Goldman Sachs CEO David Solomon Talks Middle East Conflict

It's turned out to one of our top interviews this morning from Saudi Arabia's Future Investment Initiative sum Much. Bloomberg has been speaking to CEO of Gold and Sachs David Solomon. Our Horizons Middle East Africa anchor Jimani Bressacci has been speaking to him. Here is the exclusive interview in full, starting with David Solomon's thoughts on Saudi Arabia as an investment destination.

We are excited to be opening up a new office in the financial district, and I would say we are committed to our presence here in Saudi Arabia. I was reflecting, you know, last night, around the past eight years, seven or eight years that I've been coming to this event and just watching the progress, you know, and the progress has been meaningful, and we've participated in that progress. It's interested in what your clients here on the ground participate in that progress and be in a position.

To try to help them. But also as you look at the international community.

The international community is more interested in what's going on from an economic development perspective here, and we're delighted to be positioned to help our clients in this region.

Yeah, and it feels like there is so much deal making even IPOs. Last year it was a great year in terms of activity across all these exchanges, which means also more and where banks are looking to get involved in the action. Are you finding it difficult to retain and attract talent given increasing amount of competition.

We have a very very deep bench of bankers around the globe, including here in the region. We have a number of bankers from the region, the base out of London and sometimes move back to this region.

We've been able to attract talent. We're Golden Sachs.

We've been able to attract talent here in this region all.

Other places in the world.

I do agree there's more competition here, but that's positive and actually the levels of activity are picking up and I feel very very confident and our ability to have really extraordinary people on the ground here to serve our clients very well.

One of the stories that our Bloomberg News team have you been reporting on is the fact that the PIF have been sort of refocusing some of their investment efforts at domestically, which means that in terms of the relationship with asset managers in the region, there's been a lot more focus on or questions asked about what some of these asset managers are delivering on the ground within Saudi Arabia.

It's a very very natural progress.

And we've been talking about what's going on here in the kingdom, but the level of investment in diversifying the economy here in the kingdom is significant, and of course that's a significant focus of the PIF.

For a firm like.

Golden Sachs, where we're well positioned to serve as an investment banker, to serve as a trader, to serve as an asset and wealth manager, I think the firm is incredibly well positioned to help in this part of the world, regardless of the trajectory.

So we're excited about what's going on here.

I'm excited about the opportunities we'll have to help serve our clients here.

I can I ask you what your level of concern is vias to be the geopolitical situation in the region right now.

I'm concerned about the geopolitical situation in the region. It's not good for security. It's not good for safety, it's not good for economic growth. And I'm hopeful that leaders both in the region and around the world, and important governments around the world will be able to find a path to settle.

It down as we move forward.

But of course, anytime you have geopotocon certainty, that's not good for economic growth and prosperity.

And one of the things I just noticed i spend.

Time with people here on the ground, people want to find a path to a secure, prosperous, economically vibrant in Middle least.

Has it impacted business trading.

In the region, You know, it's interesting.

People are obviously concerned and very very focused, but it's not had a significant impact on activity up to this point, on activity in this part of the region.

Yeah, well, let's just stop. More broadly, your earnings came out very strong, sur fascinating expectations. Obviously the stock has had a good run this year. You must be feeling good. But let me just ask you how you're feeling about the outlook in general.

I feel good about the outlook.

I think you know, if you took a tour around the world, the US economy is actually doing quite well.

It's been very, very resilient.

I'm a little bit more concerned about European growth and also the economic situation in China, but overall, the engine of the US has been quite powerful, and our building our business while.

Global, is quite correlated to US growth. I can give you a.

List of things to worry about, but generally I can tell you also a list of things that I'm quite optimistic about. The progress around technology and AI and the opportunities to increase productivity, or real progress that we're seeing around healthcare and medical technology or extraordinary and the impact that they'll have.

So there are a lot of reasons to be optimistic about.

The growth and trajectory of economies around the world, but there's also fragility and things can go wrong.

Well, I was going to pick up on that because it's been really difficult to sort of track the narrative around the US economy the last few months, because we've gone from hard landing to soft lanning. Now people are talking about no lanning. I'm not going to ask you for a descriptor of the US economy, but what I will ask you is, where are some areas of concern that you're seeing?

Well, the base case in the US is certainly at this point for a soft landing. That doesn't mean that at some point there can't be, you know, some sort of a slow down in economic growth. But what I would say is the US economy is proving to.

Be incredibly resilient.

We do have an election in the US and there'll be policy decisions that come out of that election, and so you know, certainly those will have an impact on the trajectory in twenty twenty five and twenty twenty six. With respect to you know, European growth, European growth is

Well, I mean, the other big development is obviously the said have started cutting interest rates. And I think you were asked about what your expectations were for the said the last I already said a thirty percent chance of a fifty basis one cut. So we'll give you that they went for the fifty. But what matter is more, as you think for financial markets, how quickly they go or where they end up.

I mentioned I think there's an awful lot of attention on short term rates. I'd actually be focused over time on longer term rates. And you know, you know, I continue to be concerned about the level of spending and deficits in the United States. I don't think that's a short term, you know, crisis factor. But unless we have policy change and get our spending and our debt under control, you know, ultimately that's kind of a bigger impact on long term rates. And I think people are anticipating today

You know?

Those are all things I think the FED will be watching carefully.

Can I just circle back to your first point vis a vis spending, the send your treasuries trading around four point three percent, so you think that is ad and put the pricing in the fiscal premium in the years to come to us.

The market's the market, and so it is absolutely pricing

I want to ask to you a little bit more about your trading numbers, since they came in stronger than expectations, and earlier on you had guided that fixed income trading was gonnessee to clients, but overall for the quarter, you ended up posting quite strong trading results, namely on the back of your equity trading business. Was this sort of a one off because there was so much volatility and equities this quarter or can we expect that momentum to continue more?

Equity franchise is performing very very well. We have the leading equity franchise of the big banks. It's something we've invested in, it built over a long period of time. I can't tell you quarter to quarter what the market environment will put up for that franchise, but we were our positioned very well to serve our clients and have

It had been softer in August, particularly in fixed income.

We had a very very strong comp from the third quarter in twenty two three, and ultimately our fixed income business was softer.

Year over year.

But I did say when I made that comment that it would be very very dependent on what happened in September, and we actually had a more robust September than we expected.

Yeah, well, Marcus said, do you think you can continue to gain market share of the trade inside?

We do believe there are opportunities for us to continue to take share, although we're operating in a leading share position, so those gains will not be as pronounced as they've been over the last five years. But we think we have a very very powerful ecosystem in our global Banking and Markets franchise. Our one GS operating ethos is helping us serve our clients in a very very you know,

Very focused on the.

Outlooks like right now for deal making, Yeah.

Look for deal makings improving. You know, I talked, I talked on earnings on our earnings call about the fact that our m and a backlog had improved.

I talked about some headwins, particularly on the regulatory side. I think the regulatory environment has been a headwind to some deal making. Obviously, with an election, we could see a change in that context. But there's no question the deal making environment is improving. And when you look at what's going on with technology and the investment that's necessary to power AI, I think that's a tailwind for deal

As the world of olfs well, I.

Know you've also been making a big push into your alternatives business. Private credits is an area of focus. What is the opportunity that you see there, because it really feels like that has become the major focus of the market. Many many of different players are looking to get.

Involved in that.

But we've been in the private credit business for over thirty years. We have one hundred and forty billion dollars in private credit assets. We've been a leading private credit player since the nineteen nineties. What I would say is there continues to be secular growth around the opportunity set for additional private credit formation, and we're very very well positioned given way the firm sits to be a very

Investor through asset management business. That's a very unique combination.

I think it positions our firm very well, and you will see, in my opinion, continued secular growth in private credit formation. I still think we're early on that cycle.

What do you think lower interest rates do for the private credit landscape?

Though give so much of the I think that private credit it's not immune to lower interest rates, but there are different ways that we can finance activity, and private credit is a very important part of that. People use private credit as a very very broad term. Are we talking about insurance companies financing investment grade companies? We're talking about investment grade financing. Are we talking about below investment grade corporate financing? Are we talking about direct lending to small.

And medium sized enterprises?

These are all different forms of private credit and the reality of it is regardless of what the interest rate environment is, people need to finance, and so of course in the short term movements and interest rates have an impact in short term activity, but we're talking about the engines of finance that drive capital structure in a whole variety of ways.

This is not something that's cyclically tied to short term interstry.

Can I just in an updates on how you see newer consumer finance business and the pathway ahead from Gorman.

We've been very clear over the last few years that we're narrowing our consumer focus and we've taken active steps to do that. We continue to have a very very powerful deposit platform under markets, but we continue to take steps to narrow our consumer activity. We're focused on our two big businesses, global banking and markets and asset and wealth management, and we feel good about the way we're positioned.

Well. We've been speaking for I guess like fifteen minutes and I still haven't up the big US election coming off next week. Let me just ask you this, because as a bank, I'm sure you would have run scenario analysis on what will happen either way. What would you say is the biggest risk for your business for either outcome, a Harris win or a Trump win.

We're watching the election like everybody else. The good news is it's coming up, you know, next week, and you know, my hope would be, you know, shortly after election night we have a clear direction of travel in terms of what the next administration will be. Goldman Sachs is set up in position to help and support either administration either outcome, and to support our clients at.

Either of those outcomes. And so we're watching like everybody else.

It's going to be a close election and we'll see in the next couple of weeks what the direction of travel is.

Do you think it might have a knock on it knock on effect on a regulation and some of the regulatory stunts.

That's taken there is There's there's no question that the regulatory pendulum has swung, you know, pretty significantly over the last few years. And my hope would be an either administration there'll be a fresh look at how we can ensure regulations important to keep guardrails in the economy and

So that was the CEO of Goldman Sachs David Solomon there speaking to Bloomberg's Jumana Barsacchi at the Future Investment Initiative summit in Saudi Arabia.