Vice Chairman at Goldman Sachs, Robert Kaplan, Talks Monetary Policy, Geopolitical Risk

Being a small business owner isn't just a career, it's a calling.

Chase for Business knows how much heart and effort go into building something of your own.

Manage all your business finances from banking to payments to credit cards

all in one place with Chase's digital tools.

Plus, access online resources designed to help your business thrive.

Learn more at Chase.com slash business.

Chase for Business. Make more of what's yours.

The Chase mobile app is available for select mobile devices.

Message and data rates may apply.

JP Morgan Chase Bank NA.

Member FDIC.

Copyright 2026.

JP Morgan Chase & Company.

Bloomberg Audio Studios.

Podcasts, radio, news.

Wonderful surprise for you this morning.

All things to talk about with Robert Kaplan of Goldman Sachs.

Former president of the Dallas Fed, we could talk for three hours

with him, but we're going to do a massive audible here

and the kid from your grew up in Brooklyn.

No, my parents did, and I grew up in Kansas State.

You grew up in Prairie Village.

Yeah.

And with John Sherman, you enjoy partial ownership of the Bobby Whits.

That's right, of the Bobby Whits.

I watched him with a giants in Phoenix here recently.

He's an electric player.

Yeah, he's a great player.

How will the Kansas City Royals your team,

your part owner with John Sherman,

how will they compete where the payrolls about the size of Aaron Judges payroll?

I got 182 million as a working statistic.

This is unfair, right?

Yeah, and that's why in the, in the, is a sensitive topic,

but in the labor negotiations over the next year or two,

there's going to have to be a discussion about some type of balancing salary cap

that the sport really, really needs to create more competitiveness.

Having said that, royals are going to, I say this in a little biased,

royals are going to be good this year.

I mean, there's, I mean, the word is in sports radio,

there's going to be a work stoppage next year in baseball.

Are you, do not need within the delicacies, Robert Kaplan,

of where you sit with the Kansas City Royals?

Are you optimistic there can be a constructive agreement?

I'm optimistic that it's clear the sport needs to deal with the, the, the,

the disparity, yes, like other sports.

How are we going to get from here to there?

I don't know, but it's clear it would benefit everyone involved in the sport.

One Kansas Final Kansas City question before serious issues.

Am I right? Kansas City is booming.

Is that that's what I notice the radar from here?

It's booming with the new airport at all.

Of course, yes.

Listen, I'm, Kansas City is a fabulous place to live.

I love it. I go back there regularly and, and it's,

it doesn't have a lot of like 43 other states in the United States.

The state of Kansas and Missouri are, are not growing substantially in terms of

population, but it's a fabulous place.

Yeah, that's good.

Should we start the show?

Let's go.

Let's start the show.

Paul Sweeney with Robert Kaplan, the former Fed president of Dallas.

Robert, you know, the Fed decision I guess was not surprising in March kind of,

but if I look at the WIRP function, look where the market is thinking.

The market's not really pricing in any cuts or even any rate heights for the

meantime of the year.

I guess that makes sense because there's so much uncertainty out there.

It makes a lot of sense is, if you, if we talked literally just a month ago,

we would have said we're set up for a strong year growth in 2026.

Tax incentives, regulatory reform, AI, data center power boom.

And I think the Fed was hopeful in the back half of the year

that headline inflation would tail off a bit so they might be able to cut rates once or twice.

Obviously because of what's going on in the Middle East, I think they're,

they're going to need to step back.

That's the right thing to do and let this unfold.

And the market is sort of backed off also and is pricing in basically no cuts this year.

What do you think, if I'm at the board level, if I'm at the C-suite level,

I've navigated tariffs.

Now I have to navigate what may be, you know, an inflationary,

slowing economy due to higher energy prices.

What is the C-suite?

What is the board to do these days?

Are they going to sit on their hands as well a little bit, do you think?

They're what we're seeing.

They're not sitting on their hands because we are in the middle of not only an AI

data center power cap ex boom, but now we're in the early stages of the adoption boom,

which is going to improve productivity growth.

And every business we talk to has got to be trying use cases and trying to figure out how

that's going to work and many are concluding that in this new era, they're better off

getting more size and scale and merging.

So that's not slowing down at all.

Having said that, if you want to, if you're forecast for the year,

this is put a little bit of a damper on, for many businesses on their growth outlook,

and they're going to be more careful and that will start with hiring and other expenditures.

But they've got to keep aggressively pursuing this AI situation and mergers will be part of that.

You're in the early crucible of this, of course, at the Dallas Fed,

and we all know how Texas is booming and the philanthropy of Michael Dell.

And others, here's Anna Crockett from Robert Kaplan's Dallas Fed,

salary not sole concern for young adults weighing career decisions.

So you bring it over to AI in the boom, whether it's Deer Valley out in Phoenix or

everything going on in Texas.

What's going to be the incentive here to drive employment and happy employment forward?

So what we've seen, and I saw this when I was at the Dallas Fed, and I see it more now,

we've got a lot of what I call mismatches.

So the Fed worries about, are we sickly growing?

Are we weakening?

We got a difference.

We got structural problem.

We got college graduates, programmers, others who can't find jobs.

But I've never seen more open jobs, window installers, technicians,

plumbers, people to work on the Ford Motor Company,

assembly line to make 135 grandier, can't find them.

And so these mismatches have to be worked through and we're kind of struggling with that right now.

Okay, this is Senator Grassley Welders in Iowa, a million years ago.

What's the simple issue?

More pay for those working class people?

Some of it is aspirational.

If I go to college, I think, did I go to college to be a plumber,

or electricity turns out those jobs make a lot of money.

And so I think you may see, you're going to need to see more changes in our educational system

where it wouldn't shock me if 15 years from now, a state college offers a skill training option

that I do that now.

This would be an agricultural and mechanical school like at college point Texas.

Exactly.

That's right, college station.

Yep, college station, exactly.

Robert, I mean, talk to us about the M&A environment.

We came into the second term of President Trump.

The expectation was that this was going to be an administration that was going to be very supportive

of M&A consolidation.

Have we, in fact, seen that?

I think the, I'll talk generally the attitude in boards is there is a window here

where I think companies are more confident that if they want to do a merger

that they'll be able to get it done and they want to take advantage of that window.

Private credit, if it weren't for the war in Iran, Tom and I keep saying to each other,

boy, if it weren't for the war in Iran, this private credit issue would be maybe a bigger issue

for global Wall Street.

And concerns about, is there a systemic risk in the private credit world, which has seen such

a tremendous amount of growth since a great financial crisis? How do you guys think about that?

Yeah, so if you actually look under the hood in the portfolios,

obviously you want to check what their industry exposures are,

how much software exposure. By the way, there's nothing wrong with software companies.

It's just you may not want them to be leveraged five times evenly.

But there's the portfolio issue, which I would argue, if growth is solid this year,

we're unlikely to have a credit cycle in 26. So what's going on?

There's that liquidity mismatch. That's big problem. And I think they're being confused,

meaning there are certain BDCs that you have to offer quarterly liquidity,

and when investors rush for the exits, and they think others are, then they're going to rush.

And I think in portfolios that have good matching of assets and liabilities liquidity,

they may be fine. Having said that, this is the crisis before the crisis to quote someone else.

If we have a credit cycle next two or three years, I actually think this concern now is going

to be healthy, because if we have a credit cycle, then you're going to see more issues in private credit.

If you're listening across America, good morning to you, Paul Swinion, Tom Keen, Bloomberg

surveillance on YouTube, subscribe to Bloomberg Podcasts. It's our digital distribution humbled by

that success. And of course, all of you on traditional audio as well. Where there's Robert

Kaplan of the Dallas Fed, now holding court again at Goldman Sachs' Vice Chairman. I would say like

Mark Kimett in the military spans finance. Robert Kaplan, you span academics over to finance

over to your service at the Dallas Fed, like no one else in America. Once again, we're studying

within private credit the efficacy of hedging. In every single class ever been taught,

there's a point where a hedge catches up with you. How closer do we, within re-hedging,

where the game, the shell game we're playing, where we get to a shock at tip point that upsets

the apple cart. Well, obviously, the yield curve is drifted up because oil prices have drifted

up. The real yields come up. People are concerned that essential banks just aren't going to cut

in the way that we may have thought literally a month ago. Having said that, I think the private

credit issue, maybe not this year, but over the horizon, is about operational risk matching

financial risk. We were taught way back when, if operational risk is high, be careful about the

financial risk. An AI and disruption is going to increase operational risk. Businesses will figure

it out, but you don't want to be as highly leveraged. That's something I think people are going to

have to go back and screw it. But there's a private credit people, Paul. We're not leveraged.

We're not. Yeah, we're going to hear. I'm listening to Robert Kaplan. Well, the companies,

listen, we would have said in the past four or five times EBIT, that's not over leveraged.

Well, it is. If there's a risk that your EBIT might drop 30% because of a new innovation,

that's the issue. What's the message to your bankers these days when you sit down with your

senior bankers or coverage bankers and all right, for the next few weeks, let's go out. We want

to get this message out to our clients. Let's let's stay close to clients. Let's understand

their needs. Let's be sharing bringing. Let's bring the whole firm to bear, including our thought

leadership to help them figure out what's going on. Corporate clients are very active investing

clients across all our sectors are trying to figure out and handicapped what's going on.

And our job is to understand and build our relationships and serve them by bringing the whole

firm to bear. Are you sensing that this? I mean, the AI revolution, I guess we'll call it,

I'm not sure what it is. We used to call it big data back in the day. But some people are telling me,

this is more important than the internet. And it might just be a cut below electricity

in terms of the importance of society. I thought somebody expressed to me that way.

Boy, if I'm a corporate board or CEO, I feel like I got to get super smart, super quick,

because it's either a friend or an enemy to my business. I'm not sure which.

Yeah. So here, businesses are handling the following way. A typical business has 10 or 15

use cases. You know, how can we change our controllers department, our marketing department,

every all the different things that they do. They're in the middle with partners,

outside partners of going through those use cases. And I'd say we're in the early

earnings and two years now they're going to be a whole lot smarter. Two years will be an

eternity. But businesses will be a whole lot smarter. Some of them are saying I want to do more

strategic merger activity to help mitigate some of the risk here. But we're learning right now.

So anybody tells you I know exactly how it's going. They don't know. The smartest people I know

are in the middle of it and they're open to learning and they're not prejudging it.

On AI, what is your observation on a roll-up of all the competitors now? Are there too many,

just on a unit basis? Are there too many players? Well, so a lot of our attention because we can't

avoid it is all the capex and the compute infrastructure part. Yeah. Okay. Then there's the

adoption companies which are extremely highly valued. And the truth is I've no doubt we need to

create more compute. How the adoption companies are going to shake out, I think that's where more

the uncertainty is and that's where the software situation. The first reaction is it's going to

be disruptive. I think the second reaction after people calm down is, but clients are going to need

advice to help with the installation of software companies or critical that. So I think we're

literally rustling our way through this. Thank you for the comments on Kansas City.

The Royals, I mean, was George Brett's bad-tard? I think it was. Robert Kelvin, thank you, thank you.

All of the Kansas City Royals with the modest, interesting Goldman Sachs. And of course,

it's a public service at the Federal Reserve Bank of Dallas.

This message is brought to you by Apple Card. Apple Card members can earn unlimited daily cash

back on everyday purchases wherever they shop. This means you could be earning daily cash on just

about anything like a slice of pizza from your local pizza place or a latte from the corner coffee

shop. Apply for Apple Card and the wallet app to see your credit limit offer in minutes.

Subject to credit approval, Apple Card issued by Goldman Sachs Bank USA Salt Lake City branch,

terms and more at Applecard.com. For many men, mental health challenges aren't recognized until

they've already taken a toll, work pressure, financial stress, changing relationships,

and traditional expectations around masculinity can quietly wear men down.

Often without clear warning signs, in season three of the Visibility Gap, Dr. Guy Winch and his

guests explore how these pressures show up, how to spot them earlier, and how men can access

meaningful support. Listen to the new season of the Visibility Gap, a podcast presented by Sigma