Goldman Sachs (NYSE:GS) CEO Lloyd Blankfein has heard enough people talk about uncertainty in the markets lately that, he says, it's starting to sound "trite."
So in a recent video posted on Goldman Sachs' website, Blankfein delved into the causes of that uncertainty and why, in his view, everything would be OK.
"I hear from our clients, 'Where are things going to go? What should we do?'" Blankfein said. "And I'll tell you: It's uncertain for a reason, because there are a lot of new things going on."
The Trump administration is expected to take a significantly different policy stance not only from the Obama administration's, he said, but also from what we might have expected from Democratic candidate Hillary Clinton.
"That's a very wide gap," Blankfein said, "and most of those policy changes are in the nature of stimulus."
Under Trump, Blankfein said, we can expect to see less regulation, rather than more; lower taxes, rather than higher; and a bigger commitment to infrastructure spending. That has boosted gross-domestic-product expectations and optimism.
Blankfein last May described the "low confidence" environment in the US and its impacts on various businesses within Goldman Sachs. At the time he said there were "signs on the horizon" that we were moving away from that period, including rising employment levels, low energy prices, and the Federal Reserve's decision to start raising interest rates.
Blankfein said, however, that the positive turn the markets had taken since Trump's election should be viewed in the wider context of a previously evolving macroeconomic environment. Expectations for rising interest rates, for example, were already baked in before the election.
Blankfein has previously said the market rally that followed Trump's electoral win was a continuation of a trend.
"It was drawing people in the direction that it was already heading," the chief executive said at the World Economic Forum in Davos, Switzerland, in January.
'Change in general creates opportunity'
In this week's video, he pointed to some potential adjustments ahead, including diverging currency rates as a result of diverging economic performance.
"The cost of that divergence, you'll get differences in interest rates that could very well lead to differences in currency rates," Blankfein said.
But that doesn't mean we're in unprecedented times, he said.
"It's a vanity, always, at any given moment, to think, 'My goodness we have challenges of a dimension we've never seen before — the world is more uncertain,'" he said.
"It always seems uncertain when you're living in it, and it always seems so simple and sure when you're looking back at it."
Instead, Blankfein said, we're simply undergoing a change from a cycle of low economic activity, very low interest rates, and a high level of pessimism about the future. Now markets are seeing more growth potential, more opportunity, and more optimism.
"So I'd say change in general creates opportunity," he said, "but change from a pessimistic state of mind to one of more optimism is the better of the two possibilities."