cannot decently turn away from hydrocarbon companies at a time when the world needs them the most. Faced with the fight against climate change, pragmatism should once again prevail. As is often the case in the world of finance.