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Chapter 1: What is the main topic discussed in this episode?
Hello and welcome. This is The Michelle Hussein Show. I'm Michelle Hussein. I speak with people like Elon Musk. I think I've done enough. And Shonda Rhimes. That's so cute. This will be a place where every weekend you can count on one essential conversation to help make sense of the world.
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You certainly ask interesting questions.
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We can cross over now to Turin where, of course, our Tom McKenzie speaking to David Solomon, the interview of the day. Here it is.
Given the geopolitical strains, given now as well the shutdown in the U.S., David, does the U.S. economy weather the current political standoff in Washington? And does that resilience that we've seen this year continue into 2026?
Well, first, thank you for having me here. Delighted to be here. The U.S.
economy is in pretty good shape, and there are some very, very strong tailwinds that have really had a profound effect, and there are also some things going on that are creating headwinds and are probably leading the economy to underperform its expectations at this time, but I'm optimistic that we're probably going to see an acceleration as we continue to add into 2026.
The big structural issue that's kept the US economy going so well is the US, and by the way, other developed economies around the world, are running very aggressive fiscal stimulus plays. Governments are spending enormously into economies in the developed world, and that keeps the economy going even when you have other headwinds.
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Chapter 2: What are David Solomon's thoughts on the current state of the U.S. economy?
The markets are expecting another approximately four cuts between now and this time next year, another one percentage point of cuts, with inflation remaining above the target for the Fed. Does that seem reasonable to you?
I think it's in the distribution of outcomes. I think we'll have to watch. I know there's a great parlor game of people kind of predicting what the world's going to look like six months, 12 months out. If you think about what the world looked like in April and where markets were in April and think about where they are today, I'd just be cautious. I think that...
I think that we've got competing forces between labor and inflation, and how they balance, which is still a little bit uncertain, will have an impact on whether we get one more cut or we get two or three more cuts.
Global stocks at record highs. US stocks at record highs. The S&P 500 is up about 15% year-to-date. Nvidia's market cap is around $4.5 trillion. That's more than the entire market caps of France, UK, Germany, Italy combined. Does the market rally, does this bull market, are you comfortable with this bull market given some of the concerns you flagged?
Am I comfortable? I sleep very well. I'm not going to bed every night worrying about what will happen next. But markets run in cycles.
And whenever we've historically had a significant acceleration in a new technology that creates a lot of capital formation and therefore lots of interesting new companies around it, you generally see the market run ahead of the potential because they're going to be winners and losers. They're going to be winners and losers. If you go back and you think about the Internet,
Amazon was one of many companies that was prosecuting that kind of opportunity. Many of the companies went away. Amazon became an incredible company. You're going to see a similar phenomenon here. I wouldn't be surprised if in the next 12 to 24 months we see a drawdown with respect to equity markets, but that shouldn't be surprising given the run we've had.
But generally speaking, I think what's super exciting is the technology is expanding, new companies are being formed, and the potential of this technology deployed into the enterprise can be very, very powerful. And so it's an exciting time, and the market looks forward.
What does that mean for deal-making? You've seen a pick-up in deal-making. What is the scale of the pick-up you expect to see, and what are you seeing in Europe?
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Chapter 3: How is government spending impacting economic growth?
We had a $1 trillion M&A volume quarter this past quarter. And if you look at large cap M&A, meaning M&A for companies that are $10 billion or larger, it's up 100% year over year. So there is real momentum in the deal-making environment. I think you're gonna see an acceleration of that into 26 for sure.
And increasingly, CEOs are testing what the bounds are of their ability to enhance their competitive position or improve their scale and their lead where they have a leading position in a variety of industries. And I think the regulatory environment's going to permit that at the moment.
Okay, so it sounds like you're gonna be very busy, you and the team, on deal making in 2026. What are your priorities, David, for Goldman and the franchise next year?
Well, we don't really think about it next year. Our priorities always start with the way we face and serve our clients. But in 2019, 2020, we laid a strategic plan out for the firm, and we've been executing against it for the last six or seven years. And as you highlighted earlier in the discussion, we've created a lot of value because we've grown the firm.
At the end of the day, as a public company, we have to grow. We might be a big, mature public company, but we have to grow. We have to grow. We have to grow our earnings. And to do that, you have to have a cogent plan where you're investing in different parts of the business.
We have two big principle businesses, our investment banking and trading business, where I think there's little debate about our leadership position. It's an extraordinary business, very big business.
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Chapter 4: What role does AI infrastructure play in the economy?
We've been investing and adding more resources to that business over the last five, six years. We've increased our market shares very meaningfully in that business. Our market shares are up about 350 basis points over the last five years in that business. And then separately, we have the fifth or sixth, seventh, depending on how you look at it, largest active asset manager in the world.
We manage about 3.3, $3.4 trillion through our asset and wealth management platform. That business is growing high single digits is what we've put out publicly. It's actually been growing faster than that. And we continue to invest In a variety of aspects of that business where we see real growth, we can grow our wealth business, which is an ultra high net worth wealth business.
We can continue to grow our alternatives platforms, private capital formation. And we have a very flexible solutions business where really for big institutional capital allocators, we have an ability to really create and customize what they need from an investment perspective.
There's been a lot of discussion here at Italian Tech Week about how to get globally significant generational businesses, tech businesses built out of Europe, $100 billion plus. What is your prescription for that?
I mean, my prescription for that is savings in Europe and capital in Europe needs to come into the risk economy in Europe. You just don't have the scale and scope of the available savings here getting deployed into the tech risk ecosystem at the pace that it should when you compare and you look to the way things are deployed in the United States.
And in fact, one of the things that happens here is capital from here looks over there. And so there are enormously smart, talented people here, lots of great ideas, capital formation, and a real focus on risk-taking. Stuff's going to go right, stuff's going to go wrong, but you've got to take risks, you've got to deploy capital.
This really has to become a bigger center of capital deployment, and also the more We can get the European Union to be operating as an economic union and taking advantage of the 400 plus million people that are here as opposed to the individual states, for lack of a better term.
The more we can get the tech economy working that way, I think the better chance we have of reaching your goal, which I think would be a very noble goal for the world.
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Chapter 5: How are trade policies affecting the economy's performance?
I mean, the more innovation over here, the better for the world.
Yeah. So Ursula von der Leyen will be here. So your one message to the European Commission president would be, centralizing or capital, capital markets? Are you seeing the urgency?
You know, I'm feeling more urgency when I'm over here, but still, you know, the regulatory process in Europe is slow. Capital markets union for sure, you know, more encouragement of risk taking in capital markets, trying to bring it all together. Consolidation in the banking system instead of national champions in every market.
Consolidation in the exchange system instead of champions in every market. You know, those are all things that will make capital formation easier, risk capital formation better, and will allow the acceleration of great companies here in these markets.
You have lent into tech and into AI. Your team are telling me you have 12,000 engineers across Goldman Sachs. You have the Goldman Sachs AI assistant. You have an AI developer. What parts of the business, and you've talked about some of them, whether it's wealth or asset management or trading or the consumer, what parts of the business at Goldman are going to be most transformed by AI?
Well, I think, you know, the business of work is getting transformed by AI broadly, and... You know, we are, at our heart, we're a professional services firm. If you think about Goldman Sachs and the value it brings to its clients, its value is deployed really among three different things. People, capital, technology.
And so, if you think about AI, you know, AI really allows smart, talented, driven, sophisticated people to be more productive, to touch more people, to have better information at their disposal, better analysis. I mean, this is a journey we've been on
This technology accelerates it, but when I started 42 years ago and I wanted to look at five different companies and think about how to compare the trading in five different companies, I had to go to the library, I had to go to the microfiche, I had to spend hours really thinking about how to put that comparison together.
Obviously today you can do it in a fraction of a second speaking into your phone. So this journey in providing tools to super productive people and giving them more capacity to serve their clients and to be more productive is obvious, and we've been working on all those tools as most enterprises have.
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Chapter 6: What is the current health of the U.S. job market?
The extent of that will depend on how long this goes. By the way, if we were having this conversation in 1988, you would have been asking the same question, yet the environment went on for another three years. until there was then a significant check in 2001 and 2002. So I'm not smart enough to know. I think it's going to go on for a while. I think the opportunities are great.
I think they're very exciting. But I also see complacency around risk-taking. And when that happens, ultimately, there'll be some speed bumps or some drawdowns.
David Solomon, Chairman and CEO of Goldman Sachs. Thank you so much. Thank you. Fantastic. Appreciate it. Thank you, David. Thank you.
Appreciate it.
What a wonderful conversation. Also with, I have to say, a spitting set. It's not something that you see every day. Tom McKenzie there speaking with our Goldman Sachs, well, the Goldman Sachs chief executive, David Solomon, at Time Tech Week. They talked about the Fed. They talked about tech and some of, of course, the things that we should be watching out for.
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Chapter 7: How is the Federal Reserve responding to economic conditions?
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