In an interview with CNBC, Goldman Sachs CEO Lloyd Blankfein advises the CNBC host that at some point, some event will happen that will reset portfolios.
Blankfein states that interest rates will rise, which will be a shock to the market, and states that I have a lot of bad dreams at night, liquidity is one of them.
Lloyd Blankfein’s full interview with CNBC is below:
I mean, is there something coming that we don’t know about? well, joe, there is always something coming that we den foe about because nobody know what is the future is. and, you know the second we assume there is not going to be any volatility.
it’s not just happenstance, you usually get shocks after, in fact, it’s the very complacency that always leads to that kind of aing sho you know at the end of the day markets are very calm. i think, given the calm in the market, we can look for explanations. i don’t really understand it fully. i don’t think anybody understands it fully. some exgogenous thing will happen. eventually, people acknowledge higher growth. money is a commodity will start to cost something again and that, in itself, will produce a shock to the mark as again a lot debt has been issued, acquired. those portfolios will be market-to-market when interest rates rise, that, in itself, will be a shock to the market.
do you wake up in the middle of the night and say to yourself, liquidity? your former cfo? i have a lot of bad dreams at night, liquidity is one of them.
that’s your watch word? it still? it certainly was in ’08 i would say that most, there are a lot of problems, with the way problems manifest themselves in a financial services firm ultimately is liquidity dries up. we are remote from a session like that. but we keep a very watchful eye on our liquidity as every financial institution should.
lloyd, it’s been unprecedented the volatility seems unprecedented. you never see — how difficult the environment is to trade with no volatility. if something is coming, it just seems like it could be a doozy. but when we are taught to think we’ve already had the doozy the next doozy is we paid the piper.
i mean, is it really, are we looking at something that could be quite it fromening coming up our not?
well, joe, one has to always be prepared. the answer is, i don’t know, so i wouldn’t, given enough time everything happens. it’s not difficult to trade. in fact, when nothing is moving, it’s quite easy to trade. a lot of trading isn’t going on, a lot of policency in the market for that. this could go on a while or change. can i tell you, it won’t go on forever. we should are the luxury of a steady, calm, quiet market forever. its just not our lot in life to have that. i mean, i almost wish it would be like that. we’ve accommodated our business to the levels of flow, now you can see what our returns on equities, you know, we’ve had for the past couple of years, low double digit returns in the markets we have now. i’ll tell you, we’re an intermediary in the market. we are scaling ourselves with the current mark. we are preserving our optionality to play our role in the market when volatility picks up, some say when volatility picks up, i don’t want to quibble with that. i think in the long run, we can’t lack on a volatility in the market. we’re not that lucky.