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Stocks Rally Despite ‘People Under-Invested:' Goldman CEO Blankfein

Friday, 25 Jan 2013 | 8:12 AM ET
Banking on Blankfein at Davos, Part 1
CNBC's Andrew Ross Sorkin sits down with Lloyd Blankfein,Goldman Sachs chairman & CEO, at the World Economic Forum in Davos, Switzerland, to discuss the global economic outlook. The U.S. economic environment is "very good," he said.

The U.S. economic environment is "very good" and the stock market's rally to multi-year highs has more room to go, said Goldman Sachs Chairman and CEO Lloyd Blankfein in a CNBC interview on Friday from the World Economic Forum in Davos, Switzerland.

(Read More: Davos 2013 Special Report)

"The market has gone up with people being under-invested," Blankfein told "Squawk Box," adding that investors should want the market to go down "so they can get in."

(Read More: Bulls Gear Up for Another Run at 1,500 on S&P)

He said that people have reason to be optimistic. "In a lot of ways, the worst case scenario [in Europe] is taken off the table. … There is a lot of relief that the Euro isn't going to collapse."

"[But The place that is in a much better position right now is the United States."

(Read More: ECB's Draghi: Economic Activity Is Stabilizing)

As for how long interest rates will remain low in the U.S., Blankfein said, "The turn in interest rates … it won't necessarily happen when the Fed changes interest rate policy. It'll be when the market decides the Fed will have to change interest rate policy."

He added that could happen sooner than the official shift by the central bank.

Banking on Blankfein at Davos, Part 2
CNBC's Andrew Ross Sorkin sits down with Lloyd Blankfein,Goldman Sachs chairman & CEO, at the World Economic Forum in Davos, Switzerland, to discuss the impact of regulations on banking and the outlook on M&A activity in the coming year.

Meanwhile, the political landscape in Washington has been a big factor for investors in recent months, as President Barack Obama and Republican leaders work to resolve the nation's spending and debt issues.

During the "fiscal cliff" debate at the end of last year, Blankfein had supported higher taxes as part of the deal to avoid it, but now he said, "My ear is attuned for hearing about more cuts in spending. I'm not hearing it. I would be disappointed if this is all there was."

Last week, Goldman Sachs reported quarterly earnings and revenues that far exceeded Wall Street's expectations.

(Read More: Goldman Profit Jumps on Banking, M&A)

And Blankfein told CNBC Friday that he expects that to continue, "We're an investment bank … All the things we do correlate with growth."

"We advise people on acquisitions" and help finance them, he added. "We manage risky assets, which people only put money in risky assets when they're confident."

Besides the profit picture, Blankfein's 2012 compensation package — said to be worth around $20 million — has been a hot topic, as it far surpassed JPMorgan CEO Jamie Dimon's pay, which was cut due to the "London Whale" losses at his firm.

(Read More: Goldman officials get over $100 million in stock-filings)

Blankfein acknowledged, "In the context of what Nobel laureates and physicists make, [my compensation] makes no sense at all. In the context of alternatives for people in finance I understand what one has to do draw talent in our part of the industry."

Responding to a direct question about whether he'd leave Goldman if paid less, he said, "Not today, no."

By CNBC's Matthew J. Belvedere; Follow him on Twitter @Matt_SquawkCNBC

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