Goldman Sachs 2015 Annual Report Download - page 10

8 Goldman Sachs 2015 Annual Report
Letter to Shareholders
macroeconomic and geopolitical dynamics — have
made for pervasive uncertainty. Slowing growth in China,
a presidential election in the U.S., a referendum in the
U.K. about its future in the European Union, volatility
in the markets and regions consumed by conflict, to name
a few, are examples of issues that are naturally generating
unease. Other fundamental questions being raised —
from whether technology is permanently displacing jobs
to whether monetary policy has reached its limits in
affecting economic outcomes — have gone from esoteric
to mainstream.
At Goldman Sachs, we grapple with these questions day
in and day out. As managers of risk, we do our best to
understand them, and to prepare our clients and our
firm for even low-probability but highly consequential
scenarios. This is why we worry about deflationary
pressures, or liquidity problems in financial markets as
a result of new regulations, or how China will manage
its transition from an infrastructure-driven to a
consumer-driven economy. It’s why we keep a close eye
on emerging markets, particularly those that lack
diversification and are heavily exposed to commodity
exports, where a prolonged supply overhang could
negatively affect prices for some time to come.
When our clients confront these or other challenges,
we use our institutional resources to help them navigate
the choppy waters, and we regularly consider how these
scenarios and other tail-risk events could directly affect
our firm.
While we must consistently try to “see around corners”
to anticipate problems, we also see plenty of reasons
for optimism. We see the U.S. nearing full employment,
signs of modest inflation and some stabilization in equity
and commodity markets. We don’t see how a world
of zero or negative interest rates could possibly be the
“new normal.” Moreover, we view China’s slower rate
of economic growth as still substantial, particularly given
that it is now the world’s second-largest economy. We
see room for continued fiscal policy expansion in
some economies, and options for monetary policy if
meaningful growth proves elusive.
We can’t forecast every outcome, and we expect the
near-term environment to prove challenging. This is
why we focus on issues such as tight cost controls, and
consistently assess our own strategic areas of focus.
Yet we find ourselves generally optimistic about the
longer term. By staying true to our strategic focus, while
adapting quickly to structural and cyclical factors, and
maintaining our focus on meeting the needs of new and
existing clients, we strive to continue to deliver on our
long history of providing our shareholders with best-
in-class returns.
Lloyd C. Blankfein
Chairman and Chief Executive Officer
Gary D. Cohn
President and Chief Operating Officer