David Solomon’s morning keynote conversation started the Forbes Iconoclast Summit on Monday, June 12.
Daniel Paik for Forbes
Almost midway through 2023, markets have bounced back from a lousy 2022 more robustly than many investors inspected, but fears of a recession haven’t faded completely. More than 30 influential investors and business leaders converged on Pier Sixty in Manhattan for the second annual Forbes Iconoclast Summit on Monday to break down how they’re positioning their portfolios and steering their companies and clients through the delicate environment.
Billionaires Ray Dalio, Bruce Flatt, Jonathan Gray, Marc Lasry and Toto Wolff are all taking the stage, as well as Goldman Sachs CEO David Solomon, Formula 1 superstar Lewis Hamilton and Ariel Investments co-CEO and Starbucks chair Mellody Hobson.
Below is live coverage of the summit as we’ll be following all of the day’s panel discussions in real time. You can also join the conversation on social media using #ForbesIconoclast.
Goldman Sachs’ Crystal Ball
Goldman Sachs CEO David Solomon started the summit with a keynote conversation with Forbes Chief Content Officer Randall Lane and addressed Goldman Sachs chief economist Jan Hatzius’ forecast last week lowering the probability that the U.S. will enter a recession in the next year to 25% from 35%.
“The economy’s been incredibly resilient,” Solomon said, “but if you’re running a business like ours, you have to be prepared for the downside…. I’ve got a sense that inflation is going to be a little stickier than the current market expectation.”
Solomon also discussed Goldman’s recent struggles with its consumer banking products, which the investment bank attributed about $3 billion in losses to since 2020 in January, and didn’t rule out further layoffs at the investment bank after it shed 3,200 jobs in the first quarter. He noted that Goldman Sachs paused its standard performance reviews that cut some staff annually during the pandemic, so this year’s cuts are part of the readjustment.
“The direct to consumer platform was harder than we thought,” Solomon said. “It’s important for a business like Goldman Sachs to always be looking for more avenues to invest in, and when you do that, some things are going to go well and some things aren’t.”
Solomon ended the conversation on a higher note about the state of capitalism and free markets in the U.S. “The system’s not perfect, but I think it’s the best system there is,” he said. “We need to advocate for the fact that this is something most of the world looks at and strives for.”
Long-term Opportunities in China and Europe
J.P. Morgan asset and wealth management CEO Mary Callahan Erdoes, Brookfield CEO Bruce Flatt and Baroness and member of the House of Lords Dambisa Boyo sat down with Forbes executive editor Diane Brady to discussed the state of long-term, global investing as China re-opens its borders after years of isolation during the pandemic.
“Home-country bias is a real thing,” Callahan Erdoes said. “Assets outside the home country continue to be underappreciated.” Looking beyond companies’ home borders, especially as China continues to re-open post its pandemic isolation, the J.P. Morgan executive shared her excitement, with trepidation, to do business with the country.
“If it isn’t happening at the governmental level, make it happen in business,” she added. Flatt and Baronesse Boyo agreed with the opportunities in China, especially given Middle Eastern and Asian investors’ interest in growing their business in the region. “We can choose who to do business with in China,” added Flatt.
Downturn conditions for the market and regulatory uncertainty for banking also make Europe an attractive region for banks to expand their businesses to, said Callahan Erdoes, emphasizing the need for a long-term view. “You have to stress-test your portfolio.”
“The key questions is how do you put money to work over a long period of time,” added Baronesse Boyo.
MORE FROM FORBES
Source: https://www.forbes.com/sites/hanktucker/2023/06/12/forbes-iconoclast-summit-2023-wisdom-from-the-worlds-most-influential-investors/