Speed on the market action. Futures are a bit firmer. 0. 3 . Market,tion in the fx the bullish dollar call. The euro is a touch solid softer. Yesterday, massive repricing. 220 on the 10 year. Alix time for your morning brief. We get weekly crude inventory for the u. S. Trading at a oneweek low. Watching that later. Speaking gothe fed a conference. 2 00, the beige book, survey of regional economies, what does it say about the reflationary theme . Jonathan do you read the beige book . David i do not. Alix i will skim it. Jonathan it is a reason it is beige. Prime jonathan Prime Minister may will take questions and later, over in the u. K. , as they will debate the call for a snap election. It was not meant to happen until 2020. Two thirds need to vote for the snap election that Prime Minister may would like. David . David Morgan Stanley was not the only Bank Reporting results. Blackrock posted better than estimator earnings. It is the cover story of markets magazine. The ceo, larry fink, sat down with our erik schatzker. We are fortunate to have larry us for shorter version of that interview. K i will not submit larry to that revealing q and a. As david mentioned, black rock poster earnings. Adjusted earnings per share, five dollars and quarter. Looking for 4. 89. Perhaps, you have had longterm inflows of 80 billion, as david mentioned, revenue was short of expectations and so did operating income. There are people who wonder if it is a red flag. Larry i do not think so. And an fees, in line operating income, we had special charges where we prepaid a bond we noted was a 14 million expense in the quarter. Charge we took that we pronounced with a restructuring of the equity area. We were very excited about the quarter. In anllion in inflows industry there predominately had outflows. What was great about the quarter was pretty broadbased. 44 billion in inflows in equities. 33 billion in bonds. Both multiasset and about 1. 5 billion in alternatives. It was a pretty broadbased inflow, it was global. And i would like to have every quarter like this one. Of speak numbers kind for themselves and they always do. They are backwards looking. Lets talk about the quantitative asset of business. How would you describe the state of your business right now . Larry fink probably in the best position we have ever been in. Ever. Erik why . 29 years of hard work of building relationships worldwide. Erik do people know that part . Larry fink no. Every year in week, we are growing. The consistency and it is expanding our presence across the globe and in different products. As you know, i travel continuously through the year. I am very happy and proud of the relationship building. Clients are seeking our information, our opinions more so than ever before. Erik 80 billion of inflows, well ahead of last years, is is sustainable . Would never say that. I would never predicted that future. I do not know what is in the future. We saw huge inflows in the Fourth Quarter. It carried on to the First Quarter. We always talk about the wall of cash. Some of it has been put to work. Marketplace, a little pullback now. Are waiting to see corporate earnings for this quarter and see if there is objective of the significant rallies especially in u. S. Stocks. The u. S. Economy is not growing as fast as people would have thought in the Fourth Quarter. To assert we will grow at that rate or higher i do not ever make forward estimates and predictions like that. Is the dialogues are greater and deeper than ever before. Aladdin sales are moving at 12 . Erik technology . Larry fink all of the components of the organization are doing quite well. Erik lets go back to the flows for a moment. Predictable, but they do Say Something about what clients want and what their appetite is. You have you do have your finger on the pulse right now. Larry fink we do. Erik have flows slowed . Not necessarily, it is too early to tell. No, i do not talk about this current quarter. I would say flows are still quite strong. Opportunities are still is robust. Our conversations with clients are just as deep. Erik there were more outflows this past quarter, almost 7 billion on top of 20 billion in 2017. A business you are already trying to fix. Larry fink we were in the process. Billionw much of the 7 and 20 billion is unique to blackrock and how much of the industry . Larry fink some is unique to blackrock and much of it is industry. We are still seeing very large outflows as an industry and equities into passive we have been a big beneficiary of that. We are seeing the many more active managers using the an asset class. Those trends are continuing and then you have many Financial Advisors moving even before we knew what to the regulation outcome will be moving toward advisory relationship. Advisory relationship, using one more etf as an instrument. We are seeing that. As you know, we announced a big restructuring. We have mr. Wiseman running our platform. The initial reaction has been strong. Our performance in year to date is good, especially current equity team. We have had tremendous performance in the first three months and two weeks. Erik how low do you think it will take until you see positive inflows into equities active equities . I would i would not even been to estimate that. Efully, probably well hopefully come early next year. Erik it will take a year . Nothing happens overnight. That is the beauty of our industry. Investors not sure would agree that nothing happening overnight is a beautiful thing. Larry fink i dont agree with that. What we have done is we have been more prescribed in strategy , developing and recreating what we are doing on m a strategy. When we announced the merger, most people hated it. That was most people did not think about it. We did all of that stuff. Our growth in factors, factor based analysis, our growth in fixed income. Our unconstrained growth. We are seeing pockets that is not because of one quarters action, but over years of action. Erik was saying we touched on, the idea that blackrock should now, more than ever before, what you deal with 5. 4 trillion in assets . How is size and advantage . Larry fink size has been an advantage area we are reinvesting in the business more than any firm. We are using size and scale to make acquisitions in technology. Our Scaling Technology is a really differentiating ourselves with aladdin, future advisor and aladdin for wealth. Erik what else . Probablyk well actively looking at three or four companies now. So, nothing largescale. Nothing like we will merge into another big Financial Institution or anything like that. Scale is been a unique opportunity for us and will continue. We will use scale to continue to help our clients. We will use scale to offer a great Value Proposition to everybody. Erik one of the ways you were able to use scale to your vantage is by cutting scenes. Two advantage is to cut fees. 52 billion dollars in inflows in those categories. You cane implicit bet make up in volume that you lose revenue . Larry fink it is working beyond plan. Erik you will cut further or extend a dell fees . Extend the fees . Larry fink we will look at ways to bring scale and differentiate blackrock and we will do that. Fees . Up on erik on larry fink we will drive our position. I will also say one thing related to will we do this perfectly, yes. , i things people are missing would say that most people in the community believes that absolute returns will be systematically lower in the next five years than 10 years ago. And if so, the problem we have today with the returns being largeower, fees are a component of the overall expense profile. Clients are saying how do we have a better expense profile . What can you do about it . Across the board, we read how persia is doing in hedge fund and many other clients are looking at it. This is where skill will be a real advantage. Erik squeezing vendors . Larry fink we have done that before. our custodial assets to another bank. We will do that. Will continue. Not just with what you are up to but what i am of two. Larry fink, we will continue. Jonathan that is coming gulf. Morgan stanley earnings came out with a solid beat on revenue, fixed income, 1. 7 billion. It raised more questions about Goldman Sachs. Coming up on this program, Prime Minister theresa may taking to the house of commons and we will look for updates and she looks to get a vote of 2 3 of parliament to get the snap election in early june. The cable rate pushing higher. You are watching bloomberg. \ jonathan from new york city, a focus on the city of london where Prime Minister may is taking questions. The unexpected, if you are suffering from political fatigue call you do not want to see this one. Fatigue, you do not want to see this one. That vote will come up in a couple hours time. Erik schatzker and larry fink, blackrock ceo and chairman joins us. Larry, great to have you. How do you factor in the Political Risk in europe with the broader question of the breakdown and globalization . What are your thoughts . Oury fink i would say from and fourthhe Third Quarter into the First Quarter, the fears have abated somewhat. We still have [no audio] and until we understand what brings it means in relation to your and one of europe and people have not talked about the europeans have been discussing items like we want you to manage all european liabilities in europe. London ast firms use their platform for that, if they can find a way to force their you have tonge that manage so you have to have traders, Portfolio Managers in continental europe, that is the key element. If we have to move to europe to manage it, the banks will move their trading desks to europe and custodial and everything can be quite disarming. And difficult. It iswe know where pretty antitrade, it is a real severe issue. That is the pivotal issue for institutions in relation to being in the city of london. For me, brexit is wait and see issue. I think the Prime Minister is. Oing a very aggressive think the popularity of the party is very strong. Obviously, if the polling is correct and theres an overwhelming win that solidifies herself as a pm of the party, i look at this as more of a gesture of strength than anything else. We have a French Election this weekend and, i dont know. We still have a strong view that it looks like monochrome macron can eke it out. Everydays a different day. We have seen an incredible horse race. The market is anticipating a probable, good outcome. Jonathan why is macron a good outcome . Larry fink well, i think they are more fearful of the two. Outcomeink a fillon would be perceived to be good. The marketplace is looking at a more centrist outcome that has the french government wishing to stay within the eurozone, more protrade and so, we will see. I think it would be a very difficult thing if we had one of winning and the market will probably reverse. Can we draw a contrast between europe and the United States . There are risks. Of course, there are risks. The question if the risks are in assettely reflected values. You are among the people, and there are many, who were surprised the u. S. Equity market rallied as hard it did after the election and furthermore, consolidated those gains. So, paint as a pitcher. How does the future look for you as assess the European Assets . the u. S. Is probably the market for most expensive relative. This is earnings season is probably the most important issue for the markets today. The marketplace had Higher Expectations on quick actions out of our government related to andreform, infrastructure then deregulation. Those were the very things the marketplace looked at. It will take more time. Do not havee earnings validated in these higher pes we can adjust downwards. The administration does succeed in some of the items, the market will reassert itself going higher. You make it seem as u. S. Stocks have nowhere to go but down unless a validating picture . Larry fink that is true all the time. If the market moves up, it has to be validated. I do not look at it as different from any other time. Pes are relatively high. Pes of u. S. Are higher than europe or asia. It has to be validated one way or another. We have had since the Third Quarter, synchronized Global Growth. The slowest economy in the g7 is the u. S. So, you are seeing China Growing much faster. Remember a year ago, we will worry china was going into recession. They are growing at close to 7 . We worried about japan. They will profit is growth. To 3 . S growing even france is 1 . And canada. We are worried about north america, canada will go over 2. 5 . The market has been validated by a synchronized Global Growth, not just the election. More importantly now, for the market to have another leg up, we need to see the validation of these policies from the Trump Administration and validation from the earnings. My worry is it is going to be a harder picture. We since there is more certainty because there is uncertainty related to tax reform and the time of deregulation, we are seeing more and more businesses holding back. You are starting to see that in different at 1 economic numbers. I will say there are warning signs that are getting darker because we have seen some pullback, you have seen that in car sales. You are starting to see a slowdown in m a. , peopleseeing things are taking a policy. Pause. Valuations are high. Alix and 2. 2 on the 10 year. Larry fink that is one thing i am calling. Alix how low do we go . It infink i said december and a few weeks ago, a 51 probability that the 10 year treasury can go low tempers sent. I believe there is great uncertainty. Can go below 2 . It was the most crowded in the u. S. Reflection a trump or forward buying . Larry fink i never called reflation trade. We are seeing weakness in energy again. A lot of signs that inflation is not picking up. We are at of pivot point, we are starting to see full employment in many places. U. S. , we areof the having a harder time hiring qualified workers. You will see wage pressure. Maybe it will happen but may be delayed six months or a year. We are not seeing spiking inflation. We are seeing consternation by executives running companies. , consumeris optimism confidence, that is not translating into retail sales. You know, this is why earnings are so important to validate this rise or the market will have to adjust downward. Lot ofes been a consternation about the Trump Administration. Reform, in frustration researchers spending Infrastructure Spending antiregulation. This president likes to be unilateral. Is it enough to balance the market . Larry fink i would argue that is harder to do. Most of the context of a global reregulation. I were to say if we do know our unilaterally changed our banks to have more liberal thelations relative to europeans, that is a trade policy issue. Easynot think that is as as you said, david. Most certainly, just changing the tone of regulation will ease some of the issues. We doankers are saying not want to regulations. Many saying we need to amend components of doddfrank and of the vocal world. And many of those things are valid. The vocal role. Vock one of the big issues that many banks complainedle r andu there isl a lot of consternation is the qualitative analysise. That regulators give. One qualitative approach could be differ from another one. I do not think anyone is as where about the quantitative analysis in terms of reporting. David there is what is written down on the piece of paper and how they implement it. Something the president has a lot more influence of it. Could it spur real Economic Growth . Larry fink probably not. I am not a believer that regulation really inhibited loan growth. I think, again, i believe bankers all wanted to growth, but i do believe with votto scores are more relaxed fight the scores are more relaxed. To eight years, the time bring down fica scores . I do not believe we had a reduction in Economic Activity because of regulation. Everybody i feel that is, everybody, the leaders of banks, Financial Institutions will do anything to drive growth and i believe when there was a demand for a loan, demand for a mortgage, in most those. They drove scorese clear fica did change so the homeowner may be able to get a mortgage in 2007, that was an inappropriate loan in many cases and we do not want to go back to that. If you are providing enough equity, if the appraisal is right. Many mortgages were created in 2007, one injured 2 of appraised value. We do not want to go back to those type of things. 102 of appraised value. Haveof these institutions hired a huge amount of lawyers, auditors and if theres a better atmosphere, a more a better relationship in terms of with a regulators, that will save money andwe are still talking about to big to fail. Maybe that will drop. We will see how that plays out. You have raised a number of growth,ncies concerning Donald Trumps agenda. What do you expect . With the dollar as strong as it Companies Going to be able to extract enough earnings power out of this growth . Sortthe Republican Party out its differences and pass legislation and not find itself in the same situation as the obama care repeal of her . Get appropriate tax reform. Look at a need to investment. I know as much as you do related to this. I am a pretty good student of the markets, of washington. Thisld not predict how would come out. I believe some of this will get through. Some of it will not. Has expectation grown too large . Yes. We are starting to see more reasonableness to what can happen. I want to see this administration successful. We need these changes. We need this relative to our positioning worldwide. Our corporations need it to be competitive. For investorsish to be in the mar