Goldman Sachs CEO David Solomon says the US economy is definitely slowing down, but he doesn’t foresee a near-term U.S. economic crisis or recession.
However, Solomon notes that escalating trade tensions between the United States and China pose a danger to global financial stability.
“I don’t think we’re at a moment where there is an impending economic crisis,” Solomon told CNN Business (video below).
“But things could change. At the moment, I think the real impact of tariffs has been small, but you’ll have to watch that carefully.”
"I don't think we're at a moment where there is an impending economic crisis."
Goldman Sachs CEO David Solomon acknowledged the trajectory of America's economy is "slowing a bit" and that the deepening US-China trade war has potential to cause problems https://t.co/bhNunsUjLW pic.twitter.com/x90ue5R2LV
— CNN International (@cnni) August 12, 2019
Solomon: Someone has to stand up to China
While the media is hyping a U.S. recession in the near future, Solomon says those fears are overblown.
“I don’t see that,” he said. “There is a tendency to look at things through the rear-view mirror.”
The Goldman Sachs boss is not a fan of President Donald Trump’s use of punitive tariffs against China and the European Union as a negotiating tactic in trade agreements.
However, Solomon agrees with Trump’s tough stance toward China. He says it’s about time the United States does something to deter China’s decades-long trade abuse and intellectual-property theft.
“I’m not a fan of tariffs, but we need to find a way to push,” Solomon said.
According to a CNBC report, 1 in 5 U.S. corporations say China has stolen their intellectual property within the last year.
JPMorgan analysts: Keep calm and carry on
Meanwhile, two top analysts at Goldman Sachs rival JPMorgan urged investors to keep calm during stock market volatility.
In a note to investors, JPMorgan quant guru Marko Kolanovic and chief US equity strategist, Dubravko Lakos-Bujas, said investors should expect the Dow to be erratic.
However, they insist that the downturns are temporary, and the stock market will recoup any lost gains.
Kolanovic and Lakos-Bujas wrote: “We do think that after a short period of stabilization, markets will likely regain previous highs. Hence, we see this sell-off as a medium-term buying opportunity.”
JPMorgan's Advice for Navigating Wild Stock Market Swings: BTFDhttps://t.co/bRJV0p8h2D
— CCN Markets (@CCNMarkets) August 9, 2019
Like Goldman Sachs CEO David Solomon, the JPMorgan analysts are troubled by the rising trade dispute between the United States and China.
Kolanovic and Lakos-Bujas expect tensions between the US and China to continue. However, they don’t expect further “uncontrolled escalation.”
In other words, they expect the US and China to eventually resolve their trade differences before too much damage is done to both economies.
Investment pro expects Dow Jones to hit 30,000
As HVY reported, several Wall Street investment pros also believe that a Dow 30,000 is a near-term probability.
Troy Gayeski is co-chief investment officer at Skybridge Capital in New York. He says investors should ignore the nonstop negative headlines and instead focus on the reality, which is a healthy U.S. economy.
Gayeski concedes that a recession is always a possibility. However, he predicts that there’s a better-than-25% probability of Dow 30,000 within the next six months.