Goldman CEO Solomon Says Deal Recovery Possible in 2023

The video discusses the current economic uncertainty and its impact on capital markets, highlighting the need for market participants to adjust to new realities. It explains the risks associated with investments, particularly in IPOs, and the increased demand for risk premiums. The video also covers the rebalancing period expected to last several quarters and predicts a future equilibrium in capital markets with different valuations and costs of capital.

What is a significant factor contributing to the current decrease in capital markets activity?

• Rising inflation rates

• Technological advancements

• Greater uncertainty in economic growth and interest rates

• Increased government regulations

Why are investors demanding higher risk premiums in the current market?

• To encourage more IPOs

• Due to a decade of stable economic conditions

• Because of increased competition among investors

• As a result of a shift from easy money and rapid asset price appreciation

What is considered one of the riskier investment activities in the current market environment?

• Investing in real estate

• Buying established company stocks

• Participating in an IPO

• Investing in government bonds

How long does it typically take for markets to rebalance during periods of uncertainty?

• Six to eight quarters

• Two to four quarters, sometimes up to six

• One to two quarters

• More than eight quarters

What is expected to happen as we move into 2023 regarding capital markets?

• Issuers and capital allocators will continue to diverge

• There will be a clearer understanding of market trajectories

• Interest rates will remain unchanged

• Asset prices will decrease significantly