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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. I'm Hardie Stradolz here

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Speaker 1: in Sydney and we have a very special guest, a

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Speaker 1: very special event here in Sydney this morning. It is

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Speaker 1: the Golden Sacks Australia Week Alternatives and Macro's Summit, and

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Speaker 1: with me here as a seer and chairman, David Solomon.

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Speaker 1: Really great to have you with us, and I know

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Speaker 1: you've been doing a lot of talking. We're about to

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Speaker 1: make you do some more. Welcome to Australia. But of

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Speaker 1: course markets, wonderful to have you. Markets are really gripped

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Speaker 1: by what's going on Roughly eight thousand miles away right

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Speaker 1: the Middle East conflict is still front and center. We

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Speaker 1: don't know how extended it's going to be. You said

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Speaker 1: yesterday you were surprised Baha benign markets were Your team

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Speaker 1: of strategists, led by Peter Oppenheimer, is saying, by the dear,

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Speaker 1: do you see complacency at this moment?

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Speaker 2: I I don't see complacency. I just I think there's

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Speaker 2: a lot of uncertainty around the direction of the conflict,

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Speaker 2: how it will be resolved. You know what the off

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Speaker 2: ramps are, and you know, I think it's fair to

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Speaker 2: say when you're markets market reactions have been relatively benign,

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Speaker 2: and I certainly could have seen over the last couple

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Speaker 2: of days, you know, a little bit more volatility. But

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Speaker 2: I don't think people are being complacent. I think that

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Speaker 2: market participants are looking and trying to say, you know,

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Speaker 2: how is this going to play out?

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Speaker 3: What's the end game?

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Speaker 2: You can see you know, good scenarios and more difficult scenarios,

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Speaker 2: and as they have more information in the coming days

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Speaker 2: and the coming week or two, you know, I think

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Speaker 2: that will have an impact on risk premiums. I think

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Speaker 2: at the moment, what market participants are really looking at

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Speaker 2: is is this going to translate through to things that

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Speaker 2: affect economic growth and activity, particularly energy supply chains you

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Speaker 2: know so far. I think one of the reasons why

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Speaker 2: markets are reacting the way they are is they're encouraged

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Speaker 2: that there is you know, strong support for trying to

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Speaker 2: ensure that doesn't happen.

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Speaker 3: But it's uncertain. You don't know, and we'll see in

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Speaker 3: the long run.

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Speaker 2: For portfolio allocation, and I know Peter Oppenheimer, Charmin most

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Speaker 2: of Barramari, it a call for our wealth clients.

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Speaker 3: You know, if you have portfolio allocation.

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Speaker 2: There's nobody that's say you should share your fundamental portfolio

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Speaker 2: allocation because of what's going on. But for traders and

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Speaker 2: day to day market participants to think about risk premia,

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Speaker 2: you know, every single day.

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Speaker 3: Obviously they're watching very closely.

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Speaker 1: What a lot of people that run big, major global

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Speaker 1: banks like yours, right, do you worry about the lack

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Speaker 1: of predictability when it comes to policy, when it comes

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Speaker 1: to how this potentially ends, and when it ends, what's

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Speaker 1: going on with your at least operations.

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Speaker 2: For anxiety, I worry about a lot of things. We

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Speaker 2: run a big global business. We have an extraordinary team,

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Speaker 2: and you know, I think one of the things that

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Speaker 2: we have to accept is the world as a very

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Speaker 2: complicated place. There's always a lot of uncertainty. There's always

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Speaker 2: a lot of nuance. But we have you know, base

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Speaker 2: beliefs and how economies will perform, how the world will evolve,

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Speaker 2: and you know, we operate around that. But we always

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Speaker 2: are prepared to risk manage and think about downside risks.

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Speaker 2: And I think one of the things you have to

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Speaker 2: do when you run a big, large financial institution is

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Speaker 2: that when you know fact change or risk come up

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Speaker 2: you've always got to.

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Speaker 3: Be prepared to pivot, to shift to de risk. And

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Speaker 3: you know, we run our business, you know that way always.

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Speaker 2: We run a big balance sheet and we you know,

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Speaker 2: we think about that every day. But there's there's nothing

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Speaker 2: while these are very very significant events and I don't

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Speaker 2: want to diminish them in any stretch. You know, we've

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Speaker 2: operated the firm through lots of very significant events. You're

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Speaker 2: in year out, and that's that's part of what we do.

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Speaker 1: Is it business is normal? Then for say, your offices

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Speaker 1: in Saudi Arabia, is this travel going on? What's a

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Speaker 1: communication with third clients?

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Speaker 3: That's that is complex.

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Speaker 2: We have We've got a significant number of people in

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Speaker 2: you know, in those Middle East countries, and obviously, first

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Speaker 2: and foremost we're concerned with their safety and you know

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Speaker 2: we're trying to do everything we can to support them

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Speaker 2: in their families. I would not say, you know, it's

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Speaker 2: business as usual in those markets. You know, all those

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Speaker 2: markets for all businesses you know are operating work from

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Speaker 2: home and and you know stay safe as a first priority.

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Speaker 2: And so we'll just have to watch closely, you know,

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Speaker 2: how things play out. And you know, we're very very

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Speaker 2: focused on making sure our people and their families are

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Speaker 2: safe and sound, and at the moment, that's our primary focus.

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Speaker 3: In that part of the world.

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Speaker 1: Do you think there is a bit of an existential

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Speaker 1: cloud of buy as a financial center, now.

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Speaker 2: Well, you know, I do think safety and security, you know, matters,

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Speaker 2: And I wouldn't say I think it's a little bit

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Speaker 2: premature to talk about existential clouds. But you know, if

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Speaker 2: you're living and operating in a place and you didn't

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Speaker 2: anticipate this, it's quite scary and it's quite unsettling. And so,

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Speaker 2: as I said, our primary focus is on the safety

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Speaker 2: and security of our people there were working very hard

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Speaker 2: to make sure that we're protecting.

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Speaker 3: Them and their families.

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Speaker 1: It's not as the background prior to this conflict was

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Speaker 1: crystal clear, right, we just came off really trying to

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Speaker 1: work out what the AI scare trade is going to be. Like,

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Speaker 1: do you do think that when it comes to that

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Speaker 1: narrative of sustainability of you know, I know, Jamie Dahmer said,

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Speaker 1: there's some players doing dumb things, for example, does that

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Speaker 1: still have further to go?

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Speaker 2: I'm not sure I understood the question exactly. Are you

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Speaker 2: you're talking about kind of AI investment. You know growth. Look,

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Speaker 2: AI is a fabulous, fabulous, incredible technology that is going

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Speaker 2: to drive massive productivity gains through society. There's a lot

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Speaker 2: of capital being deployed to grow AI capabilities around the world.

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Speaker 2: Some of that capital is are going to get reasonable returns,

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Speaker 2: some of that capital is not.

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Speaker 3: They're going to be winners, they're going to be losers.

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Speaker 2: As within any technology super cycle, I think we're early

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Speaker 2: in that process, but I think it's exciting and I

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Speaker 2: actually look at the.

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Speaker 3: Glass being half full.

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Speaker 2: That doesn't mean that there won't be capital that's burned

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Speaker 2: companies that don't work out. But I think overall, the

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Speaker 2: benefits to enterprise productivity, you know, the economy broadly as

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Speaker 2: this technology gets developed and deployed is going to be

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Speaker 2: quite exciting. And I'm looking at the optimism of you know,

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Speaker 2: what's ahead from all this, and of course try to

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Speaker 2: manage the risk of the downside, the speed bumps that

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Speaker 2: will inevitably come along the way.

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Speaker 1: I like the earlier saige. You know, in your job,

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Speaker 1: you will worry about a lot of things, right, Trade

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Speaker 1: Tariff's US policies obviously one of them, And I think

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Speaker 1: this is the first time we've spoken to you since

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Speaker 1: the Supreme Court passed down their judgment. Does the further

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Speaker 1: lack of predictability on trade policy? Is that also a

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Speaker 1: concern when it comes to business sentiment, when it comes

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Speaker 1: to your views on how the US economy is going

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Speaker 1: to cope?

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Speaker 2: What? I think uncertainty does affect business sentiment broadly, But

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Speaker 2: I just say I don't think that.

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Speaker 3: I don't think that at.

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Speaker 2: The moment, US trade policy is that uncertain, you know.

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Speaker 2: I think this administration has been clear about how they

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Speaker 2: intend to drive a trade policy. I think the Supreme

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Speaker 2: Court decision affects a certain discharge of tariff's into the economy,

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Speaker 2: but there's certainly other avenues for the president. I think

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Speaker 2: the President's made quite clear, you know, how he thinks

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Speaker 2: about tariff and trade. And I think while this administration

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Speaker 2: is in place, that is going to be a construct

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Speaker 2: that we have to operate in. Of course, if there

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Speaker 2: could be more, it can be more certainty around exactly

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Speaker 2: how that looks. And I think the important thing is

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Speaker 2: how it will look in longer perpetuity. You know, of

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Speaker 2: course the market would appreciate that, but I think the

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Speaker 2: market operates knowing that there's a level uncertainty around trade

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Speaker 2: and trade policy that we just have to adapt to.

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Speaker 3: And we have to live with.

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Speaker 1: I wanted to get a bit more while you're here,

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Speaker 1: for example, in beautiful Sydney, do times that use of

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Speaker 1: increased global and certainty does it make a relatively more

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Speaker 1: idiostromcratic market like Australia more interesting?

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Speaker 3: Well, Australia's always been interesting market.

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Speaker 2: We have four hundred people here, but a lot of

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Speaker 2: very very important, you know companies in Australia. We have

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Speaker 2: a good wealth business in Australia. You know, Australia is

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Speaker 2: an important market and an important economy, not just for

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Speaker 2: the world, but also for Golden Sacks. You know, any market,

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Speaker 2: any economy that's important is important for Golden Sacks. Given

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Speaker 2: our global footprint, I try to get here about once

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Speaker 2: a year.

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Speaker 3: I try to do it around an event like this.

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Speaker 2: So we've got a lot of our clients bort together

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Speaker 2: first of all for this conference. But this has always been,

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Speaker 2: you know, this has always been an important market, an

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Speaker 2: important economy for Golden Sacks, and you know, I think

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Speaker 2: that's consistent, you know, in any environment. So I was

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Speaker 2: here the same week last week, and I'm excited to

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Speaker 2: be back again this year.

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Speaker 1: What else are you excited about around the region? Are

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Speaker 1: there as a house view Goldmen Sex is very bullish

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Speaker 1: on China or it's of course National People's Congress Week

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Speaker 1: as well. What's your feel about that market given some

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Speaker 1: of the crosswinds on trade, on tech, on geopolitics.

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Speaker 2: Is China is one of the largest China is one

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Speaker 2: of the largest economies in the world. That's going to

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Speaker 2: continue to be one of the largest economies in the world.

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Speaker 3: You know.

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Speaker 2: At the moment, I'm very focused on the bi ladder

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Speaker 2: relationship between the US and China. I'm looking forward to

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Speaker 2: President Trump's visit with President Chief that it's planned for

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Speaker 2: later this month, the beginning of April. It'll be interesting

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Speaker 2: to see what comes out of that, and you know,

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Speaker 2: whether or not China and the US can make.

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Speaker 3: More progress, you know, on their biladder relationship.

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Speaker 2: I think that's important for growth in the world, and

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Speaker 2: I think it's important for both the US and China,

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Speaker 2: and I think at the moment that's fragile, and so

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Speaker 2: I'm very curious to see, you know, how that progresses.

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Speaker 2: In the meantime, Chinese markets have done very well in

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Speaker 2: the last twelve months. That's increased capital flows, you know

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Speaker 2: into the region. We obviously participate in that. But we're

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Speaker 2: going to watch those bilateral meetings and progress in the

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Speaker 2: Bilader relationship very closely.

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Speaker 1: What would you like to come out in terms of

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Speaker 1: deliverables from.

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Speaker 2: I'd like to see, you know, more certainty and clarity

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Speaker 2: around how the Biladder relationship will work going forward. I

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Speaker 2: think there are things that the US wants and things

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Speaker 2: that China wants. I'd like more clarity around what that's

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Speaker 2: going to look like, you know, not just in twenty

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Speaker 2: twenty six, but you know, over the coming years. And

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Speaker 2: I think that's still relatively uncertain.

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Speaker 1: What are we not talking about enough? I know we've

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Speaker 1: talked a little bit about private credit. You don't think

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Speaker 1: it's a sort of a systemic risk at this point.

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Speaker 2: I think credit formation around the world is really correlated

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Speaker 2: to you know, economic growth and economic activity. I do

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Speaker 2: think that we've gone if I just look at the

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Speaker 2: US market, which is obviously, you know, very when you

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Speaker 2: talk about private credit, a very very large market. The

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Speaker 2: context of private credit, We've got a long time without

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Speaker 2: a credit cycle. We've gone a long time without a recession.

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Speaker 2: I do think when you have these long dated cycles,

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Speaker 2: they're a variety of things that happen. One, credit spreads narrow,

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Speaker 2: two lending standards.

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Speaker 3: People have more capital deploy they get.

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Speaker 2: Aggressive, lending standards deteriorate a little bit due diligent standards deteriorate,

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Speaker 2: and so we're watching very closely to see if there's

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Speaker 2: been a little bit too much aggression froftiness in those markets.

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Speaker 2: But fundamentally, when you look at the underlying credit portfolios,

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Speaker 2: particularly below investment grade credit, while there have been a

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Speaker 2: bunch of idiosyncratic events where there have been problems, the

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Speaker 2: broad portfolios are performing reasonably well. Why are they performing

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Speaker 2: reasonably well because the economy is doing fine and it's

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Speaker 2: very hard to have broad underperformance and a broad diversified

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Speaker 2: credit portfolio. If the economy is doing well. When we

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Speaker 2: do have a slow.

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Speaker 3: Down in the economy, you will see it.

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Speaker 2: I think because of the length of the cycle, you

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Speaker 2: probably will find places where the losses are higher than

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Speaker 2: people expect.

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Speaker 3: We're very, very focused.

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Speaker 2: On back leverage and things that could affect or amplify

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Speaker 2: in a more difficult economic environment, you know, credit deployment.

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Speaker 3: But at the moment when you.

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Speaker 2: Look broadly across portfolios. We're not seeing things that are

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Speaker 2: super concerning. That's a completely different issue than retail participation

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Speaker 2: and retail investors wanting liquidity from what are fundamentally illiquid products,

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Speaker 2: and so that's getting a lot of attention. But that's

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Speaker 2: different than the underlying credit portfolios. But I do think

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Speaker 2: that when there is a slowdown in the economy or

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Speaker 2: we do get to a place where we have, you know,

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Speaker 2: a recession, you're you're going to see losses and credit portfolios,

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Speaker 2: and you know those losses could be meaningful, but you know,

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Speaker 2: we'll watch that closely while the economy is chugging along.

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Speaker 2: You know, that's that's not the primary focus.

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Speaker 1: David, I know we must let you go, but we

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Speaker 1: really appreciate you giving us your time in a very

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Speaker 1: very busy schedule. Thank you so much for joining us.

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Speaker 3: Absolutely great to be with you. Thank you for having me.

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Speaker 1: Also Common Sex chairman and CEO David Solomon here at

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Speaker 1: the Australia Week event