Latest news with #Goldman
Business Insider
14 hours ago
- Business
- Business Insider
2 big warning signs a correction in stocks may be looming, according to Goldman Sachs
Investor exuberance is high, but there's a pair of risks that could derail the latest rally to record highs. Alexnadria Wilson-Elizondo, the co-CIO of multi-asset solutions at Goldman Sachs, said the bank was expecting the market to soon run into a correction. There are two warning signs that the market is flashing, she said, speaking to CNBC about her outlook on Tuesday. "A little bit of a correction," Wilson-Elizondo said of the short-term. "And it would be an opportunity for us to continue to add back into the portfolios." Here are the two warning signs she sees: 1. High risk-appetite Market sentiment has improved dramatically since President Donald Trump first unveiled his tariffs in April — but there are signs that investors are growing overly optimistic, Wilson-Elizondo said. According to a survey conducted by Bank of America, global fund managers' sentiment reading in July rose from 3.3 to 4.3. Investors are now the most positive about the market since February, when they were still feeling upbeat in the early days of Trump's second term. Investors have also largely brushed off the risk of a recession. Fifty-nine percent of fund managers said they believed a global recession was unlikely, the most optimistic investors have felt about growth in about five months, the BofA survey found. "When you look at fund manager surveys or risk appetite and sentiment, things have shot up to record-highs in three months. So really quickly, tactically people have re-invested," Wilson-Elizondo said. 2. Retail's stock buying boom Retail investors have been ultra-bullish on stocks, aggressively buying the post-Liberation Day dip in equities. Wilson-Elizondo said retail investors purchased around $50 billion worth of stocks over the last month, in-line with estimates from Barclays released on Tuesday. In a note earlier this month, JPMorgan estimated that retail investors purchased a net $270 billion worth of stocks over the first six months of the year, and were on track to buy a net $360 billion in the second half. "It's coming in at much higher levels than it has in the past," Goldman's Wilson-Elizondo said of retail activity. "And in our minds, that's very vulnerable to changes in the labor market." The job market has remained resilient, but there are signs that hiring is beginning to slow, Goldman strategists wrote on Tuesday. The bank pointed to the slowdown in private job gains and said the job market risked hitting "stall speed" if the economy continued to slow — a situation where jobs growth is so week, it creates a "self-reinforcing rise in unemployment," they added. "There's a very high correlation between the labor market and the willingness to be invested in risky assets," Wilson-Elizondo added. Still, Wilson-Elizondo said she remains bullish on the outlook for stocks over the long term. She pointed to a cocktail of bullish factors that could help stock prices tread higher past 2025: Monetary policy. The Fed is expected to cut interest rates down the line, which should loosen financial conditions and offer a boost to risk assets. Investors are pricing in a 93% chance the Fed will cut rates anywhere from one to three times by the end of 2025, according to the CME FedWatch tool. Trump's tax bill. The GOP tax and spending bill, which includes some stimulus measures and offers tax breaks to key businesses, is also expected to help juice the market, Wilson-Elizondo said. Talk of a pullback has been swirling on Wall Street since major indexes climbed back to record highs. Evercore ISI, Stifel, Pimco, and HSBC are among the firms that have recently flagged the risk of a stock correction.
CNBC
2 days ago
- Business
- CNBC
This chart shows how stocks are now ignoring Trump's tariff threats
The stock market is taking President Donald Trump's tariff threats in stride as investors expect milder duties on U.S. trading partners than initially feared. Goldman Sachs looked at the first day performance in the S & P 500 as well as a basket of stocks with high tariff exposure on dates of key trade developments, such as Liberation Day on April 2 and a hike in China duties on April 7. The Wall Street firm found that the market seems to be reacting less and less to the headlines. "The equity market appears to be unconcerned by the recent tariff hike announcements," David Kostin, Goldman's head of U.S. equity strategy, said in a note to clients. "Our client conversations indicate that many investors believe tariff rates will eventually settle lower than what the recent announcements have indicated." The broad equity benchmark plunged 5% on Liberation Day when Trump announced "reciprocal tariffs" on more than 180 countries and territories. On April 7 when Trump raised China levies to a whopping 145%, the S & P 500 dropped another 3%. In contrast, stocks have largely ignored the most recent tariff announcements on July 7 when Trump started to send out tariff letters as well as news of a potential 30% levy on European Union on July 13. The S & P 500 notched a new record high last week, while Goldman Sachs's tariff risk basket is just 4% off its record high. .SPX YTD mountain S & P 500 year to date Goldman said investors have shifted focus on the outlook for economic and earnings growth in 2026. "Consensus earnings revision breadth has recently jumped to the highest level since 2022, and the outperformance of cyclical industries suggests the equity market is pricing an outlook for solid GDP growth despite consensus expectations for sluggish growth in coming quarters," Kostin said. The firm also noted that the recent dollar weakness should provide a small tailwind to S & P 500 earnings. International sales account for 28% of S & P 500 companies' revenue, so a 10% decline in the greenback could give a 2%-3% boost to S & P 500 earnings, Goldman said.
Business Times
2 days ago
- Business
- Business Times
China wage growth hits weakest pace since Covid: Goldman Sachs
[BEIJING] China's wage growth has slowed to the weakest pace outside the pandemic, an alternative indicator compiled by Goldman Sachs Group showed, revealing an obstacle to stronger consumption at home as risks abroad mount. Wages grew 3.9 per cent from a year ago in the second quarter – the lowest reading on record, with the exception of the pandemic years, according to a tracker published on Sunday (Jul 20) by Goldman economists led by Andrew Tilton. That is about a percentage point lower than shown in official statistics so far this year, they said, with the expansion 'trending down' since China reopened from the pandemic in early 2023. 'Our wage tracker suggests that sluggish wage growth may impose headwinds to consumption growth in the second half of 2025,' the economists said. 'We anticipate incremental and targeted easing measures in the second half of the year to alleviate labour market pressures.' China's soft labour market and wage growth remain a key hurdle to a more sustained recovery in consumption, even after retail sales improved in recent months thanks to government subsidies for purchases of items like smartphones, home appliances and cars. In further evidence of weakening pay pressures in China, official statistics on the average annual salary among private enterprises showed an increase of only 1.7 per cent in 2024 from a year ago. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up But gauging the health of the Chinese consumer has become increasingly difficult after a decline in available independent data made it harder to assess labour market conditions, since official employment figures are often believed to underestimate the problem. To get around the dearth of data, Goldman Sachs recently revamped its wage indicator to incorporate statistics including the employment sub-gauges of various purchasing managers' index surveys and payouts from China's unemployment insurance funds, which can be claimed for jobless workers. Those sets of alternative indicators replaced the discontinued wage data from one of China's largest online recruitment platforms as well as delayed results of central bank surveys on household income and sentiment. Apart from Goldman Sachs, other economists have also used PMIs to scrutinise the state of employment. Those surveys have split from the official jobless rate in recent years, with the former indicating sustained sluggishness while the latter remained largely steady. Ernan Cui, a consumer analyst at the research firm Gavekal Dragonomics, said the divergence may stem from the fact that an increasing share of China's labour force is self-employed or engaged in other types of informal work that's not captured by surveys of large companies but still counted by the official statistics bureau. Coupled with poor wage data, it shows people are increasingly being pushed into self-employment or flexible work because of a lack of formal jobs on offer, according to Gavekal's report earlier this month. 'The data indicate that China's labour market has been consistently weak, despite a broadly stable headline unemployment rate,' Cui said in the report. 'Until the labour market truly tightens, it seems unlikely that household confidence will rebound.' BLOOMBERG
Business Recorder
2 days ago
- Business
- Business Recorder
Goldman's profit tops estimates as market turbulence powers record equities revenue
NEW YORK: Goldman Sachs' second-quarter profit exceeded Wall Street expectations, as turbulent markets raised revenue in its equities division to a record, and a pickup in dealmaking boosted investment banking. The results capture a growing trend of market turmoil boosting trading desks across Wall Street as investors rebalance their portfolios to manage tariff-related risks. Goldman's equities revenue rose 36% to $4.3 billion, higher than the $3.6 billion analysts were expecting, according to estimates compiled by LSEG. Fixed income, currencies, and commodities business hauled in $3.47 billion, 9% higher than a year ago. Financing revenue in both equities and FICC hit a record. While shifting tariff risks kept some companies on the sidelines, pent-up demand for dealmaking triggered a flurry of acquisitions. Still, trade policy uncertainty in recent weeks has revived concerns about how long the momentum would last. Goldman's peers JPMorgan Chase and Citigroup reported strong growth in investment banking fees, while Morgan Stanley and Bank of America posted declines. 'A narrowed range of outcomes on trade and the overall economy has helped CEO confidence and increased their willingness to transact. We've seen a pickup in momentum with both strategic and sponsor clients,' Goldman CEO David Solomon said. Goldman's investment banking fees stood at $2.19 billion, rising 26% from a year ago. Analysts were expecting a nearly 10% jump. The bank remained the top adviser by deal value on mergers and acquisitions globally in the second quarter, according to Dealogic data. It advised Holcim on the spinoff of its North American business Amrize, now valued at $28 billion. It also worked with Informatica, which was bought by Salesforce for about $8 billion. 'The well-above consensus rise in investment banking was (a surprise), with a lot of analysts snookered into thinking that macro uncertainty would hold back this line item more than it did,' said Stephen Biggar, director of financial services research at Argus Research. Advisory fees were significantly higher due to strength in the Americas and Europe, the Middle East, and Africa, the bank said.
See - Sada Elbalad
5 days ago
- Business
- See - Sada Elbalad
Goldman Sachs: Egyptian Pound Undervalued by 30%
Taarek Refaat Goldman Sachs urges a short position on USD/EGP, forecasting further gains for the Egyptian pound, amid improving macroeconomic indicators and rising market confidence in the North African Country. In a newly released report, Goldman Sachs has declared the Egyptian pound (EGP) is significantly undervalued—by approximately 30%—and has reiterated its recommendation to short the U.S. dollar against the pound, citing improving fundamentals and market sentiment. The American investment bank emphasized that the recent strengthening of Egypt's foreign reserves and a sharp turnaround in the banking sector's net foreign asset position are crucial tailwinds for the local currency. As of May 2025, net foreign assets had swung to a $4.8 billion surplus, a stark reversal from a $17.6 billion deficit recorded at the beginning of 2023. Since Egypt's March 2024 devaluation, the pound has maintained a stable trajectory. Goldman noted the disappearance of the parallel market premium—a persistent challenge in previous years—as a key indicator of renewed investor confidence in Egypt's exchange rate policy. 'The narrowing gap between the official and parallel exchange rates signals restored credibility in monetary management, despite ongoing geopolitical tensions in the region,' the report stated. According to the bank's valuation models, the EGP is now the second most undervalued currency among frontier markets, and is expected to remain so by around 25% over the next 12 months—provided the current spot rate holds. Goldman Sachs has therefore renewed its Short USD/EGP recommendation, targeting a 5% return, with a stop-loss threshold set at -2.5%. The move reflects growing optimism in Egypt's ability to sustain foreign investment inflows and macroeconomic stability. As of Thursday's trading session, the official rate for the U.S. dollar stood at EGP 49.36 for buying and EGP 49.50 for selling, according to the Central Bank of Egypt. The highest rate was recorded at Crédit Agricole at EGP 49.41/49.51, while the lowest was at Housing and Development Bank at EGP 49.35/49.45. This comes as Egypt's Prime Minister Mostafa Madbouly confirmed the government's commitment to settling $1.4 billion in overdue payments to foreign oil companies by the end of 2025, further boosting investor confidence in Egypt's external obligations. With portfolio investment flows rebounding and FX reserves on the rise, analysts suggest that the pound could outperform regional peers if current trends persist—marking a potential turning point after years of currency turbulence. Egyptian Pound read more CBE: Deposits in Local Currency Hit EGP 5.25 Trillion Morocco Plans to Spend $1 Billion to Mitigate Drought Effect Gov't Approves Final Version of State Ownership Policy Document Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister Qatar Agrees to Supply Germany with LNG for 15 Years Business Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves Business Suez Canal Records $704 Million, Historically Highest Monthly Revenue Business Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday Business Wheat delivery season commences on April 15 News Israeli-Linked Hadassah Clinic in Moscow Treats Wounded Iranian IRGC Fighters News China Launches Largest Ever Aircraft Carrier Sports Former Al Zamalek Player Ibrahim Shika Passes away after Long Battle with Cancer Videos & Features Tragedy Overshadows MC Alger Championship Celebration: One Fan Dead, 11 Injured After Stadium Fall Lifestyle Get to Know 2025 Eid Al Adha Prayer Times in Egypt Arts & Culture South Korean Actress Kang Seo-ha Dies at 31 after Cancer Battle News "Tensions Escalate: Iran Probes Allegations of Indian Tech Collaboration with Israeli Intelligence" News Flights suspended at Port Sudan Airport after Drone Attacks Arts & Culture Hawass Foundation Launches 1st Course to Teach Ancient Egyptian Language Sports Get to Know 2025 WWE Evolution Results
