Stock markets have been on a tear since Donald Trump’s electoral victory in November, but at least one Wall Street titan says the president-elect can’t take all the credit.
Goldman Sachs CEO Lloyd Blankfein on Wednesday told CNBC that the market had already been on the right path before the election, and the “Trump effect” simply added to the existing momentum.
“I think one of the reasons why the election had such a dramatic effect is because it was drawing people in the direction that it was already heading,” Blankfein said from the World Economic Forum in Davos.
“I think the markets were improving, you know, the Fed’s focus on the likelihood of them raising rates, the growth was already in it. We were already getting at or near full employment.”
Those factors, he said, were already “baked in,” and provide a tailwind to Trump’s “stimulative” platform.
Goldman’s own stock has helped lead the rally and is currently up about 26.7% since the election.
His comments stand in contrast to other Wall Street CEOs who appear more bullish on President-elect Trump’s plan for the economy. Jamie Dimon, CEO at JPMorgan, told CNBC in Davos that “some people are starting to spend in anticipation” of tax reform and repatriation resulting from Trump’s election.
“I’ve heard some CEOs here say I’m going to invest faster now,” he said.
Of course, Blankfein said, Trump’s message has filled investors with greater confidence. The president-elect has promised lower corporate taxes, more infrastructure spending, and less regulation, among other things.
Blankfein added that the Trump effect did not result just from difference between the new set of expectations and the status quo, but rather the difference between the new set of expectations and what had been built in for a Hillary Clinton win. Blankfein said prior to the election that he was backing her bid for president.
That said, Blankfein referred to the president-elect as simply “part of the macro environment.”
“It was going this way, you know, the basic bones of the US economy [are] good,” Blankfein said.
“The balance sheets of companies and balance sheets of individuals had been fixed. Again, I’m talking about full employment, wage growth… So this is pushing in the direction of the momentum.”
When asked if he wishes he had backed a different horse, given Clinton had pushed for higher taxes and more regulation, Blankfein said that there is more to it than just those two factors.
“Let me put it this way. I am dying to look back at this and like the outcome of it and I’m certainly going to behave in as supportive of a fashion as I possibly can to make sure that I like it.”
Goldman Sachs reported fourth-quarter earnings on Wednesday that beat analyst expectations.