Jan Hatzius on Forecasting During a Pandemic, TV Tips and More
Jan Hatzius, Goldman Sachs' global head of Global Investment Research, discusses strategic initiatives for GIR, how the division accelerates societal change and impact, and his professional experience during the pandemic.
You were named the Global Investment Research (GIR) division head in March 2020, just as the pandemic was starting to shut down the global economy. Walk us through that experience.
The timing was pretty crazy because March 2020 was one of the two most epic months of my 24-year career as an economic forecaster, rivaled only by September 2008. The transition would have been impossible without the fantastic leadership team in GIR, which enabled me to devote enough of my time to managing the forecast when it really mattered.
Unlike the financial crisis — which did not surprise us entirely in light of the extreme financial imbalances that had built up in prior years — the pandemic crisis came largely out of the blue. But I’m proud of our pivot in March 2020 to a forecast of a near-term plunge followed by a strong recovery. The different teams across Macro and Micro GIR incorporated this forecast quickly into their investment recommendations, and it turned out to be the right call.
What strategic priorities have you set for GIR as a division? How is the division continuing to improve the client experience?
For as long as I have been in GIR, our mission has been to produce analytically ambitious research with out-of-consensus conclusions in a fast-paced environment where time to market is of the essence. That mission hasn’t really changed.
We continuously evaluate how we can drive our franchise forward in terms of strengthening client service, deepening investment in key equity research sectors and ensuring we have diverse perspectives.
I’m also excited about our ability to leverage more and more timely data. I think the growth in big data will continue to help our ability to “nowcast” what is happening in the economy, as well as individual businesses. But with that said, I actually think the principles of good investment research are somewhat timeless. Know what it is your job to “call;” use a wide range of data and models to form a view; look for opportunities to beat the market consensus and help your clients position accordingly; but also be honest about the fact that you won’t be right every time.
The most important way in which we are improving the client experience is through our digital content strategy. Our client research portal not only looks much better than five to 10 years ago, but it is also far more user-friendly, has a sleek mobile counterpart in GS Now and contains a wider range of content from across the firm — not just GIR — in one place. The digital landscape offers unique opportunities to enhance the client experience and we’re actively investing more in this space.
GIR’s research – the Black Womenomics report and Investing in Racial Economic Equality report, for example – has been key to quantifying social challenges; how do you think that the division can continue to accelerate societal change and impact?
In a nutshell, by producing high-quality and data-driven research on gender, race, inequality, climate change and other societal issues that are not as directly related to financial market outcomes, but are nevertheless critically important to the world at large. To feature this type of research, we recently created a new publication series called The Bigger Picture.
Black Womenomics was the inaugural report in that series. We start from the observation that the median Black woman has 90 percent less wealth than the median white man. We then show that two-thirds of this gap reflects an earnings gap, which we trace to factors such as education and health status, as well as bias and discrimination. We conclude by showing how a reduction in the earnings gap could turn the US not only into a fairer but also richer society. It’s really exciting to see how this research has been core to the firm’s initiative, One Million Black Women.
Some of the analysis in Black Womenomics builds on our report Investing in Racial Economic Equality, which was written right after the murder of George Floyd last summer. That event was definitely a catalyst for many of us to focus more on issues of racial discrimination and disadvantage, not only personally — by listening to and learning from our Black colleagues and friends — but also by using our research platform to contribute to the debate in a positive way.
You’ve become a familiar face on television, particularly in conjunction with the monthly jobs report. How did you become such a natural on camera?
The key point to remember, in my opinion, is that a TV interview is not that different from a discussion with a client. The less you think about the number of people watching you, the easier it is to have a natural conversation and the better that conversation will come across to viewers.
A couple other important points. Review your interview later and ask yourself what you might have done better. This is not fun because I guarantee that you will find plenty to criticize, but it’s necessary in order to keep learning.
And, get enough sleep the night before. One of my first TV interviews was the morning after the 2000 US presidential election and I had stayed up for most of the night watching Florida get called for Bush, then for Gore, and then back to undecided. So I was really tired, there wasn’t much to talk about except hanging chads, and it didn’t go very well.
What’s your typical Sunday routine?
As cliché as this may sound, my work interests align with my personal interests, which makes my job not really feel like a job. So I admit that I read a lot of content on economics and current affairs on weekends. Beyond the day-to-day, I have recently gotten more into US history before World War I —a topic that was barely covered in my school in Germany — and am currently reading a biography of President Ulysses S. Grant.
Weekends are also family time for me. We love all that New York City has to offer—especially as far as food is concerned — and can’t wait for the vibrancy to return (it’s getting there).