Goldman Sachs(US:GS)2025-11-07 01:28Summary of Key Points from the Conference Call Transcript Industry Overview - US Government Shutdown: The US government shutdown is likely nearing its end, with expectations for it to conclude around the second week of November. The shutdown is estimated to have reduced 4Q25 US real GDP growth by 1.15 percentage points (pp) on a quarter-over-quarter annualized basis. This effect is expected to reverse in 1Q26, adding 1.3 pp to growth as furloughed workers return and some federal purchases and investments spill over from 4Q25 to 1Q26. The forecast for 4Q25/1Q26 real GDP growth is now 1.0%/3.1% compared to previous estimates of 1.3%/1.5% [2][5][7]. Core Insights - Employment Reports: The release of the September employment report is anticipated shortly after the shutdown ends, while the October report may be delayed until December. The November employment and CPI releases may also face delays due to the shutdown [3][5]. - AI and Market Dynamics: Concerns about an AI bubble persist, but analysts believe the US tech sector is not currently in a bubble, as public market valuations and capital activity levels remain below Dot-Com peaks. Strong fundamentals and balance sheets in the tech sector support this view. S&P 500 3Q25 EPS growth is tracking at 11% year-over-year, exceeding consensus expectations [7][8]. - Federal Reserve Outlook: Anticipated Fed rate cuts are expected to help reverse the recent gains of the US Dollar. Despite rising Treasury yields due to a hawkish tone from Fed Chair Powell, a sustained increase in yields would require better US growth outcomes [8][9]. Regional Economic Insights - Europe's Economic Outlook: Spain's economic outlook is positive, with growth forecasts for 2026/2027 raised to 2.3%/1.9% due to strong investment and productivity growth. Conversely, Germany's potential growth estimate for 2025 has been lowered to 0.5% from 0.8%, with a forecast of only 0.3% real GDP growth this year. However, a cyclical rebound in Germany is expected due to fiscal support and a reduction in global trade tensions [9][10]. Additional Considerations - Yen Intervention: The potential for Yen intervention is being monitored, as the Yen's performance aligns with fiscal premium shifts and near-term Bank of Japan expectations. Current conditions do not warrant intervention, but caution is advised due to recent Yen weakness [14]. - UK Gilts Performance: The outperformance of UK Gilts is expected to continue, with further Bank of England cuts anticipated due to ongoing disinflation. Year-end 2025/2026 10-year Gilt yield forecasts have been lowered to 4.25%/4.00% [14]. - AI in Power Markets: The rise in data center electricity demand is transforming global power markets, presenting opportunities in fuel cells that can provide stable, dispatchable power independent of grid constraints [14]. This summary encapsulates the key points discussed in the conference call, highlighting the macroeconomic environment, regional economic forecasts, and specific industry insights.