As yet more chaos enveloped Week Six of the Trump Administration, there was a rare and unusual glimmer of hope. Larry Fink, the CEO of BlackRock, surprised everyone by handing President Donald Trump a rare victory. After a month of feverish backroom negotiating, the world’s most influential investor convinced Hong Kong’s richest tycoon and President Trump to let him buy the two ports on the opposite ends of the Panama Canal. Key to the deal is a more than 40-year relationship that Larry Fink and Donald Trump started as young entrepreneurs in New York City.
In a blink, Fink helped the President save face with China and allowed Trump to “take back” the canal without a shot being fired. Trump was so pleased that he name-checked the deal this week in his address to Congress. More importantly, for Fink, the deal put BlackRock back into the good graces of the most vindictive administration since Richard Nixon.
Midtown titans
So how in God’s name did this happen? For the past two years, Fink and BlackRock have been vilified and sued by Republicans across America for being “too woke.” He is also a lifelong Democrat who placed Hillary Clinton’s former Chief of Staff on his board. But Fink and Trump share a deeper bond. Both were denizens of a curious and immensely powerful financial subculture I covered as a reporter and worked in for 40 years: Midtown Manhattan.
Bordered by Central Park on the north and Grand Central Station to the south, Midtown Manhattan was the epicenter of global dealmaking for 40 years. It was the favored hunting ground of the world’s apex alpha financial predators. Henry Kravis and George Roberts invented private equity in a long-gone steak house. Here, Ivan Boesky perfected insider trading from his vast suite at 650 Fifth Avenue. Carl Icahn became a corporate raider just up the road. Sprinkled in between was a vast web of creditor banks, law, accounting, and PR shops that cranked out deal after deal that shaped the world we live in today. Everyone knew everyone.
Spectacular failure
Neither Fink nor Trump were ever considered financial Jedi by their hard-charging midtown peers. For decades, that title was reserved for Kravis, First Boston’s Joseph Perella and his partner Bruce Wasserstein, or Morgan Stanley’s John Mack. Trump was a gaudy but bankrupt real estate guy who lived in a black tower and sold condos to dodgy Russians. Fink had been a high flying bond trader, but a spectacular wrong way trade made him a non-person in this close-knit club of money exchangers. Overnight, Fink told Vanity Fair, he went “from a star to a jerk.”
The lost years
Undeterred, both have spent much of the new century navigating two of the greatest comebacks in American history. But other than shared failure, the two men are chalk and cheese. For decades, Trump held court in the soaring heights of Trump Tower while Fink plotted his comeback in a grubby office building across the street from where he was fired.
If Trump was a serial risk-taker who saved his career by firing people on a network reality television show, Fink rebounded by managing risk. He created a proprietary magical black box called Aladdin that evaluated investments using sophisticated Monte Carlo simulations. He also branched into managing funds. Deal by deal, he slowly gained the trust of the managers of the world’s largest pension, insurance, and sovereign wealth funds, and now BlackRock controls or monitors more than $31 trillion of their precious assets.
They’re back!
Both are masters of the art of the comeback for two reasons. First, they have an uncanny ability to understand and exploit developing trends in American culture. Twice, Trump has capitalized on voter disaffection with so-called coastal elites. A self-described “student of the market,” Fink is really good at sniffing out emerging mega investment trends. When he purchased Barclays Ishares exchange traded fund business, there were little more than $200 billion in ETF assets worldwide. Today, there are $14.7 trillion, and BlackRock manages $4.2 trillion.
But there is a more personal reason for their success. Both are driven by an almost pathological determination to make up for past mistakes. If failure does not kill you, it becomes a very powerful motivator.
Near death
Surprisingly, both have also suffered new near-death career experiences. If Trump had not won the presidency, he could have been on his way to jail or community service in an orange suit. Fink has been struggling to regain his reputation after a now disastrous public relations decision to reposition himself as the human face of capitalism and publish a series of “CEO letters” with pretentious titles like “Profit and Purpose.”
From climate champ to energy pragmatist
While Democrats and progressive fund managers loved it, Red State lawmakers rebelled. Sensing reputational failure, Fink made a dramatic environmental course correction. The climate champion darling of the left proclaimed himself an “energy pragmatist” arguing somewhat correctly that he has alway seen a role for fossil fuels.
More likely, he also discovered it was a lot easier to shut up and focus on making money investing in one of Wall Street’s hottest trends: infrastructure.
A little more than a year ago, Fink announced the “dawning of infrastructure” and bought Global Infrastructure Partners (GIP), which has more than $170 billion in diversified infrastructure properties across 100 countries.
Thars gold in infra. Source: FT
Little did Fink know this would be his ticket to redemption with Donald Trump. According to Bloomberg, shortly after Trump declared he would seize the Panama Canal, Fink called his old Midtown neighbor and offered to end the crisis by purchasing the two ports to put them in American hands. ( The $22.8 billion acquisition from Hong Kong-based CK Hutchison also includes dozens of other ports across the globe). But what mattered more was that Fink had handed Trump a rare victory that satisfied everyone.
The buzz is gone
These days, Midtown Manhattan is enveloped in a strange, low-energy hum. It seems that almost everybody has left except Blackstone and J.P. Morgan Chase. Once buzzing Midtown office buildings are now temples of solitude as a new generation of financiers have decamped a few blocks west to snazzier digs in the shiny new towers dubbed “Dubai on the Hudson.”
But as Trump and Fink displayed this week, you can take the Boomer out of Midtown, but you can’t take Midtown out of the Boomer. Who would have ever thought the Republican poster boy for woke would cut a deal with the climate-denier-and-chief? But for these two men, deal-making trumps all. What remains to be seen is whether this was just a lucky one-off deal among old friends or a hint of what it takes to get stuff done with America’s mercurial President.
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