BlackRock President: Get Used to Scarcity Inflation
Rob Kapito tells “a very entitled generation that has never had to sacrifice” that shortages will keep driving up prices.
BlackRock President Rob Kapito says “scarcity inflation” is driving the US economy, as shortages of workers, agricultural supplies, energy and housing are driving up prices.
The head of the world’s largest asset manager this week told attendees at an energy conference in Austin that they should “put on your seat belts because this is something we haven’t seen,” Bloomberg reported.
At the meeting of the Texas Independent Producers and Royalty Owners Association, Kapito also had some choice words for millennials and Gen Xers coping with rising prices and shortages of essentials like housing and groceries.
“For the first time, this generation is going to go into a store and not be able to get what they want, and we have a very entitled generation that has never had to sacrifice,” he declared, according to the Bloomberg report.
BlackRock handles $10 trillion in global assets, including an estimated $60 billion in real estate investments.
Kapito didn’t specify which generation he was referencing, but his remarks in Texas drew a withering response on social media. Comments posted by millennials noted that younger workers emerged from the recession that followed the fiscal collapse in 2008 generally less well-off than previous generations at their age, facing higher debt.
Many of the comments accused BlackRock of contributing to the surge in home rental prices with investments in home purchases for a revived single-family rental portfolio, confusing the giant asset manager with a distant cousin it is no longer related to: Blackstone Group.
When BlackRock was launched as a fledgling risk management and bond analytics firm in 1988 by Kapito and Larry Fink, it was called Blackstone Financial Management and was seeded by Blackstone founders Steve Schwarzman and Pete Peterson.
The partnership split up in 1994, with Kapito and Fink forming their own company. In what he later called one of the worst decisions of his life, Schwarzman agreed to let Kapito and Fink call their new entity BlackRock. What followed were more than 25 years of incorrect headlines in business publications attributing actions taken by the Blackstone Group to BlackRock, which no longer has a stake in Blackstone.
Blackstone Group, now one of the world’s largest alternative investment firms with an estimated $880 billion in holdings, has been an active player in the SFR market.
Blackstone Group was a prime backer of Invitation Homes, the largest US player in the SFR sector with 80,000 homes for lease, until it sold its shares in 2019.
Blackstone dipped a toe back into the SFR market with a $240-million investment in Tricon Residential, a Toronto-based company that buys single-family rentals. Last summer, Blackstone jumped back into the rental market with both feet with a $6-billion acquisition of Home Partners of America, which owns 17,000 houses in the US and specializes in rent-to-buy.