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Business Insider
5 days ago
- Business
- Business Insider
Goldman Sachs is pulling back risk as it braces for more fallout from 'disruptive policy' shifts: COO
Goldman Sachs is battening down the hatches as it braces for a wave of volatility resulting from disruptive policy changes in Washington. "I would say, at the moment, we're relatively defensively positioned," the bank's President and COO, John Waldron, said at a conference on Thursday. "We've got heavy liquidity. We've got significant capital buffers. And we're running more muted risk in certain and important pockets in the firm." Trump's tariffs and trade war pronouncements have roiled markets in recent weeks, exposing Wall Street to more stressors than many traders and dealmakers anticipated when the former New York businessman returned to power earlier this year. On Thursday, Waldron said tariffs are just one piece of the puzzle — and no longer as concerning as they were when they were rolled out. "We're moving, as we said, towards more manageable tariff levels," Waldron said, adding, "I think we're likely to avoid a recession with this baseline set of facts." Even if the president's tariff wars are quickly resolved, the barrage of seismic policy shifts will likely continue, he said. "The Trump administration is definitely disrupting a lot of what would be the conventional wisdom of how US policymaking traditionally goes," he said at the annual Bernstein Strategic Decisions conference in New York. "You see first-order impacts right in front of you," he said, referring to the tariffs. "The second- and third-order impacts take longer to work their way through markets. And so we're watching carefully for the second- and third-order impacts, which is another reason why we run a little bit higher buffer and a little bit more cautiously in an environment like this." "So we're going to learn a lot more, and it's going to be volatile," he said. "I think we're just got to live with that volatility for some time." Waldron pointed to two cues that the firm is watching. The first, he said, is leverage in the public sector. Governments have much less wiggle room to inject stimulus into battered economies to maneuver out of tough fiscal positions, diminishing their ability to fend off economic shocks. "I think coming out of COVID, the public sector stimulus from governments around the world to rejuvenate the economy was really, really important," he said. "We're starting to see some elements of that public sector leverage play through. There's a lot less fiscal headroom in the world today than there was back when we were coming through COVID and a pretty peaceful environment." He also pointed to something the firm is terming "lowflation" — that is, its forecast that, because of tariffs, the US should ready itself for "short- to immediate-term slower growth" and "higher inflation." He said Goldman's research showed that the best case scenario for effective tariffs would be between 10% to 15%, still a significant uptick from pre-Trump administration levels. In good news, Waldron said that US consumers had continued to exhibit "tremendous resilience" in the face of these headwinds, and that the firm's pipeline of forthcoming transactions remained strong. "Not surprisingly, the second quarter is not quite as strong from an activity level as the first quarter, given the macro environment we talked about at the beginning of this conversation," he said, adding, "But in investment banking, our engagement levels are actually still very good despite the uncertainty and the volatility our pipelines remain quite strong." "When you have this kind of volatility," he said, "you just fundamentally have a harder time prosecuting transactions that may be in your pipeline."
Yahoo
5 days ago
- Business
- Yahoo
Boeing CEO says he wants to crank up 737 MAX production rate through rest of year
By Dan Catchpole (Reuters) -Boeing aims to increase production of its best-selling 737 MAX jets to 42 aircraft per month in the next few months and to boost output to 47 a month in early 2026, Chief Executive Kelly Ortberg said on Thursday. The U.S. planemaker's share price jumped 5% after Ortberg said at the Bernstein Strategic Decisions conference that he hoped to have production at 47 a month by the end of 2025. A few minutes later, he corrected his comments, saying that he expects the company to be getting ready to increase production to that level by the end of the year, not reach that level. Boeing is trying to stabilize production at 38/month, where it was capped by the U.S. Federal Aviation Administration in 2024 after a midair accident put the planemaker's safety and production quality program under new scrutiny. Production defects on the 737 program are down by 30%, he said. "Virtually every one of our customers is reporting a higher quality of airplane at delivery." Increasing production is critical to getting Boeing back to being cash positive, which Ortberg has previously said he expects to achieve in the second half of the year. It burned through $2.3 billion in cash during the first quarter. "I think the financial performance will follow the production performance of the company, and I think we need to think about it that way," Ortberg said. The company is making progress on certifying the smallest and largest MAX variants with the U.S. Federal Aviation Administration, he said. The MAX 7 and MAX 10 have been delayed in part due to concerns with the engine de-icing system. The company should finish critical testing of its fix by July, allowing time to certify the aircraft by the end of the year, he said. Boeing's backlog includes nearly 1,200 orders for the 737 MAX 10 and 332 orders for the MAX 7. Ortberg also said that Chinese airlines are set to resume taking deliveries of Boeing aircraft in June. China had stopped taking deliveries in April in retaliation to tariffs imposed by President Donald Trump. Boeing expects the impacts of the tariffs to be less than $500 million, he said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
