Goldman Sachs' latest earnings announcement was so bad that George Santos now no longer lies about working there. On a more serious note, what does this foretell for the financial sector and GS as we march into 2023. Other banks such as JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America all recently had upbeat reports and beat analyst expectations -- even as they talked about "head winds". Certainly the higher interest rates helped most banks with a large "retail" presence as they thrived on the spread. Is GS a special case or just a barometer of the future? Should GS be positioned as a short fundamentally when is hits short term peaks in trading while the overall trend is down? Is the firm floundering? Goldman Sachs shares sink after brutal quarter Goldman's profits fell 66% compared to 2021 while costs ticked higher https://www.foxbusiness.com/markets/goldman-sachs-shares-sink-after-brutal-quarter Shares of Goldman Sachs sank on Tuesday after the firm reported a dip in net revenues and bigger-than-expected 69% drop in fourth-quarter profits. The stock is on pace for the worst session since January 2022 when it dropped 6.97% as tracked by Dow Jones Market Data Group. Quarterly profit was 39% below the consensus estimate, nosediving 66% from 2021 to $1.33 billion, or $3.32 per share. David Solomon, Chairman and Chief Executive Officer, said "Against a challenging economic backdrop, we delivered double-digit returns for our shareholders in 2022." "Our clear, near term focus is realizing the benefits of our strategic realignment which will strengthen our core businesses, scale our growth platforms and improve efficiency," he added. "The foundation of all of our strategic efforts is our client franchise which is second to none." This month Goldman cut over 3,000 workers. Meanwhile, net revenues reached $10.59 billion for the fourth quarter of 2022, but were 16% lower than the same period in 2021 and 12% lower than the third quarter of 2022. The drop reflected significantly lower net revenues in asset and wealth management and lower net revenues in global banking and markets, the company disclosed. As profit and revenue slipped, operating expenses reached $8.09 billion, 11% higher than the same period in 2021 and 5% higher than the third quarter of 2022. Bank earnings season is underway Last week, JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America all reported fourth quarter earnings, beating analysts’ expectations across the board. The upbeat results came despite an industry-wide dip in deal activity like home mortgage loans and initial public offerings. (Charts at above url)
It's Goldman Sachs' venture into consumer banking that went awry AFAIK. So other investment banks do not necessarily have the same problem. Neither do real consumer banks for that matter.
Goldman is big into "swaps". Could literally be swaps for anything (I think in 2008, people had swaps on pro sports tickets!) But all these swaps have "counter-parties" who are accepting the risk. Problem is, nobody monitors the counter-parties. But the FED is loaded with "Silver Bullets", just like the Lone Ranger. Silver bullets will kill all, even the Devil (and of course inflation). It's almost like the medieval term "Deus Ex Machina" (God out of a box). Everybody feel better now?
What!? there are clearing houses, rating agencies, internal risk, credit quality, market reputation/gossip, KYC, ...
%% I was surprised @ how much they lost in consumer banking\ but they may may a real good CPA. Those older huge fines by the regulators may have hurt much more. But like L Blankfein's WSJ forecast for 2023, things have been much worse / NRA member JFK had to encircle Cuba+ drop some depth charges on the evil empire soviet subs. Good wake up call against the evil empire\ +WEC C Schwab[NOT a stock tip or related to Charles SCHW or IBKR founder],