No Taper Meant Business as Usual at Goldman: Cohn

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Oct. 23 (Bloomberg) -- Gary Cohn, president/COO at Goldman Sachs, discusses the impact of the Federal Reserve delaying tapering of its bond buying program, why he believes the time is still not right for action by the Fed and explains how Main Street and Wall Street are essentially the same thing. He speaks with Stephanie Ruhle from the Goldman Alternatives Conference on Bloomberg Television’s “Market Makers.”

Cycle were equity cycle.

Many people were caught flat- footed when they did not taper.

What does that mean for goldman sachs?

For goldman sachs, it meant business as usual.

Not tapering is what we have been in for the past year.

People were able to migrate to riskier assets or migrate back to the equity markets.

Some people had gotten out of the fixed income markets because they believed the fed was going to taper and had to rethink about the fixed income portfolio and we have seen more migration into the fixed income space.

In many respects, similar to what we have been doing for the past year.

What about the great rotation?

And you say there is a rotation, who is investing?

I agree.

We have been saying equities, equities because we believe the return on equities will outstrip the return of the fixed income asset class.

Or those investors that need along duration, they need to have a fixed income position.

They thought they would go to a more tapering environment.

Now that that is up in the air, whether the fed will be taper or not or when they will taper.

Many people are disappointed.

Saying wall street got richer last week.

We sat down with us shut down for 16 days.

What happened last week?

Investors all made money and main street did not.

Let me take the tapering question first.

If you look at where we are economically versus where we were a year ago, we are virtually in the exact same face.

If quantitative easing made cents a year ago, probably still make sense today.

-- we are virtually in the exact same place.

The only thing that is different is the headline unemployment rate has dropped down to seven .2%. we could get into why it has dropped.

So if you look at the economy of the united states and the world economy and look at 1.3 inflation in the united states and look at gdp, we basically have the same ingredients we had a year ago.

If you were a proponent or advocates of quantitative easing a year ago, you probably still are today.

That is why i tend to think the fed is in a tough position.

They are in a position where they know they cannot quantitatively ease forever.

They know they are building a bigger balance sheet, but the number one objective is to grow the u.s. economy, and they are stuck in a dilemma of what to do.

I do believe eventually they will taper.

Eventually can be a very long time.

I do not believe it is soon.

I do believe when janet yellen gets in there, she understands the dilemma she is in.

The second question you asked me about does it matter?

You said wall street is doing well.

I think it is hard to differentiate between wall street and main street.

They are the same street.

Our client of the client is main street.

We have 500 seat ioc -- cio's. many run union pensions, pensions for teachers and firemen and policemen.

That is their ultimate client.

They are managing stocks and bonds or main street to make sure pension and retirement money is intact.

When main street says to washington, we want bankers punished and the bank like

This text has been automatically generated. It may not be 100% accurate.


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