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00:00Given the geopolitical strains, given now as well the shutdown in the U.S., David, does
00:06the U.S. economy weather the current political standoff in Washington, and does that resilience
00:11that we've seen this year continue into 2026?
00:16Well, first, thank you for having me here.
00:17Delighted to be here.
00:20The U.S. economy is in pretty good shape, and there are some very, very strong tailwinds
00:26that have really had a profound effect, and there are also some things going on that are
00:29creating headwinds, and are probably leading the economy to, you know, underperform its
00:35expectations at this time, but I'm optimistic that we're probably going to see an acceleration
00:39as we continue to add into 2026.
00:42The big structural issue that's kept the U.S. economy going so well is the U.S., and by the
00:47way, other developed economies around the world, are running very aggressive fiscal stimulus
00:51plays.
00:53Governments are spending enormously into economies in the developed world, and that keeps the
00:58economy going even when you have other headwinds.
01:01Second big macro phenomenon that's affecting the U.S. economy is all of the AI infrastructure
01:05build, all the capital spending, all that's going into the ground to support the deployment,
01:11the development, the continued growth of AI infrastructure into the enterprise, and that's
01:15a big tailwind too.
01:17That's balanced on the other side by the implementation of the trade policies, which are still getting
01:22absorbed.
01:22I think we're seeing, you know, some of the effects from trade, but there's still, you
01:27know, there's still more to go in terms of really understanding how the trade policy is
01:31fully implemented and how it balances growth.
01:34And then obviously the world's a little bit more geopolitically fragile, and that has an
01:37impact on growth and, you know, kind of confidence.
01:42But when you balance it all, and you saw the third quarter reading was quite strong, but
01:47year over year, from last December to this December, the overall growth trajectory would
01:51probably be a little bit less than 2%.
01:53And so that's slightly below trend, but still in pretty good shape.
01:58And an acceleration into 2026.
01:59I think that as the trade policies are absorbed and you have the continued stimulus and the
02:05continued kind of tech spend, you've got a pretty good tailwind.
02:10You know, I hear as I talk to CEOs that would kind of have their finger on the pulse, certainly
02:15the upper end of the economy is still spending quite strongly, a little bit more constraint
02:19on the downside, you know, the lower part of the economy.
02:22But I think the things you have to watch, you have to watch labor.
02:25There's no question labor is a little bit softer.
02:27The Fed's watching labor carefully.
02:29And, you know, I think you've also got to watch inflation and whether or not the impact
02:33of trade is just a one-time price movement or there's something, you know, more significant
02:38that comes through.
02:39And it's too early to know.
02:40And you touched on labor.
02:41How would you characterize the health of the U.S. job market right now?
02:45It's a little bit softer.
02:47And I think you can step back and you can understand why when you think about big enterprises and
02:51what's going on with technology, people are pausing hiring to really kind of evaluate how
02:56as they bring this technology into the enterprise, they can automate, create efficiencies, reinvest.
03:02And so, you know, I think at the moment that's slowed hiring.
03:05And as a result, you know, the labor number is a little bit softer.
03:08The Federal Reserve cut interest rates for the first time this year in September, last month.
03:13The markets are expecting another approximately four cuts between now and this time next year,
03:17another one percentage point of cuts, with inflation remaining above the target for the Fed.
03:21Does that seem reasonable to you?
03:23I think it's in the distribution of outcomes.
03:26You know, I think we'll have to watch.
03:28I know there's a great parlor game of people kind of predicting what the world's going to
03:31look like six months, you know, 12 months out.
03:35If you think about what the world looked like in April and where markets were in April and
03:38think about where they are today, you know, I'd just be cautious.
03:42I think that we've got competing forces between labor and inflation and how they balance, which
03:51is still a little bit uncertain, will have an impact on whether we get one more cut or
03:55we get, you know, two or three more cuts.
03:57Global stocks at record highs.
04:00U.S. stocks at record highs.
04:01The S&P 500 is up about 15% year to date.
04:04NVIDIA's market cap is around $4.5 trillion.
04:07That's more than the entire market caps of France, UK, Germany, Italy combined.
04:12Does the market rally?
04:14Does this bull market, are you comfortable with this bull market given some of the concerns
04:18you flagged?
04:20Am I comfortable?
04:22You know, yeah.
04:23Does it have further to run?
04:23I sleep very well.
04:24I'm not going to bed every night and worried about what will happen next.
04:27But markets run in cycles and whenever we've historically had a significant acceleration
04:35in a new technology that creates a lot of capital formation and therefore lots of interesting
04:40new companies around it, you generally see the market run ahead of the potential because
04:45they're going to be winners and losers.
04:46They're going to be winners and losers.
04:47If you go back and you think about the internet, pick on Amazon, you know, Amazon was one of
04:54many companies that was prosecuting that kind of opportunity.
04:57Many of the companies went away.
04:59Amazon became an incredible company.
05:01You're going to see a similar phenomenon here.
05:03I wouldn't be surprised if in the next 12 to 24 months we see a drawdown with respect
05:08to, you know, equity markets.
05:10But that shouldn't be surprising given the run we've had.
05:12But generally speaking, I think what's super exciting is the technology is expanding, new
05:18companies are being formed, and the potential of this technology deployed into the enterprise
05:24can be very, very powerful.
05:26And so it's an exciting time and the market, you know, the market looks forward.
05:29What does that mean for deal making?
05:31You've seen a pickup in deal making.
05:32What is the scale of the pickup you expect to see?
05:34And what are you seeing in Europe?
05:36The pickup in deal making broadly is meaningful.
05:41But it's particularly accelerated in the U.S.
05:44And what's driving the pickup in deal making is a changed regulatory environment.
05:49So if you were thinking strategically and you wanted to really expand your scale or your
05:54competitive position in almost any industry, for the last four years in the United States,
06:00the answer was no from a regulatory perspective.
06:02It really wasn't what's the question, what could the answer be?
06:04The answer was no.
06:05And I think CEOs at this point, imagine they're an environment where you actually can get strategic
06:12transactions done to expand your competitive position.
06:15And so we obviously, inside Goldman Sachs, we have an early look at that activity and those
06:19dialogues.
06:20And I would say it's accelerated very significantly.
06:23If you just look at the facts in terms of what's public, we've obviously had a very significant
06:27M&A quarter.
06:28We had a $1 trillion M&A volume quarter this past quarter.
06:32And if you look at large cap M&A, meaning M&A for companies that are $10 billion or larger,
06:39it's up 100% year over year.
06:41So there is real momentum in the deal making environment.
06:44I think you're going to see an acceleration of that into 26 for sure.
06:50And increasingly, CEOs are testing what the bounds are of their ability to enhance their
06:55competitive position or improve their scale and their lead where they have a leading position
07:00in a variety of industries.
07:01And I think the regulatory environment is going to permit that at the moment.
07:04Okay.
07:05So it sounds like you're going to be very busy, you and the team, on deal making in 2026.
07:07What are your priorities, David, for Goldman and the franchise next year?
07:12Well, we don't really think about it next year.
07:16Our priorities always start with the way we face and serve our clients.
07:20But in 2019, 2020, we made a strategic plan out for the firm.
07:23And we've been executing against it for the last six or seven years.
07:25And as you highlighted earlier in the discussion, we've created a lot of value because we've grown
07:30the firm.
07:31At the end of the day, as a public company, we have to grow.
07:33We might be a big, mature public company, but we have to grow.
07:36We have to grow.
07:37We have to grow our earnings.
07:38And to do that, you know, you have to have a cogent plan where you're investing in different
07:42parts of the business.
07:43We have two big principal businesses, our investment banking and trading business, where I think
07:47there's a little debate about our leadership position.
07:49It's an extraordinary business, very big business.
07:54We've been investing and adding more resources to that business over the last five, six years.
07:58We've increased our market shares very meaningfully in that business.
08:01Our market shares are up about 350 basis points over the last five years in that business.
08:06And then separately, we have the fifth or sixth, seventh, depending on how you look at it, largest
08:11active asset manager in the world.
08:13We manage about $3.3, $3.4 trillion through our asset and wealth management platform.
08:18That business is growing high single digits, is what we've put out publicly.
08:22It's actually been growing faster than that.
08:24And we continue to invest in a variety of aspects of that business where we see real growth.
08:29We can grow our wealth business, which is an ultra high net worth wealth business.
08:33We can continue to grow our alternatives platforms, private capital formation.
08:37And we have a very flexible solutions business where really for big institutional capital allocators,
08:43we have an ability to really create and customize what they need from an investment perspective.
08:47There's been a lot of discussion here at Italian Tech Week about how to get globally significant
08:52generational businesses, tech businesses built out of Europe, $100 billion plus.
08:57What is your prescription for that?
08:58I mean, my prescription for that is savings in Europe and capital in Europe needs to come
09:04into the risk economy in Europe.
09:06You just don't have the scale and scope of the available savings here getting deployed
09:12into the tech risk ecosystem at the pace that it should when you compare and you look to the
09:18way things are deployed in the United States.
09:20And in fact, one of the things that happens here is capital from here looks over there.
09:25And so there are enormously smart, talented people here, lots of great ideas, capital formation,
09:31and a real focus on risk-taking.
09:33Stuff's going to go right, stuff's going to go wrong, but you've got to take risk, you've
09:37got to deploy capital.
09:39This really has to become a bigger center of capital deployment.
09:43And also, the more we can get the European Union to be operating as an economic union and
09:49taking advantage of the 400 plus million people that are here, as opposed to the individual
09:54states, for lack of a better term, the more we can get the tech economy working that way,
10:01I think the better chance we have of reaching your goal, which I think would be a very noble
10:04goal for the world.
10:05I mean, the more innovation over here, the better for the world.
10:08Yeah.
10:08So Ursula von der Leyen will be here.
10:10So your one message to the European Commission president would be centralizing or capital,
10:16capital markets?
10:17Well, certainly...
10:17Are you seeing the urgency?
10:19You know, I'm feeling more urgency when I'm over here, but still, you know, the regulatory
10:25process in Europe is slow.
10:27Capital markets union, for sure, you know, more encouragement of risk-taking in capital
10:32markets, trying to bring it all together, consolidation of the banking system instead
10:36of national champions in every market, consolidation in the exchange system instead of champions
10:41in every market.
10:42You know, those are all things that will make capital formation easier, risk capital formation
10:47better, and will allow the acceleration of great companies here in these markets.
10:52You have lent into tech and into AI.
10:54Your team are telling me you have 12,000 engineers across Goldman Sachs.
10:58You have the Goldman Sachs AI assistant.
11:00You have an AI developer.
11:02What parts of the business, and you've talked about some of them, whether it's wealth or asset
11:06management or trading or the consumer, what parts of the business at Goldman are going
11:09to be most transformed by AI?
11:10Well, I think, you know, the business at work is getting transformed by AI broadly.
11:16And, you know, we are, at our heart, we're a professional services firm.
11:20If you think about Goldman Sachs and the value it brings to its clients, its value is deployed
11:25really among three different things.
11:28People, capital, technology.
11:30And so, if you think about AI, you know, AI really allows smart, talented, driven, sophisticated
11:38people to be more productive, to touch more people, to have better information at their
11:42disposal, better analysis.
11:44I mean, this is a journey we've been on.
11:46You know, this technology accelerates it.
11:48But when I started 42 years ago, and I wanted to look at five different companies and think
11:52about how to compare the trading in five different companies, I had to go to the library, I had
11:56to go to the microfiche, I had to spend hours really thinking about how to put that comparison
12:01together.
12:02Obviously, today, you can do it in a fraction of a second speaking into your phone.
12:06So, this journey in providing tools to super productive people and giving them more capacity
12:13to serve their clients and to be more productive is obvious.
12:17And we've been working on all those tools, as most enterprises have.
12:20I think the more interesting thing for enterprises broadly, and this isn't unique to Goldman Sachs,
12:25because the world is underpinned by technology.
12:28Coding is time-consuming, but this technology allows you to code with greater productivity
12:34and efficiency.
12:35So, one great coder now with a tool such as Cognition Labs Denim, Devin, for example, you
12:42know, really creates massive coding capacity for one coder, as opposed to, you know, having
12:4810, 20 people sit around for a few days.
12:50So, big productivity there.
12:52And then, of course, when you think about operational systems in any business, the ability
12:56to accelerate automation and therefore drive more productivity, it's not just a cost exercise.
13:02It's actually about taking that productivity and having more capacity to reinvest in growth
13:07in your business.
13:09You know, we'll spend, you know, $6 billion on technology this year.
13:12I would have liked to spend eight.
13:14But I can't afford it because I've got to deliver returns.
13:17But with this technology, my ability to spend more and invest more in growth and accelerate
13:22things that can grow our enterprise, it's more available to us.
13:27Five, 10 years time, fewer jobs in banking as a result of AI?
13:31I don't think that's the right lens.
13:34I think there are places where the number of jobs, the actual jobs will come down.
13:39But the lens I look at it is, you know, I think we can continue to grow Goldman Sachs.
13:45I think we can continue to serve a wider slice of clients with these tools and these capabilities
13:50being integrated into the firm, changing our processes.
13:53The question, you know, the way I would answer the question, if the firm was the same size
13:57and it didn't grow, we would certainly be operating with fewer people.
14:01But if the firm grows and you expand and you can invest in other areas for growth, we'll
14:05wind up with more jobs 10 years from now than we have today.
14:08Just as, by the way, we have in every step along the journey for the last 40 years, as
14:13technology has made us more productive.
14:15I don't think it's different this time.
14:17So you thought, to be clear, you foresee more headcount in five, 10 years time.
14:20That's because I think we're going to be running a much bigger enterprise.
14:22Okay.
14:23Yeah.
14:24Do you worry about, there's been some hand-wringing in terms of the investment.
14:28We've seen the hyperscale.
14:29There's $350 billion in terms of CapEx and data centers and infrastructure.
14:33And the concern that the return on investment isn't being matched.
14:36That's not matching the revenue on the other side.
14:39Does that concern you, that mismatch?
14:40Well, sure.
14:41It, you know, it concerns anybody that's deploying capital.
14:44But I think the journey is pretty clear, even though, you know, we're at the beginning
14:48of the movie, not the end of the movie.
14:50I guarantee you at the end of the movie, there'll be a bunch of winners and there'll
14:53be a bunch of losers.
14:54There'll be a bunch of capital that was deployed that ultimately delivered very attractive
14:58returns.
14:59And there'll be a lot of capital that was deployed that did not deliver returns.
15:02And you can go back in any super tech cycle or any big investment cycle.
15:07And that is the pattern you'll see.
15:09It's not, again, it's not different this time.
15:12We just don't know how that will play out.
15:14But it's very exciting to see these technologies get deployed.
15:18And the impact it's going to have, it just, it allows productive people and productive businesses
15:24to be even more productive.
15:25And so people get very caught in this question of more or less.
15:29And, you know, I prefer lenses.
15:31There are obviously things where we're going to have a lot fewer people.
15:34But I'd love to have the capacity to go get more people to spend time with clients.
15:38I'd love to have the capacity to invest in new businesses where I think we can affect
15:42clients and we need people to do those things.
15:44So it's a give and take and nobody stands still.
15:46To be clear, you're not worried about an AI bubble.
15:50You know, an AI bubble.
15:53I think that there will be a lot of capital that's deployed that will turn out to not
16:00deliver returns.
16:01And when that happens, okay, people won't feel good.
16:05Okay, if, you know, I don't, I'm not going to use the word bubble because I don't know.
16:10I don't know what the path will be.
16:11But I do know people are out on the risk curve because they're excited.
16:18And when they're excited, they tend to think about the good things that can go right and
16:22they diminish the things you should be skeptical about that can go wrong.
16:26We're in one of those environments where people are out on the risk curve.
16:29And there'll be a reset.
16:31There'll be a check at some point.
16:34There'll be a drawdown.
16:34And the extent of that will depend on how long this goes.
16:39By the way, if you were, if we were having this conversation in 1988, you would have been
16:44asking the same, 1998, you would have been asking the same question, yet the environment
16:48went on for another three years until there was then a significant check in 2001 and 2002.
16:54So I'm not smart enough to know.
16:56I think it's going to go on for a while.
16:58I think the opportunities are great.
16:59I think they're very exciting.
17:00But I also see complacency around risk taking.
17:04And when that happens, ultimately, there'll be some speed bumps or some drawdowns.
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