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00:00What's the global economy look like from your lens right now?
00:03I think the economic setup is pretty constructive, especially in the U.S.
00:08But broadly, I think it's relatively constructive.
00:11You've got a confluence of lots of stimulative fiscal policy and developed economies.
00:17You have a general deregulatory trend and tone, both in the U.S. and Europe,
00:24particularly in the U.S. after a very, very difficult regulatory environment
00:27under the Biden administration.
00:29I think the Trump administration is moving quickly to rebalance regulatory burden.
00:34And I think there's a desire in Europe to also improve the regulatory situation.
00:39That's quite stimulative.
00:41Massive AI investment, infrastructure investment around the world,
00:43which is also quite stimulative.
00:45We've been in a monetary easing cycle, which also creates tailwinds.
00:50And we have midterm elections coming up in the U.S.,
00:52where you certainly could see specific policy actions,
00:56particularly around, you know, affordability that also could be stimulative in some way.
01:01So, you know, economically, things set up nicely.
01:05But?
01:05Well, I wouldn't say but.
01:07A little bit the same as last year.
01:09There's a lot going on geopolitically.
01:11There's a lot going on in the world.
01:12And as that stuff plays out, it can lead to speed bumps or, you know, distractions.
01:21You know, we saw one in April with the rollout of the trade policy.
01:23Right.
01:24That kind of slowed the economic momentum down.
01:26We then saw a pivot.
01:27We got through that.
01:29Obviously, there's a lot of noise at the moment when you talk geopolitics.
01:32You talk kind of global economic order.
01:35And people invest.
01:38People move forward when they're confident.
01:40The noise sometimes can sap confidence.
01:42Yeah.
01:43I think at the moment, generally, things look relatively green.
01:46But that doesn't mean there aren't issues that could pop up.
01:48Well, you just came back from Davos.
01:50And the ruptures, the cross-Atlantic relationship seems to be frayed at the edges, if not at the core.
01:57How does that disrupt what's been a longtime alliance between the EU and the United States?
02:04Well, I think the word frayed is a much better word than ruptures.
02:08I don't think there are ruptures.
02:10I altered my words.
02:11Yeah.
02:11I think there's a lot of noise.
02:15And that noise frays trust.
02:18You know, trust is built over time.
02:20Trust in important, you know, relationships around the world between nations is really built through sacrifice over time.
02:27And, you know, when there is, you know, when there's noise, it can fray those relationships.
02:34I think the fundamental relationships are still strong.
02:37But I certainly, in Davos, sensed a level of frustration around some of the policy debate.
02:43But I, you know, I think that stuff will get passed.
02:47One of the things that I'm spending a lot of time doing is thinking about what's noise and what's a substantive issue.
02:52And, you know, I, you know, I do think we're set in a place where we actually can make progress on a bunch of substantive issues.
03:01But we certainly have, you know, an administration in the U.S. that's shaking things up.
03:06And that sometimes leads to, you know, to fraying or concern and a bunch of noise.
03:10How's your relationship with the White House right now?
03:12Our relationship with the administration, you know, is very, very good.
03:16You know, one of the things that I've said publicly that I really appreciate, this administration is open for business and it's engaged with business.
03:24You know, in the past administration, we had trouble engaging the administration.
03:28This administration takes your calls, will listen to your point of view.
03:32They may not agree with everything.
03:34We push back, you know, privately and tell them when we don't agree.
03:37But they are open for business and engaged in a very constructive way.
03:40And I think that's the way the system is supposed to work.
03:42Not to dwell on it, but I'll just ask one more question on that.
03:45It's like, I mean, is it conducive to having, you know, good policy and the relationships when he's suing J.P. Morgan for, you know, allegations of debanking?
03:56He's sort of sidelined Brian Moynihan at Bank of America.
03:59He called you out in August for some things, saying you should go back to DJing and the like.
04:05I like DJing.
04:06You like DJing.
04:07I know he was hard on Jan Hatsias, your chief economist, for his take on tariffs back in August.
04:13But Jan, in his research, has also sort of changed his tune to saying the pass-through on tariffs into the economy is pretty much already peaked.
04:21Has it taken a lot to regain the trust of the White House?
04:24I don't look at it that way.
04:28I think we have a relationship with the administration.
04:33It's a good relationship.
04:35We like some of the things they're doing.
04:37When we don't like them, we voice our opinion.
04:39They like things that we do.
04:41When they don't like them, they voice their opinion.
04:44Sometimes I wish it wasn't in the media and the noise, but that just goes with the territory.
04:48We're focused on how do we grow?
04:50How does the economy grow?
04:52How do we contribute to helping the economy grow, to supporting our clients who are investing in America, investing in the global economy and trying to grow?
04:59And I would say this administration is incredibly constructive on that stuff.
05:03And again, ignore the noise.
05:05Focus on the substance.
05:06We're focused on the substance.
05:07And you were just reiterating a bunch of noise.
05:11Well, OK, let's talk about some of the numbers that you had, because in the fourth quarter, blowing past expectations in equity trading revenue.
05:17What's the market look like with a number of big-ticket IPOs coming, whether it's SpaceX or others?
05:23What's your outlook for the IPOs?
05:24The environment is very constructive for our business, particularly our banking and markets business.
05:30We highlighted in our fourth quarter earnings, our year-end earnings, that our backlog was again at another significantly high level.
05:38And it moved quite positively.
05:40I think it's going to be a very constructive year for M&A activity.
05:43Could be one of the best years, if not the best year ever, for M&A activity.
05:47I think CEOs feel unleashed to really invest, drive growth in their businesses.
05:53It's a better regulatory environment.
05:55They're asking big questions about what the art of the possible is.
05:58That's very different from where we were four years ago, where the answer to any question was no.
06:02Now the answer to any question is yes, maybe.
06:04And so CEOs are looking forward.
06:06That's a very, very constructive environment for our business.
06:09So we expect a strong M&A year globally.
06:11We expect a strong capital markets here globally.
06:14And we think the firm is very, very well positioned to capitalize on that.
06:17Two Fed cuts you're expecting?
06:19And what about Fed independence?
06:21Are you worried about that?
06:22You heard Jan's position on that.
06:25I think a lot of that will depend on the trajectory of the economy.
06:29I think we could see upside to both nominal and real growth this year.
06:33That would have an impact on whether or not the trajectory of monetary policy cuts continued.
06:4020% chance of recession, he said, down from 30%.
06:43Do you see any risk of...
06:45You know, I'll let Jan be the speculator.
06:47But at 20%, you know, the base case for a recession is one out of seven, okay, which is a little bit lower than 20%.
06:54I think the chance of a recession this year is low in the U.S.
06:57And I don't think you'd see one unless there was some exogenous event that materially changed the current sentiment.
07:05And I don't think that's, you know, I don't think that's a likely, you know, a likely outcome.
07:10So it's a pretty constructive environment.
07:12Are you seeing a necessary broadening out of the markets beyond MAG-7?
07:16And there's also the risk, of course, of a potential bubble.
07:19Well, you've seen a big move in markets away from MAG-7.
07:22I think there's been broader participation.
07:24I think companies are investing.
07:26I think there's a big view that AI productivity is going to move into the enterprise.
07:30And that creates flexibility for a broader array of companies to invest.
07:34And so I think there's a broader level of participation.
07:36And things are set up quite constructively for the next few years.
07:39This AI productivity gain in enterprise is a real thing.
07:43It's going to take a while for that to be implemented.
07:46But we're quite constructive on that and the tailwinds that that creates for economic growth and for investment.
07:50Well, that's a good pivot to Hong Kong because the stock market here regaining the IPO crown last year.
07:56And essentially on the back of all these IPOs in the tech sector, a lot of them really the big gainers have been the infrastructure.
08:02And not necessarily the applications or the large language models.
08:07They've been essentially the hardware players, the chips and the like.
08:10Do you see a sustainability of this pipeline from China of AI?
08:15If the environment continues to be constructive the way it is now, yes, I think it'll be a very good year for IPOs over here too.
08:24I think there's a lot of pent-up capital markets activity because we really, coming out of the pandemic, we kind of shut down capital markets for a period of time.
08:34You've got a more conducive regulatory environment.
08:36You've got a good detente in U.S.-China with a constructive setup in 2024 for more constructive dialogue.
08:44I think all that's conducive for more IPO activity here in Hong Kong.
08:47And I think you're going to see more EOP activity in the U.S. and Europe.
08:50So it's a pretty constructive setup.
08:52Now, of course, if there was a big exogenous event, we could slow it down.
08:56But I don't think that's the base case.
08:59But that doesn't mean we won't have some speed bumps along the way this year.
09:02We did in the last week get news of maybe Beijing tightening some of the listing requirements for companies here in Hong Kong.
09:09There had been a flood, a rush to the market, obviously.
09:12Maybe there's some discrepancies on whether it's CICC or some of the Chinese banks and some of their underwriting capabilities.
09:20How much of an opportunity would this be as well?
09:23As the Chinese banks have really upped their game in the underwriting and investment banking game here with listings.
09:29I think it's very, very important to have a vibrant, long-term, successful capital market listing venue here that you ensure the highest level of standards.
09:39And so, you know, mistakes and underwriting prospectuses, not acceptable.
09:43You know, the standard should be high.
09:45I think it's good that the regulators are calling that out and asking for a standard of excellence.
09:49We're used to operating at that level of standard all over the world.
09:53I think there'd be few people that dispute Goldman Sachs' position as the leading, one of the leading, if not the leading, equity underwriter in the world over the last 25 years.
10:03And we expect to participate very actively in any market, you know, that's vibrant.
10:07There's always competition.
10:09But I like when people are advocating for the highest standards.
10:12That builds confidence in IPO markets.
10:15And I think that's something that's very important.
10:17I understand you're heading up to Beijing tonight, I believe.
10:19What's your agenda?
10:20What's your top priority for the China market right now?
10:22Clarity from a regulator is what?
10:24My top priority is to be there, to spend time with government officials, spend time with our clients there.
10:29You know, I move around the world and everywhere I go, it's the same agenda.
10:33Spending time with our clients, spending time with important, you know, government partners, spending time with our people.
10:39And so, you know, I'm back up in Beijing for the next couple of days to do those three things.
10:44No different than what I did last week when I was in Davos.
10:46No different than what I'm doing here in Hong Kong.
10:48No different than what I'll do when I'm back in Washington later this week.
10:51You know, that's kind of what we do.
10:54Spend time with our clients, spend time and engage with government leaders, spend time with our people and make sure we're doing everything to ensure constructive markets, strong capital markets, strong M&A environment.
11:07And right now, I think we've got a constructive environment for all of that.
11:09What's your number one priority for the China market?
11:11I mean, it's kind of a two-speed economy.
11:13Obviously, export-driven for now, domestic economies troubled.
11:19A-share market is doing pretty well, though.
11:20Our number one goal for the China market is the same as it's always been.
11:25We've got a big base of clients there, and we're trying to position to help them achieve their goals.
11:30Whether it be capital raising, advice, consolidation, strategy.
11:35You know, our job is to serve our clients, and that's always our number one priority.
11:38You said you're always on a plane.
11:40You're heading around the world.
11:42Qatar Investment Authority, you have a new strengthened partnership there, about $25 billion.
11:46What does that say about the importance of the Middle East?
11:50When those Chinese banks, I just mentioned as well, they just tripled their number of loans last year to the Middle East, usually Saudi Arabia and the UAE.
11:58How important and how strategic would be the place where you invest those funds?
12:03Well, the partnership with the QIA is a partnership to invest all over the world based on our broad global asset management platform.
12:17We also have partnerships with clients in China and partnerships with clients in Singapore.
12:22We have partnerships with clients all over the world.
12:24That partnership is a very, very important partnership and a significant partnership.
12:28And what the QIA sees is our global footprint, our investing expertise, and in particular, our very, very unique sourcing capabilities to ensure that they get exposure to the most important and interesting opportunities around the world.
12:42That's what we do.
12:43That's kind of the strength of our asset management franchise.
12:46And so, you know, that's part of the growth in that business, which has been an important key grower for Goldman Sachs.
12:52Let's keep going around the world.
12:53How about Japan?
12:54I mean, they had the recent bond market volatility.
12:56Obviously, there's some concern over the fiscally assertive policies from Takeichi.
13:02What's your view right now, given the bond market?
13:05There's no question that, you know, given the setup over the last 30 years, there's bond market volatility in Japan.
13:11Japan needs, you know, a more outward-looking economy and more growth, you know, to really get to a different place than where it's been over the course of the last three decades.
13:19But we're actually quite excited because we see pensions and corporates in Japan, you know, looking more outward.
13:26We see a culture of risk-taking developing in Japan that really hasn't existed for the last three decades.
13:31And so we're optimistic that through our banking and markets business and our asset-managed business, there's management business, there's more that we can do to help clients in Japan.
13:40And so I'm actually headed to Japan next month.
13:43Now I'm again, and, you know, I actually think there's some very, very interesting opportunities to help our clients there and partner with our clients there.
13:50Globally, what are your hiring plans?
13:52Do you have a kind of a good map you can reveal to us where you think you need to hire more or where you need to-
13:57We're always looking for great talent all over the world.
13:59You know, I think the trajectory of talent growth for us in 2026 will be a little bit slower.
14:06But, you know, certainly as you look out five years from now, the firm's always growing.
14:11It's always looking for talent.
14:13And the thing that really differentiates the firm is extraordinary people.
14:16So even with the technology tools and AI, our ability to attract, develop, and retain extraordinary people is part of the secret sauce of Goldman Sachs.
14:24That doesn't change.
14:25I think Wall Street shed about 10,600 jobs in combined, the big banks, last year.
14:30Does 2026 look like that as well?
14:32I think that was the most since 2016.
14:35I don't have a view on Wall Street overall and its headcount.
14:38You know, I understand our headcount plan.
14:41Yeah.
14:41And, you know, all we've said publicly is it's probably a little bit more constrained in 26 because we see opportunities for efficiency and we're trying to deploy those.
14:50But ultimately, we've also said those efficiency opportunities give us more of an opportunity to invest in parts of our business where we can scale growth.
14:58And some of that growth scales with additional headcount.
15:01You know, I point to our wealth management business, which scales with people all over the world.
15:04And so we're excited about that.
15:06Let's end the interview on a moonshot.
15:08The prediction markets.
15:09You mentioned that, obviously, in the call.
15:11Very interested.
15:12You're looking at this.
15:13You have teams looking at it.
15:15What does a foray into the prediction markets look like for Goldman Sachs?
15:19Well, I mean, Goldman Sachs, to some degree, is in prediction markets because we operate derivative contracts.
15:23Yeah, right.
15:24But really pegging it to real life events, that kind of thing.
15:27I think there are interesting things going on in the prediction markets that would allow our clients the opportunity to think about and hedge risks that are inherent in their positioning.
15:38And I think that's super interesting.
15:39So, obviously, Goldman Sachs, given what we do, given our position in derivative markets, would be anxious to understand that, partner with some of those prediction markets or develop capabilities of our own that give our clients access to that with depth and liquidity that doesn't yet exist in those markets.
15:55But if you can develop depth and liquidity in those markets, it allows very interesting ways to hedge and think about positions that people take.
16:03Does a partnership or a merger acquisition happen this year?
16:07Nobody's talking about merging or buying these businesses.
16:10These are early stage things.
16:12And I think they're very, very interesting for people that are interested in market risks and how you hedge different market exposures.
16:20But it's an extension of stuff that's been going on in the regulated financial markets for a long time.
16:25And, of course, that's going to interest Goldman Sachs and interest our clients.
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