4 May 2025 | 6:57PM EDT US Daily: May FOMC Preview: A Higher Bar for Rate Cuts (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.pen ...

Financial Data and Key Metrics Changes - The company reported record revenues of $17.7 billion and EPS of $2.60, with a return on tangible equity (ROTCE) of 23% [5][16]. - The efficiency ratio for the first quarter was 68%, despite incurring $144 million in severance charges related to performance management [17][18]. - The common equity Tier 1 (CET1) ratio stood at 15.3%, indicating a strong capital position [6][43]. Business Line Data and Key Metrics Changes - Institutional Securities achieved record revenues of $9 billion, up 28% year-over-year, driven by strong performance in equity and fixed income [18][19]. - Wealth Management generated revenues of $7.3 billion, with a reported margin of 27% and $94 billion in net new assets [29][30]. - Investment Management reported revenues of $1.6 billion, a 16% increase year-over-year, with total assets under management (AUM) ending at $1.6 trillion [39]. Market Data and Key Metrics Changes - The company noted increased volatility in stock, bond, and currency markets, with a heightened risk of recession but a consensus leaning towards softer growth rather than negative [9][11]. - Client activity remained strong across various regions, particularly in Asia, where Institutional Securities revenues were up 35% year-over-year [77][78]. Company Strategy and Development Direction - The company emphasized a strategy focused on raising, managing, and allocating capital for clients, with a commitment to long-term growth despite near-term uncertainties [14][15]. - The management highlighted the importance of maintaining a strong global presence and adapting to changing market dynamics, particularly in Asia and Europe [79][82]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the economic outlook, noting that while some clients are pausing strategic activities, others continue to engage actively [92][95]. - The company is preparing for potential regulatory reforms, particularly regarding the Supplementary Leverage Ratio (SLR), which could provide additional opportunities for capital deployment [99][100]. Other Important Information - The company repurchased $1 billion of common stock during the quarter, reflecting its commitment to returning capital to shareholders [42]. - The firm experienced strong demand for strategic advice and capital raising, despite some disruptions in near-term deal activity due to market volatility [23][24]. Q&A Session Summary Question: Equities trading outlook - Management noted that client activity across all products and regions was strong, and while a weaker economy could impact trading, current engagement levels remain high [51][55]. Question: M&A outlook - Management highlighted encouraging trends in M&A activity, with year-over-year growth across all client segments, despite some market deterioration [58][60]. Question: Risk management in trading - Management indicated that client engagement remains strong, and while there is natural volatility, the market-making function continues to perform well [72][74]. Question: International business prospects - Management expressed bullish sentiments regarding the international business, particularly in Asia, emphasizing the importance of local engagement and partnerships [77][81]. Question: Impact of SLR changes - Management discussed the potential impact of SLR reforms on capital deployment, emphasizing the need for a holistic view of regulatory changes [99][100]. Question: Advisor business trends - Management reported strong interest in the advisor platform, with increased recruitment and retention trends, particularly in the self-directed and advisor-led channels [108][110].

Investment Rating - The report has downgraded the December 2025 Brent and WTI price forecasts by $5 to $66 and $62 respectively, and the December 2026 forecasts by $6 to $62 and $59 respectively [2][4][13]. Core Insights - The report highlights two key downside risks: tariff escalation and higher OPEC+ supply, which are contributing to the price downgrades [2][7]. - Global oil demand growth is now expected to be only 0.6 million barrels per day (mb/d) in 2025 and 0.7 mb/d in 2026, down from previous expectations of 0.9 mb/d [16][19]. - The OPEC+ countries have decided to increase output by 411,000 barrels per day (kb/d) in May, significantly higher than the previously guided 135 kb/d, reflecting low inventories and a shift in market equilibrium [21][22]. - The report no longer forecasts a price range due to expected elevated price volatility driven by recession risks [2][8]. Summary by Sections Price Forecast Adjustments - The December 2025 Brent and WTI forecasts have been reduced to $66 and $62 respectively, with annual averages now at $69 for Brent and $66 for WTI in 2025 [2][7]. - The December 2026 forecasts are now $62 for Brent and $59 for WTI, which are below the forward curve implied averages [11][39]. Demand and Supply Dynamics - Global oil demand is projected to grow by only 0.6 mb/d in 2025 and 0.7 mb/d in 2026, reflecting a reduction of nearly 0.4 mb/d in 2025Q4 and 0.5 mb/d in 2026Q4 [16][19]. - The increase in OPEC+ production is expected to contribute $2-3 to the December 2025 price downgrade [9][21]. Market Volatility and Hedging Recommendations - The report suggests that implied volatility remains underpriced, and recommends oil producers to hedge against further medium-term price declines [28][29]. - It is advised that refiners hedge deferred refined product margins, especially for complex refined products, due to the resilience of these margins despite recessionary concerns [37].