Goldman Sachs Group Inc. (GS) President Gary Cohn said he's “fairly bullish” on global stock markets as investors will shift money from bonds to equities as interest rates rise.
“The cause of interest rates going up, which is greater economic activity and greater growth, will be very positive for our business,” Cohn said in an interview today with Bloomberg Television's Erik Schatzker at the World Economic Forum in Davos, Switzerland.
Shares in top companies also offer attractive dividend yields relative to where interest rates are, Cohn said. The dividend yield of the Dow Jones Industrial Average is 2.51 percent, compared with the 1.86 percent yield of 10-year U.S. Treasury bonds, according to data compiled by Bloomberg.
“I look at the dividend yield that you can receive in relatively blue-chip companies around the world, and I look at that versus risk-free yields, and I think that is an interesting opportunity,” Cohn said. “You are long some global growth, you're long some inflation, and you get paid a decent return to own those.”
Cohn contrasted his view on stocks with that on bonds.
“Fixed income on the other hand, interesting,” Cohn said. “At some point, interest rates will go higher again, and all of the money that has piled into fixed income over the past three years, some of it will come out.”