Citigroup Inc. (NYSE:C) is one of the stocks Jim Cramer weighed in on. During the episode, a caller asked about the stock, and Cramer replied:
“Oh, I like Citi. Now, Citi’s up a huge amount, but I think Citi is still an inexpensive stock. It’s got still a lower multiple than others. I think it can go higher. Yields 2.4% and what can I say? Jane Fraser’s doing an admirable job there.”
Kiev.Victor / Shutterstock.com
Citigroup Inc. (NYSE:C) delivers financial services, including consumer banking, wealth management, investment banking, trading, treasury, and securities solutions. Hotchkis & Wiley stated the following regarding Citigroup Inc. (NYSE:C) in its second quarter 2025 investor letter:
“Citigroup Inc. (NYSE:C) is one of the largest US banks by total assets. Investment in its IT, compliance and risk capabilities have pressured margins and returns over recent years, obscuring the banks strong core franchise. With these investments now largely complete we expect Citi’s expense to decline and its margins and returns to be more consistent with peers. Citigroup performed well in the quarter on improved profitability and positive operating leverage. We think that C is very undervalued on our normal expectations and would still be attractive even if they do not fully achieve their goals.”
While we acknowledge the potential of C as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
The financial services industry is deploying generative AI throughout operations and investment banking is realizing high returns.
Agentic AI can enhance operations across all financial institutions including:
Private equity shops; and
Chip giant Nvidia, for one,has seen a sharp rise in the use of its agentic AI model application among financial services firms and is working to provide more computing power to drive adoption across the industry, KevinLevitt, who leads global business development for financial services at the company, told Bank Automation News.
“FIs have a long track record of adopting and integrating new technology. … They know how to integrate these new technologies into their functions and to find returns on them.”
“They’re using these [AI] agents to cover specific equities and update research reports on those stocks,” Levitt said. “The agents can handle 10 times the previous volume of documents than a human could, and they’re actually extracting information with greater accuracy.”
One investment house that Levitt did not identify reported that it has “reduced the report generation time from 40 hours down to 15 minutes,” he said. “That’s a 160X improvement.”
Higher order tasks left for humans
ChrisAckerson, senior vice president of product at AI-driven tech provider AlphaSense, agrees. He also told BAN that many financial institutions are using gen AI-driven assistants to help junior bankers write PowerPoint decks and reports.
AlphaSense’s gen AI tool scans the internet, including for specific information such as SEC filings, to find pertinent information for the analyst’s report, he said.
“Traditionally it would have taken many hours or maybe even days to find the right information and synthesize it,” Ackerson said. But with gen AI “that [process] can be automated and analysts can focus on higher order tasks.”
The tool is multidimensional, allowing it to be used to conduct due diligence for M&A activities, another time-consuming activity for FIs, he said.
Nearly 80% of the world’s top asset management firms use AlphaSense’s AI-driven solution, including Goldman Sachs, J.P. Morgan and MorganStanley, Ackerson said.
Check out our exclusive new bank industry data here.
Stephanie Cohen speaks during the 2018 New York Times Dealbook Summit. Michael Cohen/Getty Images for The New York Times
Stephanie Cohen, one of the few female top executives at Goldman Sachs (GS), is leaving the investment bank after a 25-year career in banking, The Wall Street Journal first reported today (March 18). She will join Cloudflare, a cloud service provider which Goldman Sachs took public in 2019, as its first chief strategy officer.
Cohen, who leads Goldman Sachs’s Platform Solutions unit, which includes many of the bank’s consumer-lending businesses, has been on personal leave since June 2023, the Journal previously reported.
Cohen, 46, joined Goldman Sachs in 1999 as an analyst after graduating from the University of Illinois Urbana-Champaign. She worked her way up in Goldman’s investment banking division to managing director in 2008 and was named partner in 2014. During that time period, Cohen worked on historic corporate deals, including Chrysler’s repayment of a U.S. government loan in the aftermath of the 2008 Financial Crisis.
Cohen was named Goldman’s chief strategy officer in 2017. And the next year, she was picked by CEO David Solomon as a member of Goldman’s 33-person management committee. She was one of seven women on the top decision-making team and was 10 years younger than the average man in the group. That committee has been downsized to 25 people.
“There weren’t a lot of investment bankers that looked like me. When I walked into a board room, they’d expect a very tall man, but instead they’d get a relatively short woman,” Cohen said at a 2018 event in New York reported by Observer. “You can use that as something that bothers you, or you can use that as a point of differentiation. For example, one of the things I learned early on was that when I was on big conference calls with lots of people, everyone would know when I spoke because I was the only woman.”
In late 2020, Cohen was tapped to co-head Goldman’s consumer and wealth management division, which was merged into Platform Solutions in 2022 after a reorganization. Products under her unit include Goldman’s credit card partnerships with Apple and General Motors.
Cohen is the latest in a string of female senior bankers who have left Goldman in recent years for better opportunities elsewhere. According to a Wall Street Journal analysis published last week, two-thirds of the women who were partners at the bank at the end of 2018 have left the firm or no longer have the title.
Retail tycoon Mike Ashley says his lawsuit against Morgan Stanley is in part because the bank acted out of “snobbery.”
Chris J. Ratcliffe/Bloomberg
Billionaire Mike Ashley said he brought his lawsuit against Morgan Stanley because he was concerned with how “grotesquely and unfairly” the bank had acted during a margin call rather than the potential damages.
The retail tycoon made the comments as a witness in a London court, where his firm Frasers Group Plc sued the U.S. bank for imposing a $995 million margin call on his derivatives trade positions in Hugo Boss AG shares in May 2021. The deposit demand hit him like a “nuclear bomb,” leaving him in disbelief and frustration, he told the court during two days of testimony. The bank acted in part on account of “snobbery,” he said.
It was “horrific, just unthinkable, impossible,” Ashley said referring to the margin call. Ashley’s firm has sought about $50 million in damages.
Morgan Stanley has sought to counter the lawsuit, calling Frasers’ claim divorced from reality. The retailer didn’t suffer any loss when it transferred the trades away from Morgan Stanley, the U.S. bank’s lawyers said. “Frasers has embarked on lawfare against Morgan Stanley on an extraordinary scale,” the lawyers said.
Ashley denied he derived pleasure from litigating and said the case was not personal. Before the dispute arose in May 2021, Morgan Stanley was unwilling to offer corporate and advisory services to Frasers because of Ashley’s reputation, “deserved or otherwise,” for being litigious among other reasons, the bank’s lawyers have said.
“I can assure you there is no pleasure in litigation,” Ashley said responding to a question. “If you end up in a position that you own one of the country’s biggest football clubs it comes with the territory,” he said.
Ashley and his firm have been involved in court cases ranging from defamation against a national newspaper to drunken promises over a bonus worth millions made in a London pub. He also fought his former friend over a Dubai bar-room incident and funded a court challenge to unravel a deal to save a department store chain’s operator.
“I don’t think I’m an over-litigious person,” he said. “If anything I would try to avoid it. It’s not a pleasant experience.”
A spokesperson for Morgan Stanley declined to comment on the testimony. “Frasers has never been a client of Morgan Stanley. This claim is contrived and without merit and we will defend it vigorously,” he had previously said. Lawyers for Frasers declined to comment.
Here’s a look at US Ambassador to Japan and former Chicago Mayor Rahm Emanuel.
Birth date: November 29, 1959
Birth place: Chicago, Illinois
Birth name: Rahm Israel Emanuel
Father:Benjamin Emanuel, a pediatrician
Mother: Martha (Smulevitz) Emanuel, a psychiatric social worker
Marriage: Amy Rule (1994-present)
Children: Leah, Ilana and Zach
Education: Sarah Lawrence College, B.A., Liberal Arts, 1981; Northwestern University, M.A. Speech and Communication, 1985
Religion: Jewish
Emanuel’s father is Israeli, and his mother is American.
Emanuel worked at Arby’s during high school. Part of his finger had to be amputated after a cut from a meat slicer became severely infected.
Took ballet in high school and received a scholarship to study dance at the Joffrey Ballet School, attended Sarah Lawrence instead.
Maintained dual American-Israeli citizenship until the age of 18.
Is sometimes called “Rahmbo” by news outlets such as the Economist and Salon for his tough, no-nonsense approach to politics and fundraising.
1980 – Works as a fundraiser on David Robinson’s congressional campaign for Illinois’ 20th district, in Chicago.
1984 – Works on Paul Simon’s campaign for US Senate.
1988 – Serves as national campaign director of the Democratic Congressional Campaign Committee.
1989 – Chief fundraiser and senior adviser for Richard M. Daley’s campaign for mayor of Chicago.
1991-1992 – Serves as national finance director for the Bill Clinton/Al Gore presidential campaign.
1993-1998 – Serves as a senior adviser to President Clinton, including roles as deputy director of communications, executive assistant, senior adviser on policy and strategy and senior adviser on political affairs.
1999-2002 – Managing director of investment bank Dresdner Kleinwort Wasserstein in Chicago.
February 2000-May 2001 – Member of the Freddie Mac board of directors.
December 29, 2008 – Announces he will resign his seat in the House of Representatives.
January 20, 2009-October 1, 2010 – Serves as White House chief of staff.
October 1, 2010 – Resigns as White House chief of staff and moves back to Chicago.
November 13, 2010 – Formally announces that he is running for mayor of Chicago.
January 24, 2011 – An Illinois appellate court panel rules that Emanuel does not meet the residency standard to run for mayor.
January 25, 2011 – The Illinois Supreme Court grants a stay on the appeals court ruling, and orders that any ballots printed include Emanuel’s name while the case is pending.
January 27, 2011 – The Illinois Supreme Court issues a ruling allowing Emanuel’s name on the Chicago mayoral ballot.
February 22, 2011 – With 55% of the vote, Emanuel is elected the 46th and first Jewish mayor of Chicago.
May 16, 2011 – Is sworn in at the Pritzker Pavilion in Millennium Park.
February 5, 2013 – Reports for jury duty but is ultimately dismissed. He says he’ll donate his $17 paycheck back to Cook County.
June 5, 2019 – Emanuel announces he will be joining the investment bank Centerview Partners, LLC. He will open a Chicago office and act as an adviser to the firm’s clients.
Morgan Stanley said late Wednesday that Co-President Edward “Ted” Pick will become its chief executive, effective Jan. 1.
Outgoing Chief Executive James Gorman will become executive chairman, Morgan Stanley said. Pick will also join the firm’s board of directors.
“The board has unanimously determined that Ted Pick is the right person to lead Morgan Stanley and build on the success the firm has achieved under James Gorman’s exceptional leadership,” the company said in a statement.
“Ted is a strategic leader with a strong track record of building and growing our client franchise, developing and retaining talent, allocating capital with sound risk management, and carrying forward our culture and values,” it said.
Pick’s name had been among those in the running. The executive joined Morgan Stanley in 1990, and was promoted to managing director in 2002, according to his bio on the company’s website.
Gorman became CEO in January 2010, having joined the firm in 2006.
The lack of a clear successor at Morgan Stanley has weighed on its stock lately.
The shares are down 24% in the last three months, three times the losses for the S&P 500 index SPX
in the same period. So far this year, Morgan Stanley shares are down 16%, contrasting with an advance of about 9% for the S&P.
Morgan Stanley on Wednesday said its third-quarter profit fell 10% amid weakness in its investment banking business, but its trading and asset-management revenue rose.
Morgan Stanley MS, +2.03%
said profit for the three months ended Sept. 30 fell to $2.26 billion, or $1.38 a share, from $2.49 billion, or $1.47 a share, in the year-ago period.
Analysts tracked by FactSet expect Morgan Stanley to earn $1.28 a share.
At the start of the quarter, analysts were expecting earnings of $1.58 a share.
Revenue fell 1% to $13.27 billion, ahead of the FactSet consensus estimate of $13.22 billion.
Morgan Stanley’s stock fell 2.8% in premarket trading on Wednesday.
Chief Executive James Gorman said the market environment was mixed.
“Our equity and fixed income businesses navigated markets well, and both wealth management and investment management producer higher revenues and profits year-over-year,” Gorman said.
Morgan Stanley’s stock fell 4.4% in the third quarter in a choppy period for bank stocks overall. Prior to Wednesday’s trades, the stock was down just under 10% in the past month, compared with 1.9% drop by the S&P 500 SPX.
For the third quarter, trading revenue rose 10% in the quarter to $3.68 billion.
Asset-management revenue increased by 6% to $5.03 billion, while investment-banking revenue dropped 24% to $1.05 billion.
During the past month, 11 analysts cut their profit estimates for Morgan Stanley and only one increased their view.
UBS analyst Brennan Hawken downgraded Morgan Stanley to neutral from buy last week, cutting his price target to $84 from $110.
“Despite its successful transformation into a wealth-management-focused firm with a solid, wire house peer leading growth profile, MS is confronted with obstacles such as deposit sorting/yield seeking, intense competition for talent, and a challenging revenue environment,” Hawken said.
The average rating among 26 analysts that cover Morgan Stanley is overweight.
The bank is in the midst of a leadership transition, with Chief Executive James Gorman planning to step down by next May. Three potential successors at the bank include Andy Saperstein, who heads up wealth management; Ted Pick, who runs capital markets; and Dan Simkowitz, head of investment management.
The stock market always overreacts, and this year it seems as if investors believe dividend stocks have become toxic. But a look at yields on quality dividend stocks relative to the market underlines what may be an excellent opportunity for long-term investors to pursue growth with an income stream that builds up over the years.
The current environment, in which you can get a yield of more than 5% yield on your cash at a bank or lock in a yield of 4.57% on a10-year U.S. Treasury note BX:TMUBMUSD10Y
or close to 5% on a 20-year Treasury bond BX:TMUBMUSD20Y
seems to have made some investors forget two things: A stock’s dividend payout can rise over the long term, and so can it is price.
It is never fun to see your portfolio underperform during a broad market swing. And people have a tendency to prefer jumping on a trend hoping to keep riding it, rather than taking advantage of opportunities brought about by price declines. We may be at such a moment for quality dividend stocks, based on their yields relative to that of the benchmark S&P 500 SPX.
Drew Justman of Madison Funds explained during an interview with MarketWatch how he and John Brown, who co-manage the Madison Dividend Income Fund, BHBFX MDMIX and the new Madison Dividend Value ETF DIVL,
use relative dividend yields as part of their screening process for stocks. He said he has never seen such yields, when compared with that of the broad market, during 20 years of work as a securities analyst and portfolio manager.
Dividend stocks are down
Before diving in, we can illustrate the market’s current loathing of dividend stocks by comparing the performance of the Schwab U.S. Equity ETF SCHD,
which tracks the Dow Jones U.S. Dividend 100 Index, with that of the SPDR S&P 500 ETF Trust SPY.
Let’s look at a total return chart (with dividends reinvested) starting at the end of 2021, since the Federal Reserve started its cycle of interest rate increases in March 2022:
FactSet
The Dow Jones U.S. Dividend 100 Index is made up of “high-dividend-yielding stocks in the U.S. with a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios,” according to S&P Dow Jones Indices.
The end results for the two ETFs from the end of 2021 through Tuesday are similar. But you can see how the performance pattern has been different, with the dividend stocks holding up well during the stock market’s reaction to the Fed’s move last year, but trailing the market’s recovery as yields on CDs and bonds have become so much more attractive this year. Let’s break down the performance since the end of 2021, this time bringing in the Madison Dividend Income Fund’s Class Y and Class I shares:
Fund
2023 return
2022 return
Return since the end of 2021
SPDR S&P 500 ETF Trust
14.9%
-18.2%
-6.0%
Schwab U.S. Dividend Equity ETF
-3.8%
-3.2%
-6.9%
Madison Dividend Income Fund – Class Y
-4.7%
-5.4%
-9.9%
Madison Dividend Income Fund – Class I
-4.7%
-5.3%
-9.7%
Source: FactSet
Dividend stocks held up well during 2022, as the S&P 500 fell more than 18%. But they have been left behind during this year’s rally.
The Madison Dividend Income Fund was established in 1986. The Class Y shares have annual expenses of 0.91% of assets under management and are rated three stars (out of five) within Morningstar’s “Large Value” fund category. The Class I shares have only been available since 2020. They have a lower expense ratio of 0.81% and are distributed through investment advisers or through platforms such as Schwab, which charges a $50 fee to buy Class I shares.
The opportunity — high relative yields
The Madison Dividend Income Fund holds 40 stocks. Justman explained that when he and Brown select stocks for the fund their investible universe begins with the components of the Russell 1000 Index RUT,
which is made up of the largest 1,000 companies by market capitalization listed on U.S. exchanges. Their first cut narrows the list to about 225 stocks with dividend yields of at least 1.1 times that of the index.
The Madison team calculates a stock’s relative dividend yield by dividing its yield by that of the S&P 500. Let’s do that for the Schwab U.S. Equity ETF SCHD
(because it tracks the Dow Jones U.S. Dividend 100 Index) to illustrate the opportunity that Justman highlighted:
Index or ETF
Dividend yield
5-year Avg. yield
10-year Avg. yield
15-year Avg. yield
Relative yield
5-year Avg. relative yield
10-year Avg. relative yield
15-year Avg. relative yield
Schwab U.S. Dividend Equity ETF
3.99%
3.41%
3.20%
3.16%
2.6
2.1
1.8
1.6
S&P 500
1.55%
1.62%
1.79%
1.92%
Source: FactSet
The Schwab U.S. Equity ETF’s relative yield is 2.6 — that is, its dividend yield is 2.6 times that of the S&P 500, which is much higher than the long-term averages going back 15 years. If we went back 20 years, the average relative yield would be 1.7.
Examples of high-quality stocks with high relative dividend yields
After narrowing down the Russell 1000 to about 225 stocks with relative dividend yields of at least 1.1, Justman and Brown cut further to about 80 companies with a long history of raising dividends and with strong balance sheets, before moving further through a deeper analysis to arrive at a portfolio of about 40 stocks.
When asked about oil companies and others that pay fixed quarterly dividends plus variable dividends, he said, “We try to reach out to the company and get an estimate of special dividends and try to factor that in.” Two examples of companies held by the fund that pay variable dividends are ConocoPhillips COP, -0.29%
and EOG Resources Inc. EOG, +0.52%.
Since the balance-sheet requirement is subjective “almost all fund holdings are investment-grade rated,” Justman said. That refers to credit ratings by Standard & Poor’s, Moody’s Investors Service or Fitch Ratings. He went further, saying about 80% of the fund’s holdings were rated “A-minus or better.” BBB- is the lowest investment-grade rating from S&P. Fidelity breaks down the credit agencies’ ratings hierarchy.
Justman named nine stocks held by the fund as good examples of quality companies with high relative yields to the S&P 500:
Now let’s see how these companies have grown their dividend payouts over the past five years. Leaving the companies in the same order, here are compound annual growth rates (CAGR) for dividends.
Before showing this next set of data, let’s work through one example among the nine stocks:
If you had purchased shares of Home Depot Inc. HD, -0.39%
five years ago, you would have paid $193.70 a share if you went in at the close on Oct. 10, 2018. At that time, the company’s quarterly dividend was $1.03 cents a share, for an annual dividend rate of $4.12, which made for a then-current yield of 2.13%.
If you had held your shares of Home Depot for five years through Tuesday, your quarterly dividend would have increased to $2.09 a share, for a current annual payout of $8.36. The company’s dividend has increased at a compound annual growth rate (CAGR) of 15.2% over the past five years. In comparison, the S&P 500’s weighted dividend rate has increased at a CAGR of 6.24% over the past five years, according to FactSet.
That annual payout rate of $8.36 would make for a current dividend yield of 2.79% for a new investor who went in at Tuesday’s closing price of $299.22. But if you had not reinvested, the dividend yield on your five-year-old shares (based on what you would have paid for them) would be 4.32%. And your share price would have risen 54%. And if you had reinvested your dividends, your total return for the five years would have been 75%, slightly ahead of the 74% return for the S&P 500 SPX during that period.
Home Depot hasn’t been the best dividend grower among the nine stocks named by Justman, but it is a good example of how an investor can build income over the long term, while also enjoying capital appreciation.
Here’s the dividend CAGR comparison for the nine stocks:
This isn’t to say that Justman and Brown have held all of these stocks over the past five years. In fact, Lowe’s Cos. LOW, +0.27%
was added to the portfolio this year, as was United Parcel Service Inc. UPS, -0.16%.
But for most of these companies, dividends have compounded at relatively high rates.
When asked to name an example of a stock the fund had sold, Justman said he and Brown decided to part ways with Verizon Communications Inc. VZ, -0.94%
last year, “as we became concerned about its fundamental competitive position in its industry.”
Summing up the scene for dividend stocks, Justman said, “It seems this year the market is treating dividend stocks as fixed-income instruments. We think that is a short-term issue and that this is a great opportunity.”
A new mergers and acquisitions advisory firm launched last year by former Centerview Partners dealmakers has scored a big win by advising Cisco Systems on its $28 billion acquisition of cybersecurity firm Splunk.
Based in Palo Alto, California, Tidal Partners was started by technology bankers David Handler and David Neequaye. Their firm, which employs just two dozen people, according to its website, was the sole financial adviser to Cisco, while larger investment banking peers Qatalyst Partners and Morgan Stanley advised Splunk.
While at Centerview, Handler worked closely with Cisco for several years and advised on numerous deals, including Cisco’s $5 billion acquisition of NDS Group in 2012 and Cisco’s $3.7 billion purchase of AppDynamics in 2017.
“We’ve known David (Handler) and his partner David (Neequaye) for a very long time. They did a great job for us, and so we’ve had that relationship for a long time,” Cisco CEO Chuck Robbins said in an interview on Thursday.
Tidal’s win comes as more technology bankers decide to launch their own firms amid an overall slowdown in dealmaking in the sector. Three former Qatalyst Partners bankers launched a new technology-focused investment banking boutique called AXOM Partners earlier this week, Reuters reported.
Handler and Neequaye helped launch Centerview’s technology advisory group in 2008. The group went on to advise other major technology companies, including Cisco, Qualcomm Inc and Twilio.
Since its launch last year, Tidal Partners has advised on transactions, including ServiceNow Inc’s acquisition of G2K Group and Bloom Energy’s $550 million convertible notes offering.
Handler, who previously worked at UBS Group, sued Centerview after his departure over a pay dispute.
“The U.S. economy is enjoying ‘a boom in large-scale infrastructure [and] rebounding domestic business investment led by manufacturing.’”
— Morgan Stanley’s Zentner
At least one major investment bank has bought into Bidenomics.
President Joe Biden’s Infrastructure Investment and Jobs Act has seeped into the domestic economy, “driving a boom in large-scale infrastructure,” wrote Ellen Zentner, chief U.S. economist for Morgan Stanley, in a research note out late this week. Plus, she wrote, “manufacturing construction has shown broad strength.”
As a result Morgan Stanley now projects 1.9% gross domestic product (GDP) growth for the first half of this year. That’s some four times higher than the bank’s previous forecast for the first half of 2023 of 0.5%.
Infrastructure spending signed into law in 2021 marked an early legislative win for a president handed only a slim majority in Congress. It was followed up by another legislative banner for the incumbent: the Inflation Reduction Act, a climate change and healthcare-focused spending bill signed into law about a year ago. Much of the incentives in the laws are tied to domestic manufacturing and require U.S. hiring, sometimes at the expense of less-expensive or readily available goods from abroad.
As a result of these economic lifts, the Morgan Stanley MS, +0.22%
analysts also doubled their original estimate for GDP growth in the fourth quarter, to 1.3% from 0.6%. And they nudged up their forecast for GDP in 2024 by a tenth of a percent, to 1.4%.
“The narrative behind the numbers tells the story of industrial strength in the U.S,” Zentner wrote.
The White House has run with the theme of U.S. brick-and-mortar economic growth in recent weeks, increasingly leveraged by the president and his acolytes as “Bidenomics.” It’s a phrase originally used by Republicans to take a shot at the president, who has been saddled with high inflation and rising interest rates in his first term.
For now, the Biden team co-opted the term as a badge of honor as Biden has tried to tap into economic performance during recent road appearances. That included a speech to a union crowd at a shipyard in Philadelphia this past week.
Bidenomics and Morgan Stanley forecasts aside, wider polling shows that some Americans, likely feeling the lingering sting of inflation, aren’t yet convinced.
A Monmouth University poll released Wednesday showed only three in 10 Americans feel the country is doing a better job recovering economically than the rest of the world since the COVID-19 pandemic. Respondents were split on Biden’s handling of jobs and unemployment, with 47% approving and 48% disapproving of his performance.
The latest CNBC All-America Economic Survey, released Thursday, found that just 37% of respondents approved of Biden’s handling of the economy, while 58% disapproved. Some 20% of Americans agreed that the economy was excellent or good, while 79% said it was just fair or poor, CNBC’s poll found.
Republicans looking to challenge Biden and the Democrats in 2024 care less about Wall Street’s forecasts and more about Main Street’s polling, it would seem.
“Bidenomics is about blind faith in government spending and regulation,” Republican House Speaker Kevin McCarthy said in a statement Friday. “It’s an economic disaster where government causes decades-high inflation, high gas prices RB00, -0.32%,
lower paychecks and crippling uncertainty that leaves America worse off.”
A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.
New York CNN
—
Wall Street has been hit with a barrage of complex signals about the economy’s health over the past month. From banking turmoil to weakening jobs data to slowing inflation, and now the start of earnings season, investors have remained largely resilient.
But the Federal Reserve’s March meeting minutes revealed last week that officials believe the economy will enter a recession later this year. While that’s not new news to investors who have worried that a recession is on the horizon for the past year, it does mean that markets could take a turn for the worse.
So, how should investors protect their portfolios? Investors say there isn’t one asset that Wall Street should pile all their bets on, but there are fundamentals that should underlie their investment strategies.
Jimmy Chang, chief investment officer at Rockefeller Global Family Office, says he advises clients to be patient, defensive and selective when navigating the market.
In other words, investors should make decisions based on logic, not a fear of missing out.
“You chase these rallies and then it fizzles out — you’re left holding the bag,” he said.
Chang also recommends that investors stay defensive by investing in high-quality blue chip stocks with solid balance sheets and keep dry powder.
Doug Fincher, portfolio manager at Ionic Capital Management, says investors should brace their portfolios against inflation.
The Personal Consumption Expenditures price index rose 5% for the 12 months ended in February, showing that inflation remains much higher than the Fed’s 2% target.
Coupled with the fact that the central bank has signaled that it plans to pause interest rate hikes sometime this year, it’s possible inflation could prove stickier than Wall Street expects.
“It is the boogeyman of traditional investments,” Fincher said.
He manages the Ionic Inflation Protection exchange-traded fund, which seeks to specifically perform well during periods of high inflation. The portfolio’s core exposure is inflation swaps, which are transactions in which one investor agrees to swap fixed payments for floating payments tied to the inflation rate. The fund also invests in short-duration Treasury Inflation Protected Securities.
Megan Horneman, chief investment officer at Verdence Capital Advisors, says that her firm has hedged its portfolio in cash. A well-known haven, cash is a better alternative to other perceived safe spots like gold, which tends to be volatile and run up too fast, she said.
Investors have rushed into money market funds in recent weeks after the banking turmoil both shook their confidence in the banking system and sent ripples through the market.
“Cash is actually earning you something at this point,” Horneman said. “You have to look long term.”
Earnings season kicked off Friday with a bonanza of earnings from the nation’s largest banks.
Perhaps most noteworthy out of the bunch was JPMorgan Chase, which reported record revenue and an earnings beat for its latest quarter.
The bank has $3.67 trillion in assets, making it the largest bank in the country and a bellwether for the economy. Strong earnings reports from the New York-based bank and its peers including Wells Fargo, Citigroup and PNC Financial Services have shown a promising start to the earnings season.
Charles Schwab, Goldman Sachs, Bank of America and Morgan Stanley report next week.
Here are some key takeaways from JPMorgan Chase’s first-quarter earnings:
The company guided net interest income to be about $81 billion in 2023, up $7 billion from its previous estimate. That’s especially important because this earnings season is all about guidance, as investors try to gauge whether the economy is headed for a recession and which companies will be able to weather a potential downturn.
CEO Jamie Dimon said in the post-earnings conference call that while financial conditions are a bit tighter after the collapse of Silicon Valley Bank and Signature Bank, he doesn’t see a credit crunch. But chances of a recession are now higher, he said.
The company said that its portfolio’s exposure to the office sector is less than 10%, addressing concerns that the $20 trillion commercial real estate industry could be the next space to see turmoil.
Monday: Empire State manufacturing index and homebuilder confidence index. Earnings report from Charles Schwab (SCHW).
Tuesday: Earnings reports from Bank of America (BAC), Goldman Sachs (GS), Johnson & Johnson (JNJ), Netflix (NFLX), United Airlines (UAL) and Western Alliance Bancorp (WAL).
Wednesday: Earnings reports from Citizens Financial Group (CFG), Morgan Stanley (MS), Tesla (TSLA) and International Business Machines (IBM). Speech from NY Federal Reserve President John Williams.
Thursday: Philadelphia Fed manufacturing index, jobless claims, mortgage rates, US leading economic indicators and existing home sales. Earnings reports from AutoNation (AN) and American Express (AXP).
Friday: Manufacturing PMI and services PMI. Earnings report from Procter & Gamble (PG).
Wall Street bonuses fell 26% in 2022, the largest drop since the collapse of Lehman Brothers in 2008, as New York state and city officials dial back their expectations for the economic impact of the securities industry.
While many people bemoan the salaries commanded by the Big Apple’s white-shoe bankers, the financial sector provides an economic boost to city and state budgets, helping to find public services that touch the lives of residents.
Now, with the banking sector absorbing the impact of the collapse of Silicon Valley Bank and Signature Bank in recent weeks and of a lack of investment bank deal-making, 2023 isn’t looking particularly strong. The current malaise may signal what’s in store for bonuses and employment in the coming year.
Rahul Jain, state deputy comptroller, said state and city official are baking in conservative projections for a decline in Wall Street profits and bonuses in 2023 partly because much remains unknown such as when the Fed will pause its interest rate hikes or possibly cut them.
“What we can’t tell is what the Fed will do with interest rates,” Jain told MarketWatch. “It doesn’t seem like we’ll return to the levels of 2020 and 2021, but there’s hope that 2023 will level off near 2022.”
While Wall Street and the banking sector is challenged, the overall economy remains relatively healthy, as other sectors such as travel make up for weakness in the securities industry in the New York area.
“The broad economy still matters and it’s still resilient,” he said. “People still want to do things.”
Like the FDIC and other regulators, the comptroller’s office is keeping an eye on the commercial real estate market, which will hinge on how much credit is available for loan refinancings.
“Any kind of credit crunch would make the situation worse,” Jain said.
Even with the cut, the bonus alone eclipses average U.S. wages. Full-time employees in management, professional and related occupations have the highest median weekly earnings reported by the Bureau of Labor Statistics, and the median income for this group across the U.S. was $1,729 a week, or $89,908 a year, in the fourth quarter of 2022 for men, and $1,316 per week, or $68,432 per year, for women.
Wall Street banker bonuses jumped by 28% in 2020 and grew by another 12% in 2021, only to fall 26% in 2022. That is the largest drop since the 43% fall in 2008, the year Lehman Brothers collapsed and triggered a global financial crisis.
At the same time, employment in the securities industry climbed to 190,800 by the end of 2022, the highest level in at least 20 years and surpassing the previous 20-year high of 188,900 in 2007.
Collectively, Wall Street firms generated $25.8 billion in profits in 2022, less than half the $58.4 billion produced in 2021 as the impact of inflation, the war in Ukraine and supply constraints bit into deal-making.
The securities industry accounted for about $22.9 billion in state tax revenue, or 22% of the state’s tax collections in fiscal 2021-’22, and $5.4 billion in city tax revenue, or 8% of total tax collections over the same period.
New York State Comptroller Thomas P. DiNapoli estimated a drop of $457 million in 2022 tax income for the state and of $208 million for New York City, when measured against the lucrative year of 2021.
With recession in the headlines and markets selling off in 2022, however, policy makers have already adjusted their expectations for tax income.
New York Gov. Kathy Hochul’s proposed budget assumes that bonuses in the broader finance and insurance sector will drop by 25.2% in 2022-’23, while the city’s 2023 financial plan assumes a decrease of 35.6% for the securities industry.
“While lower bonuses affect income tax revenues for the state and city, our economic recovery does not depend solely on Wall Street,” DiNapoli said in a statement. “Employment in leisure and hospitality, retail, restaurants and construction must continue to improve for the city and state to fully recover.”
The fate of Wall Street’s bonuses in 2023 remains tied up in what markets and interest rates do for the balance of the year. Based on the storm clouds over the banking sector now, it’s possible bonuses could fall again.
In one positive sign, the equities market has managed to post gains so far in 2023 after bruising losses in 2022. At last check, the S&P 500 SPX, +0.57%
is up 5.6% in 2023, while the Nasdaq COMP, +0.73%
has risen 14.9%. The Financial Select Sector SPDR exchange-traded fund XLF, -0.22%
is down 6.6% so far in 2023.
After Wall Street bonuses fell 43% in 2008, they rebounded by 39% in 2009. Such a rapid recovery may not be in the cards for the coming year, however.
Member firms at the New York Stock Exchange generated profits of $13.5 billion in the first half of 2022, down by more than half from year-ago levels, according to an October report on the securities industry in New York by the comptroller’s office.
Revenue on trading, underwriting and securities offerings dropped about 48% over the same time period, while global debt offerings dropped by 17%.
At the same time, interest-rate expenses tripled as the U.S. Federal Reserve boosted interest rates.
“Despite this uncertainty, the city’s latest forecast predicts annual profits to average $21 billion over the next five years, comparable to the 10-year pre-pandemic average of $20.3 billion,” the study said.
The bonus pool of $33.7 billion in 2022 fell 21% from 2021’s record of $42.7 billion, the largest drop since the Great Recession.
UBS is bringing back its former chief executive, Sergio Ermotti, to manage the hugely complex and risky task of completing the bank’s emergency takeover of rival Credit Suisse
(CS).
The surpriseappointment, announced Wednesday, highlights the scale of the challenge facing the Swiss lender as it executes a first-of-its-kind merger of two global banks with combined assets of nearly $1.7 trillion.
The Swiss government engineered the rescue 10 days ago as Credit Suisse teetered on the brink of collapse, a failure that would have rocked a global financial system already reeling from the second-biggest American banking collapse in history.
Ermotti was UBS
(UBS) CEO between 2011 and 2020 and is credited with successfully overhauling the bank following its bailout during the 2008 financial crisis. He is seen as a safe pair of hands capable of turningaround embattled Credit Suisse.
His second stint in the top job, which begins April 5, means the end of current CEO Ralph Hamers’ tenure after just two and a half years in the role, during which time the bank has delivered successive record results.
Hamers “has agreed to step down to serve the interests of the new combination, the Swiss financial sector and the country,” UBS said in a statement. Hamers will remain at the lender for a transition period.
UBS chairman Colm Kelleher thanked Hamers for his contribution but said the board felt Ermotti was “the better horse” for such a massive integration. “There’s a huge amount of risk in integrating these businesses,” Kelleher saidat a press conference.
As a first order of business, Ermotti will need to cut thousands of jobs and downsize Credit Suisse’s investment bank, while aligning it with a more conservative risk culture — a task he is familiar with.
During his previous tenure as CEO, Ermotti “transformed” UBS’ investment bank “by cutting its footprint and achieved a profound culture change within the bank which allowed it to regain the trust of clients and other stakeholders, while restoring people’s pride in working for UBS,” the lender said in its statement.
Kelleher and Hamers both highlighted the cultural differences with Credit Suisse. UBS’ smaller rival has been plagued by scandals and compliance failures in recent years that wiped out its profit and cost several top managers their jobs.
In a fresh blow to Credit Suisse’s reputation, a US Senate investigation published Wednesday found that the bank is complicit in ongoing tax evasion by ultra-wealthy Americans.
“We do not want to import a bad culture into UBS,” Kelleher told reporters, adding that UBS would put all Credit Suisse employees “through a culture filter, to make sure we don’t import something into our ecosystem that causes culture issues.”
Hamers said integrating the banks is something he would have “loved to do,” but that he supported the board’sdecision, which was in the best interests of the new entity and its stakeholders — including Switzerland and its financial sector.
The merger is high-stakes for Switzerland’s economy, too. The combined bank’s assets are worth twice as much as the country’s annual output, while local deposits in the new entity equal 45% of GDP — an enormous amount even for a nation with healthy public finances and low levels of debt.
In the Wednesday statement, Kelleher said the deal “imposes new priorities on us,” while supporting UBS’ existing strategy.
He added: “With his unique experience, I am very confident that Sergio [Ermotti] will deliver the successful integration that is so essential for both banks’ clients, employees and investors, and for Switzerland.”
Ermotti told reporters he felt a “call of duty” to accept the role and that during his previous stint as CEO he had believed that an acquisition of this kind was the “right next move for UBS.”
“I always felt that the next chapter I wanted to write back then was a chapter of doing a transaction like this one.”
Ermotti is currently chairman of Swiss Re
(SSREF) and intends to step down after the insurer’s annual general meeting next month.
Switzerland’s biggest bank, UBS, has agreed to buy its ailing rival Credit Suisse in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of two American banks earlier this month.
“UBS today announced the takeover of Credit Suisse,” the Swiss National Bank said in a statement. It said the rescue would “secure financial stability and protect the Swiss economy.”
UBS is paying 3 billion Swiss francs ($3.25 billion) for Credit Suisse, about 60% less than the bank was worth when markets closed on Friday. Credit Suisse shareholders will be largely wiped out, receiving the equivalent of just 0.76 Swiss francs in UBS shares for stock that was worth 1.86 Swiss francs on Friday.
Extraordinarily, the deal will not need the approval of shareholders after the Swiss government agreed to change the law to remove any uncertainty about the deal.
Credit Suisse
(CS) had been losing the trust of investors and customers for years. In 2022, it recorded its worst loss since the global financial crisis. But confidence collapsed last week after it acknowledged “material weakness” in its bookkeeping and as the demise of Silicon Valley Bank and Signature Bank spread fear about weaker institutions at a time when soaring interest rates have undermined the value of some financial assets.
Shares in the 167-year-old bank fell 25% over the week, money poured from investment funds it manages and at one point account holders were withdrawing deposits of more than $10 billion per day, the Financial Times reported. An emergency loan of nearly $54 billion from the Swiss National Bank failed to stop the bleeding.
But it did “build a bridge” to the weekend, to allow the rescue to be pieced together, Swiss officials said Sunday night.
“This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue,” UBS chairman Colm Kelleher told reporters.
“It is absolutely essential to the financial structure of Switzerland and … to global finance,” he told reporters.
Desperate to prevent the meltdown spreading through the global financial system on Monday, Swiss authorities initiated the search for a private sector solution, with limited state support, while reportedly considering Plan B — a full or partial nationalization.
“Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome,” Credit Suisse chairman Axel Lehmann said in a statement.
“This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute on its new strategy, we are forced to reach a solution today that provides a durable outcome.”
The emergency takeover was agreed to after a days of frantic negotiations involving financial regulators in Switzerland, the United States and United Kingdom. UBS
(UBS) and Credit Suisse rank among the 30 most important banks in the global financial system, and together they have almost $1.7 trillion in assets.
Financial market regulators around the world cheered UBS’ action to take over Credit Suisse.
US authorities said they supported the action and worked closely with the Swiss central bank to assist the takeover.
“We welcome the announcements by the Swiss authorities today to support financial stability,” said US Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell, in a joint statement. “The capital and liquidity positions of the US. banking system are strong, and the US financial system is resilient.”
Christine Lagarde, President of the European Central Bank, said the banking sector remains resilient but the ECB stands at the ready to help banks maintain enough cash on hand to fund their operations if the need arises.
“I welcome the swift action and the decisions taken by the Swiss authorities,” Lagarde said. “They are instrumental for restoring orderly market conditions and ensuring financial stability.
The Bank of England said it welcomed the measures taken by the Swiss authorities “to support financial stability.”
“We have been engaging closely with international counterparts throughout the preparations for today’s announcements and will continue to support their implementation,” it said in a statement. “The UK banking system is well capitalized and funded, and remains safe and sound.”
The global headquarters of UBS and Credit Suisse are just 300 yards apart in Zurich but the banks’ fortunes have been on very different paths recently. Shares of UBS have climbed 15% in the past two years, and it booked a profit of $7.6 billion in 2022. It had a stock market value of about $65 billion on Friday, according to Refinitiv.
Credit Suisse shares have lost 84% of their value over the same period, and last year it posted a loss of $7.9 billion. It was worth just $8 billion at the end of last week.
Dating back to 1856, Credit Suisse has its roots in the Schweizerische Kreditanstalt (SKA), which was set up to finance the expansion of the railroad network and industrialization of Switzerland.
In addition to being Switzerland’s second biggest bank, it looks after the wealth of many of the world’s richest people and offers global investment banking services. It had more than 50,000 employees at the end of 2022, 17,000 of those in Switzerland.
The Swiss National Bank said it would provide a loan of 100 billion Swiss francs ($108 billion) to UBS and Credit Suisse to boost liquidity.
UBS Chief Executive Ralph Hamers will be CEO of the combined bank, and Kelleher will serve as chairman.
The takeover will reinforce the position of UBS as the world’s leading wealth manager with $5 trillion of invested assets, and boost its ambition to grow in the Americas and Asia. UBS said it expects to generate cost savings of $8 billion per year by 2027. Credit Suisse’s investment bank is in the crosshairs.
“Let me be clear. UBS intends to downsize Credit Suisse’s investment banking business and align it with our conservative risk culture,” Kelleher said.
Shares of JPMorgan Chase and Goldman Sachs are retreating Friday morning, sending the Dow Jones Industrial Average into negative territory. The Dow DJIA, -1.19%
was most recently trading 199 points (0.6%) lower, as shares of JPMorgan Chase JPM, -3.78%
and Goldman Sachs GS, -3.67%
have contributed to the index’s intraday decline. JPMorgan Chase’s shares are off $3.52, or 2.7%, while those of Goldman Sachs have dropped $8.17, or 2.6%, combining for an approximately 77-point drag on the Dow. Other components contributing significantly to the decline include American Express AXP, -2.62%,
Travelers TRV, -4.17%,
and Caterpillar CAT, -1.69%.
A $1 move in any one of the 30 components of the index equates to a 6.59-point swing.
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Missing Chinese CEO Bao Fan is cooperating in an investigation by “certain authorities in the People’s Republic of China,” his company said in a statement Sunday.
China Renaissance Holdings Limited, of which Bao is the chairman and CEO, said the company has been trying to locate him and ascertain his status since the announcement he disappeared on February 16.
“The Board would like to reiterate that the business and operations of the Group are continuing normally,” a statement from the company said. “The Company will duly cooperate and assist with any lawful request from the relevant PRC authorities, if and when made.”
Bao is not the first business executive to go missing, in a country where they can suddenly and mysteriously disappear. Real estate tycoon Ren Zhiqiang disappeared for several months after he allegedly spoke out against Chinese leader Xi Jinping in 2020. He was then jailed for 18 years. Anbang chairman Wu Xiaohui was reportedly detained by authorities as part of a government investigation. He too was eventually jailed for 18 years.
The company, an investment bank and private equity firm based in Beijing, added it is monitoring the situation and will release further statements “when appropriate.”
Bao is known as a veteran deal maker in China’s tech industry. He helped broker the 2015 merger between two of the country’s leading food delivery services, Meituan and Dianping. Today, the combined company’s “super app” platform is ubiquitous in China.
Bao started his investment banking career in the late 1990s at Morgan Stanley and Credit Suisse and later went on to serve as an adviser to the stock exchanges in Shanghai and Shenzhen.
His team has also invested in US-listed Chinese electric vehicle makers Nio
(NIO) and Li Auto, and helped Chinese internet giants Baidu
(BIDU) and JD.com
(JD) complete their secondary listings in Hong Kong.
UBS Group AG on Tuesday reported a surprise rise in fourth-quarter profit as its wealth-management arm attracted billions in new client money, offsetting a slump at its investment bank amid macroeconomic headwinds.
UBSG, -2.80%
reported a net profit of $1.65 billion in the three months to the end of December, up from $1.35 billion for the same period a year earlier.
Revenue was $8.03 billion compared with $8.71 billion in the fourth quarter of 2021.
It meant the Zurich-based bank beat 4Q estimates of net profit of $1.28 billion and revenue at $7.98 billion, according to analysts’ consensus provided by the company.
UBS said it took on $23.3 billion in net new fee-generating assets at its key wealth-management business in the quarter, at a time when its local rival Credit Suisse Group AG had struggled with client withdrawals.
Profit before tax at wealth management jumped 88% to $1.06 billion, it added.
It also attracted $25 billion in net new money at its asset-management business, UBS said.
But at its investment bank, profit before tax tumbled to around $100 million, down 84%, as dealmaking slumped.
The bank cited persistent inflation, rapid central bank tightening, the Ukraine war, and geopolitical tensions that affected asset-pricing levels and investor sentiment in the year.
“While the macroeconomic outlook remains uncertain, our operational resilience, capital strength and capital generation put us in a great position to serve our clients, fund growth and deliver strong capital returns to shareholders,” Chief Executive Ralph Hamers said.
Its common equity tier 1 ratio, a measure of financial strength, at the end of December was 14.2%, down from 14.4% at the third quarter.
The company said it would propose a dividend of $0.55 for 2022, a 10% year-on-year increase.
The lender added that it would remain committed to a progressive dividend and expects to repurchase more than $5 billion of shares in 2023, after $5.6 billion in 2022.
A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.
New York CNN
—
Investors are pretty bad at living in the moment. We’re currently in the thick of fourth quarter earnings reports, but traders don’t seem to care about how companies fared during the final months of 2022. They’re more focused on what’s going to happen in the future.
Case-in-point: Earnings calls, where top execs pontificate about their economic outlook, have been moving markets more than earnings-per-share and revenue reports.
What’s happening: The mantra on Wall Street has become, as Ritholtz Wealth Management CEO Josh Brown puts it, “ignore the numbers, wait for the call.”
Microsoft reported great fourth quarter earnings last Tuesday that beat Wall Street’s expectations, but the stock dropped 4% the next day. That’s because CEO Satya Nadella got on an earnings call with investors and warned of a slowdown in the company’s cloud business and software sales. His negative outlook came just as the company announced it was letting go of 10,000 employees, further spooking investors.
Other tech companies are following suit — while things are fine for the time being, they’re reporting that the future is foggy.
IBM stock sank 4.5% last Thursday even as the tech titan beat Wall Street’s Q4 expectations. The reason for the drop might be because Jim Kavanaugh, IBM’s finance chief, warned on the conference call that it would be wise to expect the company’s total 2023 revenue growth to be on the low end. IBM also announced layoffs – the company said it plans to cut around 3,900 jobs or 1.5% of its total workforce.
The economic environment is rapidly changing. CEOs on earnings calls are talking more about recession than inflation now, according to an analysis by Purpose Investments.
Wall Street is also beginning to fear an economic downturn more than painful rate hikes and as a result investors are putting more weight on CEO and CFO forecasts.
And they’re looking bleak. As of Friday, 19 companies in the S&P 500 had issued forward earnings-per-share guidance for the first quarter of 2023, according to FactSet data. Of these 19 companies, 17, or 89%, issued negative guidance. That’s well above the 5-year average of 59%.
“My best guess is that cautious tones on conference calls will be the norm, not the exception,” wrote Brown in a recent post. These slowdowns have been partially factored into stock prices, he said, “but not necessarily in full.”
The upside: Market reaction appears to go both ways. American Express missed on earnings last week but said that credit card spending was hitting new records and that the future looks bright. The stock shot up more than 10%.
Prices at the pump typically fall during the coldest months as wintry weather keeps Americans off the roads. But something unusual is happening this year, reports my colleague Matt Egan. Gas prices are rocketing higher.
The national average for regular gas jumped to $3.51 a gallon on Friday and remained there through the weekend, according to AAA. Although that’s a far cry from the record of $5.02 a gallon last June, gas prices have increased by 12 cents in the past week and 41 cents in the past month.
All told, the national average has climbed by more than 9% since the end of last year – the biggest increase to start a year since 2009, according to Bespoke Investment Group.
Why are gas prices jumping? It’s not because of demand, which remains weak, even for this time of the year. Instead, the problem is supply.
The extreme weather in much of the United States near the end of last year caused a series of outages at the refineries that produce the gasoline, jet fuel and diesel that keep the economy humming. US refineries are operating at just 86% of capacity, down from the mid-90% range at the start of December, according to Bespoke.
Beyond the refinery problems, oil prices have crept higher, helping to drive prices at the pump northward. US oil prices have jumped about 16% since December partially due to expectations of higher worldwide demand as China relaxes its Covid-19 policies and also because oil markets are no longer receiving massive injections of emergency barrels from the Strategic Petroleum Reserve.
What’s next: Expect more pain at the pump. Patrick De Haan, head of petroleum analysis at GasBuddy, worries the typical springtime jump in prices will be pulled forward.
“Instead of $4 a gallon happening in May, it could happen as early as March,” De Haan told CNN. “There is more upside risk than downside risk.”
A return of $4 gas would be painful to drivers and could dent consumer confidence. Moreover, pain at the pump would complicate the inflation picture as the Federal Reserve debates whether to slow its interest rate hiking campaign.
Goldman Sachs had a rough time in 2022, and the investment bank’s CEO, David Solomon, is being punished for it. Well, kind of.
Solomon’s $2 million annual salary is unchanged. But the company said that his “annual variable compensation,” paid in a mix of performance-based restricted stock units and cash, was well below 2021 levels.
Goldman Sachs (GS) shares fell more than 10% in 2022. The company also reported a 16% drop in revenue in the fourth quarter and profit plunge of 66% earlier this month, mainly due to the lack of merger activity and initial public offerings.
Maybe Solomon can make that extra $10 million with payouts from his burgeoning DJ career.
