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Garbage article. This sentence got me: Since BlackRock is allowed to buy up its own ETFs, this means that taxpayers will be eating losses that might ot

by anonu 6y ago

Garbage article. This sentence got me: Since BlackRock is allowed to buy up its own ETFs, this means that taxpayers will be eating losses that might otherwise accrue to billionaire Larry Fink’s company and investors What? The sentence indicates a deep misunderstanding of the subject which the author writes about. BlackRock is (mostly) a fund manager: they earn money on assets under management and not (broadly speaking) when the market goes up or down. If the ETFs BlackRock are buying go down, it simply means they are propping up the underlying holdings - the actual corporate bonds. They will then "create" ETF shares and give them to the Fed. Think of the ETF simply as an IOU. BlackRock has also said they will be waiving the ETF fund management fee.

JumpCrisscross 6y ago
This article is polemic. For a better-informed (but still critical) perspective, I recommend Matt Levine.
earth2mars 6y ago
is this doc on Fed site related to what they are saying. https://www.federalreserve.gov/monetarypolicy/files/smccf-transition-specific-disclosures-5-29-20.xlsx https://www.federalreserve.gov/monetarypolicy/files/smccf-tr... I see BlackRock all over the spreadsheet
- whatok 6y ago
  Yes, that shows ETF purchases up until the date mentioned. The dollar value of purchases in there for Blackrock ETFs is around 48% which is around their existing market share for qualifying ETFs.
exclusiv 6y ago
> they earn money on assets under management and not (broadly speaking) when the market goes up or down Broadly speaking? Ok well what happens to the AUM when the market goes up or down? More or less AUM. More or less money no? Am I missing something? Wouldn't they have a ton to lose during these times? > Today, BlackRock has been selected in more no-bid contracts to be the sole buyer of corporate bonds and corporate bond ETFs for the Fed’s unprecedented $750 billion corporate bond buying program which will include both investment grade and junk-rated bonds. Seems like a nice setup. Especially now.
- arkis22 6y ago
  You are correct that BlackRock has an incentive to maximize their AUM to maximize their revenue. A critical distinction though is that the Fed isn't buying BlackRock's bonds. They are buying bonds that are represented in BlackRock's exchange traded funds that are meant to mirror prices of real bonds. You're not wrong that it's a sweet set up. It's better to be in BlackRock's place. It is better to be buying coronovirus bonds for the government rather than selling them to the government. The latter implies your company is under severe cash flow pressure. You shouldn't be distrustful of BlackRock because they maximize their revenue when they maximize their AUM. If they maximize their AUM, that probably means that your income is maximized as well.
- anonu 6y ago
  BlackRock is the new vampire squid. They're making out like bandits no doubt. But the reporting is sensationalist by being wrong...

by anonu 6y ago

JumpCrisscross 6y ago

This article is polemic. For a better-informed (but still critical) perspective, I recommend Matt Levine.

earth2mars 6y ago

is this doc on Fed site related to what they are saying. https://www.federalreserve.gov/monetarypolicy/files/smccf-transition-specific-disclosures-5-29-20.xlsx https://www.federalreserve.gov/monetarypolicy/files/smccf-tr... I see BlackRock all over the spreadsheet

whatok 6y ago
Yes, that shows ETF purchases up until the date mentioned. The dollar value of purchases in there for Blackrock ETFs is around 48% which is around their existing market share for qualifying ETFs.

exclusiv 6y ago

> they earn money on assets under management and not (broadly speaking) when the market goes up or down Broadly speaking? Ok well what happens to the AUM when the market goes up or down? More or less AUM. More or less money no? Am I missing something? Wouldn't they have a ton to lose during these times? > Today, BlackRock has been selected in more no-bid contracts to be the sole buyer of corporate bonds and corporate bond ETFs for the Fed’s unprecedented $750 billion corporate bond buying program which will include both investment grade and junk-rated bonds. Seems like a nice setup. Especially now.

arkis22 6y ago
You are correct that BlackRock has an incentive to maximize their AUM to maximize their revenue. A critical distinction though is that the Fed isn't buying BlackRock's bonds. They are buying bonds that are represented in BlackRock's exchange traded funds that are meant to mirror prices of real bonds. You're not wrong that it's a sweet set up. It's better to be in BlackRock's place. It is better to be buying coronovirus bonds for the government rather than selling them to the government. The latter implies your company is under severe cash flow pressure. You shouldn't be distrustful of BlackRock because they maximize their revenue when they maximize their AUM. If they maximize their AUM, that probably means that your income is maximized as well.
anonu 6y ago
BlackRock is the new vampire squid. They're making out like bandits no doubt. But the reporting is sensationalist by being wrong...