1 00:00:02,680 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:11,200 --> 00:00:14,680 Speaker 2: With its push to disrupt global trade, the Trump administration 3 00:00:14,960 --> 00:00:19,120 Speaker 2: has insisted its playing the long game. The president argues 4 00:00:19,160 --> 00:00:22,599 Speaker 2: that eventually tariffs on some of the US's largest trading 5 00:00:22,640 --> 00:00:26,440 Speaker 2: partners will usher in a new era for American manufacturing, 6 00:00:26,800 --> 00:00:30,120 Speaker 2: they'll raise money for proposed tax cuts, and they'll give 7 00:00:30,200 --> 00:00:34,120 Speaker 2: the entire US economy a boost. The juries still out 8 00:00:34,280 --> 00:00:37,640 Speaker 2: on that long term vision, but the short term impacts 9 00:00:37,680 --> 00:00:41,160 Speaker 2: are already starting to make themselves clear in whip sawing 10 00:00:41,200 --> 00:00:46,360 Speaker 2: markets and downgraded global growth forecasts. Government data published this 11 00:00:46,479 --> 00:00:49,760 Speaker 2: morning shows the US economy shrank zero point three percent 12 00:00:49,920 --> 00:00:53,280 Speaker 2: in the first quarter as companies rush to import goods 13 00:00:53,360 --> 00:00:56,600 Speaker 2: before tariffs took effect, and according to one of the 14 00:00:56,600 --> 00:01:01,200 Speaker 2: world's most influential banking executives, the uncertain caused by Trump's 15 00:01:01,200 --> 00:01:05,080 Speaker 2: tariff policies could mean more economic pain ahead. 16 00:01:05,680 --> 00:01:09,640 Speaker 1: When there's a high level of uncertainty, people titanervelt, they 17 00:01:09,680 --> 00:01:13,280 Speaker 1: invest less, they spend less, and all those things slow 18 00:01:13,319 --> 00:01:13,960 Speaker 1: down growth. 19 00:01:15,319 --> 00:01:19,200 Speaker 2: David Solomon is the CEO of Goldman Sachs, the behemoth 20 00:01:19,319 --> 00:01:23,440 Speaker 2: investment bank and financial services company that oversees three point 21 00:01:23,480 --> 00:01:27,520 Speaker 2: one trillion dollars in assets globally. Solomon sat down with 22 00:01:27,560 --> 00:01:31,200 Speaker 2: Bloomberg's editor at large, Francine Lacroix earlier this week in 23 00:01:31,280 --> 00:01:36,000 Speaker 2: Oslo during the Norwegian Sovereign Wealth Fund's annual investment Conference. 24 00:01:36,720 --> 00:01:39,119 Speaker 2: They talked about the fate of the US dollar as 25 00:01:39,120 --> 00:01:43,480 Speaker 2: a reserve currency, opportunities for new investment in European markets, 26 00:01:43,920 --> 00:01:47,720 Speaker 2: and what a slowdown could mean for IPOs and CEOs. 27 00:01:53,000 --> 00:01:55,520 Speaker 2: I'm Sarah Holder, and this is the big take from 28 00:01:55,560 --> 00:01:59,520 Speaker 2: Bloomberg News today. On the show how Goldman Sachs CEO 29 00:01:59,720 --> 00:02:03,640 Speaker 2: Dave at Solomon is assessing the economic impact of Donald 30 00:02:03,680 --> 00:02:04,600 Speaker 2: Trump's trade war. 31 00:02:08,760 --> 00:02:11,640 Speaker 3: We have to start with Trump policies. It's been one 32 00:02:11,680 --> 00:02:13,800 Speaker 3: hundred days since the inauguration. 33 00:02:13,760 --> 00:02:15,840 Speaker 4: Like where are we? We've seen a lot of volatility. 34 00:02:15,880 --> 00:02:17,400 Speaker 4: How would you describe this moment in time? 35 00:02:17,880 --> 00:02:20,040 Speaker 1: Four one hundred days in And I would say there 36 00:02:20,120 --> 00:02:24,360 Speaker 1: are a handful of policy initiatives that are being put forward. 37 00:02:24,960 --> 00:02:28,440 Speaker 1: Some of them certainly are very very interesting and intreating 38 00:02:28,480 --> 00:02:31,239 Speaker 1: to the market. But what's been put forward on trade 39 00:02:31,280 --> 00:02:34,720 Speaker 1: so far has raised the level of uncertainty very significantly. 40 00:02:34,760 --> 00:02:36,959 Speaker 5: And so I'd say, one hundred days in, we need. 41 00:02:36,800 --> 00:02:39,160 Speaker 1: Another one hundred days to kind of see where the 42 00:02:39,200 --> 00:02:41,640 Speaker 1: policy directives are going and to try to have a 43 00:02:41,680 --> 00:02:45,280 Speaker 1: better understanding of how what's talked about so far, particularly 44 00:02:45,280 --> 00:02:48,160 Speaker 1: with respect to trade, is ultimately going to be put 45 00:02:48,160 --> 00:02:50,640 Speaker 1: in place, how it's going to play out. But the 46 00:02:50,760 --> 00:02:54,720 Speaker 1: policy actions to date have raised the level of uncertainty 47 00:02:55,040 --> 00:02:57,280 Speaker 1: to a degree that I don't think is healthy for 48 00:02:57,400 --> 00:02:59,040 Speaker 1: investment and growth, and I think it's going to be 49 00:02:59,080 --> 00:03:01,640 Speaker 1: important that we get more clarity on the direction of 50 00:03:01,639 --> 00:03:02,320 Speaker 1: travel from here. 51 00:03:02,919 --> 00:03:04,880 Speaker 3: So if you look at markets, there's been a sum off, 52 00:03:04,880 --> 00:03:06,840 Speaker 3: a pretty dramatic sell off in the US assets. 53 00:03:07,240 --> 00:03:10,000 Speaker 4: It's somewhat come back, but hasn't been too drastic. 54 00:03:10,360 --> 00:03:12,919 Speaker 1: Well, it's not just for the markets, you know, first 55 00:03:12,919 --> 00:03:14,520 Speaker 1: and foremost, it's. 56 00:03:14,320 --> 00:03:16,680 Speaker 5: For businesses, it's for individuals. You know. 57 00:03:16,720 --> 00:03:19,080 Speaker 1: One of the things that has happened over the course 58 00:03:19,160 --> 00:03:22,919 Speaker 1: of the first one hundred days is that the perspective 59 00:03:22,960 --> 00:03:24,840 Speaker 1: on forward growth has been decreased. 60 00:03:25,480 --> 00:03:27,200 Speaker 5: And so when you decrease. 61 00:03:27,200 --> 00:03:31,760 Speaker 1: That perspective on forward growth, that changes investor's perspective of 62 00:03:31,800 --> 00:03:35,040 Speaker 1: equity values. So what we've seen is a relatively orderly 63 00:03:35,880 --> 00:03:39,840 Speaker 1: kind of repricing of equity assets. And what's unusual on 64 00:03:39,880 --> 00:03:41,960 Speaker 1: the context of this with pricing is generally, when you 65 00:03:42,000 --> 00:03:45,520 Speaker 1: have that kind of equity market stress, people run to 66 00:03:45,640 --> 00:03:48,120 Speaker 1: treasuries or safe haven. But here we're seeing a slightly 67 00:03:48,120 --> 00:03:49,800 Speaker 1: different rotation because of the. 68 00:03:49,760 --> 00:03:50,560 Speaker 5: Nature of the policy. 69 00:03:50,560 --> 00:03:52,720 Speaker 1: We've seen a weakening of the dollar, you know, at 70 00:03:52,720 --> 00:03:54,600 Speaker 1: the margin, and so that's been different than I think 71 00:03:54,640 --> 00:03:55,560 Speaker 1: what people expected. 72 00:03:55,960 --> 00:03:57,480 Speaker 4: Our treasury is still safe haven. 73 00:03:57,960 --> 00:04:00,960 Speaker 1: I think US treasuries absolutely are safe, but you can 74 00:04:01,040 --> 00:04:05,840 Speaker 1: reprice the safe of an asset as people's preferences shift slightly, 75 00:04:06,360 --> 00:04:09,360 Speaker 1: you know. I think at the margin, we've had for 76 00:04:09,400 --> 00:04:12,960 Speaker 1: a long period of time a trend of capital flows 77 00:04:13,000 --> 00:04:15,720 Speaker 1: into US assets, and you know, at the. 78 00:04:15,640 --> 00:04:18,080 Speaker 5: Margin, people are looking at their portfolio. 79 00:04:17,560 --> 00:04:21,359 Speaker 1: Constructions and saying, given the uncertainty that's been raised in 80 00:04:21,360 --> 00:04:23,280 Speaker 1: the US, do we want to rebalance that a little bit? 81 00:04:23,279 --> 00:04:25,640 Speaker 1: And I'd say the rebalancing so far has been at 82 00:04:25,640 --> 00:04:26,279 Speaker 1: the margin. 83 00:04:26,920 --> 00:04:29,760 Speaker 3: Investors are asking a risk premium, pretty hefty risk premium 84 00:04:29,800 --> 00:04:32,240 Speaker 3: to own US assets at the moment. Even if there's 85 00:04:32,279 --> 00:04:35,080 Speaker 3: a reversal in terms of terrorists, does it come back 86 00:04:35,120 --> 00:04:36,080 Speaker 3: to what it was like or. 87 00:04:36,120 --> 00:04:38,640 Speaker 4: Is there a permanent change. 88 00:04:38,800 --> 00:04:41,520 Speaker 1: Well, I'm not sure that they're asking a pretty hefty 89 00:04:41,720 --> 00:04:45,760 Speaker 1: risk premium. They're certainly asking a different premium than were 90 00:04:45,800 --> 00:04:46,839 Speaker 1: we were three months ago. 91 00:04:47,120 --> 00:04:48,360 Speaker 5: But I think everything's. 92 00:04:47,920 --> 00:04:50,440 Speaker 1: Got to be looked at, you know, in a broader perspective. 93 00:04:50,880 --> 00:04:52,880 Speaker 1: The moves have been real in terms of the reprice 94 00:04:52,920 --> 00:04:55,240 Speaker 1: of the equities, particularly some of the growth stuff, the 95 00:04:55,279 --> 00:04:58,560 Speaker 1: Magnificent Seven, some of these stocks, you know that really led. 96 00:04:58,400 --> 00:04:59,240 Speaker 5: The last rally. 97 00:04:59,520 --> 00:05:02,159 Speaker 1: But i'd all so step back and just say, when 98 00:05:02,200 --> 00:05:04,520 Speaker 1: you look at where stocks were a year ago, when 99 00:05:04,560 --> 00:05:07,080 Speaker 1: you look at where stocks were six months ago, you know, 100 00:05:07,160 --> 00:05:08,920 Speaker 1: we had a big move up in the early part 101 00:05:09,000 --> 00:05:11,600 Speaker 1: of the year, and we've kind of reset to kind 102 00:05:11,600 --> 00:05:13,599 Speaker 1: of where we were, you know, six and twelve months ago. 103 00:05:13,800 --> 00:05:17,400 Speaker 1: What's really important is people need to understand the policy 104 00:05:17,440 --> 00:05:20,560 Speaker 1: set going forward and the prospects for growth going forward. 105 00:05:20,960 --> 00:05:24,200 Speaker 1: And so until we have more certainty about the policy directive, 106 00:05:24,240 --> 00:05:28,240 Speaker 1: it's hard for you to see more capital allocation, more investment. 107 00:05:28,680 --> 00:05:32,919 Speaker 4: Does the dollar remain a reserve currency? Absolutely, in ten years, 108 00:05:33,000 --> 00:05:33,960 Speaker 4: twenty years. 109 00:05:34,440 --> 00:05:37,080 Speaker 1: I absolutely think the dollar is going to be the 110 00:05:37,120 --> 00:05:39,840 Speaker 1: reserve currency, but the value of the dollar relative to 111 00:05:39,880 --> 00:05:43,039 Speaker 1: other alternatives can shift, and I do think over time 112 00:05:43,880 --> 00:05:46,599 Speaker 1: the US needs to be very focused on our levels 113 00:05:46,600 --> 00:05:48,520 Speaker 1: of debt or deficit spending, et cetera. 114 00:05:48,920 --> 00:05:50,880 Speaker 5: And I think to the degree that we don't handle 115 00:05:50,920 --> 00:05:53,839 Speaker 5: that appropriately, it can put more pressure on the dollar. 116 00:05:53,880 --> 00:05:56,040 Speaker 1: But I don't see a scenario in the near term 117 00:05:56,120 --> 00:05:57,880 Speaker 1: where I think it's likely that the dollar is not 118 00:05:57,920 --> 00:05:59,200 Speaker 1: the reserve currency for the world. 119 00:06:00,000 --> 00:06:01,840 Speaker 3: I know you're basically saying, look, keep a cool head 120 00:06:02,040 --> 00:06:03,680 Speaker 3: until we have a better understanding. 121 00:06:04,160 --> 00:06:05,680 Speaker 4: Right, some of the policies could in. 122 00:06:05,720 --> 00:06:08,840 Speaker 3: Place, But what does it do to the US economy 123 00:06:08,839 --> 00:06:09,479 Speaker 3: going forward? 124 00:06:09,560 --> 00:06:11,600 Speaker 4: You know, does a FED need to cut rights? Because 125 00:06:11,600 --> 00:06:11,960 Speaker 4: if I'm. 126 00:06:11,839 --> 00:06:14,800 Speaker 5: Certain general growth, I think it depends. 127 00:06:14,880 --> 00:06:17,400 Speaker 1: You know, Goldman Sachs has lowered its growth forecast from 128 00:06:17,480 --> 00:06:21,360 Speaker 1: two percent too point five percent. It's not clear how 129 00:06:21,400 --> 00:06:23,440 Speaker 1: this will all play out in the coming months. No 130 00:06:23,480 --> 00:06:27,320 Speaker 1: one really knows. But to the degree that the economy slows, 131 00:06:27,800 --> 00:06:31,159 Speaker 1: ultimately the FED will try to act to buffet, you know, 132 00:06:31,240 --> 00:06:32,919 Speaker 1: some of that slow down in the economy, to the 133 00:06:32,960 --> 00:06:35,400 Speaker 1: degree that we go into recession, you know, that will 134 00:06:35,480 --> 00:06:38,000 Speaker 1: lead to a different reaction. So again, the FED will 135 00:06:38,000 --> 00:06:39,880 Speaker 1: look at the data. We'll look at the information, they'll 136 00:06:39,920 --> 00:06:42,719 Speaker 1: look at labor, they'll look at growth, and they'll make. 137 00:06:42,600 --> 00:06:43,720 Speaker 5: Decisions based on that. 138 00:06:44,279 --> 00:06:47,240 Speaker 1: Everyone wants to project forward and know the answer for 139 00:06:47,400 --> 00:06:49,760 Speaker 1: a moment in time where it's more uncertain than makes 140 00:06:49,800 --> 00:06:51,880 Speaker 1: everybody comfortable, and I just you know, I just say, 141 00:06:51,920 --> 00:06:54,880 Speaker 1: it's a moment in time. Let's you know, step back, 142 00:06:55,320 --> 00:06:57,479 Speaker 1: Let's see how some of these trade deals are cut. 143 00:06:57,520 --> 00:07:00,560 Speaker 1: Let's see what policy actually does go into place, and 144 00:07:00,600 --> 00:07:03,880 Speaker 1: that will help us better understand the forward growth trajectory. 145 00:07:03,880 --> 00:07:07,159 Speaker 5: But it's clearly been slowed by these actions. 146 00:07:07,320 --> 00:07:10,280 Speaker 1: And as I'm talking to CEOs, as I'm talking to 147 00:07:10,360 --> 00:07:13,600 Speaker 1: our clients, they are holding back on investment and they're 148 00:07:13,600 --> 00:07:16,240 Speaker 1: certainly tightening their belt. You're going to see some companies 149 00:07:16,320 --> 00:07:20,120 Speaker 1: laying off employees and running their businesses tighter because of 150 00:07:20,160 --> 00:07:21,280 Speaker 1: this level of uncertainty. 151 00:07:21,440 --> 00:07:23,040 Speaker 4: Well, where's China and all of this. 152 00:07:23,840 --> 00:07:27,240 Speaker 1: Well, China is a hugely important trading partner to the West, 153 00:07:27,320 --> 00:07:28,640 Speaker 1: to the to Europe. 154 00:07:29,320 --> 00:07:30,560 Speaker 5: At the moment, we're in. 155 00:07:30,560 --> 00:07:32,640 Speaker 1: The early stages of what I think is an obvious 156 00:07:32,680 --> 00:07:36,960 Speaker 1: negotiation between the US and China, and we need more clarity. 157 00:07:37,040 --> 00:07:41,000 Speaker 1: But the current state of affairs is not sustainable, and 158 00:07:41,040 --> 00:07:42,960 Speaker 1: so that's why I think there will be some change. 159 00:07:43,160 --> 00:07:46,320 Speaker 1: You're starting to hear the administration talking about the fact 160 00:07:46,360 --> 00:07:48,080 Speaker 1: that there needs to be changed and what's in place 161 00:07:48,120 --> 00:07:50,720 Speaker 1: is not sustainable, but no one knows exactly how this 162 00:07:50,760 --> 00:07:53,200 Speaker 1: will play out at the moment, and that's that's increasing 163 00:07:53,240 --> 00:07:54,200 Speaker 1: the level of uncertainty. 164 00:07:57,480 --> 00:08:01,239 Speaker 2: After the break, more from Francing the interview with Goldman 165 00:08:01,360 --> 00:08:05,520 Speaker 2: Sachs CEO David Solomon. They discussed the prospects of financial 166 00:08:05,560 --> 00:08:09,160 Speaker 2: deregulation on both sides of the Atlantic and what it 167 00:08:09,240 --> 00:08:20,480 Speaker 2: means that some companies are tightening their belts. Goldman Sachs 168 00:08:20,520 --> 00:08:23,640 Speaker 2: kicked off twenty twenty five with better than expected revenue. 169 00:08:24,080 --> 00:08:27,080 Speaker 2: In Q one of this year, Goldman stock traders rode 170 00:08:27,080 --> 00:08:31,280 Speaker 2: the market volatility to their highest revenues on record, but 171 00:08:31,400 --> 00:08:34,720 Speaker 2: CEO David Solomon says the company is entering a more 172 00:08:34,840 --> 00:08:38,880 Speaker 2: challenging operating environment as the trade war wages on, and 173 00:08:38,960 --> 00:08:42,640 Speaker 2: at the Norwegian Sovereign Wealth Fund's annual investment conference this week, 174 00:08:42,920 --> 00:08:46,520 Speaker 2: he told Bloomberg's editor at large, Francine Lacroix, that while 175 00:08:46,559 --> 00:08:50,240 Speaker 2: the US remains an attractive market for investors, he's also 176 00:08:50,360 --> 00:08:51,280 Speaker 2: eyeing Europe. 177 00:08:51,920 --> 00:08:54,160 Speaker 1: I think one of the most interesting things about what's 178 00:08:54,200 --> 00:08:56,840 Speaker 1: going on is it would be really good for global 179 00:08:56,840 --> 00:09:00,800 Speaker 1: growth and good for the global economy if Europe can 180 00:09:00,840 --> 00:09:06,480 Speaker 1: make more progress on capital markets, reform, European you know, 181 00:09:06,559 --> 00:09:09,439 Speaker 1: champions really bringing together and harnessing the power of the 182 00:09:09,440 --> 00:09:10,240 Speaker 1: European Union. 183 00:09:10,480 --> 00:09:11,320 Speaker 5: And one of the things. 184 00:09:11,200 --> 00:09:14,280 Speaker 1: I'm encouraged by as I'm over here visiting in Europe 185 00:09:14,320 --> 00:09:18,240 Speaker 1: right now is I definitely take away a sense of resolve, 186 00:09:18,880 --> 00:09:23,040 Speaker 1: of excitement about actually moving forward breaking down some of 187 00:09:23,040 --> 00:09:26,680 Speaker 1: the regulatory barriers that have been inhibition to growth here. 188 00:09:26,880 --> 00:09:29,880 Speaker 1: And I think that would be quite constructive and more stimulative. 189 00:09:29,920 --> 00:09:33,040 Speaker 1: Fixtal action here in Europe also would be quite constructive 190 00:09:33,040 --> 00:09:36,000 Speaker 1: for growth. So you know, there gives and gets, but 191 00:09:36,040 --> 00:09:39,679 Speaker 1: it would be really terrific to see some progress on 192 00:09:39,720 --> 00:09:43,280 Speaker 1: the economic trajectory of Europe holistically here. And I'm encouraged 193 00:09:43,320 --> 00:09:44,880 Speaker 1: by some of the things I'm hearing from our clients 194 00:09:44,880 --> 00:09:45,240 Speaker 1: over here. 195 00:09:45,440 --> 00:09:47,000 Speaker 4: Where do you see opportunities in Europe? 196 00:09:47,000 --> 00:09:48,880 Speaker 3: And again, is there like a six month window where 197 00:09:48,880 --> 00:09:50,640 Speaker 3: if Europe doesn't get it backed together, it's. 198 00:09:50,480 --> 00:09:50,920 Speaker 4: Just too light? 199 00:09:51,240 --> 00:09:54,920 Speaker 1: No, I think you know, there's never just a six 200 00:09:55,040 --> 00:09:58,719 Speaker 1: month window here or in the US. You know, it's 201 00:09:58,720 --> 00:10:01,199 Speaker 1: a great sound bite, but these are the big important economies. 202 00:10:01,920 --> 00:10:05,920 Speaker 1: I do think that European growth has been hampered by 203 00:10:06,120 --> 00:10:11,800 Speaker 1: a very complex regulatory environment particularly in Brussels, and by 204 00:10:11,840 --> 00:10:16,120 Speaker 1: a sense that many of the nations have acted, you know, 205 00:10:16,160 --> 00:10:20,000 Speaker 1: more nationalistically than holistically. I think given what's going on 206 00:10:20,080 --> 00:10:23,160 Speaker 1: with the US, there's really a push to break down 207 00:10:23,200 --> 00:10:26,920 Speaker 1: some of that regulatory bureaucracy, to really think about how 208 00:10:27,440 --> 00:10:30,720 Speaker 1: European champions can be bolstered and there can be more investment. 209 00:10:31,040 --> 00:10:33,480 Speaker 1: And I think that's a big opportunity. There's more tech 210 00:10:33,520 --> 00:10:36,679 Speaker 1: innovation going on here. It doesn't quite match up or 211 00:10:36,679 --> 00:10:38,920 Speaker 1: compared to what's going on in the US, but there's 212 00:10:38,960 --> 00:10:42,400 Speaker 1: more opportunity here, and so you know, I'm hopeful that 213 00:10:42,480 --> 00:10:45,000 Speaker 1: this is a moment in time where we can see 214 00:10:45,240 --> 00:10:48,480 Speaker 1: greater investment and a greater sense of the opportunity of 215 00:10:48,520 --> 00:10:51,400 Speaker 1: Europe holistically, and that would be quite constructive. 216 00:10:50,920 --> 00:10:53,319 Speaker 5: For global growth if we could see some progress on that. 217 00:10:53,360 --> 00:10:55,040 Speaker 4: I'm talking about regulation. 218 00:10:55,160 --> 00:10:57,320 Speaker 3: What are you expecting regulation for banks to look like 219 00:10:57,320 --> 00:10:57,880 Speaker 3: in the US? 220 00:10:58,000 --> 00:11:01,440 Speaker 4: Just do rip up some of the regular Well. 221 00:11:01,320 --> 00:11:04,320 Speaker 1: I think we saw an enormous pendulum swing in the 222 00:11:04,360 --> 00:11:08,760 Speaker 1: last four years toward a much tougher financial regulatory environment 223 00:11:08,800 --> 00:11:12,240 Speaker 1: in the US. I don't think it was constructive, and 224 00:11:12,559 --> 00:11:16,800 Speaker 1: I do think from a positive perspective, this administration would 225 00:11:16,880 --> 00:11:20,480 Speaker 1: like to reset that I'm hearing some very constructive things 226 00:11:20,600 --> 00:11:24,640 Speaker 1: along three fronts. One obviously is the leverage ratio, which 227 00:11:24,679 --> 00:11:27,480 Speaker 1: is very very important for the treasury market. Two is 228 00:11:27,520 --> 00:11:30,840 Speaker 1: on the capital regime and the construct of how bank 229 00:11:30,920 --> 00:11:32,599 Speaker 1: capital is calculated. 230 00:11:32,800 --> 00:11:35,840 Speaker 5: And third is just on the supervisory process. 231 00:11:36,280 --> 00:11:39,560 Speaker 1: Supervisory process should be focused on ensuring that we have 232 00:11:39,559 --> 00:11:42,000 Speaker 1: a safe and sound banking system and it shouldn't get 233 00:11:42,000 --> 00:11:46,040 Speaker 1: distracted into other areas. And so I'm encouraged by what 234 00:11:46,040 --> 00:11:49,000 Speaker 1: I hear out of Treasury. I'm encouraged by what I 235 00:11:49,040 --> 00:11:50,840 Speaker 1: hear more bloodly, and so I do think there's an 236 00:11:50,840 --> 00:11:54,640 Speaker 1: opportunity to take that pendulum which really was an inhibitor 237 00:11:55,280 --> 00:11:57,880 Speaker 1: to growth, free up some capital, get that capital we 238 00:11:57,920 --> 00:12:00,840 Speaker 1: cycled into the system, increase line in activity, and so 239 00:12:01,040 --> 00:12:03,720 Speaker 1: I'm quite constructive that we're going to see some positive 240 00:12:03,800 --> 00:12:07,160 Speaker 1: change on the front of financial regulation in the US. 241 00:12:07,600 --> 00:12:10,800 Speaker 3: Do you think Europe then follow suits in deregulating at 242 00:12:10,840 --> 00:12:13,640 Speaker 3: the margins or otherwise it puts European banks. 243 00:12:13,400 --> 00:12:14,440 Speaker 4: In a very difficult position. 244 00:12:14,800 --> 00:12:17,880 Speaker 1: Well, I think one of the issues for Europe is 245 00:12:17,880 --> 00:12:21,280 Speaker 1: that the banking system in Europe has not come along 246 00:12:21,360 --> 00:12:22,600 Speaker 1: over the last fifteen years. 247 00:12:22,600 --> 00:12:24,360 Speaker 5: The same way as the US banking system. 248 00:12:24,400 --> 00:12:27,920 Speaker 1: As you know, there are obviously lots of institutions in 249 00:12:27,960 --> 00:12:30,959 Speaker 1: the United States that are bigger, broader, much larger market 250 00:12:31,000 --> 00:12:35,000 Speaker 1: cap banks, and so in the context of that, consolidation 251 00:12:35,160 --> 00:12:38,200 Speaker 1: and growth in Europe and a capital markets union in 252 00:12:38,240 --> 00:12:40,800 Speaker 1: Europe would be a very constructive thing for the capital 253 00:12:40,840 --> 00:12:44,160 Speaker 1: markets more broadly. But Europe's been slow to make progress 254 00:12:44,160 --> 00:12:46,440 Speaker 1: in that. I'm hopeful that we'll see more progress in 255 00:12:46,480 --> 00:12:48,079 Speaker 1: the coming twelve to twenty four months. 256 00:12:48,160 --> 00:12:49,840 Speaker 3: There's a lot of talk about credits and of course 257 00:12:49,880 --> 00:12:51,920 Speaker 3: private equity and some of the l turn for investments. 258 00:12:51,960 --> 00:12:54,680 Speaker 3: How much does that grow in these uncertain times. 259 00:12:56,520 --> 00:12:58,720 Speaker 1: Well, when there's a higher level of uncertainty, the growth 260 00:12:59,240 --> 00:13:04,280 Speaker 1: of private capital slows, just like the growth of asset 261 00:13:04,320 --> 00:13:07,280 Speaker 1: management business and public capital slows too when there's uncertainty. 262 00:13:08,080 --> 00:13:10,640 Speaker 1: But I think the long term secular growth trends around 263 00:13:10,640 --> 00:13:14,840 Speaker 1: private capital formation are solidly intact. And if you step 264 00:13:14,880 --> 00:13:16,840 Speaker 1: back and you step out of this moment in time, 265 00:13:17,280 --> 00:13:18,800 Speaker 1: I think with a five or ten year view, we 266 00:13:18,840 --> 00:13:20,840 Speaker 1: still have very good secular growth. 267 00:13:20,760 --> 00:13:22,120 Speaker 5: In private capital formation. 268 00:13:22,920 --> 00:13:24,959 Speaker 1: You know, with respect to private credit, we haven't had 269 00:13:24,960 --> 00:13:27,920 Speaker 1: a credit cycle in quite some time. If we have 270 00:13:27,960 --> 00:13:30,359 Speaker 1: a real economic slow down or ultimately. 271 00:13:30,000 --> 00:13:31,920 Speaker 5: A recession, you will have a credit cycle. We have 272 00:13:31,960 --> 00:13:32,720 Speaker 5: to manage through that. 273 00:13:33,400 --> 00:13:36,520 Speaker 1: But with a five to ten year view, I still 274 00:13:36,520 --> 00:13:41,200 Speaker 1: think growth in private capital formation is a long term 275 00:13:41,240 --> 00:13:43,840 Speaker 1: trend that's firmly in place, and a firm like Golden 276 00:13:43,920 --> 00:13:46,240 Speaker 1: Sachs and what we do in our asset wealth management 277 00:13:46,240 --> 00:13:48,120 Speaker 1: business is very well positioned to benefit for that. 278 00:13:48,720 --> 00:13:50,360 Speaker 3: We often talk about a canary in the coal mine, 279 00:13:50,440 --> 00:13:52,800 Speaker 3: or is there anything in either prior credit or anything 280 00:13:52,800 --> 00:13:56,280 Speaker 3: that you're watching out for an indication of a significant 281 00:13:56,640 --> 00:13:58,680 Speaker 3: souring I guess of the economy. 282 00:13:58,360 --> 00:14:02,520 Speaker 1: Or well, what's what has happened that we're all watching 283 00:14:03,160 --> 00:14:09,520 Speaker 1: is the level of uncertainty has changed the prospects for 284 00:14:09,720 --> 00:14:13,040 Speaker 1: growth in the short term, and as a result of that, 285 00:14:13,520 --> 00:14:18,000 Speaker 1: companies slow down capital plans, people because they have less 286 00:14:18,040 --> 00:14:19,440 Speaker 1: confidence spend less. 287 00:14:20,040 --> 00:14:21,840 Speaker 5: I think there was evidence in late. 288 00:14:21,760 --> 00:14:25,000 Speaker 1: January early February that when you looked at certain consumer 289 00:14:25,040 --> 00:14:27,440 Speaker 1: discretionary businesses, we were starting to see a little bit 290 00:14:27,440 --> 00:14:28,040 Speaker 1: of slow down. 291 00:14:28,480 --> 00:14:30,920 Speaker 5: Obviously, with the level of uncertainty we have now. 292 00:14:31,120 --> 00:14:34,720 Speaker 1: That's been accelerated, and so you know, there's no canary 293 00:14:34,760 --> 00:14:37,360 Speaker 1: in the coal mine. The prospects for growth are slower, 294 00:14:37,880 --> 00:14:40,720 Speaker 1: and as a result of that, investment will be slower. 295 00:14:41,240 --> 00:14:44,400 Speaker 1: And until there's more confidence in the policy path forward, 296 00:14:44,960 --> 00:14:47,120 Speaker 1: we're going to have to manage through a slower growth environment, 297 00:14:47,200 --> 00:14:47,760 Speaker 1: and so m. 298 00:14:47,720 --> 00:14:49,880 Speaker 4: And A and IPOs will take a backseat. 299 00:14:51,520 --> 00:14:52,440 Speaker 5: Too strong a statement. 300 00:14:52,480 --> 00:14:56,720 Speaker 1: Again, capital markets activity was up year of year in 301 00:14:56,760 --> 00:14:59,560 Speaker 1: the first quarter, m and A activity for deals above 302 00:14:59,560 --> 00:15:01,480 Speaker 1: five hundre millions, So the kind of m ANDAU and 303 00:15:01,520 --> 00:15:04,520 Speaker 1: I talk about was up in the first quarter year 304 00:15:04,560 --> 00:15:06,800 Speaker 1: over year. Sponsor m and A was up in the 305 00:15:06,800 --> 00:15:09,520 Speaker 1: first quarter year over year. I think it depends on 306 00:15:09,560 --> 00:15:11,480 Speaker 1: where we go from here. You know, if you look 307 00:15:11,480 --> 00:15:13,400 Speaker 1: at the month of April, there's still been a reasonable 308 00:15:13,440 --> 00:15:17,600 Speaker 1: amount of MNA activity. IPO activity is slower given the 309 00:15:17,680 --> 00:15:20,480 Speaker 1: level of uncertainty. If the level of it certainly grows 310 00:15:20,480 --> 00:15:22,880 Speaker 1: from here, yes you won't see the same amount of 311 00:15:22,880 --> 00:15:26,560 Speaker 1: capital markets activity. But my own belief is things will 312 00:15:26,600 --> 00:15:30,200 Speaker 1: settle down. We'll have a clearer policy perspective and some 313 00:15:30,360 --> 00:15:34,080 Speaker 1: normalization of capital markets as we shift into twenty five 314 00:15:34,120 --> 00:15:37,560 Speaker 1: and twenty six. Even if we have a slower economy 315 00:15:38,240 --> 00:15:41,520 Speaker 1: or even far worse we have a recession, Ultimately, when 316 00:15:41,560 --> 00:15:44,640 Speaker 1: the market adjusts to that and resets. People need to transact, 317 00:15:44,680 --> 00:15:47,920 Speaker 1: they need to raise capital, they need liquidity for their investments, 318 00:15:48,280 --> 00:15:50,080 Speaker 1: and so part of this is just a reset of 319 00:15:50,080 --> 00:15:52,520 Speaker 1: expectations and we're in the process of that happening. 320 00:15:52,640 --> 00:15:54,720 Speaker 3: And given all of this, where do you see hiring 321 00:15:55,760 --> 00:15:59,040 Speaker 3: and firing in what divisions and where geographically. 322 00:15:58,360 --> 00:16:04,040 Speaker 1: At Goldman's, Well, I think this firm always manages its 323 00:16:04,080 --> 00:16:07,360 Speaker 1: headcount with a long term perspective, and we will continue 324 00:16:07,400 --> 00:16:09,880 Speaker 1: to do that in an environment like this, where there's 325 00:16:09,920 --> 00:16:10,840 Speaker 1: more uncertainty. 326 00:16:11,120 --> 00:16:12,600 Speaker 5: We probably control. 327 00:16:12,280 --> 00:16:15,400 Speaker 1: Our headcount by doing less hiring, not by at the 328 00:16:15,440 --> 00:16:19,480 Speaker 1: moment based on what I see doing more firing. But 329 00:16:19,600 --> 00:16:21,480 Speaker 1: I do think one of the things that the labor 330 00:16:21,480 --> 00:16:24,600 Speaker 1: force broadly will have to deal with when there's uncertainty 331 00:16:24,600 --> 00:16:25,240 Speaker 1: with companies. 332 00:16:25,280 --> 00:16:27,360 Speaker 5: And I'm hearing this from CEOs. 333 00:16:27,120 --> 00:16:31,280 Speaker 1: More broadly, CEOs tightener belts, and when CEO's titaner belts, 334 00:16:31,280 --> 00:16:32,560 Speaker 1: they get focused on expenses. 335 00:16:32,600 --> 00:16:33,800 Speaker 5: And so I think we're going to go through a 336 00:16:33,800 --> 00:16:34,880 Speaker 5: period here in twenty. 337 00:16:34,640 --> 00:16:37,840 Speaker 1: Twenty five where expense management is going to be more 338 00:16:37,840 --> 00:16:42,160 Speaker 1: in focus for CEOs running big businesses than capital investment. 339 00:16:42,760 --> 00:16:45,600 Speaker 1: And if we get more certainty as companies head into 340 00:16:45,640 --> 00:16:46,800 Speaker 1: their planning processes. 341 00:16:46,800 --> 00:16:48,680 Speaker 5: In the summer, that might change. 342 00:16:48,880 --> 00:16:51,080 Speaker 1: But if we have the level of uncertainty we have now, 343 00:16:51,120 --> 00:16:53,200 Speaker 1: that probably won't change in twenty twenty five. 344 00:16:57,960 --> 00:17:00,920 Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder. 345 00:17:01,160 --> 00:17:04,240 Speaker 2: This episode was produced by Bloomberg TV. It was edited 346 00:17:04,240 --> 00:17:08,119 Speaker 2: by our Deputy Executive producer Julia Weaver, Patty Hirsch, and 347 00:17:08,240 --> 00:17:11,359 Speaker 2: Daniel Taube. It was fact checked by Rachel Lewis Kriskey 348 00:17:11,440 --> 00:17:14,960 Speaker 2: and Audriana Tapia, and mixed and sound designed by Alex Sugiura. 349 00:17:15,320 --> 00:17:18,399 Speaker 2: Our senior producer is Naomi Shaven. Our senior editor is 350 00:17:18,440 --> 00:17:22,919 Speaker 2: Elizabeth Ponso. Our executive producer is Nicole beamsterbor Sage Bauman 351 00:17:23,040 --> 00:17:26,200 Speaker 2: is Bloomberg's head of Podcasts. If you liked this episode, 352 00:17:26,320 --> 00:17:29,080 Speaker 2: make sure to subscribe and review The Big Take wherever 353 00:17:29,080 --> 00:17:31,680 Speaker 2: you listen to podcasts. It helps people find the show. 354 00:17:32,359 --> 00:17:35,080 Speaker 2: Thanks so much for listening. We'll be back tomorrow.