Goldman Sachs is battening down the hatches as it braces for a wave of volatility resulting from Disruption 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 Pronounsments have roiled markets in recent Weeks, Exposing Wall Street to More Stressors than Many Trades and Dealmakers Anticipated 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 very rolled out.
“We’re Moving, as we Said, Towards more Manageable Tariff Levels,” Waldron Said, Adding, “Think We’re Likely to Avoid A Recession with Baseline Set of Facts.”
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 Disruption a Lot of What Wauld Be the Conventional Wisdom of How Us Polymking 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, reference 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 bofher bofer and a little bit m rso cauti 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 mess wiggle room to inject stimulus into battered economicies to be foundver out of tough fisions, diminishing their ability to fend off Economic Shocks.
“I Think Coming Out of Covid, The Public Sector Stimcor 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 playing Through. There’s a lot less fiscal headroom in the World Today said we were back to Through Covid and a Pretty Peaceful Environment.”
He also pointed to something to firm is terming “Lowflation”- that is, its forecast that, Because of Tariffs, the US SHOULD READY ITSELF FOR “TOMEDIATE-TERM SLOWER GOWTH” AND “HIGHER INFLATION.” He Said Goldman’s Research Showed that the best case scenario for effecative tariffs beuld be between 10% to 15%, still a significant uptick from pre-trump administration.
In good news, waldron said that US CONSUMERS HAD CONTINATED TO EXHIB “Tremendous reshyilience” in the face of these headwinds, and that the firm’s pipline of FortthComing Transactions Remained Strong.
“Not Surpringly, the Second Quarter is Quite Quite As Strong From An Activity Level As the First Quarter, Gioven the Macro Environment We Talked About at the Beginning of this Conversation,” He Said, Adding, “But in Investment Banking, Our Engagement Levels Actall Stati Stati Stati uncetainty 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.”
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