WHEN: Today, Monday, July 18, 2022
WHERE: CNBC’s “Mad Money”
Following is the unofficial transcript of a CNBC exclusive interview with Goldman Sachs Chairman & CEO David Solomon on CNBC’s “Mad Money” (M-F, 6PM-7PM ET) today, Monday, July 18th for the debut of “Mad Money” broadcasting from the New York Stock Exchange. Following is a link to video on CNBC.com:
All references must be sourced to CNBC.
JIM CRAMER: David, in a time of tremendous market turmoil, Goldman Sachs had an unbelievable quarter. Explain the pieces that made that happen.
DAVID SOLOMON: Well, first, Jim, it’s great to be with you and I want to congratulate you on the movement of your show to the Stock Exchange which is super exciting. I really wish I could be there with you in person but unfortunately, I’m just not in New York this evening, but but a big congrats to you.
CRAMER: Oh, you’re very kind.
SOLOMON: Absolutely. It was, it’s it’s a complicated I said this on the earnings call, it’s a complicated and uncertain period of time. There’s a lot of uncertainty in the macro environment. But we’ve been working on the evolution of Goldman Sachs, strengthening our existing core businesses that everyone knows so well, our investment banking franchise, our global markets franchise, making sure we’re extremely client centric, growing our, our wallet shares in those businesses, but we’ve continued to invest and expand in other areas where we’re bringing in more fee income and that I think is just broadening the scope of the firm and making us, you know, a little bit more resilient. And so, while this was a challenging environment, I think our performance was was was strong considering the overall macro environment.
CRAMER: Well, one thing you stressed to us when we were, when we were at your office in February, you talked about being the trusted adviser and that you’re not getting enough credit for that. It seems again when markets, you called it good volatility or bad volatility, it really didn’t matter, the volatility you go to Goldman Sachs and that is even extends to trading. So the trusted advisor is something that I think deserves a higher P/E.
SOLOMON: Well, I think our business has always been about serving our clients, Jim, and one of the things this this leadership team has really tried to do over the last four years is really amplify, you know, that message throughout the organization and make sure the whole organization is focused on the highest level of client service, taking a long-term view, really thinking about their needs, their interests. And when you do that and if you do that consistently, if you take a long-term view and invest in those client relationships, I think good things happen and you gain market share, you gain wallet share, people want to work with you because they trust you and they think you’re bringing a lot of value. And so, we continue to be very focused on our clients and I think it’s paying dividends.
CRAMER: You also emphasize that a lot of people felt that Goldman could not adjust if certain businesses didn’t make a lot of money, that you would have a lot of so-called dead weight. Your expense headcount was extraordinary, and I think is something that could be long lasting but also demonstrable of new Goldman.
SOLOMON: Well, we, people are, people are really, really important to, to our business. They’re really, really important to the ecosystem of Goldman Sachs. We’re in an incredibly privileged position where, where there’s an enormous amount of interest in working at the firm. I know that right around today, we’ve got about 3,500 undergraduates starting their career at the firm. Those 3,500 graduates are chosen from over 300,000 applications for those jobs. And so we’re always looking to add talent to the firm. You know, at the same point, we’re going to, you know, manage the growth of that going forward a little bit more cautiously given the macro environment, but we’ve been investing in building our businesses and have been lucky to continue to attract great talent to the firm.
CRAMER: Well, I gotta tell you, I, I started about right down the block, and I always felt it was the hardest job in the world to get. Now there was a period where the Facebooks and the Googles were able to get people, they’re not hiring anymore. They are not even replacing, but it sounds like Goldman is back getting or never really lost but David, you’re getting the cream of the crop and the cream of the crop means that the people who are going to be customers are going to find the best and that’s the way I remember Goldman.
SOLOMON: Well, we’re very focused on that and, you know, it’s a constant for us. We’ve always got to be attracting super smart, super motivated young people into our organization. And some of them stay and build their careers here but a lot of them go out and do very interesting things in the world and always feel an affiliation for the firm and that’s, that’s part of what helps us be successful as we as we move forward in serving our clients.
CRAMER: The diaspora is strong. Okay, so we got to give a nod to Lloyd Blankfein because the trading here really exceeded those of all other firms, made you a lot of money and we certainly while consumers great David, we certainly got to give a nod to a division that has just made a ton of money for you, which is trading.
SOLOMON: The trading, the trading business has always been core to the firm and it will always be core to the firm. What I’m, what I’m really excited about and and, you know, feel really great about is the leadership group and that division has really invested over the last four years and our client relationships. They’ve had a very, very targeted program of looking at the 100 most important clients in that business and making sure that our market share, our wallet share and the feedback we get from those clients is on a positive trajectory and improving and we’ve had real strides in the context of our wallet share with those top 100 clients, which really are the most significant institutions that we deal with in our market business. Sure there are lots of others but that top 100 is very important. So we’ve been committed to this business. I think it’s one of the great things that that Lloyd did. He was always steadfast in his commitment to this business. I’m steadfast in my commitment to this business. It served our clients well. We’ve got a great global footprint and we’re going to continue to make sure we’re in a position to serve our clients across all markets.
CRAMER: Alright so David, the two things that were absent from the call are divisions I’m really looking at Marcus where you get just a great rate and then Apple they did not pick you for the Buy Now Pay Later. These are two initiatives that I feel are really necessary in order to get P/E expansion. Are they not as much part of the mosaic as before?
SOLOMON: No, they’re equally part of mosaic. I did get a call on the, I did get a comment or question on the earnings call about the growth of the consumer business and our commitment to it. The revenues for the quarter in the consumer business I think were, you know, were viewed positively. I talked about the fact that over the last five years we built this business from scratch. You know, we started with deposits and then loans and then this credit card platform, which I think is a really super technology platform. We’ve obviously added Invest. And now we’ve got GreenSky and we’ve set out a revenue target of $4 billion in this business by 2024 and when we set that target earlier this year, we commented that the investments in the products that are necessary to meet that target is basically in the ground. And so we’re making good progress. We’re gonna continue to make progress and focus on building what we think is a really excellent digital platform, but we’re pleased with the progress we’re making Jim.
CRAMER: Well do the customers want, on the digital platform, are they interested in crypto? Are they interested in the more extraneous FinTech aspects that would not be the part of the Goldman that I worked at?
SOLOMON: Well, there are certainly people that are interested in those things, but we’re trying in a very, very simple, transparent way to put forward terrific banking products, financial products, investment products, wealth products that are simple, straightforward, transparent and integrated to make everybody’s financial experience and financial wellness more stable. And we’ll, you know, the esoteric stuff or the more complex stuff is, is left to, you know, to other niche players. What we’re doing, Jim, is the stuff that people want, they want a good credit card, they want to understand what they’re charged, they want to be pay it easily. If there’s something wrong, they want to be able to get in touch with somebody very quickly all on the phone, all digital. That’s an example of what we’re trying to do and how we’re trying to lead in that space.
CRAMER: Alright one last question, I was taken aback when you said inflation deeply entrenched. To me that meant more than than 175 basis point, maybe even more than two. When it’s deeply entrenched, it’s not going to go away until maybe rates go high as four?
SOLOMON: You know, I, my my, you know, my words so I know you’re now putting them back to me. I think what I was trying to say is there’s inflation everywhere and as I talked to CEOs that have big global supply chains, they’re not seeing it level off yet. And so I’m not going to predict, you know, I think certainly we’re going to see tighter monetary conditions to try to control that but I’m not going to predict that that trajectory, Jim, but we’re just trying to be nimble and in a position to support our clients as they navigate what obviously will be a period of tighter financial conditions in order to try to tame that inflation.
CRAMER: Well all I know that is, if it gets rocky and rough, that’s when Goldman exceeds everyone. David Solomon, Chairman and CEO of Goldman Sachs. David, thank you so much for coming on “Mad Money” on a very big day for us. I greatly appreciate that you found the time.
SOLOMON: Absolutely, I’m delighted to be with you, Jim. Wish I could be in person over at the Exchange but we’ll do that sometime soon.
CRAMER: Alright. Thank you so much.
SOLOMON: Absolutely. Thank you.
