Tag: Goldman Sachs Group Inc

How much money should you have in a high-yield savings account?
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A checking account and a savings account are two basic, but very important, accounts for managing money. And while there isn’t any one “correct” way for an individual to manage the money in their checking and savings accounts, there are some general rules of thumb that can help you figure out how much money you should have in each account.

“Like many Americans, you may default to leaving extra funds in a traditional checking or savings account,” says Dan Stampf, a CFP® and Vice President of Advisory Solutions for Personal Capital. “Maybe you haven’t decided how to allocate it to investment accounts. Perhaps you’re stowing away money for a rainy day or emergency fund. Or you could be building up savings for a short-term goal like funding a wedding or a vacation.”

It’s important to note that you’re essentially losing money if you allow that cash to just sit in a low-yield checking account, as the value of your money is being eaten away by inflation and you’re missing out on higher interest payments from a high-yield savings account. This is why high-yield savings accounts are generally recommended as a vehicle for keeping savings, including your emergency fund.

Some checking accounts, like the Ally Interest Checking Account or the Capital One 360 Checking® accounts do offer slightly higher interest rates compared to traditional checking accounts, but the interest is still lower than what high-yield savings accounts offer.

How much money should you keep in a high-yield savings account?

Of course, you do want to make sure you’re investing — and not only saving — so you can reach long-term goals like retirement. So you do have to draw a line between how much you should invest versus keep in a savings account.

“Everyone’s financial situation is different and the amount of cash you have on hand will depend on your life stage and savings goals,” Stampf says. “As a general rule, consider aiming to have six to 12 months worth of liquid cash or cash alternatives, so you can withdraw from those if needed without touching your [investment] portfolio.”

Avoid over-saving

Stampf also cautions against over-saving for emergencies since keeping too much cash on hand could mean not having enough of your money invested, which could potentially undermine your retirement goals or other investing goals.

You can avoid over-saving by targeting a specific number for your emergency fund. Maybe a fully funded emergency account for you means having six months’ worth of necessary expenses saved; take your monthly expenses and multiply that by six to find your target amount. You might also consider using a budgeting app, like Mint or Personal Capital, to help you figure out what your total monthly expenses look like.

And of course, a high-yield savings account is also the best way to save for large expenses that you foresee having to make in the near future (1–3 years). It’s prudent to make sure you save for these expenses on top of your fully-funded emergency account money. And the higher interest rates let you grow your balance just a little quicker. Select ranked the Marcus by Goldman Sachs High Yield Online Savings as the best account for no fees.

Marcus by Goldman Sachs High Yield Online Savings

Goldman Sachs Bank USA is a Member FDIC.

Annual Percentage Yield (APY)

Minimum balance

None to open; $1 to earn interest

Monthly fee

Maximum transactions

Up to 6 free withdrawals or transfers per statement cycle *The 6/statement cycle withdrawal limit is waived during the coronavirus outbreak under Regulation D

Excessive transactions fee

Overdraft fees

Offer checking account?

Offer ATM card?

The SoFi Checkings and Savings also stands out since it offers a welcome bonus after you setup and receive direct deposit payments. You can earn anywhere from $50 to $300, depending on the amounts of your direct deposits in a 30-day period.

SoFi Checking and Savings

Information about Sofi Checking and Savings has been collected independently by Select and has not been reviewed or provided by the issuer prior to publication.

Monthly maintenance fee

Minimum deposit to open

Minimum balance

Annual Percentage Yield (APY)

Members with direct deposit earn 3.00% APY on savings and Vaults balances, and 2.50% APY on their checking balances. Members without direct deposit will earn 1.20% APY.

Free ATM network

55,000+ fee-free ATMs within the Allpoint® Network

ATM fee reimbursement

Overdraft fee

No-Fee Overdraft Coverage is available; however, SoFi requires $1,000 of monthly direct deposit inflows to unlock it

Mobile check deposit

Pros

No minimum deposit to open an account

1.80% APY with direct deposit

2-day-early-paycheck automatically when you set up direct deposit

Save your change automatically with Roundups and set savings goals with Vaults

Get up to 15% cash back at local establishments

No foreign transaction fees

Cons

No reimbursement for out-of-network ATM fees

Not a standalone checking or savings account

Bottom line

A high-yield savings account can sometimes be a happy medium between investing for the long-term and keeping liquid cash on hand for shorter-term large expenses, but it’s still important to avoid over-saving. ]

Stampf recommends keeping six to 12 months’ worth of expenses in a high-yield savings account for easy access to cash in case of an emergency and saving for larger expenses that are are coming in the short term, like buying a home. Of course, you’ll want to also consider your stage of life and your needs when determining how much money to keep in a high-yield savings account.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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November 27, 2022
Is the market bottom in? 5 reasons U.S. stocks could continue to suffer heading into next year.

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With the S&P 500 holding above 4,000 and the CBOE Volatility Gauge, known as the “Vix” or Wall Street’s “fear gauge,”
VIX,
+0.74%
having fallen to one of its lowest levels of the year, many investors across Wall Street are beginning to wonder if the lows are finally in for stocks — especially now that the Federal Reserve has signaled a slower pace of interest rate hikes going forward.

But the fact remains: inflation is holding near four-decade highs and most economists expect the U.S. economy to slide into a recession next year.

The last six weeks have been kind to U.S. stocks. The S&P 500
SPX,
-0.03%
continued to climb after a stellar October for stocks, and as a result has been trading above its 200-day moving average for a couple of weeks now.

What’s more, after having led the market higher since mid-October, the Dow Jones Industrial Average
DJIA,
+0.23%
is on the cusp of exiting bear-market territory, having risen more than 19% from its late-September low.

Some analysts are worried that these recent successes could mean that U.S. stocks have become overbought. Independent analyst Helen Meisler made her case for this in a recent piece she wrote for CMC Markets.

“My estimation is that the market is slightly overbought on an intermediate-term basis, but could become fully overbought in early December,” Meisler said. And she’s hardly alone in anticipating that stocks might soon experience another pullback.

Morgan Stanley’s Mike Wilson, who has become one of Wall Street’s most closely followed analysts after anticipating this year’s bruising selloff, said earlier this week that he expects the S&P 500 will bottom around 3,000 during the first quarter of next year, resulting in a “terrific” buying opportunity.

With so much uncertainty plaguing the outlook for stocks, corporate profits, the economy and inflation, among other factors, here are a few things investors might want to parse before deciding whether an investable low in stocks has truly arrived, or not.

Dimming expectations around corporate profits could hurt stocks

Earlier this month, equity strategists at Goldman Sachs Group
GS,
+0.68%
and Bank of America Merrill Lynch
BAC,
+0.24%
warned that they expect corporate earnings growth to stagnate next year. While analysts and corporations have cut their profit guidance, many on Wall Street expect more cuts to come heading into next year, as Wilson and others have said.

This could put more downward pressure on stocks as corporate earnings growth has slowed, but still limped along, so far this year, thanks in large part to surging profits for U.S. oil and gas companies.

History suggests that stocks won’t bottom until the Fed cuts rates

One notable chart produced by analysts at Bank of America has made the rounds several times this year. It shows how over the past 70 years, U.S. stocks have tended not to bottom until after the Fed has cut interest-rates.

Typically, stocks don’t begin the long slog higher until after the Fed has squeezed in at least a few cuts, although during March 2020, the nadir of the COVID-19-inspired selloff coincided almost exactly with the Fed’s decision to slash rates back to zero and unleash massive monetary stimulus.

BANK OF AMERICA

Then again, history is no guarantee of future performance, as market strategists are fond of saying.

Fed’s benchmark policy rate could rise further than investors expect

Fed funds futures, which traders use to speculate on the path forward for the Fed funds rate, presently see interest-rates peaking in the middle of next year, with the first cut most likely arriving in the fourth quarter, according to the CME’s FedWatch tool.

However, with inflation still well above the Fed’s 2% target, it’s possible — perhaps even likely — that the central bank will need to keep interest rates higher for longer, inflicting more pain on stocks, said Mohannad Aama, a portfolio manager at Beam Capital.

“Everyone is expecting a cut in the second half of 2023,” Aama told MarketWatch. “However, ‘higher for longer’ will prove to be for the entire duration of 2023, which most folks haven’t modeled,” he said.

Higher interest rates for longer would be particularly bad news for growth stocks and the Nasdaq Composite
COMP,
-0.52%,
which outperformed during the era of rock-bottom interest rates, market strategists say.

But if inflation doesn’t swiftly recede, the Fed might have little choice but to persevere, as several senior Fed officials — including Chairman Jerome Powell — have said in their public comments. While markets celebrated modestly softer-than-expected readings on October inflation, Aama believes wage growth hasn’t peaked yet, which could keep pressure on prices, among other factors.

Earlier this month, a team of analysts at Bank of America shared a model with clients which showed that inflation might not substantially dissipate until 2024. According to the most recent Fed “dot plot” of interest rate forecasts, senior Fed policy makers expect rates will peak next year.

But the Fed’s own forecasts rarely pan out. This has been especially true in recent years. For example, the Fed backed off the last time it tried to materially raise interest rates after President Donald Trump lashed out at the central bank and ructions rattled the repo market. Ultimately, the advent of the COVID-19 pandemic inspired the central bank to slash rates back to the zero bound.

Bond market is still telegraphing a recession ahead

Hopes that the U.S. economy might avoid a punishing recession have certainly helped to bolster stocks, market analysts said, but in the bond market, an increasingly inverted Treasury yield curve is sending the exact opposite message.

The yield on the 2-year Treasury note
TMUBMUSD02Y,
4.479%
on Friday was trading more than 75 basis points higher than the 10-year note
TMUBMUSD10Y,
3.687%
at around its most inverted level in more than 40 years.

At this point, both the 2s/10s yield curve and 3m/10s yield curve have become substantially inverted. Inverted yield curves are seen as reliable recession indicators, with historical data showing that a 3m/10s inversion is even more effective at predicting looming downturns than the 2s/10s inversion.

With markets sending mixed messages, market strategists said investors should pay more attention to the bond market.

“It’s not a perfect indicator, but when stock and bond markets differ I tend to believe the bond market,” said Steve Sosnick, chief strategist at Interactive Brokers.

Ukraine remains a wild card

To be sure, it’s possible that a swift resolution to the war in Ukraine could send global stocks higher, as the conflict has disrupted the flow of critical commodities including crude oil, natural gas and wheat, helping to stoke inflation around the world.

But some have also imagined how continued success on the part of the Ukrainians could provoke an escalation by Russia, which could be very, very bad for markets, not to mention humanity. As Clocktower Group’s Marko Papic said: “I actually think the biggest risk to the market is that Ukraine continues to illustrate to the world just how capable it is. Further successes by Ukraine could then prompt a reaction by Russia that is non-conventional. This would be the biggest risk [for U.S. stocks],” Papic said in emailed comments to MarketWatch.

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November 25, 2022
Goldman Sachs says the ‘bear market is not over’ for global stocks and predicts the bottom

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November 21, 2022
Goldman Sachs paid $12 million to female partner to settle sexism complaint, Bloomberg reports

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Goldman Sachs logo displayed on a smartphone.

Omar Marques | SOPA Images | LightRocket via Getty Images

Goldman Sachs paid more than $12 million to a former female partner to settle claims that senior executives created a hostile environment for women, Bloomberg reported Tuesday.

The former partner alleged that top executives, including CEO David Solomon, made vulgar or dismissive remarks about women at the firm, according to Bloomberg, which cited people with knowledge of her complaint. The complaint alleged that women at Goldman were paid less than men and referred to in insulting ways, Bloomberg said, citing the anonymous sources.

Goldman management was “rattled” by the complaint and settled it two years ago to keep word of the claims from being made public, according to the news outlet. The female partner, who now works for a different employer, declined to comment to Bloomberg, which said it withheld her name in part because she never went public with her allegations.

Wall Street continues to deal with accusations that its hard-charging culture results in unfair treatment for female employees. Solomon, who took over from predecessor Lloyd Blankfein in 2018, faces a class-action lawsuit alleging gender discrimination that could go to trial next year; Goldman has denied the claims and attempted to get the lawsuit dismissed. Earlier this year, an ex-Goldman managing director published a memoir detailing episodes of harassment over her 18-year career at the bank.

In public remarks, Solomon has said hiring and promoting more women and minorities were top priorities of his, and the company has publicized its efforts to boost the ranks of women at the bank.

Other male-dominated industries such as tech and law have also dealt with accusations of systemic bias against women. In June, Alphabet subsidiary Google agreed to pay $118 million to settle a lawsuit alleging that the technology company had discriminated against thousands of female employees.

The incidents described by the Goldman partner allegedly happened in 2018 and 2019, and included male executives critiquing female employees’ bodies and assigning menial tasks to women, according to Bloomberg, which cited people with knowledge of the complaint. The partner rank is exceedingly difficult to achieve, and fewer than 1% of the firm’s employees have that title, which comes with enhanced compensation and other perks.

Top Goldman lawyer Kathy Ruemmler said in a statement to CNBC that the firm disputed the Bloomberg article. The New York-based bank declined to comment beyond its statement or answer questions about whether it had paid the $12 million settlement.

“Bloomberg’s reporting contains factual errors, and we dispute this story,” Ruemmler said in the emailed statement. “Anyone who works with David knows his respect for women, and his long record of creating an inclusive and supportive environment for women.”

A Bloomberg spokeswoman had this response to Goldman’s comment: “We stand by our reporting.”

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November 15, 2022
The crisis is over for the British pound, but analysts see further weakness ahead

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Traders in London.

DANIEL LEAL-OLIVAS | AFP | Getty Images

LONDON — The British pound is on firmer footing since the appointment of new Prime Minister Rishi Sunak, but Wall Street still sees further vulnerability over the next 12 months.

After falling to a record low against the dollar of below $1.04 on Sep. 25 following the disastrous fiscal policy announcements that would eventually lead to the resignation of former Prime Minister Liz Truss, sterling had recovered to around $1.139 by Thursday morning, but remains down over 15% year-to-date.

Sunak’s planned return to a more traditionally conservative fiscal policy agenda mostly stabilized markets and reduced expectations for more aggressive interest rate hikes from the Bank of England, offering respite to the currency.

In a note Monday, Deutsche Bank vice president and FX strategist Shreyas Gopal said the “crisis” chapter on the U.K. can now close, with the pound now likely to trade as a “normal” currency, but noted that downward pressure from large external financing needs and low real rates remains.

“The U.K.’s external financing needs remain large and, on current market pricing, real yields are still too low compared to other major currencies. As long as the global risk environment remains weak this leaves the pound vulnerable and the likely trend lower,” Gopal said.

The Bank of England is expected to raise interest rates by 75 basis points on Thursday, its biggest hike since 1989, but economists expect the central bank to adopt a more dovish tone and ultimately fall short of the terminal rate of almost 5% priced in by the market.

“In all, we remain bearish on the pound and believe GBP weakness will return for the rest of the year,” Gopal said.

“In the volatility space, the market has rightly assessed that the tails have narrowed for the pound, in line with our view, and we take profit on our short volatility recommendations from earlier this month.”

The U.K.’s long-running current account deficit has been exacerbated by soaring energy prices, which have added almost 2% of gross domestic product to the country’s trade deficit over the past year while placing a historic squeeze on household incomes. U.K. real wages fell at a record rate in the second quarter and inflation hit a 40-year high of 10.1% in September.

Gopal suggested that as a result, private sector savings may fall further in the coming quarters in order to sustain consumption of essential goods, while the government’s new fiscal plans, set to be laid out in full later this month, will likely mean public sector borrowing will exert less downward pressure on the trade balance.

The government has also promised further details on a more targeted version of the Energy Price Guarantee scheme, which will reduce government spending but will further cement the U.K.’s likely recession.

“This should lead to import compression and a (cyclical) improvement in the current account balance — though as a fraction of GDP this impact is likely to be less pronounced,” Gopal said.

“Beyond this, two other offsets include the recent fall in gas prices, with the further from their peak that gas prices settle the better for the external accounts.”

While the recent news flow has been more positive for the U.K. current account, Deutsche Bank does not believe it will prevent external deficits growing “wider than usual and wider than other developed market peers.”

A dovish shift in monetary policy would be seen as negative for the pound given how much tightening is priced in. What’s more, the removal of fiscal support during a particularly tough economic downturn may be “easier said than done,” according to Goldman Sachs.

“Taking these things together, we are revising our Sterling forecasts in a more positive direction, but still expect some further GBP underperformance ahead,” Kamakshya Trivedi, head of global FX, rates and EM strategy at Goldman, said in a note last week.

Goldman last week upgraded its three-, six- and 12-month outlooks for the pound to $1.10, $1.11 and $1.22 from a previous projection of $1.05, $1.08 and $1.19.

Not the last crisis for the UK

Despite the persistent vulnerabilities, however, analysts do not see a return to the record lows seen in late September. In a note Tuesday, BMO Capital Markets suggested that a less hawkish posture from the Bank of England was unlikely to trigger an aggressive near-term sell-off of the pound, nor would a more restrictive stance create buying pressure.

“The U.K. economy and the GBP still have numerous macroeconomic and balance of payments (BoP) headwinds to face. However, one of the more appealing features of the U.K. macro picture is that it’s generally beneficial to be the first to have had a crisis and emerge from it on the other side,” said Stephen Gallo, European head of FX strategy at BMO.

On a longer-term horizon, however, Gallo said the Canadian investment bank was skeptical that 2022 will have marked the last crisis for the U.K., whether around the currency, balance of payments or fiscal policy.

“We would argue that overall UK risk premia should be higher today than during the prior 10-year period. However, the most aggressive phase of the re-pricing seems to be fading in the distance of the rearview mirror,” he added.

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November 2, 2022
Goldman Sachs expects European natural gas prices to tumble 30% in the coming months

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European gas prices are expected to drop to 85 euros megawatt hour in the coming months, said Goldman Sachs

Krisztian Bocsi | Bloomberg | Getty Images

Goldman Sachs predicts that European natural gas prices would drop by about 30% in the coming months as nations gain a temporary upper hand on supply issues.

The Dutch Title Transfer Facility (TTF) is Europe’s main benchmark for natural gas prices. It traded at around 120 euros per megawatt hour on Tuesday. But Goldman Sachs expects this benchmark to fall to 85 euros per megawatt hour in the first quarter of 2023, according to a research note published last week.

This would mark a significant change to the levels seen back in August. At the time, Russia’s unprovoked invasion of Ukraine and the subsequent pressures on Europe’s energy mix pushed prices to historic figures — above 340 euros per megawatt hour.

The recent cooling in gas prices has derived from several factors: Europe’s gas storage is basically full for this winter season; temperatures this fall have been milder than expected thus delaying the start of a period of heavy usage; and there is an oversupply of liquefied natural gas (LNG).

Recent reports have pointed to about 60 vessels waiting to discharge their LNG cargo in Europe. Some of these shipments were bought during the summer and are just arriving now as storage fills up. Indeed, the latest data compiled by industry group Gas Infrastructure Europe shows storage levels in Europe are sitting at 94%.

Despite optimism on lower gas prices in the near term, which may alleviate some of the cost-of-living crisis, there’s plenty of pressure on European leaders to secure supplies in the medium term.

“Our commodity team forecasts a further decline to 85 euros in the first quarter before sharply picking up into next summer as storage levels are rebuilt,” Goldman Sachs analysts said in the research note. Their forecasts point to a surge in prices to just below 250 euros per megawatt hour by the end of July.

Natural gas prices are expected to pick up after the first three months of 2023 due to several factors.

Fatih Birol, executive director of the International Energy Agency, told CNBC’s Julianna Tatelbaum Friday that only a very small amount of new LNG will hit the market next year. “If China economy sees a rebound, next year the LNG import of China may also increase together with Europe,” he said.

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China was the world’s top importer of LNG in 2021, according to the U.S. Energy Information Administration. However, due to its strict Covid-19 policy, the Chinese economy has had to deal with a number of lockdowns which have dented growth. Any change in this political approach would increase demand for LNG and push up prices for European buyers too.

Additionally, gas storage has been helped by Russian supplies which the EU has been trying to ween itself off. Even Xavier Bettel, the prime minister of Luxembourg, an EU nation, acknowledged in October that storage was full with Russian gas. Russian supplies have since been severely disrupted and it’s Europe’s aim to be completely free from Russian fossil fuels.

The CEO of EDP, Portugal’s utilities firm, summed it up when speaking to CNBC’s “Squawk Box Europe” Friday. “Certainly we are in a much better place than we were a couple of months ago,” Miguel Stilwell d’Andrade said, but “we should expect a lot of volatility going forward.”

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November 1, 2022
Bitcoin’s trading has become ‘boring’ — but that’s not necessarily a bad thing

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Representations of cryptocurrency Bitcoin are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration

Dado Ruvic | Reuters

Bitcoin’s lack of volatility lately isn’t a bad thing and could actually point to signs of a “bottoming out” in prices, analysts and investors told CNBC.

Digital currencies have fallen sharply since a scorching run in 2021 which saw bitcoin climb as high as $68,990. But for the past few months, bitcoin’s price has bounced stubbornly around $20,000 in a sign that volatility in the market has settled.

Last week, the cryptocurrency’s 20-day rolling volatility fell below that of the Nasdaq and S&P 500 indexes for the first time since 2020, according to data from crypto research firm Kaiko.

Stocks and cryptocurrencies are both down sharply this year as interest rate hikes by the U.S. Federal Reserve and a strengthening dollar weighed on the sector.

Bitcoin’s correlation with stocks has increased over time as more institutional investors have invested in crypto.

But bitcoin’s price has stabilized recently. And for some investors, that easing of volatility is a good sign.

“Bitcoin has essentially been range bound between 18-25K for 4 months now, which indicates consolidation and a potential bottoming out pattern, given we are seeing the Dollar index top out as well,” Vijay Ayyar, head of international at crypto exchange Luno, told CNBC in emailed comments.”

“In previous cases such as in 2015, we’ve seen BTC bottom when DXY has topped, so we could be seeing a very similar pattern play out here.”

Antoni Trenchev, co-founder of crypto lender Nexo, said bitcoin’s price stability was “a strong sign that the digital assets market has matured and is becoming less fragmented.”

An end to crypto winter?

Cryptocurrencies have suffered a brutal comedown this year, losing $2 trillion in value since the height of the 2021 rally. Bitcoin, the world’s biggest digital coin, is off around 70% from its November peak.

The current so-called “crypto winter” is largely the result of aggressive tightening from the Fed, which has been hiking interest rates in an effort to tame rocketing inflation. Large crypto investors with highly leveraged bets like Three Arrows Capital were floored by the pressure on prices, further accelerating the market’s drop.

However, some investors think the ice may now be beginning to thaw.

There are signs of an “accumulation phase,” according to Ayyar, when institutional investors are more willing to place bets on bitcoin given the lull in prices.

“Bitcoin being stuck in such a range does make it boring, but this is also when retail loses interest and smart money starts to accumulate,” Ayyar said.

Matteo Dante Perruccio, president of international at digital asset management firm Wave Financial, said he’s seen a “counterintuitive increase in demand of traditional institutional investors in crypto during what is a time where generally you would see interest fall off in the traditional markets.”

Financial institutions have continued taking steps into crypto despite the fall in prices and waning interest from retail investors.

Mastercard announced a service that allows banks to offer crypto trading, having previously launched a new blockchain security tool for card issuers. Visa, meanwhile, teamed up with crypto exchange FTX to offer debit cards linked to users’ trading accounts.

Goldman Sachs suggested we may be close to the end of a “particularly bearish” period in the latest cycle of crypto movements. In a note released Thursday, analysts at the bank said there were parallels with bitcoin’s trading in Nov. 2018, when prices steadied for a while before rising steadily.

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“Low volatility [in Nov. 2018] was following a large bitcoin bear market,” Goldman’s analysts wrote, adding that “crypto QT” (quantitative tightening) occurred as investors poured out of stablecoins like tether, reducing liquidity. The circulating supply of USD Coin — a stablecoin that’s pegged to the U.S. dollar — has fallen $12 billion since June, while tether’s circulating supply has dropped over $14 billion since May.

Selling pressure has slowed, too, as bitcoin miners reduced their sales of the cryptocurrency, suggesting the worst may be over for the mining space. Publicly-traded bitcoin miners sold 12,000 bitcoins in June and only around 3,000 in September, according to Goldman Sachs.

Wave Financial’s Perruccio expects the second quarter of next year to be the time when crypto winter finally comes to an end.

“We’ll have seen a lot more failures in the DeFi [decentralized finance] space, a lot of the smaller players, which is absolutely necessary for the industry to evolve,” he added.

All eyes on the Fed

James Butterfill, head of research at crypto asset management firm CoinShares, said it was difficult to draw too many conclusions at this stage. However, he added, “we err on the side of greater potential for upside rather than further price falls.”

“The largest fund outflows recently have been in short-Bitcoin positions (US$15m this month, 10% of AuM), while we have seen small but uninterrupted inflows into long Bitcoin over the last 6 weeks,” Butterfill told CNBC via email.

The main thing that would lead to greater buying of bitcoin would be a signal from the Federal Reserve that it plans to ease its aggressive tightening, Butterfill said.

The Fed is expected to hike rates by 75 basis points at its meeting next week, but officials at the central bank are reportedly considering slowing the pace of future increases.

“Clients are telling us that once the Fed pivots, or is close to it, they will begin adding positions to Bitcoin,” Butterfill said. “The recent liquidations of net shorts is in sync with what we are seeing from a fund flows perspective and implies short sellers are beginning to capitulate.”

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October 30, 2022
Goldman’s pivot away from money-losing Marcus shows that disrupting retail banking is hard

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David Solomon, Goldman Sachs, at Marcus event

Goldman Sachs CEO David Solomon is reining in his ambition to make the 153-year-old investment bank a major player in U.S. consumer banking.

After product delays, executive turnover, branding confusion, regulatory missteps and deepening financial losses, Solomon on Tuesday said the firm was pivoting away from its previous strategy of building a full-scale digital bank.

Now, rather than “seeking to acquire customers on a mass scale” for the business, Goldman will instead focus on the Marcus customers it already has, while aiming to market fintech products through the bank’s workplace and wealth management channels, Solomon said.

The moment is a humbling one for Solomon, who seized on the possibilities within the nascent consumer business after becoming CEO four years ago.

Goldman started Marcus in 2016, named after one of the bank’s cofounders, to help it diversify revenue away from the bank’s core trading and advisory operations. Big retail banks including JPMorgan Chase and Bank of America enjoy higher valuations than Wall Street-centric Goldman.

Scrutiny from analysts

Instead, after disclosing the strategic shift and his third corporate reorganization as CEO, Solomon was forced to admit missteps Tuesday during an hour-plus long conference call as analysts, one after another, peppered him with critical questions.

It began with Autonomous analyst Christian Bolu, who pointed out that other new entrants including fintech startup Chime and Block’s Cash App have broken through while Goldman hasn’t.

“One could argue that there’s been some execution challenges for Goldman in consumer; you’ve had multiple leadership changes,” Bolu stated. “Looking back over time, what lessons have you guys learned?”

Another analyst, Brennan Hawken of UBS, told Solomon he was confused about the pivot because of earlier promises related to coming products.

“To be honest, when I speak with a lot of investors on Goldman Sachs, very few are excited about the consumer business,” Hawken said. “So I wouldn’t necessarily say that a pulling back in the aspirations would necessarily be negative, I just want to try and understand strategically what the new direction is.”

After Wells Fargo‘s Mike Mayo asked whether the consumer business was making money and how it stacked up against management expectations, Solomon conceded that the unit “doesn’t make money at the moment.” That is despite saying in 2020 that it would reach breakeven by 2022.

Troubles with Apple

Even one of the bank’s successes — winning the Apple Card account in 2019— has proven less profitable than Goldman executives expected.

Apple customers didn’t carry the level of balances the bank had modeled for, meaning that it made less revenue on the partnership than they had targeted, Solomon told Morgan Stanley analyst Betsy Graseck. The two sides renegotiated the business arrangement recently to make it more equitable and extended it through the end of the decade, according to the CEO.

With his stock under pressure and the money-losing consumer operations increasingly being blamed, internally and externally, for its drag on operations, Solomon appeared to have little choice than to change course.

Selling services to wealth management customers lowers customer acquisition costs, Solomon noted. In that way, Goldman is mirroring the broader shift in fintech, which occurred earlier this year amid plunging valuations, as growth-at-any cost changed to an emphasis on profitability.

Despite the turbulence, Goldman’s adventure in consumer banking has managed to collect $110 billion in deposits, extend $19 billion in loans and find more than 15 million customers.

“There’s no question that the aspirations probably got, and were communicated in a way, that were broader than where we’re now choosing to go,” Solomon told analysts. “We are making it clear that we’re pulling back on some of that now.”

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October 18, 2022
Citadel’s billionaire CEO Ken Griffin becomes GOP $100 million midterm megadonor

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Ken Griffin, Citadel at CNBC’s Delivering Alpha, Sept. 28, 2022.

Scott Mlyn | CNBC

Citadel’s billionaire CEO, Ken Griffin, is one of Wall Street’s biggest political donors in the 2022 midterms, giving more than $100 million toward state and federal candidates across the country since April 2021, campaign finance records show.

The $50 million Griffin has donated to Republicans running in federal races alone make him the party’s single biggest individual donor from the finance industry and the third-biggest political donor to federal candidates in this election cycle, according to data tracked by campaign finance watchdog OpenSecrets.

Only Soros Fund Management founder George Soros and shipping magnate Richard Uihlein have given more to candidates running for the U.S. House or Senate. Soros has donated over $128 million to Democrats while Uihlein has given $53 million to Republicans, according to OpenSecrets.

Griffin, however, has spent another $50 million during this election cycle — which runs from Jan. 1, 2021 through the end of this year — on the failed Illinois gubernatorial campaign of Aurora, Ill., Mayor Richard Irvin, who lost in the Republican primary, according to state campaign finance records.

Citadel announced plans this summer to move its headquarters from Chicago to Miami, as the Windy City struggles to stop a rise in crime. Griffin has previously said part of his feud with Illinois Gov. J. B. Pritzker is over the Democratic leader’s record on crime. Griffin said at a DealBook conference last year that when he brought up the crime issue to Pritzker, “he took the moment to call me a liar.”

Zia Ahmed, a spokesman for Griffin, told CNBC in a statement that the Citadel CEO is aiming to “broaden the tent of the Republican Party.”

“Ken wants to elevate talented candidates and broaden the tent of the Republican Party to make it more representative of our country,” Ahmed said. “He supports leaders who will focus on education, job creation, public safety and a strong national defense so that every individual has access to the American dream.”

Democratic political operatives have taken aim at Griffin, especially as he’s tried to make an impact on elections.

The Democratic Governors Association, an outside group that backs Democrats, organized opposition research on Griffin as he was deciding who to support in the Illinois Republican primary for governor. The research, which was reviewed by CNBC, is titled “Ken Griffin Has Been Playing Kingmaker In IL Politics With No Consequences.” It’s a compilation of public documents and reporting that included a focus on Griffin’s divorces. Pritzker, who has an estimated net worth of $3.6 billion, donated $24 million to the group as Griffin moved to back Irvin, according to records filed to the IRS.

In a statement to CNBC, the Democratic governors’ group compared Griffin’s contributions to those of Charles Koch and his brother, the late David Koch. They said that Griffin deserves scrutiny due to him becoming a major donor for Republicans.

“Much like when the Koch Brothers were the Republican Party’s number one donor it was important for the public to understand how they were trying to use their money to further their own special interests,” a Democratic Governors Association spokesperson said after being asked about the opposition research. “Ken Griffin is now the largest donor in the GOP and deserves the same kind of scrutiny.”

Senate Minority Leader Mitch McConnell, R-Ky., and other GOP leaders have privately courted Griffin as one of their most important and lucrative donors this cycle, as Republicans try to take back both the U.S. House and Senate, according to people familiar with the conversations.

Democrats control the House and Senate, but by slim margins. The Senate is split 50-50 with Democrats relying on Vice President Kamala Harris to break any ties. Cook Political Report labels Senate seats held by Sens. Raphael Warnock, D-Ga., Catherine Cortez Masto, D-Nev., and Ron Johnson, R-Wis., as toss-ups. In the House, Democrats have a nine-seat majority. But the Cook report projects that 30 of the chamber’s 435 seats are up for grabs.

Data from AdImpact shows the general election fight for control of the Senate has cost over $1 billion with almost 30 days left to go until Election Day. In total, federal candidates and PACs have spent in excess of $6.4 billion on the 2022 midterms, putting them on track to be the most expensive ever.

Republican leaders are turning to Griffin to take the lead after two of the GOP party’s most influential donors have died: former executive vice president of Koch Industries David Koch at 79 in August 2019 and casino magnate Sheldon Adelson at 87 in January 2021.

CEO and chairman of casino company Las Vegas Sands Sheldon Adelson (L) listens as US President Donald Trump delivers remarks at a Keep America Great rally in Las Vegas, Nevada, on February 21, 2020.

Jim Watson | AFP | Getty Images

“He likes being a player” in politics, a Koch political advisor told CNBC when asked about Griffin’s efforts to sway the midterms. Griffin said in a 2012 interview with the Chicago Tribune that he knew David Koch and his brother Charles for “a number of years” and regularly went to the Koch network seminars, where business leaders would huddle with the group’s donors.

The Koch’s policy network has spent hundreds of millions of dollars over the past decade on campaigns.

David Koch

Carlo Allegri | Reuters

Griffin, 53, has “youth on his side and probably $35 billion,” the Koch advisor said. “He could step up but those are big shoes to fill.” Forbes estimates Griffin has a net worth of $30.5 billion.

Among Wall Street executives, the next biggest GOP donors include Blackstone CEO Steve Schwarzman with $20 million in contributions and Paul Singer, the founder of Elliott Management, who’s donated $14 million during this election cycle. Jeffrey Yass, the co-founder of Philadelphia based trading firm Susquehanna International Group, has contributed over $30 million.

McConnell and party officials this summer were expecting Griffin to cut a multimillion-dollar check to the Senate Leadership Fund, according to those familiar with McConnell’s thinking. Though McConnell doesn’t run the super PAC, which is dedicated to helping Republicans get elected to the Senate, it’s closely aligned with the senator and run by his former chief of staff, Steven Law.

Griffin donated $10 million to the PAC in two evenly split checks sent in December and March, Federal Election Commission filings show. Griffin cut another check to the PAC in the third quarter, according to a person close to the billionaire, but they wouldn’t say how much and the PAC doesn’t need to disclose its most recent fundraising records to the FEC until Oct. 15.

Griffin also recently donated to the Congressional Leadership Fund, a super PAC backing House Republican candidates, that person said, declining to say how much. FEC records show Griffin donated over $18 million to that group from Jan. 1, 2021 through June.

A representative for McConnell did not return a request for comment.

Griffin gave $5 million last year to a separate political action committee backing Florida Gov. Ron DeSantis’ 2022 reelection bid and an additional $5 million to the Republican Party of Florida in August, according to state campaign finance records.

During CNBC’s Delivering Alpha Conference, Griffin indicated that he’s become so close to DeSantis that his team told the governor that Griffin didn’t agree with DeSantis’ decision to fly two planes of Central and South American migrants to Martha’s Vineyard.

“I don’t agree with what he did,” Griffin said when asked at the conference about DeSantis shipping migrants to Florida. “I’m certain that my team’s communicated that to him,” he added. He also said he was open to becoming Treasury secretary if the country was experiencing an economic crisis. DeSantis hasn’t ruled out running for president in the upcoming 2024 election.

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October 7, 2022