Why Goldman Sachs Is Lagging Its Big Rivals
Much of the attention on Goldman Sachs’ earnings on Tuesday focused on restructuring Wall Street firms, dwarfing the importance of volatile but traditionally profitable businesses like mergers and acquisitions. . Provide advice and improve more stable operations such as wealth management and wealth management. (It will also split Goldman’s struggling consumer finance division.)
But yesterday’s results also highlight the split fortunes of the big banks. Goldman Sachs and Morgan Stanley, which rely heavily on traditional Wall Street businesses, have suffered a slowdown in high financial activity such as deals and IPOs, leading to lower earnings. By comparison, lenders that rely heavily on Main Street, such as Bank of America, JP Morgan Chase, and Wells Fargo, report higher sales.
Unsurprisingly, the latter group has outperformed the former as investors have acquired broader bank stocks. Over the past five days, financials are the leading sector in the S&P 500, up 6.4%. According to Fidelity.
The exception to the Main Street theme, of course, was Goldman. For more than a year, the Marcus division has struggled to meet the high expectations set by CEO David Solomon.
On Tuesday’s earnings call, Solomon admitted his strategy to make consumer banking a core business pillar had hit a rough patch. “There’s no question that it’s been communicated in a broader way than it’s been doing,” he told analysts.
this is what is happening
The Federal Reserve may raise interest rates by three-quarters of a percentage point next month. After more signs of sustained high inflation suggesting the economy needs to continue to cool, plans for another big rally were made. One small benefit of inflation is that many Americans may pay less taxes next year.
The US plans to release more oil to keep gasoline prices from rising. President Biden is set to announce today that the Department of Energy will release an additional 15 million barrels from the Strategic Oil Reserve. The move comes as Brent crude prices fell below $90 a barrel yesterday for the first time in two weeks.
Netflix breaks streak of losing subscribers. The streaming giant added 2.4 million new customers in the third quarter, allaying investor fears that it can’t grow any further. The news sent Netflix’s stock soaring in after-hours trading.
What happened to Elon Musk’s Twitter deal
Big hit contract. In April, Elon Musk made a one-sided bid worth more than $40 billion for the social network, saying he wanted to make Twitter a private company so people could speak more freely on the service.
Workers at an Amazon warehouse near Albany, New York, have refused to form a union. Employees voted 2 to 1 against organizing, dealing another blow to the fledgling Amazon union. The group has lost two elections since winning the vote to organize a Staten Island warehouse in April.
Hong Kong introduces $3.8 billion plan to stem exodus of executives. City leader John Lee Visa and tax incentives For investors and companies. The measure is the latest effort to revive Hong Kong after at least 140,000 workers left the city amid the pandemic and widespread political repression over the past two years.
Tesla bulls feel uneasy on Twitter
Tesla reported earnings after markets closed on Wednesday, investors Bad moodThe company’s shares rallied last week as Tesla bulls speculated whether billionaire CEO Elon Musk would be forced to sell a large stake by the end of the month to finance a bid to buy Twitter. It hit a 52-week low due to concerns.
Here’s why Twitter’s fundraising questions continue to affect Tesla’s stock price.
Musk has set aside $12.5 billion from banks, and he is responsible for about $33 billion in unaccounted equity financing. He has already sold about $15.5 billion of Tesla stock to cover some of that gap. And investors, mostly his Silicon Valley friends, offered a $7.1 billion tip. Assuming no one dropped out of that contingent, Musk is still about $9 billion short.
Attracting new investors can be difficultMusk’s own antics aren’t doing him any favors, considering how dramatically markets have fallen since the spring. Tesla bosses have been talking to Twitter investors, including co-founder Jack Dorsey, about rolling over their holdings to fund the acquisition, and that option was likely out for the same reason.
Meanwhile, Tesla short sales are back, said Ihor Dusaniwsky, managing director of data provider S3 Partners. In his 30 days to Oct. 10, Tesla’s stock fell 25.6% of his, while short-selling increased by about 14%. “That period saw 8.63 million new shorts on his TSLA sale,” he added.
Activists are back, and they want change
Times of market turbulence are usually seen as the best times for activist investors, hedge funds who buy shares in companies to force changes in corporate strategy, such as divestitures or share buybacks. not.
But based on the packed crowd at the 13D Monitor Active-Passive Investor Summit in New York City on Tuesday, there were dozens of lines for coffee and macaroons of hedge fund executives, investment bankers and corporate lawyers. It’s been years. Darren Novak, Head of Shareholder Engagement and M&A Capital Markets Europe, Middle East and Africa at JPMorgan Chase, told Dealbook:
A famous activist is taking on big business again. Third Point’s Dan Loeb said in a letter to investors: he bought stock It has its sights on convincing consumer products giant Colgate-Palmolive to spin out its pet food business.and Starboard’s Jeff Smith openly aimed at Salesforce At the conference, the company declared that it had a “subpar balance of growth and profitability.”
Activist investors are seizing the moment. Volatile markets are seen as bad for the kinds of moves these hedge funds recommend, but conference attendees see a lot of undervalued companies pushing. They also benefit from changes in securities rules that require companies to adopt universal proxy cards, making it easier for hedge funds to propose directors to vote for shareholders.
“A lot of problems are hidden when the tide is high,” said Caitlin McSherry, director of investment stewardship at Neuberger Berman. is starting to appear, and we’re trying to take advantage of those situations.”
“The decision to become a business partner with ISIS has been extraordinary. Using ISIS to harm a competitor is unbelievable, but it has happened.”
— Brooklyn-based U.S. Attorney Breon Pease said French cement company Lafarge was secretly making payments to ISIS militants in northern Syria.Lafarge agreed yesterday pay $778 million To settle US government lawsuits.
Don’t Mess with Texas Crypto Enforcement
As Washington debates how to regulate the crypto market, many states are not waiting for federal policymakers to act. Eleven states and the District of Columbia have filed lawsuits against bankrupt lender Voyager Digital, and about 40 states have sued Celsius Networks. bankrupt crypto lenderled by Texas and Vermont.
texas is crypto mining heaven, and investors still show a lot of interest in the sector. “It’s been amazing the last two years and how the market has changed,” Joe Rotunda, executive director of the Texas Securities Commission, told his DealBook. But he said states are being forced to lead crypto enforcement efforts to protect investors. “The SEC is nowhere to be found,” Rotunda said.
Rotunda has launched an investigation into cryptocurrency exchange FTX and its founder Sam Bankman-Fried, accusing them of selling unregistered securities to consumers. He isn’t sure if the SEC is also investigating the company. (The SEC declined to comment, and FTX did not respond to requests for comment.) Texas last week asked New York bankruptcy court to block Voyager’s $1.4 billion sale of him to FTX. and pending an investigation into the exchange and his Bankman. -Fried. What is certain, Rotunda said, is that America’s best securities cops are following state precedents.
The state pushed BlockFi’s legal deal. A good example, according to Rotunda, is $100 million settlement Cryptocurrency lending platform BlockFi agreed to pay the SEC earlier this year.
BlockFi offers products similar to those under scrutiny on FTX, and the state agreed that a resolution would require the company to register with the SEC.
Rotunda said it was the state that contacted the commission to participate in the enforcement action and reach a settlement. This is usually handled by national regulators. ”
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Facebook parent company Meta plans to market GIF platform Giphy to comply with UK antitrust regulator orders. (NYT)
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Brazilian cosmetics company Natura Aesop brand spin-off After losing $12 billion in market cap since last summer. (Bloomberg)
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Automakers Renault and Nissan are said to be close to an agreement. re-form their alliance(Bloomberg)
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KKR is increase investment in Japan, taking advantage of the depreciation of the yen and the decline in corporate valuations. (FT)
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