Goldman Sachs 4Q16 Earnings Call Notes

Harvey Schwartz

Shifting policy around the globe is an extraordinary catalyst for client dialogue

“And as you know over the past several years there’s been a general sense of concern with respect to global growth that was reinforced by a lot of the monitory policy around the world. And so I would say as we come into 2017, activity levels are quite high. You know we can’t – we’ve come out of a very low volume, low volatility environment for a number of years. We’re happy to see how this year progresses. But with the shipping policies around the globe, it’s an extraordinary catalyst for client dialog, for decision making and for content and that’s really where as a firm that’s where we really want to drive value and drive value with content.”

Lots of opportunity if rates rise in connection with expectations of growth

” I would say the following I think if rates continue to rise and it’s a reflection of optimism and concerns around deflation abate and concerns around economic decline debate and they are replaced with expectations of economic growth and activity and confidence and client sentiment continues to shift. I think there is meaningful upside in terms of the activity levels we could see in fixed income. So we’ve been pretty optimistic now. We’re positioned for a number of scenarios obviously given all the steps we’ve taken over the years. ”

It’s pretty difficult to predict

“I think it’s very difficult to quantify just like it was difficult to quantify in 2012, 2013, 2014 how concerns around deflation and low economic growth will impact activity in a number of businesses. I think it’s very difficult to quantify how increased optimism. You know we like to say in some respects, confidence is the best stimulus. And the extent to which we enter a period of increased confidence with respect to economic growth, physical policy, you mentioned tax policy, I think there could be a lot that happens. Now we’ll have to see all these policies of ours. But who knows we could be at the beginning of a long term trend, we may not be. Again it was difficult to predict things in 2012 and how they will be in 2013, 2014 and 2015.”

This is a huge body of work compiled by regulators

” I think what we’ve seen and one of the things I think gets lost in the global dialog around regulation is that you know eight years past the crisis, the body of work that’s been created by the regulators whether it’s Basel capital ratios, the implementation of CCAR, stress testing broadly globally, the leverage ratios, the requirements around liquidity, all those things that were designed to address points to systemic risk, clearing, margin requirements, all of that data reporting, I think sometimes gets lost in the narrative and have to step back and look at the past eight years and realize that and it’s a credible body of work that regulators, the industry participants and the clients have actually created.

I think long – I think the dialog around regulation and whether or not there should be some degree of pause and stepping back, I think that started really at the beginning of last year maybe a little bit before you saw some of that in the Basel Committee across the second half of the year, and obviously I think market participants regulators and also it seems like a very reasonable point in time to step back and assess we obviously have gotten some great benefits out of the regulation and the question is, is there a cost in economic growth. So this seems like a pretty normal part of the process in terms of taking a step back and evaluating it.”