When: Today, Thursday, April 25th
Where: CNBC's "Squawk on the Street"
Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Goldman Sachs President & COO Gary Cohn today, Thursday, April 25th on CNBC's "Squawk on the Street" (M-F, 9-12PM ET). Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000163044.
All references must be sourced to CNBC.
COHN ON GROWTH MARKETS:
WE OBVIOUSLY BELIEVE THE GROWTH THAT'S COMING IN THE GROWTH MARKETS AND AS YOU GO AROUND THE WORLD, YOU HAVE DIFFERENT VIEWS OF THESE DIFFERENT GROWTH MARKETS, BUT OVERALL OUR ECONOMISTS AND LEGAL HAVE EXCESS OF 6.5% GROWTH IN THE GROWTH MARKETS. A LOT OF THAT WILL COME OUT OF ASIA, WHETHER IT BE CHINA OR SOUTHEAST ASIA, SOME OF IT WILL COME OUT OF LATIN AMERICA, SOUTH AMERICA. THOSE ARE AREAS WHERE WE ARE VERY CONFIDENT THERE WILL BE GROWTH.
COHN ON CHINA GROWTH:
NO ONE IS 100 PERCENT SURE WHAT'S GOING ON WITH THE GROWTH IN CHINA. CHINA IS THE BIG ECONOMIC ENGINE IN ASIA. SO WHAT HAPPENS IS, IS AS CHINA GROWTH EXPANDS, THESE COUNTRIES IN THE PERIPHERY OF CHINA, WHETHER IT BE INDONESIA, MALAYSIA, SINGAPORE, THE PHILIPPINES, THEY END UP GROWING WITH CHINA BECAUSE THEY BECOME BIG EXPORTERS. MANY OF THOSE COUNTRIES ARE BIG COMMODITY EXPORTERS. AS CHINA GROWS THEY INCREASE THEIR CONSUMPTION OF COMMODITIES, THEY INCREASE THEIR IMPORTS. THOSE COUNTRIES INCREASE THEIR EXPORTS. SO THERE IS A NATURAL PULL AND PUSH GOING ON IN THE WORLD. CHINA NEEDS THE PULL TO SOME EXTENT FOR THOSE ECONOMIES TO GROW.
COHN ON U.S. ECONOMY:
I THINK THE U.S. IS STUMBLING ALONG. I THINK YOUR CHARACTERIZATION IS RIGHT. THAT SAID, WE HAVE ENORMOUS OPPORTUNITY IN THE UNITED STATES. WE HAVE THE CHEAPEST NATURAL GAS IN THE WORLD. WE'VE GOT AN ABUNDANT LABOR FORCE THAT'S WILLING TO GO BACK TO WORK. WE'VE GOT ENORMOUS OPPORTUNITY TO FINANCE PROJECTS. THERE IS ENORMOUS CAPITAL IN THE SYSTEM AND CAPITAL IS LOOKING FOR A HOME. SO WE HAVE THE NATURAL INGREDIENTS HERE IN THE UNITED STATES TO REALLY SEE A GROWTH AND A GROWTH ECONOMY.
COHN ON CONFIDENCE LOW:
WHAT HARVEY SAID IN OUR EARNINGS CALL IS WHERE WE ARE TODAY. WHAT WAS GOING ON IN MARCH IS GOING ON IN APRIL. CLIENTS WANT TO GROW. CLIENTS WANT TO DEPLOY CAPITAL. CLIENTS ARE ALWAYS LOOKING FOR OPPORTUNITIES TO INCREASE MARKET SHARE AND EARNINGS FOR THEIR SHAREHOLDERS. THAT SAID, THEY HAVE A FIDUCIARY RESPONSIBILITY TO THEIR SHAREHOLDERS. SO THEY NEED TO BE CONFIDENT THAT THERE WILL BE AN ADEQUATE RETURN ON INVESTMENT FOR INVESTING IN THEIR BUSINESSES. AND RIGHT NOW THE CONFIDENCE LEVEL IS RELATIVELY LOW ON GETTING THE RETURN THAT IS NECESSARY.
COMPANIES WOULD MUCH MORE PREFER TO INVEST THE CAPITAL IN THE BUSINESS AND GROWING THE BUSINESS THAN RETURN THE CAPITAL. BUT IF THERE'S NO BETTER ALTERNATIVE THAN RETURNING CAPITAL, THEY HAVE A FIDUCIARY RESPONSIBILITY TO THOSE SHAREHOLDERS TO RETURN THE CAPITAL AND YOU'RE STARTING TO SEE MORE AND MORE OF THAT. AND I THINK THAT'S A TREND THAT WE WILL SEE FOR THE NEAR TERM FUTURE. THE GOOD NEWS IS THESE THINGS CAN CHANGE RELATIVELY QUICKLY.
COHN ON GOLDMAN SACHS:
RIGHT NOW WE'RE IN A POSITION WHERE WE THINK THE OPPORTUNITY SET IS GOING TO REMAIN FAIRLY CONSTANT TO WHERE WE ARE. WE FEEL LIKE WE'VE SPENT AN ADEQUATE AMOUNT OF TIME RIGHT-SIZING THE OPERATIONS OF THE FIRM. WE'VE GONE THROUGH A FAIRLY SIGNIFICANT DOWNSIZING IN PEOPLE, AND MORE IMPORTANTLY, COST. WE'VE TAKEN A LOT OF COSTS OUT OF THE RUN RATE. AND WE'LL SEE WHAT THE FUTURE BRINGS.
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