(Bloomberg) -- Investors are at rising risk from political problems worldwide, including the U.S.-China trade dispute, conflicts with Iran and an impeachment inquiry of President Donald Trump, said Goldman Sachs Group Inc. President and Chief Operating Officer John Waldron.“The risk premium on politics and geopolitics is elevating,” Waldron said in a Bloomberg Television interview Wednesday morning in Beijing. “For a long time, post financial crisis, we actually had a pretty modest amount of risk premium in the marketplace around the broad category of geopolitics, and that’s starting to change.”Tensions escalated between Washington and Tehran following an attack this month on Saudi Arabian oil facilities, which the U.S. has blamed on Iran. The trade dispute between America and China, which has roiled global markets, worsened in May when negotiations broke down, with a new round of talks planned for October. And Speaker Nancy Pelosi said the U.S. House is opening a formal impeachment inquiry of Trump, saying he’s violated his oath of office and obligations under the Constitution.Aside from a possible impeachment, next year’s U.S. presidential election “is an element of the broader risk premium that’s going to start to be injected into the marketplace,” Waldron said. “Risk in election, risk in what happens in Brexit, risk in what happens in U.S.-China trade, geopolitical risk around the Middle East, in Iran” will all affect allocation of capital, he said.More comments from the interview:“The capital markets are wide open. It’s still a good time to raise capital, still a very good time to transact. We see a regular flow of activity,” Waldron said. “It’s certainly a little bit less constructive than it was, say, six, nine months ago.”The U.S. Federal Reserve and other central banks that are employing monetary policy to spur growth need to be careful, as they won’t have many options left during an economic slowdown, he said. “There is not an enormous amount of room, so you’ve to use the bullets carefully.”“There is a clear disinvestment in assets that are touching China, particularly multinational corporations that have more exposure to China,” Waldron said. “You’re seeing a bit of a flight to quality in many different elements of the allocation of capital, and the U.S. is probably the net beneficiary of that.”“The United States still seems to be the safest place to put capital today, with all the risks that you highlight vis-a-vis impeachment or otherwise,” he said.Waldron said he expects U.S. 10-year Treasuries to end the year around their current level, depending on geopolitical events.To contact Bloomberg News staff for this story: Lucille Liu in Beijing at xliu621@bloomberg.net;Cathy Chan in Hong Kong at kchan14@bloomberg.net;Tom Mackenzie in Beijing at tmackenzie5@bloomberg.netTo contact the editors responsible for this story: Candice Zachariahs at czachariahs2@bloomberg.net, Daniel Taub, Sam MamudiFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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