Morgan Stanley, Goldman CEOs See Likely Correction But No Shift
The CEOs of Morgan Stanley and Goldman Sachs believe a market drawdown is likely, but remain positive on a continued uptrend in the longer term.
Global markets continue to climb higher with the S&P 500 rising more than 15 percent year-to-date. Since the fears about US President Donald Trump’s tariff scare around «Liberation Day» in April, investors have experienced a fairly smooth ride upwards in 2025. However, this bull market could see a temporary pause, according to Wall Street leaders on a panel during the «2025 Global Financial Leaders’ Investment Summit» in Hong Kong.
«We should also welcome the possibility that there would be drawdowns. 10 percent to 15 percent drawdowns that are not driven by some sort of macro clip effect,» said Morgan Stanley CEO Ted Pick, highlighting the extraordinary run by precious metals as one asset class that could see a correction.
«It is likely there'll be a 10 to 20 percent drawdown in equity markets sometime in the next 12 to 24 months,» echoed Goldman Sachs CEO David Solomon.
Market Direction Still Positive
Nonetheless, the two banking heads remain positive on the overall trend and view any correction as merely a natural and healthy development.
«In April, we had the height of the headwinds when we had DOGE and immigration and the bill being put through and tariffs,» Pick recalled. «So we come to today and yes, markets seem expensive […] but the reality is systematic risk has probably narrowed.»
«Technology multiples are full. I'd say technology multiples are kind of 80th percentile in a historical context. But when you look at the broad market, there are lots of things where the multiples aren't as full especially given earnings growth and kind of the momentum in economies,» Solomon added. «I'll give you lots of things that could go wrong. But at the moment, those don't seem likely in the short-term distribution of outcomes.»
AI: Bubble or Not?
Specifically on artificial intelligence, both CEOs admitted that while some bets may prove to be correct, there may be just as many investors that will be disappointed.
«In the long run, these are really interesting opportunities and a lot of capital will be winners and losers, just as always has been,» Solomon remarked.
Asia Outlook
Within Asia, Solomon was bullish on China, noting that global allocators have been gradually shifting back to adding exposure amid improved sentiments and stability after several years of shunning the market. Pick agreed with the view and also named other opportunities in the region, such as Japan, due to reawakened investor interest and corporate governance reforms, and India, for deregulation and infrastructure-led tailwinds.
«It's hard not to be excited about Hong Kong, China, Japan, and India – three vastly different narratives but all part of a global Asia story,» Pick exclaimed.
