Although uncertainty abounds regarding how stock and bond markets will digest a host of potential pitfalls on the horizon, Goldman Sachs’s top dog appears undaunted—even bullish about future prospects for the financial markets.
In Thursday videocast on Goldman’s website, Lloyd Blankfein, chief executive officer and chairman of Goldman Sachs Group
said he sees pessimism fading and the prospects for the market brightening.
“The change in the market today is from a cycle where we were of very low economic activity, consequently very low interest rates, and a very, very high level of—maybe call it pessimism about where we go. And it feels like we’re changing to one in which it’s going to get growthier. More growth out there, more opportunity and one in which we are getting a bit more optimistic” he said.
“The change in the market today is from a cycle where we were of very low economic activity, consequently very low interest rates, and a very, very high level of—maybe call it pessimism about where we go. And it feels like we’re changing to one in which it’s going to get growthier. More growth out there, more opportunity and one in which we are getting a bit more optimistic.”
Blankfein, who runs the world’s most prominent bank, said clients have been wrestling with the challenges of increasingly uncertain markets in light of geopolitical worries in Europe and questions about policies advocated by President Donald Trump.
Trump has pledged to increase fiscal spending, loosen banking regulation and cut taxes, among a litany of campaign promises that could jolt the economy and stock market to new heights (so far it has worked for stocks). But questions about Trump’s temperament, legislative priorities, tough talk on trade, as well as growing concerns about the future of the eurozone, amid a rise of populist fervor in the region, has left some investors uneasy.
“I hear from our clients ‘where are things going to go? what should we do?’ and I tell you it’s uncertain for a reason,” Blankfein said. “It’s always uncertain when you’re living in it and so simple and sure when you’r looking back.”
Blankfein & Co., have been big beneficiaries of Trump’s policy agenda, including those aimed at peeling back aspects of the Dodd-Frank bank reform act that were written into law in the wake of the 2008-09 financial crisis. Also, a number of Goldman alum are among Trump’s confidants and cabinet members, including the bank’s former No. 2, Gary Cohn, who is now director of the president’s National Economic Council; Steven Mnuchin, nominee for Treasury secretary; and chief strategist to the president, Steve Bannon.
And Goldman, along with the rest of the banking sector, has rallied sharply, gaining 33% since the Nov. 8 election win by Trump, compared with a 7.3% gain for the S&P 500 index
and roughly 10% rises for the Dow Jones Industrial Average
and the Nasdaq Composite Index
over the same period. Those three stock-market benchmarks all hit intraday records on Thursday.
Going forward, banks, which had mostly traded sideways over that past decade, may be on a path to score an epic rebound, some analysts and market observers forecast. That cold particularly be the case if Trump follows through with his promises and truly unlocks the market’s animal spirits.
But there are doubts.
A number of Wall Street heavyweights have emerged to warn of the dangers of a Trump administration and his protectionist persuasion, including billionaire George Soros, as well as well-regarded investor Seth Klarman.