Joe Kernan (3:09)

President Trump suggesting he knows who he's going to pick as his next Fed chair nominee. When I spoke with the president, in fact, I mentioned Treasury Secretary Scott Bessant's idea that the administration might not want a new Fed chair who gets nervous about inflation when the country sees hot economic growth numbers if those numbers are the result of a productivity boom brought on by AI or by Big Beautiful Bill or other deregulation, other policies. And here's what the president told me right now.

David Solomon (3:40)

If you announce great numbers, the stock market goes down because they say, oh, they're going to raise the rate, they're going to kill it, which really stops you from having any great runs. And we want to have a great run. So we're going to be at five and a half or something. They're predicting, I don't know, it's much higher than they thought. But let's say we're at five and a half. We could be at 10 or we could be at 12. We could be at 15.

Joe Kernan (4:02)

Yeah, there was, it was funny on Kalshi yesterday. Did you see there was questions. I was betting on what words that the president would use and, and someone sent it to me and I didn't want. Then I was, I didn't look at.

Andrew Ross Sorkin (4:14)

It, by the way. There was a thing that I had done recently where my son sent it to me. And now people are betting on what you're going to say. It's wild.

Joe Kernan (4:20)

It is, it is crazy at this point. 8% nominal growth. You can ask our next guest whether that it happened once. Can it actually happen? I don't know.

Andrew Ross Sorkin (4:31)

Andrew, David Solomon is here, CEO of Goldman Sachs. And we got a lot of ground to cover with you. That was not where we're going to start, but let's start right there. Chairman and CEO of Goldman Sachs. Welcome, welcome.

David Solomon (4:43)

Thank you.

Andrew Ross Sorkin (4:43)

Nice to see you.

David Solomon (4:44)

Nice to see you guys. Always nice to be here with you guys. We have a confluence of some very stimulative things that make us pretty optimistic about the level of growth that we could see in 2026. I don't know that I would have thrown out, you know, 8% nominal, though. Yeah, I wouldn't throw out 8% nominal, but I do think that, that, you know, our view on nominal growth this year would be higher than the consensus you have. Very, very Strong fiscal stimulus. You obviously have the things in the bill that are coming through. You have some stimulus that comes from the deregulatory environment that the administration has created. We obviously have continued AI infrastructure spend that's very, very significant. Plus you've got productivity gains coming as AI is implemented into the enterprise. So it's a relatively constructive environment. And barring in my mind some sort of an existence exogenous event or a change in sentiment that's created either by geopolitics or you know, some other speed bump that we don't see. I, you know, I think the nominal growth that we see will be out of the consensus. So I think the tailwinds are pretty constructive in that front.

Joe Kernan (5:48)

You know, do you see the expense? I keep hearing about the expensing thing that factories are, that previously wouldn't have been built, are being built. Someone was going to make batteries. They didn't even make batteries for their own equipment before now because they can write it off immediately. They're actually starting breaking ground on a factory.

David Solomon (6:04)

Well, I think, I think the, I think the expense, depreciation, you know, benefit is a big benefit to spur investment. There's a lot of talk about investment from US companies and from foreign companies. And I think one of the things that we're trying to do, I think everybody should be doing is tracking what actual investments occurring and how it's occurring. You know, these things, Joe, and you know this, they take time, you know, to build factories, plan factories, actually get them in place, get them online, takes time. And so we're at the beginning of what is the potential for a much more significant, when you're tracking it, what numbers. It's early. In other words, right now it's, it's more talk than it's actually happening. But there are a lot of people making significant commitments and you know, as people follow through, that is a further tailwind for growth. When you talk about the possibility for a multi year run, you know, I think we're set up where we have the possibility for a stronger growth trajectory for the next few years. We're set up for that. That might not happen much of exogenous things could soften it, but that's, I think we're set up with a better possibility for that than we've had in quite some time.

Andrew Ross Sorkin (7:06)

Can you square this circle for me? So the economy looks strong yet on one end we had the Mark Carney speech where the whole world is breaking apart and there'll be new partnerships and complete sort of re shaping of power in the world. And on the other end, the President makes this deal with NATO last night and the market goes up. And some people are saying, you know, this is just another great example of new cooperation. What's going on here underneath the, underneath the sheets?

David Solomon (7:37)

Well, we talked about what's going on in the economy, particularly the US Economy. You know, underneath the sheets, we're in a, we're in a geopolitical environment that's more fragile than it's been for some time. You know, we have a president that's got a clear view about how he wants to drive an agenda and he's got a certain style in the context of the way he, he drives that. I think, you know, markets don't like uncertainty. And so if you just look back over the last couple of days, there's been a variety of narratives that have created a little bit more uncertainty. And then there have been narratives that have followed up that seem to have taken the uncertainty out. And so I think what's interesting right now is the business environment sets up very well. Business people feel unleashed, you know, all over the world and want to invest in their businesses and grow their businesses. They have an environment where they think they really can make progress growing their businesses. You've got technology innovation that's helping people in their businesses and CEOs are very focused on that.

Andrew Ross Sorkin (8:32)

Are those US companies or around the world?

David Solomon (8:34)

I think it's around the world. I think what, what slows them down and we're talking big multinationals, what slows them down is when there's uncertainty. And some of the noise around geopolitics creates uncertainty. One of the things I try to do is I always try to step back and say, okay, what's noise? What's actually substantively going on? And I think that's a helpful lens. But on a day to day basis, when you're listening to the news, when you're listening to the speeches, if you're sitting here now, there's going to be.

Joe Kernan (8:55)

Noise mixed in with the, is it compartmentalized between economic issues and security issues? And I think there's a lot of overlap. I think maybe that, that escapes us sometime, whether it's Venezuela that could be really positive for the Western Hemisphere if their oil starts coming out of the ground again. Think about the Middle east and what happened with the peace deal and what could happen in Iran and how the Middle east could play out. Our discussion was whether Greenland was worth it, whether bringing this up, making a big deal about it, spooking the markets, worrying that NATO is Going to dissolve because of an attack on a sovereign country. Was all that worth it? Would it be worth it if we did get a golden dome and had a greater control of what happens in the Arctic Circle, which is so important?

David Solomon (9:44)

Well, again, let's get to the substantive issue that you're highlighting, Joe. The substantive issue for the US And Europe is Arctic security. That's the substantive issue. If we come out of this with a better, with a strengthening of Arctic security for the US And Europe, that will be a good thing for the world. So I don't, I don't have to debate, you know, every discussion in every way that we get there.

Joe Kernan (10:04)

None of us were thinking about this on Inauguration Day. No one was worried about Arctic security.

David Solomon (10:08)

Suddenly, Arctic security is, is something that's worth thinking about. Okay. There are different ways to get there, but if we wind up with a better structure around that, that would be good both for Europe and the US.

Joe Kernan (10:18)

But we don't know at this point what it looks like. And, but it's both security, but that you can't have economic prosperity without security.

David Solomon (10:28)

Security. Security is a very, very important of economic prosperity, for sure.

Andrew Ross Sorkin (10:33)

Do you want to speak, I'm curious what you do think then of the Mark Carney speech, because clearly he's saying that he, that China, that Canada may ultimately have to align to some degree with China. So our neighbour aligning with China in any way is something that historically we would have done everything to prevent.

David Solomon (10:47)

Yeah, I, you know, again, I think we're talking about some long change, long cycle, structural changes. You know, I wouldn't let one speech at Davos at this moment in time drive a conclusion as to where things wind up. The US and Canada are massively economically entwined. Canada is a hugely important ally to the U.S. i watch to see how this plays out. I wouldn't, I wouldn't glean too much from the speech, but it obviously was an important speech. You know, he said some things. It's certainly, we'll get people on both sides thinking about where we are. I think a de escalation and a focus on the important relationship we have would be very.

Andrew Ross Sorkin (11:22)

Let me ask you a couple other questions. So the President, though, has been going after Wall street in some very unique ways. One on the credit card piece and then the other, interestingly, on some of the big firms that are basically buying up homes in America and either renting them out or reselling them. Yesterday he made a point of explaining, I think, just how depreciation works and how, you know, if you buy 500 homes, you can depreciate it as a company. You buy a home by yourself, you can't do that at all. What do you think of what's happening here?

David Solomon (11:52)

So he's touching on, with these, with these topics, he's touching on issues that are real issues. I think affordability is a real issue in the United States. You know, with respect to the credit card cap, the first thing I'd say is you're so happy you're out of that. It's very good time for us to get out of the credit card business. But stepping back just as an observer of, you know, markets and someone has some understanding of the business, I don't think that's a good idea. I think it would significantly constrain credit, you know, for most Americans and meaning that it wouldn't be offered. Yeah. The point that affordability is a big issue and we need to get at it, I think is correct. I don't believe that a 10% credit card cap would be constructive in that context. Brian Moynihan told us that if, if that goes through that 10% cap, you would have to have a credit score well into the seven hundreds as a consumer to get access to credit. I don't, I'm not, I'm not, I'm not clear on the exact cutoff, but, you know, I don't know, 3/4, 80% of American consumers would be constrained in credit that's available to them. And look, a lot of people, people obviously run credit card balances where they pay interest, but there are a lot of people that use their credit cards to run the working capital during the month. They, based on their paycheck, where they're actually not paying the interest, but they need the access to credit in order to run the working capital on a month to month basis with their paycheck. And so that I don't think that's a constructive path to get at that cost.

Andrew Ross Sorkin (13:10)

What about the housing piece?

David Solomon (13:12)

Housing is a real issue. I've talked, you know, I've talked with you guys, you know, on TV before about housing. I think it's a, it's a complicated, multifaceted issue. I do think the president made some very good points around how, how the structure, depreciation works with some of this. But to really get at the housing issue, I think we've got to get it supply. I think we've got to get at things that create incentives or make it easier for people to afford down payments on homes. I think one of the things that's been A big issue is the price of homes based on the price of construction. The lack of supply has made the prices higher and people don't have the down payments. I think there's some interesting ideas.

Andrew Ross Sorkin (13:47)

There's talk of allowing people to effectively invade their 401k plan to do that. And some people think that's a great thing, and some people think it's a horrible idea.

David Solomon (13:54)

I think it's an interesting idea. I think you've got to think carefully through, you know, the consequences, you know, of that and how you would do it and how you would make it work. But at the end of the day, home ownership and the long run, people live in their homes, has been a great source of savings and stability for Americans. I think things that we can do to accelerate that and make it more accessible will be very positive.

Andrew Ross Sorkin (14:14)

Wouldn't this help on the supply issue? Because if Blackstone can't buy it, that takes a big buyer out of the market and, and should create some more supply. If, I mean, it's not real supply, but if you think about just the constraints on who's bidding for the property at the.

David Solomon (14:28)

At the margin, that has to be true, Andrew. But remember, they're all different forms of institutional capital that buy homes in the United States. Not just the public companies, the couple of public companies. There's all sorts of institutional capital formation that supports the accumulation of housing, you know, in the United States. And so the bigger issue I think that we have to really get at. I'm not saying that that's not an appropriate issue to look at. The bigger issue is supply and the availability of housing stock.

Andrew Ross Sorkin (14:53)

Okay, David, it's great to see you. Thank you for coming in.

David Solomon (14:54)

Thank you very much. Glad to be here. Thank you.

Andrew Ross Sorkin (14:56)

Absolutely.

David Solomon (15:03)

ABC's David Muir, the most trusted anchor in America, the most watched anchor in America. Thank you for making World News Tonight with David Muir the number, number one newscast in America. Most trusted, most watched. David Muir on abc.

Jennifer (15:18)

Thy ticket lady, Jennifer of Coolidge. Well, many thanks, good sir. Here is my Discover card. They accept Discover at Renaissance Fairs. Yeah, they do here. Discover is accepted at the places I love to shop. Geth with the Times.

David Solomon (15:35)

With the Times.

Jennifer (15:37)

You're playing the loot. Yeah. And it sounds pretty good, right?

David Solomon (15:41)

Discover is accepted at 99% of places that take credit cards nationwide. Based on the February 2025 Nielsen report.

Expedia Narrator (15:48)

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts.

Jennifer (16:21)

Thank you for listening to this special Squawk Pod Reports from Davos. This is just one of our many interviews from the World Economic Forum. I promise it's worth following Squawk Pod wherever you're listening now. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin, usually from the NASDAQ market site in Times Square. But one week a year they're in the snowy Alps. Squawk Pod is produced by me, Cameron Costa and Zach Felici. Julie Tras is our editor. Have a great.

Expedia Narrator (17:00)

Martha listens to her favorite band all the time. In the car, gym, even sleeping. So when they finally went on tour, Martha bundled her flight and hotel on Expedia to see them live. She saved so much she got a seat close enough to actually see and hear them. Sort of. You were made to scream from the front row. We were made to quietly save you. More Expedia made to travel Savings vary and subject to availability. Flight inclusive packages are atoll protected.