Now that the Fed has, as Rabobank put it, "carved central planning into the bedrock of the US financial system", and moral hazard is not just universally accepted but a widely expected component of the investing process (or what's left of it), it probably also means that conflicts of interest are also a thing of the past. Because when the asset manager tasked with executing the Fed's takeover of the bond market says that it plans on co-investing with the Fed - its client whose trades it is executing and thus potentially frontrunning - what is that if not one giant conflict of interest? Worse, what does it say about the future of the entire financial industry and investing itself?
BlackRock, which manages roughly $7 trillion in assets and is the world's largest asset manager, said it plans to keep a "significant cash cushion" for now given uncertainty about length and depth of economic downturn, and "will follow the Fed and other DM central banks by purchasing what they’re purchasing, and assets that rhyme with those", wrote Rick Rieder, head of the firm’s global allocation team, in a blog post.
