Goldman Sachs CEO David Solomon expressed optimism that mergers and acquisitions (M&A) activity would recover later in the year as market stability improves, despite the anticipated “Trump bump” not materializing as expected.
Solomon noted that President Donald Trump’s initial 100 days introduced significant uncertainty, yet he anticipates that a new normal will help markets stabilize.
Speaking to Bloomberg Television, Solomon highlighted how Trump’s unpredictable tariff policies have impacted both public and private markets. This uncertainty has led CEOs to implement measures such as layoffs to mitigate the effects.
Solomon stated that the policy actions thus far have increased uncertainty, which he believes is detrimental to investment and growth. He reported that clients and CEOs are currently cautious about investments and are tightening budgets.
The ongoing tariff disputes under Trump’s administration have contributed to an 8% decline in stock value, marking the poorest start for a new administration since Gerald Ford’s term. The tariffs on China, reaching 145%, have prompted some Chinese companies, like Temu and Shein, to raise prices. Similarly, companies such as Adidas, which rely on Chinese manufacturing, have also warned of impending price increases.
Despite the prevailing uncertainty, Solomon noted an increase in M&A activity, a crucial revenue stream for Goldman Sachs, during the first quarter. The bank generated $1.9 billion in dealmaking and underwriting fees, slightly below JPMorgan’s $2.2 billion and a decrease from last year’s $2.1 billion during the same period.
Solomon stated that if uncertainty continues to rise, capital markets activity may diminish. However, he remains optimistic that market conditions will normalize, leading to increased capital market activities.
Investors had initially anticipated a surge in M&A activity, fueled by expectations that Trump would adopt a relaxed stance with the Federal Trade Commission and reduce regulations. However, ongoing tariff uncertainties have stalled mergers and public listings.
Further encouragement for Solomon comes from the Treasury Department’s plans to ease banking regulations, signaling potential rejuvenation in dealmaking.
Solomon emphasized the necessity for transactions, capital raising, and investment liquidity, suggesting that the current scenario is part of an adjustment in expectations.
This article was originally reported by Fortune.com.
