Markets will ‘flush out’ some SPAC excess “” but it won’t be a crisis, Goldman Sachs CEO says

  • Date: 25-Jan-2021
  • Source: CNBC
  • Sector:Economy
  • Country:Middle East
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Markets will ‘flush out’ some SPAC excess “” but it won’t be a crisis, Goldman Sachs CEO says

Goldman Sachs' Chairman and CEO David Solomon attends a session at the 50th World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 21, 2020.Denis Balibouse | ReutersSome of the excess in stock market valuations caused by a rush toward new capital market activities will naturally "flush out," according to Goldman Sachs CEO David Solomon.Earlier on Monday, Solomon's predecessor at the helm of the Wall Street giant, Lloyd Blankfein, had cautioned that a windfall of SPACs — which are special purpose acquisition companies that are designed to take firms public — could backfire for investors. He suggested that such vehicles circumvent the usual due diligence guardrails of a normal IPO (initial public offering) process.Speaking on a CNBC-moderated panel at the virtual Davos Agenda summit, Solomon said that while there was potential for new capital market activities to cause higher volatility and some excess, the situation should not be called a "crisis." "At the moment I certainly see things in the markets that are concerning to me. We have very, very low rates and we are clearly going to have low rates for a long period of time," Solomon said. He added that while low rates and inexpensive capital inevitably fuels speculation, there