Goldman Sachs pares risk after tariff move, braces for more uncertainty
NEW YORK: Goldman Sachs has moderated its risk-taking since U.S. President Donald Trump's April tariff announcement, and the Wall Street bank is braced for more uncertainty, a top executive said.
'We have moderated our risk positioning since April 2nd – I think that's a sensible thing for us to do,' Goldman President John Waldron said in a podcast released by the investment bank on Thursday.
'We're absorbing a lot of risk from our clients. We want to continue to do that, but we also, where we can, we (pare) our risk and stay a little bit closer to home.'
Goldman is readying for continued uncertainty in the coming months, which means keeping a greater liquidity cushion, he said.
Financial markets have been turbulent since Trump's so-called 'Liberation Day,' when he announced plans to increase tariffs on trading partners.
Waldron, who is widely seen as the likely successor to Goldman CEO David Solomon, said the tariff move was 'very, very disruptive.'
Goldman Sachs sees OPEC+ raising oil output by 0.41 mb/d in August
Some companies are now starting to make business decisions based on assumptions that tariffs will be raised to a range of 10% to 15%, he said.
'We're moving into now an adjustment phase, and you'll see, I think, some more decision-making on capital spend, M&A transactions, capital return, stock buybacks,' Waldron said.
The U.S. economy is still strong, backed by a solid labor market and consumer spending, he said.
'All those factors in the U.S. to me lead to a likely scenario where we don't have a recession,' he said.
Meanwhile, Waldron warned investors were getting concerned about an unsustainable U.S. fiscal deficit.
'The bond market is starting to be heard, and I hope that gets some attention in the halls of Congress,' he said.
Rating agency Moody's cut the pristine U.S. sovereign credit rating by one notch last month, the last of the major ratings agencies to downgrade the country, citing concerns about the nation's growing $36 trillion debt pile.
The biggest question for markets is the path of interest rates, particularly in the long term, Waldron said.
'We're seeing a lot of increase in duration in the rate curves in the United States and Japan and many other countries - and I think that could be a brake on economic growth,' he said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
32 minutes ago
- Business Recorder
Gold subdued as dollar gains, markets await Iran response
Gold prices edged lower on Monday as investors favoured the dollar following the US attack on key Iranian nuclear sites over the weekend, with markets closely watching for Iran's response. Spot gold was down 0.2% at $3,362.29 an ounce, as of 0341 GMT. US gold futures fell 0.2% to $3,378. 'The US strikes on Iranian nuclear facilities resulted in the dollar receiving safe haven buying flows in the currency market,' KCM Trade Chief Market Analyst Tim Waterer said. 'This USD uptick had pegged gold back and caused an uncharacteristically subdued performance from the precious metal despite risks stemming from the conflict.' The dollar rose rose 0.2% against its rivals, making gold more expensive for other currency holders. US President Donald Trump on Sunday raised the question of a regime change in Iran following US strikes against key military sites over the weekend, as senior officials in his administration warned Tehran against retaliation. Iran vowed to defend itself a day after the US dropped 30,000-pound bunker-buster bombs onto the mountain above Iran's Fordow nuclear site. Meanwhile, Iran and Israel continued to trade volleys of missile attacks. An Israeli military spokesperson said Israeli fighter jets had struck military targets in western Iran. Gold price per tola gains Rs1,465 in Pakistan Shares slipped in Asia on Monday and oil prices briefly hit five-month highs, but there were no signs of panic selling across markets. The Federal Reserve's latest monetary policy report to Congress, released on Friday, said US inflation remained somewhat elevated and the labor market was solid. On the technical front, spot gold may retest support at $3,348 per ounce, a break below could open the way toward $3,324, according to Reuters technical analyst Wang Tao. Elsewhere, spot silver rose 0.2% at $36.07 per ounce, platinum edged 0.1% higher to $1,269.17, while palladium gained 0.2% to $1,046.62.
Business Recorder
3 hours ago
- Business Recorder
Indian stocks set to slip after US attack on Iran's nuclear sites
India's shares are set to open lower on Monday, in line with Asian peers, as investors anxiously wait to see if Iran retaliates after the U.S. attacked its key nuclear sites. The Gift Nifty futures were trading at 25,008, as of 7:51 a.m. IST, indicating that the Nifty 50 (.NSEI), opens new tab will open below the previous close of 25,112.4. The U.S. attacked key Iranian nuclear sites over the weekend, joining Israel in the biggest Western military action against the Islamic Republic since the 1979 revolution. Most Asian stocks were lower on the day, with MSCI Asia ex Japan down more than 1%, while the oil prices briefly hit a five-month high. Indian shares higher The concerns that Iran may shut the Strait of Hormuz, through which around 20% of global oil and gas flows, triggered fears of a supply disruption. Goldman Sachs flagged risks to global energy supply amid the concerns, and said it would lead to significant spikes in oil and natural gas prices. Higher crude oil prices do not bode well for India, which relies on imports for its energy requirement, as they may fuel inflation and raise the government's fiscal deficit. The surge in oil prices could also be detrimental to corporate earnings growth as they could raise input costs. India's benchmark indexes rose about 1.6% last week, driven by gains in financials.
Business Recorder
3 hours ago
- Business Recorder
Indian rupee under fire after US strikes on Iran jolt oil, stoke risk aversion
MUMBAI: The Indian rupee is set to open weaker on Monday, pressured by the rise in crude oil prices and risk-off sentiment following the U.S. military action against Iran. Non-deliverable forwards indicate the currency will open around 86.75-86.80 per dollar, compared to 86.5850 in the previous session. Oil prices jumped to their highest level since January after the U.S. joined Israel in attacking Iranian nuclear facilities over the weekend, increasing concerns over the potential impact on energy supply. Tehran vowed to defend itself. The attack came just after U.S. President Donald Trump said on Friday that such a decision would come 'within the next two weeks'. Fears that Iran may disrupt traffic through the Strait of Hormuz, a key conduit for about a fifth of world crude flows, lifted oil prices and weighed on risk assets. Indian rupee gains slightly Goldman Sachs warned that if oil flows through the Strait of Hormuz — a key chokepoint for crude shipments — were halved for a month and remained down by 10% for the following 11 months, Brent could temporarily spike to $110. Brent crude hit a high of $81.40, before retracing a part of its rally. The rupee, which had caught a bit of a breather on Friday, unfortunately has to contend with the U.S.-Iran news, a currency trader at a bank said, 'and we're back to watching if 87 breaks'. An FX trader at another bank noted that the rise in oil prices was milder than expected, and attention now shifts to how Iran chooses to respond. 'While Iran may feel it needs to retaliate to US strikes, blocking the Hormuz might be a step too far,' ING Bank said in a note, and said that the price action in Asian trading suggests markets do not yet believe crude flows through Hormuz will be blocked.
