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Amid market swings and trade war chaos, at least one top executive sees a light at the end of the tunnel. Goldman Sachs (GS+0.18%) CEO David Solomon said Tuesday that “things will settle down” after all the disorder, despite slow activity in mergers and IPOs.
“If the level of uncertainty grows from here, yes, you will not see the same amount of capital activity — but things will settle down,” Solomon said in an interview with Bloomberg Television. “People need to transact, need to raise capital, need liquidity for their investments. Part of this is just a reset of expectations.”
He added that he was encouraged by what he was hearing from the Treasury Department on easing banking regulations.
“I really think there’s an opportunity to take that pendulum, which really was an inhibitor to growth, free up some capital, get that capital recycled into the system, increase lending activity,” he said. “So I’m quite constructive that we’re going to see some positive change on the front of financial regulation in the U.S.”
He added that he sees U.S. treasuries as a “safe haven.”
Still, Solomon warned that the current level of policy uncertainty wasn’t healthy. As a result of President Donald Trump’s tariffs, more and more CEOs are expecting a recession, and Federal Reserve chair Jerome Powell said the levies are “highly likely” to fuel inflation.
“The policy actions to date have raised the level of uncertainty to a degree I do not think is healthy for investment and growth,” Goldman’s CEO said. “As I am talking to CEOs, talking to our clients, they are holding back on investment, and they are certainly tightening their belts.”
He warned that “expense management is going to be more in focus for CEOs” in 2025 and said companies could start cutting expenses by doing less hiring and laying some employees off — although those cost-cutting measures don’t seem to extend all the way to the top. On Wednesday, Goldman Sachs shareholders supported a measure to give both Solomon and company president John Waldron an $80 million retention bonus, which received notably less backing (66%) than last year’s executive compensation did.
This isn’t the first time Solomon has warned of a chaotic market environment. In the company’s first-quarter earnings report, he warned that this second quarter has seen a “markedly different operating environment.” And on the subsequent earnings call, he said his “general message to people is to go slow and take a pause here until we have more clarity around a lot of these issues.”
The U.S. markets aren’t the only thing on the Goldman CEO’s mind. Solomon also said Tuesday that he sees the Middle East as a key opportunity for firms such as Goldman given the region’s vast capital resources and global investment. And he also talked about European regulation, where he said that he hopes officials would roll back regulation that has prevented balanced growth in capital markets and consolidation in the sector.
“I definitely take away a sense of resolve, of excitement, about actually moving forward, breaking down some of the regulatory barriers that have been inhibitions to growth [in Europe], and that would be quite constructive,” he said. “More stimulative fiscal action here would also be good for growth.”
Meanwhile, the IMF recently slashed its U.S. economic forecast, saying the trade war will “significantly slow global growth.”
