“Greed and wild optimism”: CEOs of banking giants on the rally on Wall Street

A few days ago, at the Reagan National Economic Forum, Damon chose his words carefully. “I do think the market is showing wild optimism,” he said. “I’ve seen it before. Of course, wild optimism can last a long time, and that’s not a bad thing.”

You can notice that he avoids the word “bubble”, and he does not tell investors to sell. “But there is also an element of ‘hype’,” he said. “Credit spreads are very low. That’s why I look at all of this, as a risk. If something goes wrong, the prices of these assets could go down. Interest rates are the force of attraction for asset prices,” according to a CNBC report.

He adjusted his tone without abandoning the concern, describing the wild optimism as a real phenomenon, but one that can be justified when supported by growth in corporate earnings, according to Seeking Alpha.

This distinction is key. Wild optimism fueled by real expansion in corporate profits is a completely different animal from wild optimism fueled by speculation. Dimon seems to believe that the market currently contains both of these elements, and that investors do not completely separate them.

Damon cited inflation as his most immediate concern. He said inflation could “easily reach” 4% this year, which would push bond yields substantially higher and put direct pressure on stock prices.

Rising yields reduce the present value of future corporate earnings, making bonds relatively more attractive than stocks. He also pointed to credit spreads. When spreads are historically tight, investors don’t demand too much compensation for default risk. It can work in a comfortable and stable environment. In a market shock scenario, narrow spreads can widen rapidly, intensifying volatility in several asset classes at the same time.

However, we will recall that his warning from January 2026 against “too much wild optimism” did not lead to a correction in the markets.

“more greed than fear”

“The AI ​​boom will continue to thrive as long as confidence in the market remains high,” said Goldman Sachs CEO David Solomon.

“There is plenty of liquidity in the system if the world continues to remain so optimistic,” said Solomon during an interview held yesterday (Tuesday) at the “Economic Club of New York”. “We are definitely in a moment where there is more greed than fear,” he said to a CNBC reporter.

Solomon “does not tolerate” the rally on Wall Street. After raking in $17 billion in profits last year, Goldman Sachs is poised for another successful and exceptional year driven by market volatility and the AI ​​”gold rush.” Its IPO team picked up the top and coveted slot for SpaceX’s indulgence. Goldman Sachs is also the lead underwriter in an $80 billion equity capital raising for Google’s parent company, Alphabet.

“The stock is trading well,” Solomon said of Alphabet’s fundraising, describing the deal as the largest secondary IPO ever. Goldman is also vying for a top spot in the IPOs of AI companies Anthropic and OpenAi.

But the demand for infrastructure and computing power for AI “is not going to progress in a straight line as everyone is predicting right now,” Solomon said. “Potential bumps in the road include additional technological changes, as well as fluctuations in production and distribution costs.”

“The demand for AI computing power must ultimately be purchased by enterprises and companies,” Solomon added. “Organizations in general will progress more slowly, they will be slower to change, and slower to adapt than I believe some of the current expectations assume.”

According to him, the use of AI is expected to change according to the different industries. While businesses with high profit margins can afford to invest and experiment more, businesses with low profit margins have fewer resources and incentives to adopt AI.

When asked how quickly the artificial intelligence boom could change from greed to fear, he said: “It can turn quickly. That doesn’t mean it will actually happen.”