Goldman's Solomon on Iran, AI and Private Credit

I don't see complacency. I think there's a lot of uncertainty around the direction of the conflict, how it'll be resolved, what the off-ramps are. And I think it's fair to say when you look at markets, market reactions have been relatively benign. And I certainly could have seen over the last couple of days a little bit more volatility. But I don't think people are being complacent. I think that market participants are looking and trying to say, how is this going to play out? What's the end game? You can see good scenarios and more difficult scenarios. And as they have more information in the coming days, the coming week or two, I think that will have an impact on risk premiums. I think at the moment, what market participants are really looking at is, is this going to translate through to things that affect economic growth and activity, particularly energy supply chains? So far, I think one of the reasons why markets are reacting the way they are is they're encouraged that there is strong support for trying to ensure that doesn't happen. But it's uncertain. You don't know. And we'll see in the long run for portfolio allocation. And I know Peter Oppenheimer, most of our memory is a call for our wealth clients. If you have portfolio allocation, there's nobody that's saying you should change your fundamental portfolio allocation because of what's going on. But for traders and day-to-day market participants to think about risk premia, every single day, obviously they're watching very closely.

I worry about a lot of things. We run a big global business. We have an extraordinary team. And I think one of the things that we have to accept is the world is a very complicated place. There's always a lot of uncertainty, there's always a lot of nuance. But we have base beliefs and how economies will perform, how the world will evolve. And we operate around that, but we always are prepared to risk manage and think about downside risks. And I think one of the things you have to do when you run a big, large financial institution is that when you know facts change or risks come up, you've always got to be prepared to pivot, to shift, to de-risk. And we want our business, you know, that way always run a big balance sheet. And we think about that every day. But there's nothing while these are very, very significant events and I don't want to diminish them in any stretch. We've operated the firm through lots of very significant events year in, year out. And that's part of what we do as a business.

That is complex. We've got a significant number of people in those Middle East countries. And obviously first and foremost, we're concerned with their safety. And we're trying to do everything we can to support them and their families. I would not say it's business as usual in those markets. All those markets for all businesses, our operating work from home and stay safe as a first priority. And so we'll just have to watch closely how things play out. And we're very, very focused on making sure our people and their families are safe and sound. And at the moment, that's our primary focus in that part of the world.

Well, I do think safety and security matters and I wouldn't say I think it's a little bit premature to talk about existential clouds. But if you're living and operating in a place and you didn't anticipate this, it's quite scary and it's quite unsettling. And so, as I said, our primary focus is on the safety and security of our people. Therefore, we're working very hard to make sure that we're protecting them and their families.

I'm not sure I understood the question exactly. Are you talking about kind of investment? Growth? Look, AI is a fabulous, incredible technology that is going to drive massive productivity gains through society. There's a lot of capital being deployed to grow AI capabilities around the world. Some of that capital is going to get reasonable returns. Some of that capital is not. There are going to be winners. There are going to be losers. As with in any technology supercycle. I think we're early in that process, but I think it's exciting. And I actually look at the glass being half full. That doesn't mean that there won't be capital that's burned, companies that don't work out. But I think overall, the benefits to enterprise productivity, the economy broadly as this technology gets developed and deployed is going to be quite exciting. And I'm looking at the optimism of what's ahead from all this and of course, trying to manage the risk of the downside, the speed bumps that will inevitably come along the way.