13 June 2025 | 4:48PM EDT Fed Chatterbox: June Edition The Fed Chatterbox highlights notable comments on key topics from Fed officials since the last FOMC meeting. A few themes stand out: Jan Hatzius +1(212)902-0394 | jan.hatzius@gs.com Goldman Sachs & Co. LLC Alec Phillips +1(202)637-3746 | alec.phillips@gs.com Goldman Sachs & Co. LLC David Mericle +1(212)357-2619 | david.mericle@gs.com Goldman Sachs & Co. LLC Jessica Rindels +1(972)368-1516 | jessica.rindels@gs.com Goldman Sachs & Co. LLC Investors should ...

12 June 2025 | 9:22AM EDT US Daily: A Slightly Smaller Tariff Effect (Mericle) Jan Hatzius +1(212)902-0394 | jan.hatzius@gs.com Goldman Sachs & Co. LLC Alec Phillips +1(202)637-3746 | alec.phillips@gs.com Goldman Sachs & Co. LLC David Mericle +1(212)357-2619 | david.mericle@gs.com Goldman Sachs & Co. LLC Ronnie Walker +1(917)343-4543 | ronnie.walker@gs.com Goldman Sachs & Co. LLC Manuel Abecasis +1(212)902-8357 | manuel.abecasis@gs.com Goldman Sachs & Co. LLC Elsie Peng +1(212)357-3137 | elsie.peng@gs.com G ...

Investment Rating - The report maintains a Neutral rating for Oracle Corp. (ORCL) with a price target raised to $195 from $145, reflecting a potential upside of 10.6% from the current price of $176.38 [1]. Core Insights - Oracle's strong F4Q results exceeded consensus expectations in revenue (+2%) and gross profit (+1%), although free cash flow (FCF) was significantly below expectations due to a 140% increase in capital expenditures [1]. - The company anticipates a 100 basis points increase in FY26 revenue guidance, with a solid performance in remaining performance obligations (RPO), which grew 41% year-over-year [1]. - Oracle's cloud infrastructure (IaaS) is expected to grow over 70% in FY26, driven by a 62% increase in OCI consumption, indicating strong demand [1]. - The company aims to double its RPO in FY26, excluding Stargate contributions, reflecting a robust OCI pipeline [1]. - Despite the positive outlook, there are concerns regarding the ambitious growth targets for both IaaS and SaaS, which may be challenging to achieve given the current macroeconomic constraints [1]. Summary by Sections Financial Performance - Revenue forecasts for Oracle are updated to $57.4 billion for FY25, $67.1 billion for FY26, $80.6 billion for FY27, and $92.8 billion for FY28 [3]. - EBITDA is projected to grow from $31.2 billion in FY25 to $54.5 billion in FY28, indicating a strong upward trend [3]. - The report highlights a significant increase in capital expenditures, projected at approximately $25 billion for FY26, raising questions about its impact on future earnings [1][15]. Market Position and Strategy - Oracle is positioned as a strong player in the IaaS market, gaining traction with major customers like Uber and TikTok, despite being a distant fourth compared to hyperscalers [15]. - The company is also focusing on its strategic back-office applications, which are experiencing steady growth, particularly through its NetSuite and Fusion ERP offerings [15]. - Long-term targets include achieving over $104 billion in revenue by FY29, with a commitment to AI investments underpinning this growth [15]. Valuation Metrics - The report provides various valuation metrics, including a P/E ratio of 26.0 for FY25, decreasing to 17.9 by FY28, indicating a potential for improved valuation as earnings grow [9]. - Free cash flow yield is projected to improve from negative in FY25 to 0.9% by FY28, reflecting a recovery in cash generation capabilities [9]. - The report notes that Oracle's valuation at 22x FY27 P/E reflects a balanced risk-reward scenario until further evidence of growth materializes [15].

Investment Rating - The report does not explicitly state an investment rating for the industry but provides insights into market conditions and forecasts for the S&P 500 [2][4]. Core Insights - The S&P 500 is forecasted to reach 6,500 by 2026, with adjusted EPS expected to be $280 [7]. - The report highlights a projected 12-month total return of 9% for the S&P 500, compared to a historical median of 13% [11]. - Economic growth forecasts indicate a rise in the US effective tariff rate by 13 percentage points, impacting market dynamics [30]. - The report notes that the US real GDP growth is expected to be 2.4% in 2024 and 2.2% in 2025 [34]. - The equity market is currently positioned lightly at -1.3 standard deviations, indicating potential for upward movement [20]. Summary by Sections Economy and Earnings - The report discusses the correlation between macroeconomic factors and individual stock returns, with macro factors explaining 42% of median S&P 500 stock returns [13]. - It also mentions that actual 1Q EPS growth was 12%, significantly above the consensus of 6% [45]. Valuation - Investors are currently assigning a valuation premium for quality factors, with various metrics indicating a preference for companies with strong fundamentals [17]. Money Flow and Demand for Stocks - The report indicates that market breadth has narrowed, which could signal momentum risk for the S&P 500 [23][27]. Corporate Uses of Cash - Companies are increasingly focused on passing through increased input costs to maintain profit margins, with a significant percentage indicating plans to adjust prices accordingly [61]. AI Adoption - The report does not provide specific insights on AI adoption within the industry but emphasizes the importance of companies with pricing power in the current economic environment [65].

Investment Rating - The report indicates a negative trend in global equity fund flows, with net outflows of $10 billion for the week ending June 11, contrasting with inflows of $5 billion in the previous week [3] Core Insights - There were significant net outflows from equity funds, particularly in G10 markets, while fixed income funds experienced robust inflows, particularly in emerging markets [3][9] - Emerging market local currency bond funds saw strong inflows, indicating a preference for these assets amidst the broader market trends [3][9] - The report highlights a shift in investor preference towards short-duration bond funds over long-duration options [3][9] Summary by Sections Global Fund Flows - Total equity experienced net outflows of $18.2 billion over the past four weeks, with a weekly outflow of $10 billion [9] - Fixed income funds saw inflows of $77.1 billion, with $15.1 billion in the latest week, driven by demand for credit products [9] - Money market funds had a decline of $9.1 billion in assets [9] Equity Flows - Developed markets saw significant outflows, particularly from US equities, which had outflows of $24.2 billion [9] - Emerging markets showed mixed results, with mainland China experiencing outflows of $7.2 billion, while Taiwan and Brazil saw inflows of $4.7 billion and $0.8 billion respectively [9] Fixed Income Flows - Total fixed income inflows were $77.1 billion, with $64.2 billion from developed markets [9] - Emerging market fixed income funds had inflows of $10.8 billion, with local currency bonds being particularly favored [9] FX Flows - Cross-border FX flows remained elevated at $56.4 billion, with G10 currencies attracting strong inflows [11] - The report notes that the South Korean won (KRW) saw the strongest net inflows among Asian currencies [11] Sector Flows - Consumer goods funds saw the largest net inflows, while technology funds experienced the greatest net outflows [3][9] - The report indicates a notable preference for sectors such as consumer goods and utilities, contrasting with the outflows from technology and financial sectors [9]

13 June 2025 | 7:27PM BST Global Rates Trader Inflation Offers Relief, Oil Offers Risks Inflation relief for global bond markets was short-lived as geopolitical tensions saw oil prices move sharply higher into the weekend. Even with some improvement in the underlying growth versus inflation trade-off and signs of duration risk appetite finding better footing, the macro impediments to a sharp move lower in US yields remain largely in place. Heading into the June FOMC decision, we continue to think any sustai ...

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies Core Insights - The report highlights the ongoing monetization of AI applications, with software vendors beginning to charge for AI software while balancing commercialization and user expansion [2][6] - The monthly active users (MAU) of single ToC AI applications have surpassed 10 million, with a paying ratio ranging from 3% to 13% [6][13] - AI pricing strategies vary, with ToC AI tools priced between US$20 and US$200 per user annually, while ToB applications range from US$80 to US$1,000 per user per year [7][28] - The emergence of multiple AI models in China has reduced training and inferencing costs, making AI more accessible to users [2][17] Summary by Sections Monetization Progress - AI software vendors are starting to charge for their products, with the revenue contribution from AI software still low, ranging from single digits to high teens [6][19] - The number of enterprise clients for single AI software is targeted to exceed 1,000 units this year [16] Pricing Strategy - ToC AI tools are generally priced between US$20 and US$200 per user annually, while ToB applications charge between US$3,000 and US$20,000 per enterprise per year [7][28] - Vendors often provide trial periods of 7 to 30 days to attract users [7] User Cases - The report categorizes AI applications into four segments: AI creation, AI productivity, AI industry tools, and AI enterprise services [10][34] - Key user cases include AI search, video creativity, productivity tools for consumers, and enterprise applications in finance, HR, and procurement [2][10] Competitive Landscape - Companies like Kingsoft Office, Meitu, Wondershare, and iFlytek are identified as early beneficiaries of AI monetization [3][6] - The competition is intensifying as platform vendors offer general AI assistants with multiple features, challenging specialized AI application vendors [19] Future Outlook - The report suggests that software vendors view AI as a key growth driver in the coming years, with expectations for further reductions in API token fees and increased user adoption [6][19] - The focus for ToB vendors is on generating higher ROI through AI tools that can perform complex tasks independently [18]

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies within it Core Insights - The May core CPI rose by 0.13% month-over-month, which was below expectations, with the year-over-year rate increasing to 2.79% [2][3] - Declines in airfares (-2.7%) and used car prices (-0.5%) were noted, attributed to softer demand in business and tourism travel [2][3] - The report estimates that tariff increases have raised CPI components exposed to these tariffs by an average of 1.2%, contributing 0.04 percentage points to monthly core CPI inflation over the last three months [2][3][7] - The core PCE price index is estimated to have risen by 0.18% in May, corresponding to a year-over-year rate of +2.62% [8] Summary by Relevant Sections CPI Analysis - The headline CPI rose by 0.08%, influenced by a 1.0% decline in energy prices and a 0.3% increase in food prices [7] - The core CPI components that negatively impacted the overall index included public transportation (-2.5%), apparel (-0.4%), and used cars (-0.5%), which collectively weighed down the core by 7 basis points [3] Price Index Estimates - The report anticipates that the headline PCE price index increased by 0.14% in May, reflecting a year-over-year increase of 2.29% [8] - Market-based core PCE is estimated to have risen by 0.22% in May [8]

Investment Rating - The report suggests that platinum prices are likely to fall back within the historical range of $800-$1,150 per troy ounce, indicating a cautious outlook on sustained price increases [1][10][12]. Core Insights - The recent surge in platinum prices to $1,280 per troy ounce was primarily driven by speculative and ETF demand, making a sustained breakout unlikely due to price sensitivity in key markets, particularly China [6][12]. - Chinese demand for platinum is highly price-sensitive, with significant buying occurring at lower prices, which has contributed to the metal's range-bound trading over the past decade [4][18]. - The automotive sector is facing downside pressure on platinum demand due to China's rapid transition to electric vehicles (EVs), which reduces the long-term need for platinum in autocatalysts [26][32]. - Global platinum supply is expected to remain stable to moderately higher, primarily driven by South African production, which constitutes about 70% of global output [2][33]. Summary by Sections Price Dynamics - Platinum prices have historically fluctuated between $800 and $1,150 per troy ounce, with a recent spike attributed to speculative trading and ETF investments [1][10][12]. - The World Platinum Investment Council (WPIC) estimates a supply deficit of approximately 1 million troy ounces, or about 20% of annual mining production, for the current year [13]. Demand Factors - Chinese demand, which accounts for around 60% of new annual platinum production, is significantly influenced by price levels, leading to reduced purchases when prices rise [4][18]. - The shift towards EVs in China is expected to diminish long-term demand for platinum in the automotive sector, while increasing scrap availability from retired internal combustion engine (ICE) vehicles [26][32]. Supply Outlook - The report anticipates stable to moderately higher global platinum supply unless South African power constraints re-emerge, with guidance from major miners indicating a moderate increase in production [2][33]. - South Africa's platinum production is largely a byproduct of other metals, and the profitability of mining operations is influenced by the overall PGM basket price rather than solely the platinum price [45][49].

Investment Rating - The report maintains a "Buy" rating on Meituan, JD, Alibaba, Guming, Mixue, and Yum China, with specific target prices set for each company [18][24][25][26][27][36]. Core Insights - The food delivery industry in China has seen a significant increase in daily order volumes, reaching approximately 120 million, driven by competitive subsidies and evolving consumer behavior [2][20]. - Meituan is expected to maintain its leadership in the food delivery market, with a projected market share of 60-65%, while JD and Taobao Instant Shopping/Ele.me are estimated to hold 10-15% and 25-28% market shares, respectively [11][18]. - The competition among food delivery platforms has intensified, particularly between Meituan, JD, and Taobao Instant Shopping, leading to aggressive subsidy strategies and increased order volumes [2][8][10]. Summary by Sections Market Dynamics - The food delivery market has expanded due to platform subsidies, resulting in an increase of around 30 million incremental daily orders, with 15 million of these being beverage orders, which are less likely to sustain post-subsidy normalization [12][20]. - The effective take rate for merchants in the industry has decreased to the low 20% range, down from mid-20% levels, indicating increased pressure on margins due to competition [10]. Company Strategies - Meituan has shifted to more aggressive strategies to defend its market share, including targeted subsidies and differentiated offerings [8]. - JD has ramped up its order volumes to 25 million daily, leveraging its delivery capabilities and expanding its on-demand retail offerings [24]. - Taobao Instant Shopping has initiated aggressive subsidy campaigns to enhance its market position, benefiting from traffic support from its main apps [10]. Long-term Projections - The expert forecasts that JD's loss per order will peak in Q2 2025, with gradual improvements expected by Q4 2025 [11]. - The long-term competitive landscape suggests that Meituan will continue to dominate, while JD and Taobao Instant Shopping will need to adapt to maintain their market positions [11][18].