The decisions of the US Congress and the Federal Reserve will have a greater impact on the markets and the economy than the pandemic will. Word of Goldman Sachs’ number one, CEO David Solomon.
It should be noted that the total amount of fiscal and monetary bazookas launched by Capitol Hill and the Jerome Powell Fed to address the economic consequences of the Covid pandemic has been around $ 10 trillion since March 2020. The problem is that both supports are destined to be dampened (that of the Fed has already been with the launch of the tapering of asset purchases).
“I don’t think we are in a new paradigm, where the world is fundamentally different. But it will take time to make progress – said Solomon, in an interview with Cnbc, in the ‘Squawk Box’ program. this context, I believe that monetary and fiscal policies will have a greater impact on the trajectory of the markets than the pandemic will have, from now on “.
Regarding the threat of inflation in the US, Solomon said that “we clearly see real inflation in the economy,” adding that it is possible that investors may not have fully discounted the price flare.
“I believe we have seen lower-than-trend inflation for a significant period of time and that there is now a real possibility that we will have higher-than-trend inflation for another period of time. 1970s, but when you think of times when there was inflation, you think of times when inflation hurt asset prices and slowed down one’s ability to make money on almost any asset. ” .
In this context, Solomon added that he believes that “we will not see the same returns from equities and many other assets over the next few years as we have seen over the past two years.”