Transcription
Well, we're celebrating 30 years of Squawk Box this week. This morning we're also reflecting on September 11th. Our next guest, it was in Lower Manhattan on that fateful morning. Joining us right now is former Goldman Sachs CEO Lloyd Blankfein.
This is quite a morning because there's a lot of things that we've been talking about. Charlie Kirk, 9/11. >> No, it's kind of a, it's, you know, I don't want the whole conversation to be so sober, but it's a sober moment to reflect on it. And of course, I was downtown, downtown all day, worked downtown. And every night on, every night on TV, I get these lawyers run these ads for people who got diseases from breathing in that stuff. Of course, I had lymphoma, so I get a, I always get reminded when I watch late night TV of the consequences of working alongside the World Trade Center that day, and for months afterwards.
I. >> Didn't connect those to it. Yes, you did, and you're better than ever. But I remember, and there's you can't say for sure, but why wouldn't you at least think there's some linkage there? >> Well, people who weren't downtown get it, and people who were downtown don't get it. So you never know. But it's an environmental thing. And so every time I see one of those ads for people to to join some class action or something, I think, I don't do it. But I think about, I think about the consequences of that day.
>> What do you think about on a morning like this? Meaning, we're 24 years later, and to the extent that there's generations of people who who may not even understand it or know it, what took place that. >> Day? You know, I think of, you know, circle of life, Simba, you know, life, you know, life goes on. And people were were too young to remember it. And I was born, you know, I was born after, you know, people were in World War Two. Did I live through World War Two? The other day I was talking to somebody and they were reflecting, and they said that their nephew didn't even didn't know about enough about Vietnam. And I said, well, he was born further from Vietnam than you were from World War One. And so it's just the nature of things. And, you know, it's good. It's part of the charm of life. You know, you don't get too overly saddled with the consequence, you know, with things that just came from the past. And we can look forward as we, as we're going to do this morning.
>> Okay. So let's do that right now, which is I always think of you as someone who thinks about risk as a risk manager. So where are we today in America in terms of our economy, in terms of all of the different crosscurrents? We've got tariffs, we've got issues about the Federal Reserve and what they're going to do or not do. We've got questions about the independence. Well, we saw politics. >> We certainly have.
>> A what is the risk manager. That is Lloyd Blankfein. We have a. >> Wall of worry. And look, we're about to raise, we're about to lower interest rates into a bull market. So I would say the setup for the markets is pretty benign. We can go over a lot of details. But everybody else, you know, talks about that. And then you have to worry about a lot of things that could go wrong, which, you know, I always, you know, I always lived life spent 99% in the 1% of the things that could go wrong. So explains a lot of my unhappiness all the time. But the way I used. But people are hard pressed to come up with it. You know, people don't see a lot of leverage and they don't see this, and they don't see that. The way I used to try to draw people out is I never used to say what could go wrong. I'd say, you know, you just, you know, you were swimming in the Arctic, you got frozen in an ice floe, you melt it down. And a year later, I'm telling you, the market crashed. Tell me what happened. And then people could come out and say the likeliest things that probably could have happened. And it usually involves around leverage. And in this time now, probably credit leverage in places that you don't see it. And, you know, there's certainly, you know, there's certain environmental hazards that are here. And and then I used to think to myself, if I could think of it, that's probably the last thing that would happen. But I look at credit spreads being so narrow, so much money going to private credit, people trying to, you know, goose their returns a little bit by leveraging up and kind of odd ways, you know, at the portfolio level or other levels. Right. And so, you know, leverage starts to sink in. I think of the places where this is being done. A lot of these assets are being put into insurance companies where people are reinsurers. People kind of assured because the long term, you know, the investing premium for longer term liabilities. But if I were an insurance regulator at some point, I might say, are those assets really worth what you say they're worth? And are those are they going to are they going to come? Is it going to come to pass that you'll have the money to pay your liabilities? And let's look at that and let's mark them and let's take, you know, there are a lot of things like that that I would be going out and, you know, we'd be going around the table and then somebody would say, well, I don't think this or that. And I'd say, well, I don't care what you think, just tell me what might happen.
>> And do you, but do you say to yourself, these are sort of 1% risks and otherwise, as you said, we're in this benign environment, which I think you're saying is a bullish environment. It continues a pace. Or do you. >> Say there's a lot of there's a lot of 1% risk, but it's not a 1% risk that something bad will happen. It always look, we had, you know, roughly the crisis of the century, roughly every 4 or 5 years, you know, you know, the sovereign debt crisis, emerging debt crisis in 1994, big crisis, 1998, long term capital and the Russian debt default.com bubble, 2000, 2001, 2007. We're kind of well. >> Are you saying we're due? >> I'm saying we're due. And it doesn't matter that you can't see from where it's coming from. Now, having said that, the other thing I used to ask people all the time is, you know, it's so you sound so much smarter when you're bearish than I used to say, what do you think? And then I said, what are you, how are you positioned? And, you know, you know, I have all these bearish thoughts, but I'm 100% in equities. >> Personally right now. Yeah. >> Because I because we're about to lower interest rates into into into a bull market. Anything having to do. You know there's a anything having you know, yeah. People who can't spell AI, but will buy anything that has that's associated with it. People think it's the, you know, it's an epic moment. Do you. >> Think it's an epic moment? Is the trader that is Lloyd Blankfein buying all of the mag? Like when you say you're you're 100% equity, what does the portfolio look. >> Like? I think it's a phenomenal moment. It might be. I'm not, I'm not a great technologist. And I've lived through waves of technology and I experienced things that changed the world. And I experienced things that changed our fortunes because we overinvested in stuff.
>> Boy, have you ever not been 100% in equities? Was there ever a time where you thought, okay, this is getting scary, I'm going to take some money? >> And let me ask the corollary to that, because we go back a ways and we've been in different forms. We've we've listened to you and off the record things in foreign countries, you know, that have a lot of skiers and stuff that we cannot talk about. But we've, we've taught you have always had a lot of things that concerned you. And, and you say it's 1% and you're a risk guy. I just want to know and answer Becky's question too, on a scale of 1 to 10, you're always you're always worried about all these things. Is it more or less right now than normal? Because that's the only way, as a risk guy, and you've always been able to stay 100% invested, even though you're always. >> Listen, we had, you know, you divide the world into, you know, your outlook in two parts. What do you think is going to happen? What do you bet on? How do you position yourself? And then you get into risk management mode where I don't care what anybody thinks, just what could possibly go wrong? Let's look around the corners. >> That's when you're managing for a fight. >> Well, I think about that. >> Versus what you're doing. >> So the the answer is I think the world is I think the investing market is all tailwind except it can't possibly be. So I have to work. I have to work to find. I work to find things. But that's the nature of my that's the nature of my life.
>> When you're when you were managing other people's money, you were probably more cautious with it than potentially your own. I'm just guessing. Or is there a time where you were ever not 100% involved in equities? >> Oh, sure. >> Yeah. There was there was a time where you took money off the table. >> But I don't know. I don't know if it correlated with what the reality. I used to I'd say to people if people looked, if people looked, you know, very happy and, you know, the world was benign. I said, I'd say to people, you know, I haven't felt this good since 2007, or I haven't felt this good since early 1994. I thought, you know, the birds were chirping and the sun was shining and those periods of time and, you know, who knew?
>> But I guess that's what I would what I would ask, is there a time that you've ever taken money off the table? >> Yes, yes, I feel caused you to answer your question in the risk-taking side of things. I feel very, very good about things and in fact. But, you know, but kind of informs my sense of foreboding that I haven't felt this good since 2007 or 1994. >> You don't know when it's going to come. So there's not a whole lot you can do about it. >> Well, you know, I think you have to protect the tail risks. I never wanted to I wanted to own lottery tickets, not write them. >> Right. >> And, you know, you start to look at in times like this, I want to go around and I want to see, you know, what's really susceptible, what could go, you know, if something went wrong, what would the impact. And so you can move up the credit curve and you can move up the higher value curve. And I think that that's not a bad thing to do now. And it happens to conform to my view of the market, because I think the most exciting companies, the fastest growing, usually size is the enemy of growth. Right. But here you have the biggest companies who are positioned to take advantage of the new technologies because they can afford to are actually have been the best kind of the best ones to go in. But then you go in other people and peop