WHEN: Today, Wednesday, May 18, 2022
WHERE: CNBC’s “Squawk Box”
Following are excerpts from the unofficial transcript of a CNBC exclusive interview with Goldman Sachs Chairman and CEO David Solomon on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Wednesday, May 18th. Following is a link to video on CNBC.com: https://www.cnbc.com/video/2022/05/18/goldman-sachs-ceo-david-solomon-warns-theres-a-reasonable-chance-of-a-recession.html
All references must be sourced to CNBC.
SOLOMON ON TIGHTENING
NOW THAT WE’RE TIGHTENING MONETARY CONDITIONS, IT SHOULDN’T BE SURPRISING THAT IN PLACES WHERE THE VALUATIONS WERE MOST FORWARD AND WHERE PEOPLE ARE FOCUSSED ON THE FORWARD AND WHAT COULD BE AND WHAT MIGHT BE. BUT THAT’S THE FIRST PLACE WHERE YOU ACTUALLY SEE VALUATIONS AND ASSET VALUES, YOU KNOW, CONTRACT.
SOLOMON ON THE CHANCE OF A RECESSION
YOU HAVE TO BE THINKING ABOUT YOUR RISK APPETITE, YOU HAVE TO THINK ABOUT YOUR PLANNING, YOU HAVE TO THINK ABOUT THE FACT THAT WE PROBABLY AT SOME POINT, THERE’S A REASONABLE CHANCE AT SOME POINT THAT WE HAVE A RECESSION OR VERY, VERY SLOW, SLUGGISH GROWTH, SO START PREPARING FOR THAT. THE START THINKING ABOUT THAT DOESN’T MEAN IT’S CERTAINLY GOING TO HAPPEN, BUT I THINK IF YOU’RE RUNNING A SIGNIFICANT ENTERPRISE YOU HAVE TO LOOK THROUGH A LENS WITH A LITTLE MORE CAUTION RIGHT NOW
SOLOMON ON M&A
PEOPLE ARE THINKING A LOT ABOUT HOW TO BEST POSITION THEMSELVES COMPETITIVELY AND THERE ARE OF COMPANIES THAT THOUGHT THEY HAD EASY ACCESS TO CAPITAL BUT NOW HAVE A PROBABLY HARDER JOURNEY TO RAISE CAPITALTHEY NEED TO EXECUTE ON THEIR PLANS. SO I WOULD SAY THE DIALOG LEVEL INSIDE OUR ORGANIZATION OF COMPANIES LARGE AND SMALL IS VERY, VERY ROBUST. YOU’RE ALSO SEEING A SIGNIFICANT INCREASE IN ACTIVISM. BECAUSE OF A RESET IN VALUES, WE’RE SEEING MORE DIALOG AROUND TAKE PRIVATES. SO NOW THE ACTIVITY LEVELS ARE STILL HIGH NOW WHETHER THAT ALL COMES TO FRUITION AND THE PACE AT WHICH THAT COMES TO FRUITION YOU HAVE TO WAIT AND SEE.
SOLOMON ON FED ACTION
THERE IS NO QUESTION THE FED IS TAKING ACTION. THE FED IS WORKING TO TIGHTEN MONETARY CONDITIONS. MONETARY CONDITIONS ARE GETTING TIGHTER. FISCAL CONDITIONS ARE CERTAINLY GETTING TIGHTER. IT’S HAVING AN IMPACT ON ASSET PRICES. STOCKS ARE ASSETS AND IT’S HAVING AN IMPACT ON THOSE PRICES. I WOULD SAY THERE’S NOTHING THAT SURPRISING ABOUT WHAT’S HAPPENED SO FAR.
