Core Viewpoint - Goldman Sachs believes that excluding tariff impacts, inflation is close to the 2% policy target, and the trend of a cooling labor market remains unchanged, supporting the logic for interest rate cuts [1][4][5]. Group 1: Interest Rate Predictions - Goldman Sachs maintains its baseline prediction for a 25 basis point rate cut in December, driven by the ongoing cooling of the labor market [3][11]. - The September dot plot indicates that most committee members view rate cuts as the default option, with no signs of improvement in the labor market [5]. - Despite Fed Chair Powell's hawkish signals, the consensus reflected in the dot plot still points towards rate cuts, as there is no evidence of labor market improvement [5][11]. Group 2: Impact of Government Shutdown - Even if the government shutdown ends next week, the incremental data available to the Fed before the December meeting is likely to be weak, affecting employment reports for October and November [6][7]. - The reliability of data as a signal will be diminished due to the government shutdown, complicating the Fed's decision-making process [7]. Group 3: Future Economic Outlook - Looking beyond 2025, Goldman Sachs emphasizes that the policy path will be more dispersed with numerous intersecting factors influencing it [9]. - The recent announcement by Amazon regarding layoffs due to AI highlights the potential for a weakening labor market despite improved productivity, suggesting lower neutral interest rates [9]. - The market's pricing around terminal rates has been fluctuating around 3%, but significant uncertainty exists around this level [9].

Core Viewpoint - Investment executives from major Wall Street asset management firms suggest that investors should prepare for a potential market correction of over 10% within the next 12 to 24 months, viewing such adjustments as a healthy market development rather than a sign of a bear market [1][2]. Group 1: Market Valuation and Performance - Mike Gitlin, CEO of Capital Group, indicates that while corporate earnings are strong, market valuations are high, with most investors perceiving the market as between fair and expensive [1][2]. - Ted Pick, CEO of Morgan Stanley, acknowledges that while the market appears optimistic, a correction of over 10% is a normal trend, emphasizing the need to focus on fundamental earnings data in the coming years [2][3]. - David Solomon, CEO of Goldman Sachs, notes that while tech stocks are highly valued, this does not apply to the entire market, advising clients to maintain a global investment perspective [2][3]. Group 2: Market Dynamics and Sentiment - Solomon mentions that 10% to 15% market corrections often occur during bull market cycles, allowing investors to reassess asset classes [3]. - Ed Yardeni, founder of Yardeni Research, expresses concern over the extreme bullish sentiment in the U.S. stock market, particularly regarding major tech companies, predicting a potential short-term correction of 5% to 10% by year-end [3][4]. - The S&P 500 index has surged 37% since early April, with such rapid increases being rare historically, leading to skepticism about the sustainability of this growth [4][5]. Group 3: Risks and Market Behavior - The significant weight of major tech stocks in the market raises concerns about the potential for a sharp decline if unexpected events occur, as the market may have already priced in optimistic expectations [5]. - The Nasdaq 100 index is currently trading 17% above its 200-day moving average, indicating a potential irrational market trend [4][5].

Core Insights - Major Wall Street investment bank CEOs indicate that investors should prepare for a potential market adjustment of over 10% within the next 12 to 24 months, suggesting that such pullbacks are not necessarily negative [1] Group 1: Market Outlook - Capital Group's CEO Mike Gitlin states that corporate earnings remain strong, but valuation poses a current challenge [1] - Gitlin notes that most investors perceive stocks to be between fair and overvalued, with few considering them to be between cheap and fair [1] - Morgan Stanley's CEO Ted Pick and Goldman Sachs' CEO David Solomon echo similar sentiments, predicting significant pullbacks as a common occurrence in market cycles [1] Group 2: Sector Analysis - Solomon highlights that technology stock valuations are quite full, although the overall market is not in the same position [1] - He points out that a 10% to 15% market pullback is typical during upward cycles and does not alter capital flows or long-term allocation strategies [1]

Spread the loveFinanciers are deserting Wall Street in search of asylum from socialist policies. Miami is a hot spot for Wall Street refugees, but another notable area has garnered attention that those in the industry are terming “Y’all Street.”Dallas, Texas, has a rapidly expanding ecosystem of financial institutions, private equity firms, fintech companies, hedge funds, and major banks. Areas like Uptown, Downtown, and Victory Park have seen a massive migration of financial service professionals from New ...

Group 1 - Four major mergers announced in the U.S. on Monday, totaling over $80 billion, led by Kimberly's agreement to acquire troubled Tylenol maker Kenvi for approximately $40 billion, positioning Kimberly as the second-largest health and wellness product seller globally, behind Procter & Gamble [1] - The number of U.S. transactions exceeding $1 billion has reached 57 this year, the highest level recorded since 1970, indicating a recovery in investment banking activities [1] - Starbucks finalized a long-stalled equity deal, selling the majority stake of its China business to private equity firm Boyu Capital for an enterprise value of $4 billion, aiming to restart growth in China [1] Group 2 - Signs of recovery in U.S. energy sector transactions, with SM Energy and Civitas Resources completing an all-stock deal valued at $12.8 billion, and BP selling its U.S. shale asset stake for $1.5 billion to improve its balance sheet [4] - Eni and Malaysia's national oil company reached a binding agreement to merge upstream assets in Indonesia and Malaysia, planning to invest over $15 billion in gas projects over the next five years [4] - Coeur Mining announced a $7 billion acquisition of Northern Dynasty Minerals, reflecting rising investor interest in the North American gold production sector [4] Group 3 - Goldman Sachs solidified its position as a leading M&A advisor, with total transaction volume exceeding $1 trillion this year, expected to reach a historical high [7] - The CEO of Goldman Sachs noted that the current global M&A market environment is favorable for business development in 2026 and 2027, particularly in the U.S. market, with significant integration opportunities emerging [7] - International capital interest in the Chinese market has significantly increased compared to 12 months ago, despite cautious investor sentiment [7]

Core Viewpoint - The immediate risk of Japanese yen intervention is low, even as the yen depreciates to the critical level of 155 yen per dollar, as the usual conditions for intervention have not been met [1][2] Group 1: Market Reactions - The yen has depreciated approximately 4% against the dollar in October, making it the worst performer among G-10 currencies [1] - The recent depreciation is attributed to the market's reaction to the new Prime Minister, Kishi Sanae, who is perceived to favor fiscal expansion and dovish monetary policy [2] - The so-called "Kishi Sanae trade" has led to significant volatility in the stock, bond, and currency markets, reflecting expectations of a return to "Abenomics" [2] Group 2: Government and Central Bank Stance - Japanese Finance Minister Katayama Satsuki has indicated that the government is closely monitoring the yen's movements, particularly those driven by speculation [3] - The last intervention by the Japanese Finance Ministry occurred in 2024, with the ministry having over $270 billion available for potential intervention [3] - Goldman Sachs predicts that intervention risks will significantly increase if the dollar-yen exchange rate reaches the 161-162 yen range [3] Group 3: Future Projections - Goldman Sachs expects the yen to gradually appreciate as hedging costs decrease and the dollar index weakens due to anticipated Fed rate cuts [4] - However, substantial fiscal stimulus measures under "Abenomics" and the potential for the U.S. economy to outperform other regions could undermine the yen's appreciation outlook [4]

Core Viewpoint - Goldman Sachs believes that the key conditions for intervention in the foreign exchange market have not yet been met, despite the rising USD/JPY exchange rate approaching 155 [2][4]. Group 1: Market Performance - In October, the USD/JPY increased by approximately 4%, making the yen the worst-performing major currency among G-10 currencies [4]. - The recent poor performance of the yen is primarily driven by Japan's fiscal risk premium and the repricing of short-term interest rate expectations by the Bank of Japan [2][4]. Group 2: Government and Central Bank Actions - Japanese officials have expressed concerns over the rapid and unilateral movements in the foreign exchange market, with Finance Minister Katsunobu Kato stating that they are closely monitoring the situation with a sense of urgency [4]. - The last intervention by the Japanese Ministry of Finance occurred in 2024 at USD/JPY levels of approximately 157.99, 159.45, 160.17, and 161.76 [4]. Group 3: Future Outlook - Goldman Sachs anticipates that the yen will gradually appreciate in the long term as hedging costs decrease and the USD weakens, although this trend could accelerate if U.S. labor market data deteriorates [5]. - Analysts from Bank of America suggest that the USD/JPY may test the 158 level before triggering substantial policy responses, maintaining a year-end forecast of 155 while noting an increased risk of reaching 160 by Q4 2025 [5].

Core Viewpoint - The Federal Reserve Chairman Jerome Powell's statements after the October meeting surprised the market, but Goldman Sachs maintains its baseline forecast for a 25 basis point rate cut in December due to the ongoing cooling of the labor market [1][2][7] Group 1: Federal Reserve's Position - Goldman Sachs expects that even if the government shutdown ends next week, the incremental data available before the December meeting is likely to be weak, supporting the case for a rate cut [2][4] - Powell's hawkish signals after the meeting indicated that monetary policy is not on a preset path, and committee members have differing views on the pace of rate cuts, which caught the market off guard [2][3] - The dot plot from September suggests that most committee members view rate cuts as the default option, with no signs of improvement in the labor market [3] Group 2: Economic Data and Employment - The government shutdown is expected to negatively impact employment data, with delayed resignation data affecting the October employment report and potentially the November data as well [4] - The reliability of the data as a signal will be diminished due to the government shutdown, complicating the Fed's decision-making process [4] - Goldman Sachs believes that betting on a rate cut in December will prove to be a good opportunity, but suggests waiting for a better entry point due to the lack of immediate catalysts for a market reversal [4] Group 3: Future Policy Outlook - Looking beyond 2025, Goldman Sachs emphasizes that the policy path will be more dispersed with numerous intersecting factors [5] - The recent announcement by Amazon regarding layoffs due to AI highlights that, despite productivity improvements, the labor market may weaken while economic growth remains strong, potentially leading to lower neutral interest rates [5] - Although the market has stabilized around a terminal rate of approximately 3%, Goldman Sachs notes significant uncertainty surrounding this level [5]

Investment Rating - The report indicates that the investment rating for the industry is positive, with forecasts for GDP growth in China significantly above consensus for 2025 and 2026 [4][5]. Core Insights - The report highlights an upward revision in GDP forecasts for China, driven by a strong manufacturing push, which is expected to enhance economic growth [5]. - The Global Financial Conditions Index (FCI) has shown a slight increase, indicating a more favorable financial environment for growth [9][32]. - Current Activity Indicators (CAI) for various regions, including China and India, reflect robust economic activity, with China reporting a CAI of +5.8% for September [54][56]. Summary by Sections GDP Forecast Changes - The report details changes in GDP forecasts for various regions, with notable increases for Taiwan (+1.9 percentage points) and Turkey (+1.2 percentage points) [6][12]. - The overall global GDP forecast has been adjusted positively, reflecting improved economic conditions across multiple countries [103][104]. Financial Conditions - The Global ex Russia FCI rose by +0.5 basis points over the week, suggesting a slight easing in financial conditions [9][32]. - The report provides insights into the implications of financial conditions on real GDP growth, indicating a positive correlation [45][46]. Current Activity Indicators - The CAI for the global economy stands at +2.7% for October, with developed markets at +1.5% and emerging markets at +4.5% [54][56]. - Specific countries like Spain and Australia show strong CAI values, indicating robust economic performance [54]. Wage and Price Inflation - Wage trackers indicate varying trends across different countries, with the US and Canada showing positive wage growth [73][75]. - The report discusses the impact of wage growth on inflation measures, highlighting the relationship between labor market conditions and price stability [21][22]. Fiscal Policy Impacts - The report analyzes the effects of fiscal policy on real GDP growth, with projections indicating a positive impact from expansionary fiscal measures in the US and other regions [84][89]. - It emphasizes the importance of fiscal impulses in shaping economic growth trajectories [87][90].

[CC may contain inaccuracies] Very good conditions. We're in an equity bull market. Mag seven and everything else.We've had this historic meeting last week between the two presidents, US and China. What do you what do you make of are the state of play right now. Are we in a much better position than we were at the start of the year.Well, it seems like the meeting was constructive. I'm I'm watching the news the same way here, all watching the news. I think at the moment, you know, de-escalation is a good thi ...