Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Very happy to say alongside me David Solomon of gomaz
Speaker 2: SAX David, good afternoon.
Speaker 1: Good Afternoon's good to see you.
Speaker 2: Fantastic to see in Paris as well.
Speaker 1: At Paris, France.
Speaker 2: I think we need to talk about France first and
Speaker 2: we'll move our way through the business and talk about
Speaker 2: the United States as well. Typically, I can say as
Speaker 2: a brit that we used to look at France as
Speaker 2: sort of anti business, not a place you'd want to
Speaker 2: put an employee. Perhaps you'd choose London over Paris. That
Speaker 2: seems to have changed, am I right, Well.
Speaker 3: It's involved a little bit, and Brexit had a big
Speaker 3: impact on that evolution. You know, we have between three
Speaker 3: hundred and fifteen four hundred people in Paris now, that's
Speaker 3: triple what we would have had, you know, five six
Speaker 3: years ago, So there's been an evolution. I do think
Speaker 3: it's still a complex place for a professional services person
Speaker 3: to put an employee. In our dialogues, you know, here
Speaker 3: we've talked about that. It's one of the things, you know,
Speaker 3: I'm encouraged by. I think the administration is looking to
Speaker 3: do things here that actually improve you know, this is
Speaker 3: a business environment. I think one of the things that
Speaker 3: is interesting is we've chosen France. It's a very very
Speaker 3: important hub for us here on the continent. But I'd
Speaker 3: also say, are people like living here? And one of
Speaker 3: the things in a competitive world for talent is we
Speaker 3: give our people much more latitude to work and operate
Speaker 3: out of places that they want to live.
Speaker 1: And it's certainly a very attractive place.
Speaker 2: So I wanted to ask you directly, have you chosen
Speaker 2: France because somewhere else is getting worse or because France
Speaker 2: and the continent is getting better.
Speaker 1: Well, I think it's a combination.
Speaker 3: France on the continent has gotten better, the regulatory structure
Speaker 3: requires that we have more people here for certain functions
Speaker 3: that are important to our business. Our clients are here,
Speaker 3: and we want to be near our clients, and so
Speaker 3: you know, it's a combination of things that make this
Speaker 3: an appropriate place for Golden Sacks to continue to grow.
Speaker 2: I think a lot of us going forward through twenty
Speaker 2: twenty four into twenty twenty five feel like we're flying
Speaker 2: blind a little bit. You have more clarity, more visibility
Speaker 2: on the future of Europal, the future of the United States.
Speaker 3: I don't have a lot of visibility on the future
Speaker 3: of the world, let alone Europe and the United States.
Speaker 3: I know there are a lot of people that you
Speaker 3: talk to that are very sure as to how things
Speaker 3: will play out as we go forward. I tend to
Speaker 3: look at things and think about risks. How do we
Speaker 3: manage risks? What are the tails that are out there
Speaker 3: that we need to be concerned about. When I think
Speaker 3: about economic outcomes, I think about distribution of those outcomes,
Speaker 3: and so you know, there's a perception of the.
Speaker 1: Direction of travel.
Speaker 3: We can certainly talk about that, but I certainly I
Speaker 3: certainly don't you know what the direction of travel is.
Speaker 3: I will say, going back to what we were talking
Speaker 3: about here in France and just listening to you know,
Speaker 3: a number of officials that spoke at lunch today. They're
Speaker 3: talking about ways that they can accelerate more entrepreneurship, more investment,
Speaker 3: more flexibility, and also more strengthening and interdependency in Europe.
Speaker 3: Those things are hard to execute on, but I think
Speaker 3: they are very important.
Speaker 2: The White House is doing something similar, but it comes
Speaker 2: at a cost. I think the budget deficit was six
Speaker 2: percent of GDP note to six percent last year at
Speaker 2: a time when unemployment is sounth the full speaking of
Speaker 2: risks is not WMP.
Speaker 3: It's certainly one that I'm very focused on. I think
Speaker 3: the level of debt in the United States, the level
Speaker 3: of spending is something that we need a sharper focus
Speaker 3: on and more dialogue around than what we've seen. We
Speaker 3: obviously had a pandemic, we made a bunch of decisions,
Speaker 3: you know, in that pandemic, but we're long out of
Speaker 3: that pandemic, and the spending levels, you know, are continuing
Speaker 3: at a pace that I think is raising our debt
Speaker 3: level and creating issues for us down the road. So
Speaker 3: I think this is something that deserves a lot of attention.
Speaker 3: It's not getting as much attention as I'd like to
Speaker 3: see it yet right now. We're obviously in an election year,
Speaker 3: so I'm not you know, I don't have my head
Speaker 3: in the sand. I don't think you're going to see
Speaker 3: that get a lot of attention prior to the election.
Speaker 3: But I do think it's something that requires focus.
Speaker 1: We need to deal.
Speaker 3: With the debt and the deficits, and you know, hopefully
Speaker 3: there'll be a lot more discussion as we come through
Speaker 3: the election and move into the next administry.
Speaker 2: Well, let's give it a bit of time, now, can
Speaker 2: I think I often say that the United States has
Speaker 2: the privilege of behaving recklessly sometimes that maybe the likes
Speaker 2: of the Europeans do not have. You sense this's been
Speaker 2: any kind of pushback from the treasury market, from investors
Speaker 2: against the backdrop and this risk that we're talking about currently.
Speaker 1: Well, the.
Speaker 3: Reserve currency is a great privilege, and you know, I'm
Speaker 3: not going to sit here and say that I see
Speaker 3: in the near term, you know, a threat to that
Speaker 3: in any way, shape or form, but it's not something
Speaker 3: that you can take for granted. And the United States'
Speaker 3: ability to spend without constraint is not unlimited. Ultimately, the
Speaker 3: market will challenge that hasn't challenged it yet. Not saying
Speaker 3: that's something that's coming soon, but it's certainly something.
Speaker 1: That we should be very cognitive of and very protective of.
Speaker 2: If you think the experience of the UK A company
Speaker 2: years bank was maybe a case study for what we
Speaker 2: could face in America.
Speaker 3: You know that that was a disruption to the guilt market,
Speaker 3: and it's one of the things I think you need
Speaker 3: to be concerned about.
Speaker 1: It's a risk issue. I've highlighted before.
Speaker 3: You know, at the time the Bank of England to
Speaker 3: reserve had to reverse its course and become very accommodative
Speaker 3: to deal with that blip in the markets. We've had
Speaker 3: disruptions of the treasury market before. We certainly had a
Speaker 3: disruption in March twenty twenty. To the degree that we
Speaker 3: had a significant disruption in the treasury market sometime in
Speaker 3: the future, we don't have a lot of capacity through
Speaker 3: the banking system to intermediate that. It would require very
Speaker 3: accommodative policy. If that came at a time where that
Speaker 3: was not right for the Central Bank to be accommodated,
Speaker 3: that would be a risk issue that would have to
Speaker 3: be monitored.
Speaker 2: We've had some big moves in the last three four months.
Speaker 2: I can just think about the start of twenty twenty four,
Speaker 2: we were looking ahead to maybe seven rate cuts priced
Speaker 2: into markets from the Federal Reserve went all the way
Speaker 2: down to none. I think Jan Hatzis and the team
Speaker 2: are down to two July and November. Big swings and
Speaker 2: equity markets too, David, can we talk a little bit
Speaker 2: about that. I think we're seeing ten percent swings in
Speaker 2: trillion dollar names post earnings. Is that good for business
Speaker 2: that kind of market environment. It's not what you want
Speaker 2: to see.
Speaker 3: You know, the market's the market, and you know, I
Speaker 3: think there are a handful of things that are driving
Speaker 3: these platform worms to grow earnings very significantly and gain
Speaker 3: a larger importance in the overall market capitalization.
Speaker 1: These hyper scalers, as they're.
Speaker 3: Called, I think have enormous competitive advantages in the world
Speaker 3: that we're operating in. And it's you know, it's not
Speaker 3: been surprising, given some of the changes in technology in
Speaker 3: the last twelve months, that their market caps have accelerated,
Speaker 3: don't I don't worry about that. From a market perspective,
Speaker 3: I think markets are relatively efficient. I do worry that
Speaker 3: the structure of the equity markets, particularly in the United States,
Speaker 3: but this is true all over the world, are bringing
Speaker 3: fewer and fewer public companies, and that is concerning.
Speaker 1: That is concerning.
Speaker 3: There's obviously an abundance of capital available in private markets,
Speaker 3: but I do think it's important that we have open, accommodative,
Speaker 3: strong public markets. There's tremendous disclosure transparency in public markets.
Speaker 3: I think that's good for capital deployment, and you know,
Speaker 3: I am concerned that the breadth of the public markets
Speaker 3: is getting a little bit more narrow and I think
Speaker 3: that's something first of all, to watch and think about.
Speaker 1: The Eavego visits on the pint.
Speaker 2: Do you see that improve it at all?
Speaker 3: Well, it's easy to improve when it was zero, So
Speaker 3: the IPO market closed, it has opened up. We've seen
Speaker 3: some very successful IPOs during the course of the first
Speaker 3: few months of the year.
Speaker 1: I think the level of.
Speaker 3: IPO activity will pick up in the second half of
Speaker 3: the year into twenty twenty five. It's not going to
Speaker 3: be as robust as it was during twenty twenty one,
Speaker 3: but I think we'll move back to what i'd call
Speaker 3: a more normalized environment for IPOs. That said, the overall
Speaker 3: size or number of companies coming public. Companies are staying
Speaker 3: private longer, they have more access to capital, and that's
Speaker 3: something I think is important for us to think about.
Speaker 3: There are consequences associated with that.
Speaker 2: Let's think about M and A as well. It's difficult
Speaker 2: in my position to understand which deal can get done
Speaker 2: and which deal can't get done based on current regulation.
Speaker 2: Tapestry cap pre apparently that's the problem. The deals can
Speaker 2: go forward. How much is that holding back M and
Speaker 2: A activity in the United States.
Speaker 3: I think there's no question that the regulatory environment has
Speaker 3: been a headwind to M and A active I'd say,
Speaker 3: for example, a large cap tech has kind of closed
Speaker 3: out because of the regulatory environment from making significant acquisitions.
Speaker 3: And I do think the you know, the regulatory environment
Speaker 3: has made it harder to understand or really expect exactly
Speaker 3: how it will intervene. And so I think that's how
Speaker 3: a chilling effect. That said, the world's a competitive place.
Speaker 3: Scale matters everywhere you turn. People are going to do
Speaker 3: what they need to do strategically to advance their position,
Speaker 3: and if they have to litigate it.
Speaker 1: To litigate it.
Speaker 3: You know, generally those companies that have chosen to litigate
Speaker 3: have generally made progress. Nobody wants to go down that path.
Speaker 3: But I you know, I think at the end of
Speaker 3: the day's scale matters and confidence matters, and so confidence
Speaker 3: has been improving over the last twelve months.
Speaker 1: Certainly in twenty twenty two and twenty twenty.
Speaker 3: Three, you didn't have high CEO confidence that affects M
Speaker 3: and A. But based on the indicators that we can see,
Speaker 3: some that are visible, some that aren't, I think dialogue's
Speaker 3: picking up in my GUS is we'll move.
Speaker 1: Back to what i'd call more normalized levels as we.
Speaker 2: Finished the year, and these stock is picking up on
Speaker 2: that up double digits YERE today up something like sixty
Speaker 2: percent from the lows of October. I think Hopenheimus said
Speaker 2: the first quarter was a near perfect print. You must
Speaker 2: be fit and better, almost vindicated about where this business
Speaker 2: is going now, and how appreciated that is. Well.
Speaker 3: I've always felt good about Goldman Sachs and the way
Speaker 3: the businesses has been positioned for a.
Speaker 1: Long long time. We have a plan.
Speaker 3: We've made a bunch of decisions over the last five
Speaker 3: or six years to execute on that plan. That plan
Speaker 3: has included our one GS operating ethos. That plan has
Speaker 3: included putting more financial resources toward our client franchise and
Speaker 3: banking and markets, which has allowed us to meaningfully take
Speaker 3: market share from some of our competitors. We've grown our
Speaker 3: financing business financing our clients, which is plays to our
Speaker 3: strength given the way we're positioned. And we've also made
Speaker 3: some very strategic decisions over the last five years to
Speaker 3: bring a variety of businesses together in our asset wealth
Speaker 3: management business, so we now have a real scale platform
Speaker 3: and asset and wealth management supervising a little less than
Speaker 3: three trillion dollars of assets, and we're seeing margin improvement
Speaker 3: and growth in that business given the way we positioned it.
Speaker 3: So I think the firm is very well positioned. We're
Speaker 3: executing on our plan, we're staying focused on our clients,
Speaker 3: and we've always been confident. What we can't control is
Speaker 3: the environment. So you know, i'd say twenty twenty two
Speaker 3: and twenty twenty three was not a great environment for
Speaker 3: our business. The environment's improved.
Speaker 1: I wouldn't say we're back to kind of you know,
Speaker 1: average environment before.
Speaker 3: We're getting there, and we're going to continue to stay
Speaker 3: focused on our clients and execute on our plan.
Speaker 2: Let's talk about leaning into certain postsitive business. Would you
Speaker 2: be open some more acquisitions, particularly for asset management.
Speaker 3: We're we're we're always you know, looking to grow and
Speaker 3: extend our franchise. Great asset of wealth management businesses.
Speaker 1: You don't buy them.
Speaker 3: They're generally for sale at certain points in time. You
Speaker 3: don't get to pick when those points in time are.
Speaker 3: At the moment, we're very focused on our execution the
Speaker 3: bar to do something you know, very significant or transformative.
Speaker 3: I say this all the time when I'm asked, would
Speaker 3: be very very high. But if something came along at
Speaker 3: some point that we thought could accelerate our journey and
Speaker 3: asset wealth management, bring a creative return, strengthen our.
Speaker 1: Position, we'd certainly consider it.
Speaker 3: But at the moment, we've got a lot to do
Speaker 3: to drive our organic growth strategy and we're making good.
Speaker 2: Problem and she you think those alpachitess might be in
Speaker 2: Europe or else sweat well.
Speaker 3: We made an acquisition in Europe a couple of years ago,
Speaker 3: an NIP, which has been a good acquisition for us.
Speaker 3: It doubled the size of our asset management business in Europe,
Speaker 3: and it added certain capabilities, particularly around sustainable finance, that
Speaker 3: we felt were strategic for us.
Speaker 1: So we will you.
Speaker 3: Know, it wasn't in the context of Golden Sachs was
Speaker 3: a two billion dollar appetition.
Speaker 1: It wasn't. But we're going to look.
Speaker 3: We have a strategy around our asset and wealth management business.
Speaker 1: We're executing on it.
Speaker 3: We've been very very clear that we have room to
Speaker 3: grow and that we think we can grow this business
Speaker 3: high single digits and continue to improve the margins. And
Speaker 3: so we've got room to run and so we're going
Speaker 3: to continue on that execution path.
Speaker 2: You've been acquiring town as well. They full m Dallas President,
Speaker 2: mister Kaplan. Is Mike going a comeback? What's he going
Speaker 2: to be doing?
Speaker 1: Uh?
Speaker 3: Well Rob, you know, Rob at a long and you know,
Speaker 3: a very very important career at Golden Sax.
Speaker 1: He ran the investment banking business. Yeah.
Speaker 3: Uh for a significant period of time. You know, Rob
Speaker 3: was looking to come back into the business, and you know,
Speaker 3: we decided he should come home to Golden Sacks and
Speaker 3: we're thrilled that'll spend time with our clients. Rob has
Speaker 3: deep client relationships. He'll spend time with our people. He's
Speaker 3: always been a leader as a mentor, uh, you know,
Speaker 3: to people. He believes deeply in Golden Sacks culture and
Speaker 3: so will be another senior leader that can spend time
Speaker 3: with all of us, you know, on the culture of
Speaker 3: Golden Sacks. We have four thousand people in Dallas, Texas now,
Speaker 3: and he adds it puts another senior leader in Dallas,
Speaker 3: which is obviously very very important for us. And he
Speaker 3: certainly has a view on the macro that our clients
Speaker 3: are going to want to hear. And so having Rob
Speaker 3: coordinated with our research team and and you know, able
Speaker 3: to talk to our clients about what we see going
Speaker 3: on in the macro is another area where we can contribute.
Speaker 3: So we're thrilled to have Rob back as a senior
Speaker 3: statesman at the firm, and and excited that he was
Speaker 3: excited to come back to Golden SEC.
Speaker 2: When I die one a hundred goldman full of left
Speaker 2: fet col do I called Jan Hatzias or mister Kamplin?
Speaker 3: Can you call Jan hatzik down to lead economists? But
Speaker 3: Rob is certainly somebody you should call to. And by
Speaker 3: the way, I'd be happy to give you opinions on
Speaker 3: that also, as with John Waldron and you know forty
Speaker 3: other parts.
Speaker 1: How they spend a lot of the teens right now.
Speaker 3: You know the range of opinions we have. We have
Speaker 3: a research opinion, but the range of opinions, it's one
Speaker 3: of debate. I think one of the things I feel
Speaker 3: so lucky there's so many smart partners at Golden Sacks
Speaker 3: that are out in the world talking to people. And
Speaker 3: as you do that, you learn, you bring perspectives to
Speaker 3: the table, and all those perspectives kind of go into
Speaker 3: the you know, into the mindset factory. Yana Hatzias is
Speaker 3: really really good at taking data and information and digesting it,
Speaker 3: and he sits in a very powerful place inside Golden Sacks,
Speaker 3: and all of us contribute to that and from flow,
Speaker 3: and so I think that's one of the advantages of
Speaker 3: the firm. Now we have a great ability to kind
Speaker 3: of listen and learn and talk to very smart people,
Speaker 3: and that gets incorporated into our views.
Speaker 2: We'll get a ton of information this week, we get CPI,
Speaker 2: we get retail sounds, a bit more dates, tons more
Speaker 2: fet speak. Can we finish on one of the business
Speaker 2: is telling you about the state of the US economy?
Speaker 2: But tronic age if we're slowing down, full en off
Speaker 2: a cliff or booming but well.
Speaker 3: And that pointing out we're definitely not falling off a cliff.
Speaker 3: I think the US economy is chugging along pretty well.
Speaker 3: I think the market is set up for pretty much
Speaker 3: what you see now is what you'll get.
Speaker 1: Throughout the rest of twenty twenty four. There have been
Speaker 1: a bunch of data.
Speaker 3: Points that indicate a slowing in what i'd call the
Speaker 3: bottom twenty five or thirty percent of the consumer economy,
Speaker 3: where people are making different choices and starting to tighten
Speaker 3: up on some of their spending choices.
Speaker 1: You've seen some earnings reports in the.
Speaker 3: Last few weeks that indicate that, But broadly speaking, the
Speaker 3: service sector is still relatively strong, and I think the
Speaker 3: economy is still in pretty good shape. You know where
Speaker 3: it'll be in six months. How much of that slowed
Speaker 3: down we see in the bottom quartile. We have to
Speaker 3: watch the data very very carefully.
Speaker 2: Just to final question, we alluded to it in a
Speaker 2: conversation a lit bit earlier. She still personally vindicates it
Speaker 2: about where the business is now versus some of the
Speaker 2: comforts to business going over the last twelve months.
Speaker 1: Goldman Sachs is a visible organization.
Speaker 3: The team that I have that helps us, the broad
Speaker 3: partners that help us serve our clients, run the firm
Speaker 3: move forward. We've had a high degree of confidence in
Speaker 3: our strategy over the last five.
Speaker 1: To six years.
Speaker 3: We continue to execute on that strategy. You know, when
Speaker 3: times are good, you know, things feel good. When times
Speaker 3: are tougher, things don't feel as good. But we kind
Speaker 3: of take a long view execute against that strategy, and
Speaker 3: we just know that if we have really really smart
Speaker 3: people working together, working collaboratively, really driving.
Speaker 1: For excellence to serve our clients. We're going to do
Speaker 1: just fine.
Speaker 3: And that's kind of true North serving our clients with excellence.
Speaker 2: We'll do just fine, and so we remain focused on that.
Speaker 2: David Solomon, thank you from very much for your time.
Speaker 2: We appreciate it. Thank you for France, and we'll catch
Speaker 2: up in New York next time. Absolutely stay with the flight,
Speaker 2: thank you, thank you. That was David Solomon of Goldman
Speaker 2: Sachs