WEBVTT - John Waldron Talks Private Credit, M&A Market 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.040 --> 0:00:10.800 Goldman's president and chief operating Officer, John Waldron at a 0:00:10.840 --> 0:00:14.680 conference where almost a decade ago you helped start in 0:00:14.720 --> 0:00:17.840 the world of leverage finance. You and David Solomon had 0:00:17.920 --> 0:00:21.480 cut your teeth in this industry, and it's a good 0:00:21.480 --> 0:00:25.000 time to ask what's changed the most about this business. 0:00:25.520 --> 0:00:27.200 Well, first of all, it's great to be here back 0:00:27.240 --> 0:00:30.160 at this conference in California. We've been nine years now 0:00:30.200 --> 0:00:33.920 doing this conference. We have about eighty issuers and about 0:00:33.920 --> 0:00:36.400 four hundred and fifty investors, so it's a great convening 0:00:36.400 --> 0:00:39.560 to bring the issuing side together with the investing side. 0:00:39.600 --> 0:00:41.600 I would say the answer to your question is undoubtedly 0:00:41.640 --> 0:00:43.879 the growth in private credit. So back nine or ten 0:00:43.920 --> 0:00:47.080 years ago, it was mostly a syndicated market. Private credit 0:00:47.159 --> 0:00:48.920 is not a new industry. It's been going on for 0:00:49.000 --> 0:00:50.440 quite a long time. But if you think about the 0:00:50.479 --> 0:00:53.120 size of the private credit market versus the syndicated market, 0:00:53.159 --> 0:00:56.040 the private credit market has grown enormously and that's definitely 0:00:56.080 --> 0:00:58.760 been the biggest change in the structure of the marketplace. 0:00:59.160 --> 0:01:01.520 Goldman had its own plans. There are large plans. 0:01:01.560 --> 0:01:04.160 You've told investors recently that you plan to grow your 0:01:04.200 --> 0:01:07.160 private credit business into a three hundred billion dollar business 0:01:07.160 --> 0:01:10.240 by assets in the next five years. How important is 0:01:10.280 --> 0:01:12.480 scale to you? And where is this on your list 0:01:12.520 --> 0:01:13.240 of priorities. 0:01:13.520 --> 0:01:15.520 It's very important. I'm here for a reason. This is 0:01:15.520 --> 0:01:18.240 an incredibly important client franchise for us. It's an incredibly 0:01:18.280 --> 0:01:21.760 important set of constituencies to Goldman Sachs. Private credit is 0:01:21.760 --> 0:01:24.039 a big growth opportunity for the firm. We have been 0:01:24.040 --> 0:01:26.520 doing private credit for a long time. Goldman Sachs has 0:01:26.560 --> 0:01:29.679 an over thirty year history of operating in the private markets, 0:01:29.720 --> 0:01:33.880 private equity, private credit, real estate, infrastructure, and other elements 0:01:33.880 --> 0:01:36.560 of the private markets. The big opportunity for us is 0:01:36.600 --> 0:01:38.280 to take what we've built, which is over one hundred 0:01:38.319 --> 0:01:41.520 billion dollars of AUM in private credit, and really double 0:01:41.560 --> 0:01:43.520 and triple it. We've obviously got to double it before 0:01:43.520 --> 0:01:45.240 we can triple it, so we've talked about three hundred 0:01:45.240 --> 0:01:47.240 million dollars as a target. We've got to get to 0:01:47.280 --> 0:01:49.280 two hundred million dollars first. We see a line of 0:01:49.320 --> 0:01:51.800 sight to doing that. But at the same time, I 0:01:51.840 --> 0:01:53.880 want to say that our syndicated business is a really 0:01:53.920 --> 0:01:56.880 important business. Leverage finance is a long term core strength 0:01:56.880 --> 0:01:59.400 of the firm. We've built a great business. We're number 0:01:59.440 --> 0:02:01.240 one or number two to in all the major elements 0:02:01.240 --> 0:02:03.560 of leverage finance, whether it's on the bank loan side 0:02:03.640 --> 0:02:06.080 or on the high yield side. We intend to continue 0:02:06.120 --> 0:02:08.440 to be there, and it's an incredibly important franchise. We 0:02:08.520 --> 0:02:11.240 are unique because we have scale in both. We can 0:02:11.280 --> 0:02:13.720 play in the syndicated market, we can play in the 0:02:13.720 --> 0:02:15.760 private credit market. And what our people know to be 0:02:15.760 --> 0:02:17.440 true is that their job is to go see our 0:02:17.480 --> 0:02:20.359 clients and give them good advice which markets should you 0:02:20.400 --> 0:02:22.680 be accessing at which point in the cycle, based on 0:02:22.760 --> 0:02:26.280 pricing terms available at capital and that's what we're doing. 0:02:26.360 --> 0:02:28.040 We're doing that, I think very effectively. I think we're 0:02:28.120 --> 0:02:30.360 uniquely positioned to be able to access both markets and 0:02:30.400 --> 0:02:32.040 be effective for our clients in that manner. 0:02:32.160 --> 0:02:35.880 One thing that cannot be true is that of the 0:02:35.960 --> 0:02:39.840 billions of dollars flowing into private credit, everybody is an 0:02:39.840 --> 0:02:43.400 amazing underwriter. If you think through this market right now, 0:02:43.520 --> 0:02:46.440 where is the risk and are people making mistakes? 0:02:47.040 --> 0:02:49.640 Well, I don't know that there's clear risk in front 0:02:49.680 --> 0:02:52.360 of us. I think I think the explosion of credit 0:02:52.480 --> 0:02:55.200 broadly has been good for the economy is giving more 0:02:55.200 --> 0:02:59.040 companies and issuers access to more credit. I think there 0:02:59.040 --> 0:03:02.120 definitely has been distant mediation of parts of the banking system, 0:03:02.160 --> 0:03:04.640 probably more pronounced in the regional banking system than in 0:03:04.680 --> 0:03:06.359 the larger scale banking system. 0:03:06.680 --> 0:03:07.640 I think that's something that. 0:03:07.520 --> 0:03:10.400 The market, that the regulatory apparatus should be paying attention to. 0:03:11.000 --> 0:03:13.000 But fundamentally, I'm not sure that there's lots of mistakes 0:03:13.040 --> 0:03:14.799 being made. I think that at some point we will 0:03:14.800 --> 0:03:16.600 have a credit cycle. When we have a credit cycle, 0:03:16.639 --> 0:03:19.720 my guess is there'll be some dispersion in the performance 0:03:19.720 --> 0:03:22.480 of different players in private credit. For US, we've been 0:03:22.480 --> 0:03:24.600 doing this a long time. We care a lot about structure, 0:03:24.639 --> 0:03:26.920 we care a lot about terms, we care a lot 0:03:26.960 --> 0:03:29.480 about underwriting standards, and we intend to be a good 0:03:29.520 --> 0:03:30.520 performer through the cycle. 0:03:30.760 --> 0:03:32.680 You kind of have to have a crystal mole heading 0:03:32.720 --> 0:03:35.040 into that cycle, don't you. I'm wondering when you think 0:03:35.200 --> 0:03:37.520 that cycle will come and what it looks like when 0:03:37.720 --> 0:03:38.880 it starts to turn south. 0:03:38.920 --> 0:03:41.560 Well, it's very dependent upon economic growth. You know, if 0:03:41.600 --> 0:03:44.080 we have a two plus percent GDP performance in the 0:03:44.520 --> 0:03:46.760 US economy or in the global economy for the next 0:03:46.760 --> 0:03:50.080 few years, we won't have a credit cycle. At some point, 0:03:50.080 --> 0:03:53.080 we're likely to see a contraction in the economy, or 0:03:53.080 --> 0:03:56.840 at least a significant slowing in the economy. When that happens, 0:03:57.000 --> 0:03:59.960 that will be likely a trigger for more more default, 0:04:00.280 --> 0:04:02.600 more challenges in the credit market, and we'll be prepared 0:04:02.600 --> 0:04:02.760 for that. 0:04:03.160 --> 0:04:03.400 Now. 0:04:03.440 --> 0:04:05.360 Another thing that a lot of people are waiting for 0:04:05.640 --> 0:04:08.000 is the revival of an M and A market to 0:04:08.080 --> 0:04:11.200 fuel this leverage finance market that you've been talking about here. 0:04:11.400 --> 0:04:13.880 One of your top bankers just earlier was talking to 0:04:14.160 --> 0:04:17.279 a group of people saying that this could be a 0:04:17.360 --> 0:04:20.200 four trillion dollar market or more again by the end 0:04:20.279 --> 0:04:22.679 of next year. Do you see that and how fast 0:04:22.720 --> 0:04:23.320 can we get there? 0:04:23.400 --> 0:04:26.600 We're definitely optimistic about the merger market. I think that 0:04:26.640 --> 0:04:29.279 we need the private equity community to be more active. 0:04:29.360 --> 0:04:31.679 We need the debt markets to be very open and available, 0:04:31.680 --> 0:04:33.280 whether it's on the private credit side or on the 0:04:33.320 --> 0:04:36.520 syndicated site. That's starting to happen. So the conditions are 0:04:36.520 --> 0:04:38.400 there for a much better M and A market. But 0:04:38.440 --> 0:04:39.839 the way I think about the M and A market, 0:04:39.880 --> 0:04:43.760 you've got regular way kind of corporate transaction flow, You've 0:04:43.760 --> 0:04:46.200 got very big deals and then you've got kind of 0:04:46.200 --> 0:04:49.200 a broad private equity driven marketplace, which has been the 0:04:49.240 --> 0:04:52.960 biggest grower in the merger market. The regular way activity 0:04:53.000 --> 0:04:56.919 is pretty solid. The private equity activity is getting untracked, 0:04:56.960 --> 0:04:59.200 but it's not anywhere near what it can be, which 0:04:59.200 --> 0:05:01.880 I think is probably our colleague was referring to. And 0:05:01.920 --> 0:05:04.480 the big deal market is kind of sluggish. Any trust 0:05:04.520 --> 0:05:07.040 is tougher, it's not the best environment to go try 0:05:07.040 --> 0:05:09.320 to do transformational transactions. So if you've got the big 0:05:09.320 --> 0:05:11.800 deal market firing and the private equity market firing, we 0:05:11.800 --> 0:05:14.960 can have a much bigger merger market. We expect both 0:05:15.000 --> 0:05:17.039 of those to happen, but I think everybody's kind of 0:05:17.160 --> 0:05:20.440 a rush for it to happen sooner. These things take 0:05:20.480 --> 0:05:23.200 a while to unfold, and I would just caution that 0:05:23.240 --> 0:05:25.440 I don't think you're going to see tons of new 0:05:25.480 --> 0:05:27.680 activity in the next couple of weeks or months. I 0:05:27.680 --> 0:05:29.080 think it's going to take us a little bit of 0:05:29.080 --> 0:05:32.479 time to get going, and very much depending upon economic growth. 0:05:32.560 --> 0:05:35.039 So if we have strong GDP for the next couple 0:05:35.040 --> 0:05:36.760 of years, you're going to see the merger market start 0:05:36.800 --> 0:05:40.919 to really grow. It is clearly underrepresented as a percentage 0:05:40.920 --> 0:05:42.960 of equity market cap. That's a metric that we look at. 0:05:42.960 --> 0:05:44.440 I think it's three or three and a half percent 0:05:44.480 --> 0:05:46.840 of total equity market cap. Really ought to be five 0:05:46.880 --> 0:05:48.760 or six percent of equity market cap. So there's a 0:05:48.760 --> 0:05:51.480 lot of room to run here, which could and should 0:05:51.520 --> 0:05:53.280 likely be the case over the next couple of years. 0:05:53.400 --> 0:05:55.600 There's a real sense here that you and the bankers 0:05:55.600 --> 0:05:57.279 at Goldman Sachs are trying to put the M and 0:05:57.320 --> 0:05:59.080 A train back on the rails in. 0:05:59.000 --> 0:06:00.000 A significant manner. 0:06:00.040 --> 0:06:03.840 But is there anything that could really hit pause on 0:06:03.920 --> 0:06:04.719 that trajectory. 0:06:05.880 --> 0:06:08.200 It's not off the rails. I mean, we're having a 0:06:08.279 --> 0:06:10.719 very good M and A year this year. It's just 0:06:10.800 --> 0:06:12.400 not as good as it was when we had the 0:06:12.480 --> 0:06:15.120 kind of euphoria in twenty twenty one. But by any 0:06:15.320 --> 0:06:17.440 historical standard, this is a pretty good environment. I think 0:06:17.480 --> 0:06:20.920 we're fifteen percent below the market volumes are like fifteen 0:06:20.960 --> 0:06:23.360 percent below five year averages, so we're not at five 0:06:23.440 --> 0:06:25.640 year averages, but we're not that far below five year averages, 0:06:25.680 --> 0:06:28.000 and it doesn't take a lot for it to really 0:06:28.000 --> 0:06:30.920 start to turn on. The deterrent to that would be 0:06:31.120 --> 0:06:36.120 economic contraction. It's very reliant on CEO confidence and GDP growth. 0:06:36.200 --> 0:06:39.800 I would say the two main factors driving the upswing 0:06:40.000 --> 0:06:41.080 and the M and I cycle. 0:06:41.279 --> 0:06:43.040 What about the election cycle. 0:06:43.279 --> 0:06:46.800 We were talking to David Costin, your chief equity strategist, 0:06:46.839 --> 0:06:48.640 a little bit earlier in the United States, and we're 0:06:48.640 --> 0:06:52.120 talking about volatility around the election. What does that conversation 0:06:52.200 --> 0:06:53.480 look like with clients. 0:06:53.960 --> 0:06:56.560 I think clients are starting to pay attention to the 0:06:56.600 --> 0:07:00.120 election about now. For the most part of the of 0:07:00.640 --> 0:07:02.960 the year, it hasn't really been a major factor. Gets 0:07:02.960 --> 0:07:05.520 written a lot about, But I wouldn't say in decision 0:07:05.520 --> 0:07:07.719 making we've seen a lot of impact yet. But I 0:07:07.720 --> 0:07:11.280 think we're starting to get to a place where policy 0:07:11.320 --> 0:07:14.640 differential and the outcome is starting to become more more 0:07:15.280 --> 0:07:16.920 part of the narrative and part of the discussion and 0:07:16.960 --> 0:07:18.840 meetings that we're in and I'm sure others are in it. 0:07:18.840 --> 0:07:20.160 So I think we're going to go through the summer, 0:07:20.720 --> 0:07:23.720 We're gonna have more conversations as we get into the fall. 0:07:23.760 --> 0:07:25.720 I think it's going to become much more prominent in 0:07:25.760 --> 0:07:26.400 everybody's mind. 0:07:26.520 --> 0:07:29.200 Are there specific policies investors are talking about with you, 0:07:29.280 --> 0:07:32.920 particularly when it pertains to either Trump two point zero 0:07:33.000 --> 0:07:34.200 or Biden two point zero. 0:07:34.440 --> 0:07:42.560 I think taxation, regulation, I think policy on China. Those 0:07:42.560 --> 0:07:45.960 are major, Those are probably major areas of focus. You know, 0:07:45.960 --> 0:07:47.960 there are other important areas of focus. It might not 0:07:48.040 --> 0:07:52.120 be as much economic, whether it's social issues or immigration 0:07:52.240 --> 0:07:53.720 or other issues that are important. But I think if 0:07:53.720 --> 0:07:56.600 you're talking about the things that really speak to the economy, 0:07:57.120 --> 0:07:59.720 it's global trade, it's regulation, it's taxation. 0:08:00.080 --> 0:08:03.760 On China in particular, you had President Biden announcing more 0:08:03.960 --> 0:08:08.960 tariffs and China vowing resolute measures in return. You've spent 0:08:09.000 --> 0:08:11.960 a lot of time in China yourself. How are investors 0:08:12.000 --> 0:08:15.360 thinking about this dynamic of more terrorists. 0:08:15.800 --> 0:08:18.480 Well, it's not surprising to me that the Biden administration 0:08:18.600 --> 0:08:21.600 is deploying tariffs. They obviously kept the tariffs in place 0:08:21.640 --> 0:08:24.800 that the Trump administration put put forward and are now, 0:08:24.960 --> 0:08:26.680 you know, kind of raising the ante a little bit. 0:08:27.200 --> 0:08:29.960 It's not surprising. I think that US policy, frankly, from 0:08:30.000 --> 0:08:33.040 both sides of the of the isle, is turning much 0:08:33.040 --> 0:08:35.480 more hawkish and is of the opinion that we have 0:08:35.559 --> 0:08:39.920 to protect and safeguard American interests and also invest in 0:08:39.960 --> 0:08:42.200 the industries that we need to be globally competitive in. 0:08:42.240 --> 0:08:44.360 And so I think you're going to see more of that. Frankly, 0:08:44.400 --> 0:08:47.840 whichever direct whichever president we have in the next uh, 0:08:48.040 --> 0:08:49.640 you know, in the next election, and I think that's 0:08:49.679 --> 0:08:51.760 going to that's that's a reasonable place for the US 0:08:51.800 --> 0:08:54.000 to be is to continue to invest, to be globally competitive, 0:08:54.000 --> 0:08:57.839 continue to focus on our own competitiveness and investing in 0:08:57.880 --> 0:08:59.839 our industries. I also would say, and I saw it 0:09:00.000 --> 0:09:03.160 Secretary Yellen's comments, which I think we're good comments about 0:09:03.200 --> 0:09:05.319 continued engagement. You know, we don't want to have I 0:09:05.320 --> 0:09:08.080 hope we don't have a zero sum game here where 0:09:08.080 --> 0:09:10.800 it's kind of tariffs on tariff's. Hopefully we can continue 0:09:10.800 --> 0:09:13.040 to have a rational approach from both sides. And I 0:09:13.040 --> 0:09:16.040 think that this administration deserves a lot of credit in 0:09:16.040 --> 0:09:19.880 my opinion, for having constructed engagement and putting the relationship 0:09:19.920 --> 0:09:22.120 in a firmer, you know, on a firmer footing and 0:09:22.160 --> 0:09:24.200 having more dialogue, which I think is going to be important. 0:09:24.240 --> 0:09:25.960 We're not going to agree on a lot of these areas, 0:09:26.000 --> 0:09:27.319 but it's going to be important that we continue to 0:09:27.400 --> 0:09:28.280 engage with each other. 0:09:28.200 --> 0:09:29.920 As you think about future administrations. 0:09:30.000 --> 0:09:33.559 Also, you and David Solomon, your CEO, both have been 0:09:33.640 --> 0:09:37.120 quite critical when it comes to the US debtload and 0:09:37.320 --> 0:09:40.640 what it means for the United States moving forward under 0:09:40.679 --> 0:09:43.679 both administrations, there's a sense from investors that that fiscal 0:09:43.720 --> 0:09:47.000 responsibility will not be rained in paint a picture of 0:09:47.000 --> 0:09:49.880 what the world for the United States looks like if 0:09:49.920 --> 0:09:50.679 this continues. 0:09:51.120 --> 0:09:53.400 I think the points that we're trying to make, and 0:09:53.440 --> 0:09:55.360 that we discussed a lot inside the Four Walls of 0:09:55.400 --> 0:09:59.600 Gold and Sachs, are we can't be complacent about continuing 0:09:59.640 --> 0:10:02.360 to spend and at this pace and assume because we 0:10:02.480 --> 0:10:05.840 enjoy the reserve currency status that that will always be 0:10:05.880 --> 0:10:07.920 the case and that there's not any risk to that. 0:10:08.160 --> 0:10:11.079 So I think we're looking for both parties to find 0:10:11.080 --> 0:10:13.920 a way to create more discipline in the fiscal spend. 0:10:13.920 --> 0:10:15.760 It's not that we shouldn't be spending. A country needs 0:10:15.760 --> 0:10:17.760 to be spending. There are certainly areas where we need 0:10:17.800 --> 0:10:21.360 to be stimulative from a fiscal standpoint, but broadly speaking, 0:10:21.360 --> 0:10:24.480 we think the pace is unsustainable. You're really now reliant 0:10:24.520 --> 0:10:27.840 heavily on US households to continue to fund the treasury spend, 0:10:28.360 --> 0:10:30.600 which I think is a perfectly okay assumption, but it's 0:10:30.640 --> 0:10:32.720 not an infinite assumption, and it needs to be. It 0:10:32.720 --> 0:10:34.840 needs to be thought about, and I think that we 0:10:34.520 --> 0:10:36.679 need both sides of the altbu come together and be 0:10:36.720 --> 0:10:37.800 more disciplined in the spend. 0:10:37.920 --> 0:10:41.040 At the same time, treasury issuance has been significant, and 0:10:41.120 --> 0:10:43.160 there are a lot of worries about, as you say, 0:10:43.200 --> 0:10:45.800 who absorbs all of that issuance. We haven't seen any 0:10:45.840 --> 0:10:48.760 real hiccups yet, but do you worry that we will 0:10:49.120 --> 0:10:52.120 at some point if we continue at this pace of issuance. 0:10:52.440 --> 0:10:55.360 We haven't seen hiccups. There's no evidence yet to suggest 0:10:55.360 --> 0:10:57.199 that we can't keep going in this direction. But I 0:10:57.240 --> 0:10:59.080 think those of us have been watching this for a 0:10:59.120 --> 0:11:02.520 long time are worried that this is an unsustainable pace 0:11:02.720 --> 0:11:04.920 and that we need to show more discipline in the system. 0:11:05.480 --> 0:11:07.640 And you know, I think the US continues to be 0:11:07.679 --> 0:11:09.640 a great place to invest. There's a lot of demand 0:11:09.720 --> 0:11:12.640 for US assets, including for US treasuries, but we have 0:11:12.679 --> 0:11:14.360 to make sure that we show the right kind of 0:11:14.360 --> 0:11:17.439 discipline fiscally and financially so that those investors want to 0:11:17.440 --> 0:11:18.480 continue to put money here. 0:11:18.640 --> 0:11:21.920 John, we're hours away from another inflation print, and there 0:11:21.920 --> 0:11:24.000 are a lot of worries about what inflation means for 0:11:24.040 --> 0:11:25.880 the economy and the trajectory of interest rates. 0:11:25.920 --> 0:11:27.079 How are you thinking about it? 0:11:27.800 --> 0:11:31.480 I think that we are continuing to be fairly constructive 0:11:31.640 --> 0:11:33.760 on what's happening. You have to give the Fed a 0:11:33.760 --> 0:11:36.600 lot of credit for engineering what appears at this moment 0:11:36.600 --> 0:11:39.079 to be a soft landing. We're not calling it quite yet. 0:11:39.080 --> 0:11:40.720 I think we have a lot of debate inside the 0:11:40.720 --> 0:11:42.760 four walls of our firm about word the direction of 0:11:42.760 --> 0:11:45.240 the economy will go. But it looks to us like 0:11:45.280 --> 0:11:47.880 the soft landing is very likely, and the FED deserves 0:11:47.920 --> 0:11:51.040 credit for bringing inflation down and engineering, you know, a 0:11:51.080 --> 0:11:55.240 reasonably good economic outcome. We'll see what the CPI print brings. 0:11:55.559 --> 0:11:57.600 Anytime you try to do what they're doing, which is 0:11:57.600 --> 0:12:00.520 an extraordinary amount of stimulus and then are really heavy 0:12:00.520 --> 0:12:03.160 amount of tightening in a short period of time, there's 0:12:03.200 --> 0:12:05.360 going to be bumpy outcomes. And I think we're seeing 0:12:05.559 --> 0:12:08.280 it's not a straight line down. There's been lots of disinflation, 0:12:08.800 --> 0:12:10.840 but inflation is proving a little sticky here. As we're 0:12:10.840 --> 0:12:13.240 getting closer to trying to get to the two percent target, 0:12:13.320 --> 0:12:15.640 we expect that to continue to be the case. The 0:12:15.679 --> 0:12:18.240 PPI number, I think showed that that's continuing to be 0:12:18.240 --> 0:12:20.520 the case, we'll see what the CPI number brings. I 0:12:20.520 --> 0:12:24.600 think our estimate is for twenty eight basis points and 0:12:24.679 --> 0:12:26.559 the market's estimate is thirty basis points. So we're in 0:12:26.600 --> 0:12:28.920 and around consensus and we'll see what it brings. But 0:12:28.920 --> 0:12:30.520 I think you're going to continue to see bumpy prints 0:12:30.520 --> 0:12:31.040 along the way. 0:12:31.320 --> 0:12:33.079 Now before I let you go, also, I want to 0:12:33.080 --> 0:12:35.480 talk about Goldmansax for a moment here, because we're almost 0:12:35.480 --> 0:12:37.959 halfway into the year. You were one of the earlier 0:12:37.960 --> 0:12:40.760 banks to cut headcount when things got rough, and activity 0:12:40.840 --> 0:12:43.800 is now coming back across the industry. What does this 0:12:43.880 --> 0:12:45.720 mean for headcount moving forward. 0:12:46.320 --> 0:12:48.600 We're continuing to invest in our firm. I'd say most 0:12:48.600 --> 0:12:50.800 of the investment we're making is in the infrastructure of 0:12:50.800 --> 0:12:52.760 our firm. We're continuing to try to find ways to 0:12:52.840 --> 0:12:55.840 create the infrastructure that we can scale against, and so 0:12:55.880 --> 0:12:58.080 we're going to make more investments there. And we're investing 0:12:58.080 --> 0:13:00.880 in our assonal wealth management franchise most so we want 0:13:00.880 --> 0:13:03.280 to build a much bigger asset and wealth management business. 0:13:03.640 --> 0:13:06.400 We're investing in our wealth management franchise, which is really 0:13:06.440 --> 0:13:11.040 more in people, advisors, support for advisors, technology around the 0:13:11.040 --> 0:13:14.040 advisors to make sure we can continue to grow our 0:13:14.080 --> 0:13:16.560 business there and to serve our clients more effectively. We 0:13:16.640 --> 0:13:20.000 think that that generational transfer of wealth will need and 0:13:20.400 --> 0:13:22.280 require a lot more technology, and so we want to 0:13:22.320 --> 0:13:25.440 meet our clients where they want to be met, which 0:13:25.440 --> 0:13:28.480 is really in a more mobile world, and we continue 0:13:28.520 --> 0:13:30.680 to invest heavily in technology across the firm. I think 0:13:31.320 --> 0:13:34.560 generative AI will be a big unlock for firms in 0:13:34.559 --> 0:13:36.199 our industry, and we're going to be no different. So 0:13:36.240 --> 0:13:37.720 I think you're going to see over the next handful 0:13:37.720 --> 0:13:40.480 of years a much bigger spend in terms of looking 0:13:40.480 --> 0:13:43.760 for ways to deploy generative AI, particularly around automation and 0:13:43.840 --> 0:13:46.520 resiliency and doing things that are more maybe clerical and 0:13:46.600 --> 0:13:49.760 lower level activities that are more human process that can 0:13:49.800 --> 0:13:56.000 be uplifted into more automative, automated technology driven AI lead activities. 0:13:56.320 --> 0:13:59.280 It's clear that you're putting that spend across different areas 0:13:59.280 --> 0:13:59.880 of the business. 0:14:00.040 --> 0:14:02.560 Does this mean the hiring sign is up at Goldman 0:14:02.640 --> 0:14:03.320 Sachs today. 0:14:03.760 --> 0:14:06.079 I wouldn't say that. I'd say that you're going to 0:14:06.120 --> 0:14:08.760 see us grow our headcount in a measured way. We 0:14:08.800 --> 0:14:11.520 obviously made the moves you talked about, you know, eighteen 0:14:11.520 --> 0:14:14.240 months or so ago, we saw a need to reduce 0:14:14.280 --> 0:14:16.520 our headcount from where we were coming out of the pandemic. 0:14:16.960 --> 0:14:18.920 I don't think that's very different from many companies that 0:14:18.960 --> 0:14:21.320 I certainly talked to and others talk to now. At 0:14:21.320 --> 0:14:23.320 this point, I think we're in a place where we've 0:14:23.320 --> 0:14:25.320 created a good base. We've got places we want to invest. 0:14:25.360 --> 0:14:28.560 As I said, wealth management, asset management, technology, and infrastructure. 0:14:28.840 --> 0:14:31.240 You'll see us at headcount at a measured pace in doing that, 0:14:31.560 --> 0:14:32.680 but it will be at a measured pace. 0:14:33.040 --> 0:14:34.640 John, We thank you so much for your time. That 0:14:34.720 --> 0:14:38.000 is Golden in Sacks, President and Chief operating Officer, John 0:14:38.120 --> 0:14:38.600 Waldron