Goldman's 2026 Outlook in a Volatile Market

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00:00The last two weeks certainly creates a pretty complex backdrop for where we're headed for

00:052026. So that's something that we factor in. And that complexity is creating a lot of uncertainty

00:11in markets as we're seeing today with a lot of the different dispersion across equities.

00:15That complexity is ultimately really good. That uncertainty is ultimately really good for active

00:21investors like us because it creates a lot of opportunity. So we haven't reiterated,

00:26we haven't re-underwritten our outlook as a result of it. We think that there's a tremendous amount

00:32of opportunity going forward into the new year. I'd say there's three key parts of our outlook that

00:37we're focused on. One is we think that the macro backdrop does lend itself well to having a good

00:42year for risk assets again. What, because it's a strong economy? It's a strong economy. You also,

00:49we believe, are going to have central bank cuts, right? And so that's also helpful. And corporate

00:54earnings remain strong, right? And so when you have those three things put together,

00:57as much as we have so much complexity around the world, you try to simplify it as much as you

01:01possibly can. You boil it down into those three factors. And those are good things for equity

01:06markets in particular. So those are the main three factors that you're focused on. A strong economy,

01:12Fed, an accommodative Fed, and corporate earnings that continue to be like double-digit growth,

01:19beating expectations by five plus percent.

01:21Yeah, those are the three factors. We're not expecting double-digit corporate earnings growth

01:25again. We're probably more like high single digits. So coming off a little bit from what we've had

01:29throughout this year, I would say. But yeah, we think good macro backdrop, good for equities.

01:36We do think it's important with central bank cuts to have a little bit more income in the portfolio

01:40and income in a couple of different ways, which we can talk about. And then the third thing that I

01:45would say is, you know, it's important to be diversified. It's important to have downside

01:49protection. So all of this backdrop that we're talking about, all of this uncertainty,

01:53you can't just put it in equities and let it ride. You have to make sure that you have some

01:56downside. Yeah, I was going to say, because on a day like yesterday, the Russell fell,

02:00the equal weighted S&P 500 fell. It felt that any sort of downside protection diversification did

02:05pretty poorly yesterday. Well, thankfully, there's more asset classes than just equities. And so that's

02:10that's one benefit, right? But can I ask that? Sure. Can you not hedge through equities right now,

02:14just given how ubiquitous the AI trade has become? You can diversify through equities,

02:19certainly, right? So having a higher allocation to develop markets, meaning outside of the U.S.

02:23I was just in Europe. I got back last night. There's a lot of enthusiasm for Europe.

02:27There's a lot of enthusiasm for what's going on in Japan and new administration there and fiscal

02:31expansion. So I think those are two markets, if you look, have done, you know, up 25 percent this

02:36year. S&P is up, what is it now, 11 percent, right? So that's another good opportunity. I wouldn't

02:41necessarily say it's a hedge on equities, but it's good to diversify out of just the AI trade in the

02:46U.S., right? And so that's a theme that we've been talking about for some time now is sort of

02:50broadening of equity markets. It's not just about the S&P 500. And that's come through this year.

02:55Can I just ask, I note that your title is global co-head of public investing at GSAM. And we have

03:01been shifting our focus, as has everyone lately, to really include the private markets.

03:07I've had a lot of your private market colleagues on as well. Yeah, absolutely. And they've stumbled

03:11as of late. Well, just the past few days, it's gotten a little bit more dramatic for them.

03:16Do you expect investors to continue diversifying into private assets or do you think that

03:23maybe they shift back? No, I mean, look, I think there's tons of opportunities in private markets

03:29and that will continue. When you think about an entire portfolio, the majority of it is in public

03:35assets. But you can get a lot of incremental return. You can get other diversifying benefits

03:40from being in private markets. And I think that that trend will certainly continue. There's a lot

03:45of focus on private credit right now. We think those are mostly idiosyncratic issues. But really,

03:50it comes down to underwriting. And if you have an organization like we believe we are that does

03:55good underwriting, then you'll be you'll be just fine. Just only less than a minute here, Greg. But

04:00but to your outlook, how important is it that we do get Fed rate cuts at least starting next month?

04:06I don't think it depends upon Fed rate cuts. But I do think that that's helpful for the overall setup

04:12of risk assets. Right. Look, if we don't get Fed rate cuts because of inflation, that's probably bad.

04:17If we don't get Fed rate cuts because the economy is accelerating at a faster pace than we realize in

04:22the job market remains strong, I think that that's fine for equities. But look, I think the good news in

04:27all of this is that for individual investors, for their advisors, there's more tools than ever to be able

04:33to navigate through these complicated markets with new ETFs, buffer type strategies, other diversifying

04:38liquid alternatives. There's a ton of tools that really haven't been available over the last five years

04:43that are now available to investors. All right. I want to talk to you about all that stuff. Sure.

04:46We're out of time right now. So I hope you can come back. I'd love to join us because that's a can of worms

04:51that I want to open up. I'd be delighted to open it with you. All right.

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