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Worried About Another Crash? Buy Goldman Sachs
By: Motley Fool | August 26, 2020
The S&P 500 just hit a fresh all-time high, meaning that the effects of the COVID-19 pandemic on the overall stock market have been erased. However, the financial sector has lagged behind. Although it has rebounded quite a bit since March, the Financial Select Sector SPDR (NYSEMKT:XLF) is still lower by nearly 20% this year.
However, Goldman Sachs (NYSE:GS) has been an outperformer. Its stock has rebounded significantly more than its financial sector peers, and its recent results show why it's a good financial stock to hold if you think the stock market is going to crash again before the pandemic is over.
Investment banking is crash-resistant
The main reason Goldman Sachs has performed better than most other bank stocks during the pandemic is because of its focus on investment banking. In fact, some of Goldman's key business focuses actually tend to do better during recessions and market crashes.
Some areas in particular that do well in rough times are trading, equity and debt underwriting, and advisory. Volatile markets mean higher trading volumes, which translate to higher fee income. In tough times, companies find themselves needing to raise capital. Mergers and acquisitions and restructurings can become more prevalent.
The proof is in the numbers. While the second quarter of 2020 was abysmal for most U.S. companies, Goldman posted its second-highest quarterly revenue ever. Fixed income and equities trading revenues were their highest in nine and 11 years, respectively (they both surged around the financial crisis years as well). Fixed income trading revenue was more than double what it was in the same quarter last year.
Furthermore, Goldman's equity and debt underwriting revenues were the highest they have ever been. Equity underwriting revenue came in 122% higher than the second quarter of 2019, while debt underwriting revenue "only" rose by 93%.
Goldman is set up for good times and bad
While Goldman's business is certainly resilient in tough times because of its investment banking and trading activities, it is also worth noting that the business also has some components that have tons of room to grow in prosperous economic times.
Wealth management is a good example. As investor portfolios grow, so does the amount of assets Goldman manages, and this leads to higher fee revenue.
Consumer banking is perhaps the most exciting growth area of Goldman's business. In just a few years, Goldman has gone from being strictly an investment bank to having one of the premier high-yield savings and personal loan platforms (Marcus by Goldman Sachs), and has also stormed into the credit card business with its Apple (NASDAQ:AAPL) Card. But this could be just the beginning. Goldman is reportedly developing an investment platform for everyday investors, and could potentially offer checking accounts, auto loans, mortgages, and more.
I'm talking about the business, not necessarily the stock price
Goldman's business should hold up quite well in the event of another market crash. Its investment banking revenue should help offset any declines in its wealth management or consumer banking businesses.
On the other hand, as the March 2020 market crash showed, even the most resilient stocks aren't immune to panics. Goldman bottomed out at 36% less than its current stock price, so investors shouldn't necessarily expect any different if another crash were to come. However, the resilient nature of Goldman's business should help it rebound more quickly than most, as we've seen in the past few months. Any dip in the stock price could be an attractive buying opportunity.
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Goldman Sachs to offer clearing services via LCH’s ForexClear
By: Reuters | August 20, 2020
Goldman Sachs will offer clearing facilities for some currency derivative products on the London-based clearing house LCH's ForexClear service, the bank said on Thursday.
Clearing or settling trades via exchanges or clearing houses is well established in equities and other asset classes. But lots of trades in financial products - particularly in the forex market - are still done "over-the-counter", where there is no central clearing house backing up the deals.
Clearing ensures financial market trades are completed even if one side of the transaction goes wrong.
Centralised clearing is starting to increase in the $6.6 trillion a day foreign exchange market, but this is largely limited to currency futures which make up only a tiny fraction of the total market.
New regulations are gradually making it more expensive for investment banks to trade derivatives and this is encouraging them to send some trades for clearing to exchanges like the CME Group and the London Stock Exchange and its clearing division LCH.
LCH's ForexClear provides clearing services for currency non-deliverable forwards as well as for the currency options spot and forwards market.
Non-deliverable currency forwards are products where participants take a bet on a currency but settle in a different currency, mostly the U.S. dollar. This has gradually shifted from a bilateral trading model to a more centralised trading structure.
NDFs are the only type of FX derivative which are showing the biggest growth rate in clearing, which has led to a greater concentration of trading in these instruments in the main currency hubs globally, including New York, London, Singapore and Hong Kong.
London dominates market share in NDF trading, with Britain more than doubling its share to 46% in 2019 from 20% in 2016, data from the Bank of International Settlements showed.
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Why Is Goldman (GS) Down 2.9% Since Last Earnings Report?
By: Zacks Equity Research | August 14, 2020
Strong Capital Position
Goldman displayed a robust capital position in the reported quarter. As of Jun 30, 2020, the company’s Common Equity Tier 1 ratio was 12.4% under the Basel III Advanced Approach, highlighting valid transitional provisions. The figure was up from the prior quarter’s 12.3%.
The company’s supplementary leverage ratio, on a fully phased-in basis, was 6.7% at the end of the April-June quarter, up from the prior-quarter figure of 5.9%.
Return on average common shareholders’ equity, on an annualized basis, was 11.1% in the quarter.
Goldman continued to optimize the digital consumer deposit platforms. Notably, consumer deposits escalated a record $20 billion in the reported quarter to $92 billion.
Goldman initiated its transaction banking business in the U.S. providing deposit-taking, payments, liquidity management, and escrow services. During the quarter, deposits on the platform surged $16 billion to $25 billion.
Outlook
In the second half of 2020, Goldman expects a potential pickup in M&A activity, both from companies coming from a position of strength, as well as those challenged by the environment. Dislocated asset prices are likely to drive those opportunities, as significant amount of private capital will be available for deployment amid macro and political uncertainties.
While the company’s balance sheet is modestly asset sensitive, given the mix of high turnover or floating rate assets, and hedge floating rate liabilities, if interest rates remain stable, management expects NII to gradually expand over time on consumer deposits repricing.
Given the challenging operating environment, management is re-examining all its forward spending and investment plans to ensure the best use of resources. Consistent with the historical focus on expense discipline and the emphasis on cost control at Investor Day, management will assess the timing, magnitude and pace of certain expenses and investments. Importantly, it continues to pursue medium-term efficiency target. To that end, management expects to realize the effect of planned reductions in non-compensation expenses more significantly through the second half of this year.
For the next few years, Goldman expects tax rate to be 21%.
Medium-Term Financial Targets
Return on Equity is expected to be greater than 13%, while return on tangible equity to be more than 14%. Efficiency ratio is expected to be around 60%. CET1 ratio is expected in the range of 13-13.5%.
Growing and spending business growth worth $2-$3 billion. New initiatives spend worth $1-2 billion. Funding optimization is expected to be $1 billion. Expense efficiency savings expected to be $1.3 billion.
Management expects transaction banking revenues worth $1 billion and deposits worth $50 billion in more than five years horizon.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.31% due to these changes.
VGM Scores
At this time, Goldman has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in...
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Buffett Sours on Banks and Likes (Gulp!) Gold
(AP)
By Tara Lachapelle, Bloomberg OpinionSaturday, 15 August 2020 02:58
Dumping bank shares and investing in a gold miner? It certainly doesn’t sound like a Warren Buffett move, but that’s exactly what the investing guru’s company did in the second quarter, according to a regulatory disclosure Friday.
It’s not a good sign for markets.
Buffett, the fifth-richest person in the world, has loved few things more in his life than sweets, soda and compound interest — but banking stocks have come pretty close. Buffett was there to boost them during and after the last crisis, and he’s remained a top shareholder in most of the big U.S. banks.
That’s why it’s so jarring that Buffett’s Berkshire Hathaway Inc. sold 62% of its stake in JPMorgan Chase & Co. and cut 26% of its Wells Fargo & Co. holdings last period amid the Covid-19 crisis.
The conglomerate also pared back positions in other financial-services firms including PNC Financial Services Group Inc., M&T Bank Corp., Bank of New York Mellon Corp., Mastercard Inc. and Visa Inc. Berkshire all but exited Goldman Sachs in the first quarter — in the first of Buffett’s worrying signals — and finished the deed in the second.
Berkshire also did away with its leftover airline positions — a move Buffett previously disclosed — and a stake in Burger King parent Restaurant Brands International Inc. Perhaps most telling was that Berkshire’s only new purchase was Barrick Gold Corp., a gold-mining giant. The stake is now valued at about $605 million, which is still relatively puny as far as Berkshire holdings go.
Selling bank stocks when interest rates are low and are expected to stay that way isn’t a contrarian idea, but a bet on gold is an act of fear and not something expected from an experienced investor who has ridden out numerous downturns as Buffett has in his nearly 90 years (his milestone birthday is later this month). Buffett has even ridiculed gold hoarders in the past.
Here’s a lesson he gave at the May 2018 annual Berkshire investor meeting:
Let's say you've taken $10,000 and you listen to the prophets of doom and gloom around you — and you'll get that constantly throughout your life. And instead, you use the $10,000 to buy gold. Now, for your $10,000 you would have been able to buy about 300 ounces of gold. And while the businesses were reinvesting in more plants and new inventions came along, you would get down every year and you look in your safe deposit box and you'd have your 300 ounces of gold. And you could look at it and you could fondle it and you could, I mean, whatever you wanted to do with it. But it didn't produce anything. It was never going to produce anything. And what would you have today? You would have 300 ounces of gold just like you had in March of 1942.
Now, Buffett isn’t stacking gold bars in his basement, but he’s still wagering on the precious metal. Berkshire’s top five investments remained unchanged: Apple Inc., Bank of America Corp., Coca-Cola Co., American Express Inc. and Kraft Heinz Co.; however, it has been buying more Bank of America shares in recent weeks, which are too recent to show up in Friday’s filing. Apple now accounts for nearly half the value of Berkshire’s $221 billion equity portfolio and is performing much better than Berkshire itself. Buffett used to joke that he’s “one-quarter Coca-Cola,” but he can switch that to Apple now.
To be fair, it’s not clear who exactly made these investing decisions, a responsibility Buffett shares with Todd Combs and Ted Weschler, his stock-picking deputies. Either way, Berkshire sold about $13 billion of stocks when one would expect Buffett, a stalwart believer in the U.S. economy, to go on a buying spree. It’s not as if Berkshire needs the cash — it had a mind-boggling $147 billion as of June.
As I wrote last week, it would help in times like these if Buffett held quarterly earnings calls to get a better understanding of his frame of mind. The last time investors heard from him was the virtual shareholder meeting in May, during which he said: “Nothing can stop America.” It’s not that he doesn’t believe that any longer, but these latest moves — hoarding cash and finding gold-mining attractive — suggest he sees the crisis lasting longer and perhaps getting worse before it gets better. No one knows whether that will be the case, but Buffett has his finger on the pulse of the economy by way of all the various industries Berkshire operates in: from freight railroads to airplane parts, insurance policies to car dealerships, bricks for home construction to Fruit of the Loom underwear, industrial chemicals to Dairy Queen fast food, jewelry stores to private jets and much more.
For Buffett’s big birthday, I had thought he’d want a big acquisition — the elusive “elephant” he’s talked of for so long. But maybe just ship some bullion bars to Omaha instead.
Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.
Read Newsmax: Warren Buffett Sours on Banks and Likes (Gulp!) Gold | Newsmax.com
Goldman Sachs Bids for General Motors' Credit Card Business
By: Zacks Equity Research | August 13, 2020
Continuing with the efforts to strengthen its consumer banking business, The Goldman Sachs Group (GS) has placed a bid to invest in General Motors Co's (GM) credit card unit, which is having about $3 billion in outstanding balances. The news was first reported by The Wall Street Journal.
At present, the work is being carried out by Capital One Financial (COF) , who still has one year of contract term remaining. Notably, the article reported that General Motors don’t need to replace its current card issuer.
In the era of digitization, Goldman pitched to use cars as e-commerce portals, which will allow people to make payments for gas or buy groceries from the driving seat. Barclays (BCS) is also one of the bidders for the world's largest automobile manufacturer’s credit card business.
Using the car’s dashboard screen to do transactions is not a new thing for General Motors, as the automaker made it possible in 2018 for its drivers to order food and perform other transactions with Dunkin’ Brands Group and Shell.
Goldman has been undertaking initiatives to counter falling revenues by entering new markets and diversifying income sources. Its digital consumer lending platform, Marcus by Goldman Sachs, launched in 2016, has been gaining momentum of late due to the change in consumer preference to digital modes of banking, especially during the pandemic.
Further, last year, in partnership with Apple and Mastercard, Marcus introduced its first-ever digital and physical credit card called the Apple Card. Notably, Goldman is mulling to roll out an AI assistant for its digital-only bank.
Though the coronavirus outbreak-induced concerns are expected to hamper business activities in the near term, Goldman’s solid position in worldwide announced and completed M&As will keep strengthening the business.
Shares of the company have lost 10.6% in the past six months compared with the 12.4% decline of the industry.
Goldman currently carries a Zacks Rank #3 (Hold).
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Goldman Sachs Restates Q2 Earnings After Setting Aside $2.96 Billion in 1MDB Legal Costs
By: TheStreet | August 7, 2020
Goldman Sachs said it will set aside nearly $3 billion in legal costs linked to scandal at a Malaysian sovereign wealth fund and restate its second quarter earnings.
Goldman Sachs Group (GS) restated its second quarter profits Friday after booking a near $3 billion charged linked to a corruption scandal at Malaysia's sovereign wealth fund.
Goldman said its second quarter profits now show net earnings of $197 million, down from the $2.25 billion first released on July 15. The change comes as Goldman said its legal provisions rose to $2.96 billion following a July 24 settlement with the Malaysian government, Goldman said in a Securities and Exchange Commission filing.
Goldman agreed to pay $2.5 billion in penalties, and promise the return of a further $1.4 billion in proceeds from the assets of 1Malaysia Development Bhd, or 1MDB, the sovereign wealth fund at the heart of the scandal that were seized by governments around the world.
Goldman Sachs shares were marked 0.61% lower in early trading following the earnings restatement to indicate an opening bell price of $203.00 each, a move that would extend the stock's year-to-date decline to around 11.7%.
Goldman's alleged role in the so-called 1MDB scandal, for which it helped raise $6.5 billion, ha also led the U.S. Attorney's Office in Brooklyn to file criminal charges against two Goldman bankers seeking "significant fines, penalties and other sanctions", according to an SEC filing made by the firm on November 2, 2018.
The scandal, which was the subject of probes in six different countries, also involved a former DoJ employee, George Higginbotham, who plead guilty in 2018 to charges that he made false statements to U.S. banks about funds being transferred from abroad and helped use those funds to lobby against the DoJ's investigation into 1MDB.
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"I HATE Banks – Including Goldman Sachs"
By: Avi Gilburt | July 27, 2020
Following the Elliott Wave analysis:
For many years, I have noted to the members of Elliottwavetrader and The Market Pinball Wizard that I have not been a fan of banks. In fact, they are on my list of stocks that I intend on shorting once we move towards the 2023 time frame. But, while many are focused upon the upside potential in various banks in the coming 2-3 years, I have been quite concerned about the goals of many of these banks, based upon some of the moves they have made over the past few years.
Chart on Goldman Sachs (GS) - Monthy
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Why Goldman Sachs Just Paid $3.9 Billion to Settle 1MDB Claims
By: 24/7 Wall St. | July 24, 2020
For its part in the money-laundering scheme run by 1Malaysia Development Berhad (1MDB), the Goldman Sachs Group Inc. (NYSE: GS) agreed on Friday to pay the government of Malaysia $3.9 billion to “resolve all the criminal and regulatory proceedings in Malaysia” against the company, its subsidiaries, and certain past and current directors.
Goldman’s role in the scandal surfaced in 2018 when the Malaysian government filed criminal charges against the bank resulting from Goldman’s role in arranging three debt offerings with an aggregate value of $6.5 billion for 1MDB. According to the U.S. Department of Justice, Goldman earned some $600 million in fees for its work on behalf of 1MDB.
A former Goldman executive, Andrea Vella, who headed the Asia investment bank in 2012 and 2013, was banned from the banking industry by the U.S. Federal Reserve in February. According to the Fed, Vella failed to notify Goldman of the involvement in the financing deals of Low Taek Jho, a person previously identified by Goldman as a concern.
Two other Goldman bankers, Timothy Leissner and Roger Ng, were indicted in the United States for conspiracy to launder money and to violate the Foreign Corrupt Practices Act. Leissner pleaded guilty and forfeited $43.7 million, according to CNBC. Ng pleaded not guilty and his case is still pending in U.S. federal court.
High-level officials and others who worked for the company allegedly misappropriated more than $4.5 billion in 1MDB funds. The U.S. Justice Department has sought the forfeiture of more than $1.8 billion worth of assets embezzled from 1MDB and recovered or assisted Malaysia in recovering about $1.1 billion. Among the assets recovered was a $60 million settlement from the producers of the film The Wolf of Wall Street.
Last November, Low Taek Jho, who had been facing Justice Department charges, gave about $700 million in assets in exchange for having the charges dropped.
In announcing the settlement, Goldman said that there are “important lessons to be learned from this situation, and we must be self-critical to ensure that we only improve from the experience.” An expensive lesson, even for an investment bank.
Investors have breathed a sigh of relief following the settlement. Goldman’s stock traded up about 0.9% Friday morning, at $204.75 in a 52-week range of $130.85 to $250.46. The price target on the stock is $245.16.
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Goldman Sachs Earnings Preview: Where to Buy the Dip
By: TheStreet | July 14, 2020
• Goldman Sachs has been one of the best-performing bank stocks over the past three months. Here's what the stock charts say with earnings on deck.
The bank stocks have been thrust into the spotlight this week, with earnings season starting up. Goldman Sachs (GS) will soon find itself under the microscope, with earnings due up on Wednesday before the stock market opens.
Goldman Sachs isn’t the first bank to report, though. JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) all reported on Tuesday morning.
Further, Goldman won’t have to go at it alone, either. It reports with PNC Financial (PNC) and U.S. Bancorp (USB).
Thus far, the reaction hasn’t been great from the companies that have reported. JPMorgan is about flat on the day, while Citigroup and Wells Fargo were both lower.
Working in Goldman Sachs’ favor though is the chart. Shares have traded better than many of peers - and it hasn’t gone unnoticed.
Over the last three months, Goldman Sachs stock is up 18%, lagging only Morgan Stanley (MS) - Get Report over the same measure. Goldman’s performance is almost 10 percentage points higher than the next best performer, which is Citigroup.
Trading Goldman Sachs
Daily chart of Goldman Sachs stock.
Chart courtesy of Stockcharts.com
The chart above highlights this recent strength. Look how Goldman Sachs stock has continued to make a series of lower highs, as uptrend support guides the share price higher (blue line).
On Friday, shares ripped hard off the 50-day moving average, while reclaiming the 20-day and 200-day moving averages in the process.
On Monday shares gapped up and held the gains relatively well, while Tuesday’s action — rallying in the face of lackluster price action from its sector — shows that bulls have confidence.
Now things get a little trickier.
Once the company reports, investors either need to see upside follow-through or a pullback into support.
If Goldman Sachs stock continues higher, let’s see if it can clear the two-day high currently at $212.98. That opens up the June high near $223 as a potential upside target, a level that also comes into play near the 78.6% retracement.
On the downside, I would love a dip into the $196 to $203 area. There Goldman Sachs stock will find numerous moving averages as potential support, as well as trend support. Below $195 puts $185 and the 50% retracement near $188 in play.
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$GS #Goldman Trade Setup Above $140
Alert set for possible long above $193.90 which was previous support.
May be some positive data from the Banks in the next few days.
If they can recover the market will have some extra stability.
PLEASE GIVE US A LIKE IF YOU FIND OUR CONTENT HELPFUL, THANK YOU.
Meep-meep !.....
SPX
High here this morning 193.68
Goldmans Under Macro-Scope
The Great Goldmans Bullseye (= the 190 and Action-Line) ....
Not to mention the 200 day sma (nor the RED LINE coming up from the pandemic low)
The 190 and The Financial Crisis Low Action Line
The Red Line and 200 day sma
Oh Goldmans how you're at such a Pivotal Juncture !.......You SLIMEY buncha RATS !
Note :
There's also been present a Blue Line as well !......
Meep-meep !.....Clonk !
Boy, who even knew that a "stress-test" was occurring ?......
Goldman Sucks.....
Next day :
200 - 50 day sma
Gosh, could be back to The Cup if That Red doesn't hold.....
Goldman Sachs Leads US Bank Shares Lower as Fed Caps Dividends After Stress Tests
By: TheStreet | June 26, 2020
• "The banking system has been a source of strength during this crisis, and the results of our sensitivity analyses show that our banks can remain strong in the face of even the harshest shocks," said Fed Vice Chair Randal Quarles.
Goldman Sachs Group (GS) - Get Report lead U.S. bank shares lower in pre-market trading Friday after the Federal Reserve capped buybacks and dividend payments for the country's biggest lenders following its latest round of stress tests.
The Fed, which has gauged the health of the biggest U.S. banks each year since the global financial crisis, added a so-called 'sensitivity" test to its annual check-up, allowing it to measure the ability of 34 domestic lenders to weather an extreme 'double-dip' recession triggered by the coronavirus pandemic.
Under that "W-shaped" scenario, the Fed said, banks could be on the hook for a collective $700 billion in bad loan losses and a 2.5% fall in aggregate capital ratios.
"In light of these results, the Board took several actions following its stress tests to ensure large banks remain resilient despite the economic uncertainty from the coronavirus event," the Fed said in a statement. "For the third quarter of this year, the Board is requiring large banks to preserve capital by suspending share repurchases, capping dividend payments, and allowing dividends according to a formula based on recent income. The Board is also requiring banks to re-evaluate their longer-term capital plans."
Wells Fargo (WFC) - Get Report, which set aside $4 billion in the first quarter to cover bad loans, was marked 2.85% lower in pre-market trading Friday to indicate an opening bell price of $26.59 each. JPMorgan Chase (JPM) - Get Report, the biggest U.S. lender, was marked 1.75% lower at $96.25. JPMorgan's first-quarter loan loss provision was pegged at $8.25 billion, an 87% increase from the same period last year.
Citigroup (C) - Get Report shares were marked 0.57% lower at $52.38 each while Goldman Sachs shares were seen 3.16% lower at $200.55 each. Bank of America (BAC) - Get Report slipped 2.02% to $24.22 each.
"We are impressed by banks’ balance sheet resiliency under the COVID-19 scenarios, and note that these analyses fail to consider the positive impact of economic stimuli," said BMO Capital Markets analyst Lana Chen, who estimates that nearly all of the largest U.S. banks can sustain their current dividend payments into the fourth quarter apart from Goldman Sachs, which she estimates will have a so-called 'stress capital buffer' of 6.7% when the new requirements commence in October.
Goldman's net credit loss provision for the first quarter totaled $937 million, a more than three-fold increase from the prior year, "as a result of continued pressure in the energy sector and the impact of COVID-19 on the broader economic environment."
Goldman paid a $1.25 per share dividend for the first quarter, as part of an overall shareholder return of $2.4 billion, while noting that "given our continued earnings generation and solid capital position, we feel comfortable maintaining our dividend."
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One of the most villainous goose-jobs that I've ever witnessed...and I've seen quite a few.
Next day down 7 % (not 5.7) because
It's actually dropped a lot further than that (low 193 = Down 7 %)
2 1/2 months ago : (compare with top chart)
That 164.65 dates on back to the Old Clearstation Days
Buy Goldman Sachs Stock Because Wall Street Is Recovering Faster Than Main Street
By: Barron's | June 14, 2020
Investors looking at Goldman Sachs Group have tended in recent years to focus on what’s missing.
It doesn’t have a big consumer business. It is not a major commercial lender. Its first-ever investor day in January generated limited excitement. Because of what investors have found lacking, shares of Goldman (ticker: GS) have languished at a low valuation compared with its banking peers, based on earnings and book value.
Overlooked has been Goldman’s strengths: strong risk management, a powerhouse investment bank, and a CEO, David Solomon, who is pushing to build an online banking franchise, broaden relationships with corporate clients, and expand a lucrative alternative-asset-management business, which includes private equity.
Goldman may never become a leading bank on Main Street. But given the uncertainty over a Main Street economy still struggling with the effects of the Covid-19 pandemic, the bank that is emblematic of Wall Street looks like a good bet for investors.
The firm is well positioned for the current environment, with a corporate and institutional focus and little exposure to consumer and small-business lending. And Goldman stands to gain from ultralow interest rates, unlike rivals whose margins are under pressure.
Its huge trading business had a blockbuster first quarter and could be on pace for a lucrative second quarter, capitalizing on market volatility and elevated volume.
“Goldman has less exposure to credit and interest-rate risk relative to the average bank,” says Mike Mayo, the banking analyst at Wells Fargo. “It has three times more capital per dollar of loans than the average big bank. It’s one of the best risk managers in financial services, and its bread-and-butter investment-banking business is still best-in-class.”
Investors are starting to take notice. Goldman shares have outperformed those of rivals, falling 12% so far this year against an average drop of roughly 35% for JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC). The Dow Jones Industrial Average has fallen 10% in 2020.
Goldman’s stock, now around $200, looks appealing, trading below its tangible book value of $215 a share and at a discount to most of its peers. The stock is no higher than where it traded in 2007. And the firm has a market value of about $70 billion, making it one of the smallest of the six largest U.S. banks. It’s less than half the size of online-payments leader PayPal Holdings (PYPL)
Mayo has an Overweight rating on Goldman and recently lifted his price target on the stock to $255 from $230.
“Goldman’s clout with governments, corporations, and investors around the world is as strong as ever, even while its relative market value has shrunk,” Mayo says. “Its market cap to clout ratio has never been lower.”
A key event to watch for Goldman will be the results of the annual stress tests of the top U.S. banks by the Federal Reserve on June 25. RBC analysts wrote this past week that Goldman may get the green light from the Fed to increase its dividend.
“For Morgan Stanley and Goldman Sachs, with big trading books and modest loan books, trading losses are the governing factor,” notes Eric Hagemann, a senior research analyst at Pzena Investment Management, which has held the stock for several years. “There was a severely adverse market environment in the first quarter, and there weren’t material trading losses. Can the Fed credibly model enormous trading losses in the stress test, given the experience in the first quarter?”
“That could be favorable for the capital requirements of Goldman and Morgan Stanley,” he says.
Goldman’s dividend yield is 2.6%. It has one of the lowest—and safest—dividend payout ratios among its peers based on projected 2020 earnings.
Stock buybacks, which Goldman and other large banks collectively suspended in March, are still unlikely in the coming year, however, amid a weak economy and depressed earnings for the industry.
Much has changed since the 151-year-old firm—public since 1999—stood astride Wall Street like a colossus. Regulations and capital requirements imposed after the 2008-09 financial crisis have crimped trading margins for banks. Technology has become increasingly important in finance. And the locus of power has arguably shifted to an asset manager, BlackRock (BLK).
The flat-lining of Goldman’s stock in recent years is a reflection of how the firm has wrestled with these changes.
“I would say that the strategy under the prior management was to not change who they were and wait for a better environment that would be more conducive to their traditional areas of strength,” Hagemann says.
Since Solomon took the reins of Goldman in October 2018 from longtime CEO Lloyd Blankfein, the bank has begun to pivot.
“Under Solomon, the view has been that if we’re going to be regulated like a bank, we might as well enjoy the benefits of a deposit franchise and a diversified set of revenue streams.”
Goldman didn’t make Solomon or its top executives available to speak to Barron’s.
There is periodic speculation that Goldman Sachs will merge with a large bank—recent talk involved Wells Fargo. That’s probably a long shot.
At a Bernstein presentation in May, Goldman President John Waldron played down the prospects of a “transformational” deal. “The bar goes up exponentially when we think about something that’s much larger or much more impactful to the whole of the firm,” he said, citing financial, cultural, integration, and execution issues.
Rather than merge with a bank, Goldman is creating one internally. It views itself as a Netflix-like disrupter in consumer banking because it lacks the high-cost network of branches that its larger competitors possess...
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Amazon and Goldman to Roll Out Small Business Credit Lines
By: TheStreet | June 10, 2020
• The credit line partnership is a first for Amazon, which has previously kept its small business lending in-house, CNBC reports.
Shares of Amazon (AMZN) continued their relentless rise on Wednesday, fueled by news the tech giant is teaming up with Goldman Sachs on a small business lending program.
Amazon shares rose 1.63% to $2,643.26 a share as CNBC reported that billionaire Jeff Bezos' online retail empire and the Wall Street giant will soon be rolling out offers of credit lines of up to $1 million to small businesses.
The offers will be targeted at small businesses that do business on Amazon's online retail platform, and will feature Goldman's "Marcus" brand of credit lines, according to CNBC, citing people familiar with the plans.
Similar to credit cards, borrowers who take out the credit lines will be charged interest rates ranging from 6.99% to 20.99%. The credit lines, like credit cards, can be tapped and then repaid.
Amazon has been in the small business lending sector previously, but until now has never partnered with another firm to farm out underwriting decisions, such as which businesses to lend to or not. Until now, Amazon has kept those decisions in house, according to CNBC.
As part of the partnership, Amazon will share data with Goldman about the businesses who sell on its retail platform. Goldman will also potentially be able to tap into sales numbers of businesses who use Amazon's Seller Central site and how long they have been doing business on it, provided the business owners give their OK.
"We are super excited about embarking on this journey with Amazon," Omer Ismail, head of Goldman's consumer business, told CNBC.
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Goldman Sachs Sees Less of a Drop in the S&P 500
By: TheStreet | June 1, 2020
• Goldman Sachs in a report sees less of a drop in the S&P 500 than it predicted three weeks ago.
Goldman Sachs analysts now predict that the S&P 500 will contract by a smaller percentage than they predicted in a note last month.
The firm says the S&P 500 will see a downside to 2,750, with a rally to 3,200 a possibility. The S&P closed Friday at a record 3,044.
"The powerful rebound means our previous three-month target of 2,400 is unlikely to be realized. Monetary- and fiscal-policy support limit likely downside to roughly 10%," said Goldman analyst David Kostin.
Three weeks ago, Goldman Sachs warned that the S&P 500 could contract 18% following a closing level of 2,929, as there was little room for growth in their full-year model of 3,000.
Kostin wrote that while New York seems to have been able to flatten the coronavirus curve, "new infections in the rest of the U.S. are increasing. Cases of infection may accelerate as states begin to relax shelter-in-place rules."
And while the firm is now less bearish on the S&P 500, Goldman Sachs still says the short-term outlook for the wide-ranging index is "neutral at best."
This report comes after JPMorgan analysts in a May 28 note reduced their take on the index due to increasing U.S.-China trade tensions.
"A complete breakdown of supply chains and international trade, primarily between the two largest economies (US and China), would justify equities trading drastically lower," JPMorgan said in a note, according to CNBC.
The S&P 500 was at last check rising 0.5% to 3,059. Other market benchmarks were higher as well, with the Dow industrials up 0.4% and the Nasdaq Composite up 0.82%.
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Goldman Sachs Group Inc. (GS) - Daily, Weekly, Monthly Charts
By: DiscoverGold | May 24, 2020
DiscoverGold
The Greatest Economy In The History Of The World (according to some at least).....
* According to those who control the markets.....(am not referring to Dems).
Goldman Sachs up 6 % (to 182)
Silver-haired white men.....
Year Of The Rat(s)
Friday t'was just.....
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nowwhat 2020
Goldman pushes ahead with 1,460 India hires, internships
By: Reuters | May 15, 2020
Goldman Sachs Group Inc will honor job and internship offers to 1,460 Indian graduates and students this summer, the equivalent of a quarter of its workforce in the country, forging ahead with expansion plans despite uncertainties due to the COVID-19 pandemic.
Gunjan Samtani, who heads Goldman Sachs Services India, told Reuters in an interview this week that about half of those were offers for full-time jobs at the bank's technology centre in Bengaluru, now its second-biggest office globally. The rest are internships.
He also said the bank was putting in place contingency plans that could allow it to move 40%-50% of its workforce in India back to its offices when the country's stringent lockdown ends.
His pledge on hiring runs contrary to signs that both domestic and international companies in the country's massive tech and banking outsourcing industry are withdrawing offers as they tighten their belts for a slide into recession.
"We are honoring each and every commitment that we make to our incoming interns and our college grads," Samtani said.
U.S. and European banks have postponed decisions about staff cuts for now, saying they are unsure how long the coronavirus outbreak will hurt the economy and are worried about being unprepared if business suddenly snaps back.
Banks have also shown little appetite for hiring after a first quarter when Goldman's U.S. peers put aside billions of dollars against a wave of potential loan defaults.
A spokesman for Goldman stressed that the Indian graduates were existing offers the bank was honoring and not new hires. He said the bank was still recruiting globally, but proceeding more cautiously in light of the crisis.
Over the past decade, large U.S. banks and financial institutions including JPMorgan and Wells Fargo have established a large presence in low-cost destinations like India, hiring thousands of graduates and experienced executives across technology, finance, accounting and human resources.
Goldman last year launched a $250-million office campus in Bengaluru that can seat up to 9,000 employees. The facility currently houses roughly 5,500 workers.
Staff work across a variety of functions including technology, finance and human resources, while also providing support for business lines such as trading and the consumer banking business, Marcus.
The Indian government shut down the country in March, forcing most people to work from home. Prime Minister Narendra Modi said on Monday he would look to ease restrictions despite a continuing acceleration in the number of coronavirus cases.
Samtani, who joined Goldman Sachs nearly a decade ago in New York, after stints with Citigroup Inc, UBS and Bear Stearns, said 98% of his staff were working from home in some 150 Indian cities and his strategy for the months ahead included a substantial element of working from home.
"People have been productive so they can continue to work from home," he said.
"Likewise, if people make a choice of coming back to work, and want to stay back at some point in the future, that's totally fine. Respecting the decision that our employees make and giving them that confidence is the third leg of the strategy that we have."
The first batch of interns and full-time employees joined the firm in Bengaluru on May 4, with the remaining interns and graduates to join by July. All will initially be brought in virtually.
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How Goldman Sachs Is Helping Norwegian Cruise Lines Stay Afloat
By: Chris Lange | May 6, 2020
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) stock saw a handy gain on Wednesday after the company announced that it had secured more liquidity to help keep the cruise line operator from going under.
According to the company, it has secured over $2 billion of additional liquidity in response to the impact of the global COVID-19 pandemic. This liquidity is meant to help due to the temporary suspension of voyages and to safeguard against a further downside scenario.
Keep in mind that this company has a market cap of roughly $2.5 billion.
Norwegian is launching a series of capital markets transactions, led by Goldman Sachs, to raise approximately $2 billion. The transaction has since been upsized to gross proceeds of $2.225 billion ($2.4 billion if the underwriters exercise their full overallotment options) due to significant oversubscription and demand across all three offerings.
The transactions consisted of a $400 million public offering of common equity, a $750 million exchangeable senior notes offering, a $675 million senior secured notes offering and a $400 million private investment from global consumer-focused private equity firm L Catterton.
Contingent on completion of the transactions, Norwegian expects to have about $3.5 billion of liquidity. This significantly strengthens the company’s financial position and liquidity runway, and it now expects to be positioned to withstand well over 12 months of voyage suspensions in a potential downside scenario.
While this is not the company’s base case expectation, management believes that it has taken a swift and proactive approach to protect its future, given the significant uncertainty and unknown duration of the pandemic. When the transactions are completed, the additional liquidity alleviates management’s concern about the company’s ability to continue as a going concern for the next 12 months.
Norwegian Cruise Line stock traded up about 2% to $11.41 on Wednesday, in a 52-week range of $7.03 to $59.78. The consensus price target is $30.54.
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Goldman strategist says market rally has been ‘too rapid’
By: MarketWatch | April 16, 2020
The rally in markets has come too far, too fast, leaving risks tilted to the downside despite the huge fiscal and monetary support provided to cushion the world economy, according to a strategist at Goldman Sachs.
“Our view is that the risk in the short term is still on the downside. And I think the rally that we’ve seen, which in many markets has been 25% or so from the low is probably too rapid given the near term prospects that we see for the economic and profit data,” said Peter Oppenheimer, chief global equity strategist at Goldman Sachs, during a presentation for U.K.-based reporters.
The S&P 500 SPX, -0.36%, through Wednesday, has climbed 24% from its March 23 low.
He wasn’t entirely pessimistic. As infection rates slow, it gives investors more confidence that the duration of this downturn is going to be somewhat limited, he said.
The Federal Reserve’s extension of bond buying to include corporate debt, and the European Central Bank’s widening of collateral criteria, also is supportive, as is the ramping up of fiscal policy.
“Whether it’s enough remains to be seen, but the scale and scope of these programs is fairly unprecedented,” he said.
Silvia Ardagna, managing director of the bank’s investment strategy group, said the ECB’s bond buying efforts should be able to cover the estimated spending by eurozone countries. “But if government debt were to increase by more, because more support to the economy was needed, then we think a scale-up of the program could certainly take place,” she said.
Andrew Wilson, chairman, global fixed income at Goldman Sachs Asset Management, said at some point investors will focus on the amount of debt that has been issued and just how much will need to be repaid.
“Some of the themes that we think could really play out here around central banks tolerating higher inflation because of course, one way to get out of the terrible debt burden that countries would have is to allow higher inflation,” he said.
There will be a risk to longer-dated bonds “as we get much further through this process, depending on how inflation sets up.”
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Blue-Chip Bank Stock Declines on Quarterly Earnings
By: Schaeffer's Investment Research | April 15, 2020
• GS is still up 11% in April
• Goldman Sach's Q1 profit was cut nearly in half year-over-year
Earnings season is here, and first up to bat are the big-name bankers. Goldman Sachs Group Inc (NYSE:GS) is down 4.6% to trade at $170 this morning, after the investment banking company reported adjusted first-quarter earnings of $3.11 per share, lower than Wall Street's estimated $3.35 per share and a 49% drop year-over-year. Though revenue was higher, it was outweighed by weakness in its asset management reporting line, where $868 million losses from lending and debt investments were booked.
Goldman Sachs stock has been rallying on the charts since a seven-year low of $130.85 on March 19, and last week toppled resistance at the 40-day moving average. The equity is up 11% in the past month, but still has a year-to-date deficit of 22.5%.
Analysts are bullish coming into today, with nine out of 14 sporting a "strong buy" or "buy," and the remaining five considering a tepid "hold," so not a single "sell" on the books. Meanwhile, GS' 12-month consensus target price of $209.29 is a lofty 21.6% premium to current levels.
Optimism echoes among short sellers as well, with short interest falling by 19.7% in the last reporting period to make up 5.43 million shares. This accounts for a minimal 1.64% of the stock's available float, and would take a little over a day to cover at GS' average pace of trading.
Lastly, GS' Schaeffer's Volatility Scorecard (SVS) sits at up at 91 (out of 100.) This indicates that the security has tended to exceed options trader's volatility expectations during the past year.
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Goldman (GS) Misses Q1 Profit Forecast as Credit Provisions Surge; Posts Solid Revenue Gains in Global Markets
By: TheStreet | April 15, 2020
• Goldman Sachs said market volatility pushed big gains in trading revenues, but noted credit loss provisions tripled from last year as the coronavirus pandemic hit its loan book.
Goldman Sachs Group (GS) posted weaker-than-expected first quarter earnings Wednesday but noted solid gains in revenues from its trading division and a record increase in customer deposits.
Goldman Sachs said earnings for the three months ending in March were pegged at $3.11 per share, down 46% from the same period last year and well shy of the Street consensus forecast of $3.35 per share. Net revenues of $8.74 billion were modestly lower from last year but topped analysts' estimates of a $6.75 billion tally.
The revenue beat was boosted by solid gains in fixed income and commodities trading, where revenues rose 33% to $2.97 billion, Global markets revenues, in fact, jumped 28% from last year to $5.16 billion and customer deposits rose by a record $12 billion, Goldman said.
"I am enormously proud of the determination and dedication of the people of Goldman Sachs, who continue to serve our clients despite high market volatility," said CEO David Solomon. "Our quarterly profitability was inevitably affected by the economic dislocation."
"As public policy measures to stem the pandemic take root, I am firmly convinced that our firm will emerge well-positioned to help our clients and communities recover,” he added.
Goldman Sachs shares were marked 1.92% lower in pre-market trading immediately following the earnings release to indicate an opening bell price of $174.80 each, a move that would extend the stock's year-to-date decline to around 24%.
Goldman's net credit loss provision for the quarter was $937 million, a more than three-fold increase from the first quarter of last year "as a result of continued pressure in the energy sector and the impact of COVID-19 on the broader economic environment," the bank said.
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Ha-ha-ha......It's like :
S&P F's down 38
Did GS Just Come Back to Life Again?
By: Julius de Kempenaer | April 9, 2020
* (Click Read Full Story »»» at the bottom of the page for the charts to appear on the post)
$248.94 ... That was the high for GS, set on Jan 17/2020. Two months later, on Mar 19/2020 a low was reached at $ 130.85. The stock almost halved... So now what?
On the (weekly) RRG for US sectors, Financials is travelling well inside the lagging quadrant and pushing further into it. The daily RRG shows XLF inside improving at flat RS-Momentum which makes it doubtful if the leading quadrant can be reached. In short, the Financials sector is not the best to invest in at the moment (pun intended).
Zooming in on the daily rotation for the individual members of the Financials sector against XLF, GS triggers the attention.
Over the last 20-30 trading days GS rotated from improving into leading but immediately rolled over and moved from leading straight into weakening, without touching the weakening quadrant. In there the tail stalled and remained static with the day-to-day observations clustered close together.
Since two days GS started to accelerate out of that cluster and is now hitting the leading quadrant again which suggests an outperformance going forward.
The price chart at the top of this article shows the daily bars for GS with relative strength against XLF and two panes with RRG-Lines. The first one shows the RRG-Lines vs XLF and the second pane shows the RRG-Lines vs SPY.
The RRG-Lines vs XLF correspond with the position of GS on the daily RRG printed above. The RRG-Lines vs SPY position GS inside the improving quadrant and travelling at a positive RRG-Heading but not yet inside the leading quadrant.
The most interesting part of the market structure since the low (1) was set is the fact that the second low (3) came in at a higher level than. This indicates that buyers came in more aggressively than on March 19. Breaking above the in-between high (2) with a follow through today, in the basis, signals that a new up-trend (higher highs and higher lows) is underway.
Obviously there is plenty of resistance, coming from former lows, on the way up but the worst seems to be over, at least for the time being.
For short-term traders this could be a nice setup, especially when price dips back into the $ 170-175 support zone. Another option would be to hedge a long position in GS with a short in XLF or SPY to mitigate sector or market risk.
#Staysafe
--Julius
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Here’s what Goldman Sachs is telling wealthy clients to do in this market
By: MarketWatch | April 8, 2020
President Donald Trump told reporters at the White House coronavirus press briefing on Monday that he sees “a tremendous light at the end of the tunnel” amid the pandemic.
Clearly, Silvia Ardagna, managing director in the investment strategy group within Goldman Sachs GS, +6.59% private Wealth Management, agrees with him.
‘We see light at the end of the tunnel because we believe that sooner or later the medical community will make breakthroughs, and because the fiscal and monetary response around the world, especially in the U.S., where we’re overweight stocks, has been pretty aggressive and forceful
That’s the bullish view Ardagna shared with Bloomberg News in an interview Wednesday.
“Right now is a good time to get back into markets and take advantage of the decline in equity markets to position for the rebound,” Ardagna added.
Her comments follow the advice of Goldman’s investment strategy group from mid-March, which advised clients to gradually add risk assets after the big pullbacks.
“When valuations are so low, when there’s been pretty sharp drawdowns in equity markets, on a 12- to 18-month horizon, the probability of getting a positive return is pretty high,” she said.
Investors long U.S. stocks were enjoying a “positive return” during Wednesday’s trading session, with the Dow DJIA, +3.44% up more than 700 points. The S&P SPX, +3.40% and tech-heavy Nasdaq COMP, 2.58% were also solidly higher, at last check.
Goldman’s consumer and wealth-management unit, according to Bloomberg News, had $561 billion of assets under management at the end of last year, up 23% from 2018.
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Ahead of this week’s rally, half of Goldman Sachs institutional clients thought lows hadn’t been reached
By: MarketWatch | April 7, 2020
• Three-quarters say stocks remain in a bear market
Markets may have rallied from the lows of March. But institutional investors are still not convinced.
A poll conducted by Goldman Sachs of its institutional clients, with 1,800 responses, found that 50% believe the lows have not yet been set, and 75% believe equities remain in a bear market. The poll was presented on a podcast made public by the company on April 3, so before the 7% surge on Monday.
While these clients were not totally convinced by the market, some 37% say the S&P will be above 2800 at the end of the year, and two-thirds said above current levels.
Not everyone is as bearish.
The percentage of NYSE-listed stocks above their 200-day moving average is below 10% and as oversold as it was in 2008-09, 1987 and 1974, according to technical analysts at Bank of America.
After the 7% surge on Monday, the S&P 500 SPX, 1.985% is up 19.05% from its 52-week low of 2237.40 on March 23.
Nonetheless, the benchmark is 21% lower from the Feb. 19 peak.
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Goldmans' 164.65 (high today 158)............Saving the Clonk ! for tomorrow
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Is Goldman Sachs On the Right Course?
By: Motley Fool | April 6, 2020
• The company's CEO laid out three strategic goals.
The coronavirus crisis will force a lot of banks to rethink how they do business, certainly in the short term and likely in the long term, too. Goldman Sachs (NYSE:GS) has already been transitioning from its traditional investment banking roots into other areas, like consumer banking, to help mitigate potential adverse effects when certain segments of its business get hit by a crisis.
Chairman and CEO David Solomon provided some details on Goldman Sachs' efforts in a letter to shareholders in late March. In the letter, Solomon explained that the transition continues. Solomon outlined three strategic goals for the company over the next one to five years, which include plans to strengthen existing businesses while expanding into new markets. Is the bank on the right course? Let's take a look at the goals he set forth.
Goal 1: Growth of existing businesses
Goldman Sachs has four main lines of business with the largest being capital markets, which accounts for about 40% of its revenue. Here, the firm generates revenue from conducting trades for institutional clients. Next is the asset management business, which accounts for 25% of revenue, followed by investment banking, which generates about 21% of revenue. The fourth line of business is consumer and wealth management, which comes with its traditional banking operations with private wealth management. This area represents about 14% of revenue.
The company had slight revenue gains in capital markets, asset management, and consumer and wealth management in 2019. The only segment that lagged was investment banking, where revenue was down 7%. Its most rapid growth came in consumer banking, where revenue grew 41% for the year, thanks to the growth of its online bank, Marcus. Solomon expects continued growth in this business, as well as the private wealth management, which it will expand in the European, Middle Eastern and African region (EMEA) and the Asian Pacific (APAC) region.
In this period of significant regulatory and technological change, Solomon also sees opportunities in capital markets. "We are one of the few scaled firms in both FICC [fixed income clearinghouse corporation] and equities, offering clients differentiated risk intermediation, data analytics, and a rapidly evolving set of technology platforms. Our plan is to drive higher returns by instilling further resource discipline and executing on several client initiatives to grow our franchise."
Investment banking will be challenged, as mergers and acquisitions have slowed to a crawl across the globe due to the coronavirus pandemic. But looking out beyond the short term, Goldman Sachs, which is one of the largest investment banks (along with JPMorgan Chase), is looking to expand to cover more companies in the $500 million-$2 billion value. "This is a segment where, historically speaking, we only cover 44 percent of public companies in the Americas and EMEA -- compared to 95 percent of firms over $10 billion and 80 percent in the $2-10 billion range," Solomon wrote.
Goal 2: Diversification into new areas
The second goal is to diversify into new markets (focusing on areas that are adjacent to current business), meet client needs, and capitalize on the firm's competitive advantages. One of these growth markets is transaction banking. Transaction banking addresses the cash management and payment needs of corporate and institutional customers. "Our transaction banking offering is high-tech, low-touch, and client-focused -- and as a user of transaction banking services ourselves, we believe it is unique and differentiated versus existing offerings in the market," Solomon said. The company plans to roll out various offerings this year and it sees an opportunity to gain $50 billion in deposit balances and $1 billion in net revenue over the next five years. "Even a small share of the massive transaction banking market would be accretive," Solomon said.
Alternative investments are another new growth area. Goldman Sachs is already in this space, with about $320 billion in alternative assets, but Solomon believes it is an area ripe for expansion. In December, Goldman Sachs created an Alternatives Capital Markets and Strategy Group within its asset management business to ramp up this business. With its scale and existing partnerships with asset allocators and institutions, the company sees an opportunity to attract $100 billion in net alternative asset inflows in five years.
Furthermore, the firm's digital banking platform, Marcus, has been a strong grower since it was launched in 2016. Last year, revenue grew 41% to $864 million. By 2025, Solomon is targeting $125 billion in deposit balances and $20 billion in loan and card balances.
Goal 3: Operational efficiency
Finally, Goldman Sachs is looking to streamline operations to achieve greater efficiency and cut costs. It's based on the One Goldman Sachs initiative Solomon launched when he became CEO in October 2018, which centers on simplifying touchpoints for clients by delivering services more holistically to large clients. This has resulted in greater efficiencies, which will lead to a projected $1.3 billion in expense savings in three years.
Reaching these goals is important, especially in the current crisis
These three initiatives take on added relevance in this current environment, where digital and online banking capabilities are more vital than ever and expense reduction is a must. But it's not going to be easy for any bank in this market -- and Goldman Sachs is no exception with the stock price down about 33% year to date.
There are strong headwinds going forward with low interest rates and a likely recession to slow down the asset management and investment banking businesses. Right now, it's not a great time to own bank stocks. But Solomon has the company on the right course, and once there's more certainty on the other side of this crisis, it will make a good long-term play -- so keep an eye on it.
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Goldman Sachs buys two corporate jets
By: Bloomberg | April 4, 2020
For years, there was an allergy inside Goldman Sachs to owning a private corporate jet. Top bankers had access to rides on planes shared with others, but didn’t want to erode their less-than-stellar image on Main Street with the unnecessary extravagance of having their own.
Until David Solomon took over.
The bank ordered a pair of Gulfstreams late last year that the firm is waiting to receive. The company ordered a G650ER model and a G280, a spokeswoman for the bank said. The G650ER, the more expensive of the two, typically sells for north of $50 million, can hold up to 19 passengers and is powered by Rolls-Royce engines.
The firm previously incorrectly confirmed to Bloomberg that it ordered two G700 models. It considered buying that model, but the premium plane wouldn’t be ready for a few years, the spokeswoman said.
Moves like the jet purchase have earned Solomon his share of detractors within the firm’s top ranks. Some of them worry that his flashy ways can make him appear out of touch at a time when he is also pushing through a program of austere cost cuts. Just last month, he angered critics -- both internally and externally -- by announcing he took a 20% pay raise in 2019 to $27.5 million. It was the biggest increase given to the CEO of any big U.S. bank, even though Goldman’s stock price has lagged rivals throughout most of his 18-month tenure.
The rapid economic collapse caused by the coronavirus pandemic creates another optics problem for the firm. With unemployment skyrocketing and the death toll mounting, the purchases risk rekindling some of the fury that was directed toward bankers following the 2008 financial crisis, when people took to the streets to protest Wall Street excess.
Expected Perk
A spokeswoman for Goldman Sachs Group Inc. said the purchase of the planes would save it money.
“We have long made private aircraft available to senior executives who travel extensively to see clients, and that travel was arranged through a fractional ownership arrangement with NetJets,” Leslie Shribman said. “A detailed analysis demonstrated conclusively that it would be more cost effective to own the aircraft directly.”
Private jets are an expected perk at the highest levels of Wall Street, where JPMorgan Chase & Co. and Morgan Stanley have had their own for years. And it’s also possible that the use of private jets becomes more accepted in the age of coronavirus because they can mitigate the risk of spreading the disease.
But Goldman’s purchases have already made some at the firm uncomfortable. Even if the jets do eventually save the firm money, internal critics saw the Gulfstreams as attention grabbers, according to people familiar with their thinking.
The G650, which also comes in an extended-range version that Goldman says it chose, has been in the news recently. WeWork ousted boss Adam Neumann in September and immediately put up for sale the plane it had bought him one year earlier.
Congressional Hearing
Solomon’s raise drew immediate condemnation from the likes of Senator Elizabeth Warren and former Treasury Secretary Larry Summers. They criticized the idea of one executive getting so much money at a time of widespread economic pain.
His pay had been set before the pandemic devastated the global economy. Even so, some colleagues have faulted him privately for accepting the raise while asking the rest of the firm to make do with less.
Aircraft are the sort of extravagance that can attract unwanted scrutiny, like in early 2009, when the heads of the biggest U.S. banks were called in to testify before congress on the financial crisis.
At one point, the executives were asked to raise their hand if their company owned or leased a private plane. Lloyd Blankfein, Solomon’s predecessor, was the only one who didn’t.
“Let the record show,” said congressman Brad Sherman, “all the hands went up except for the gentleman from Goldman Sachs.”
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As per Table 4, yes.
Thing too is - How we've had our eyes on this Goldmans 164.65 Level for MANY YEARS !
For example....
This one from 2 yrs ago - December 2018
And look what's happened since that date -
Now return to the top chart and see how dramatically, it fell from 164
Then tell us what U think
Is it in for ANOTHER 2008 - Style Drop ?????
Certainly FUNDAMENTALLY that could seem entirely justifiable - What given the unprecedented (horrible) circumstances
I mean like, by RIGHTS it should probably even plunge 10x FAR deeper !
Like, shouldn't it ?.........Or what ??????.........Am I NUTS ?
You tell me / us / please.......and
Looks like my editing time has run out ............
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