David Solomon notes a split in CEO sentiment. While they are constructive on the economic and regulatory environment, they are concerned by inconsistent, "shotgun" policy approaches and political "noise." This uncertainty makes them more cautious, especially outside the U.S., despite underlying business optimism.
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Unlike politicians who push a pre-set agenda, Trump engages business leaders by asking what their biggest problems are and what he can do to help. This listening-first approach, followed by direct action, builds powerful alliances and is a key feature of his political style.
David Solomon expresses extreme optimism for dealmaking, citing a robust backlog and active client dialogues. Barring a major exogenous shock, he anticipates 2026 could surpass previous records for M&A activity, driven by a more constructive regulatory environment and strong CEO confidence.
Trump's erratic approach isn't random; it's a strategy to create chaos and uncertainty. This keeps adversaries off-balance, allowing him to exploit openings that emerge, much like a disruptive CEO. He is comfortable with instability and uses it as a tool for negotiation and advantage.
A surge in IPOs and M&A isn't driven by pro-business policies, but by a reduction in policy uncertainty. With a clearer, albeit more interventionist, landscape, companies have the confidence to execute major strategic plans they had previously postponed.
Given that trade policy can shift unpredictably, rushing to execute multi-year supply chain changes is a high-risk move. According to Flexport's CEO, staying calm and doing nothing can be a radical but wise action until the policy environment stabilizes and provides more clarity.
With major US policy variables like tariffs and fiscal stimulus now more defined, investors should shift focus from predicting policy direction to analyzing how businesses and consumers react to these established policies, as this will drive market outcomes.
Businesses can adapt to stable, even unfavorable, policies. However, constant, unpredictable policy changes create an environment of ambient chaos where long-term capital investment is impossible. The lack of continuity, not the specific tariffs, is the primary reason industrial construction spending has turned negative.
Top tech leaders are aligning with the Trump administration not out of ideological conviction, but from a mix of FOMO and fear. In a transactional and unpredictable political climate, sticking together is a short-term strategy to avoid being individually targeted or losing a competitive edge.
The traditional relationship where economic performance dictated political outcomes has flipped. Now, political priorities like tariff policies, reshoring, and populist movements are the primary drivers of economic trends, creating a more unpredictable environment for investors.
Drawing lessons from former CEO Hank Paulson, David Solomon emphasizes that a leader's most crucial function is to maintain a clear direction—a 'compass pointing north'—and make the right call, even when it is unpopular or goes against the strong consensus of the room.
