Goldman to Cut About 3,200 Jobs This Week

on iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or stream us live on YouTube and Bloomberg dot com. Well, it is the most read story on the Bloomberg terminal over the last eight hours. It's a Bloomberg exclusive. Goldman Sachs embarking on one of its biggest rounds of job cuts ever, as it locks in on a plan to eliminate about thirty two hundred positions just this week, the bank's leadership going deeper than rivals

to shed jobs. It's expected to start the process midweek. The total number will not exceed thirty two d according to people with knowledge of the matter. With us now, we've got Bloomberg News Finance Team leader Sally Bakewell, she's in the Bloomberg Interactive broke his studio with us. Sally, good to have you with us this afternoon. What does our investing audience need to understand about these job cuts that are going to happen at Goldman Sachs. I think

there are two things. So. First of all, Goldman has not been immune to these forces that are impacting all Wall Street banks. They're all trying to contain this slump in profit and revenue um owing to tightening monetary conditions, which is slowing down deal activity UM. And you know it's really causing some key Wall Street profit engines to splutter um. And we've seen other banks let go of staff Morgan Stanley, Credit, sweez Barcleys, They've all either fired

staff or announced that they plan to do so. But with Goldman, they have some more specific things here, and indeed they have gone deeper than their rivals in this pullback, at least for now. UM. They're contending with some other things. For example, they made this very costly expansion into consumer bank banking, which left that unit with deep losses. This

is the Marcus unit, Alan Sacks exactly UM. And ultimately in October that unit was apped into a new business which they have called platform Solutions, and UM Shreda reported this unit is poised to report that it's it's recorded more than two billion in pretext losses. So Goldman is facing forces in the market that all Wall Street banks are forcing facing, but it's contending with a few other things.

And it also had um surging head count since twenty eighteen, and no doubt these cuts have kind of walked back

some of some of that. Well, that's that's what I was about to ask about, how much of this is really something that we should be worried about as kind of a canary in the coal mine for some sort of broader macroeconomic outlook when they have that kind of bloated head count to begin with, I think we're looking at a number here of head counts down thirty four percent of the end of eighteen, about four fifty people as of September. So that's that's a lot of people,

it is. And those years included the pandemic, of course, where banks tried not to UM let go of any staff during that incredibly difficult time, and so we started to see that when that period ended, UM and those kind of moratoriums ended that they have started to let go of people. Um. When we speak to the banks, the message we often get is that this is more normal trimming around the edges, and it's kind of a return to those annual culls um that they used to

do of underperformers. But I think with Goldman Sacks owing to these more idiosyncratic things, UM, it's a little bit you know, that's why they have had to go a little bit further than some of their rivals. Yeah. So, so talk about the consumer banking element of this because and you know you mentioned this story that's exclusit by Shrinadarajan. We've talked to him at length about it in the past,

but we can't look past the weakness there. And I mean what some analysts would say is, I don't want to call it a mistake, but it certainly didn't work out the way that Goldman Sachs wanted it to. That's right, UM. And Solomon, you know, he's said that they have been dialing back their ambitions for the consumer banking UM unit and signaled that they're reviewing other business lines to manage

headcount and limit costs. UM. How much we can pinpoint UM that episode UM as a result as resulting in these cuts is a bit unclear, and maybe it's stepping too far to to do so. And you know, the bank still continues plans to continue hiring UM. A Street reports it it will hire, including for the regular analyst

class later this year. UM. But I think, yeah, Goldman's consumer banking for a UM, just the difficulty UM, the in getting something like that, something so ambitious and huge up and running UM and the kind of regulatory perspective for doing that, the need to the sort of things that come with consumer banking that it needed to have in place were just perhaps a bridge too far. And what about at the very top when we're talking about

David Solomon, James Warman. The is kind of folks, what kind of consequences or are there any hits that they take, oh, hits that they take from this? No doubt they're getting a lot of questions, and no doubt a lot of senior leadership are pretty unhappy. Because of course, UM Investment, the investment bankers are not expecting to get particularly good bonuses this year, and those compensation discussions will happen about a week from now and again, that is something that

is the same across Wall Street. Um. But the consumer banking issue fed into and bled into a lot of um, the other sort of business lines at banks, and they've ended up kind of having to take a bit of a hit for it. UM. So I'm sure questions are pretty rife right now. All right, Sally bag Well, we love it when you join us. Thank you so much for taking the time. Check out Sharinadar Rajin's story Goldman to cut about thirty jobs this week after a cost review. Again,

it's a Bloomberg exclusive. It's among the most read on the Bloomberg terminal. These sees Bloomberg Business Week with Carol Messer and Tim Stanovic on Bloomberg Radio. Well, the forthcoming issue of Bloomberg Business Week, it's the year Ahead issue. It's on news stands later this week. But right now you can read one of my favorite features that the magazine does each year. It's on the Bloomberg terminal and

at Bloomberg dot com slash business Week. The features based on tapping into the excellent team of analysts that we have over at Bloomberg Intelligence. That team tracking some two thousand companies and sectors that range from communications to commodities to finance and food. Now, of those, b I has identified fifty that weren't a closer look this year based on a list of focus ideas. The companies they run the gamut Adidas to vinci eBay to Portscha and more.

It's also today's big take. We've got with us Bloomberg Business Week Editor Joel Webber and Business Week Solutions and Strategy Senior editor Rebecca Penty. Joel with us in the Bloomberg Interactive Broker's studio, Rebecca joining us on the phone from the UK. Joel, I want to start with you and just get an understanding from from you how this list comes together because a sub Bloomberg intelligence they follow

a couple of thousand companies. Yeah, it's uh, it's a it's a feat what they do on in an given day. And one of the things that we've long done with them is this project which culminates, uh it's it's actually like months in the making and then culminates with the publication of the list UM today. We've also gone on and done quarterly installments UM that we now do. So this is uh fifty companies to watch for the year, but you'll hear us come back and ahead of every quarter,

will will tell you U companies to watch this quarter. Um. But the fifty is the real deal. And what what basically, um, the team of of analysts at Bloomberg Intelligence Intelligence does is take that two thousand plus companies and push it through Excel sheets and it spits out, uh, just a couple of dozen companies that we really want to kind of talk about. And we can't tell you these are bison cells that we're not gonna do anything. Um, that

foolish that much conviction. But we can look at hindsight is as a measure of that. Yeah, exactly, that's what hindsights for, right. Um, we we look we call this watch because some of them we expect will outperform and others might lack. And so it's a great little mix of companies that we just think are going to have interesting years. Um. Rebecca was one of the Business Week editors who worked closely with the I to come up with that list and refine it and turn it into

the magic that it is. Rebecca, I'm curious, what was the company that m was your was the one that you liked the most on the list? Well, I think Disney and Um, it was interesting. You know, b I has these focus ideas and they you know, basically they're they're high conviction ideas of companies where they think the market is not recognizing something about the company and so

either the market's undervaluing overvaluing. And Disney was one of them that was really beat up during the pandemic and and you know, continues to be beat up once recession risks started looming because of all their theme parks. And the thing that was so interesting for me is that b I had this conviction that, you know, Disney is really poised for a rebound um due to you know,

restructuring and accelerating streaming strategy. And we'd already landed on Disney as a company, and then the announcement of Bob Biker's return as CEO and and so that just reinforced the view from b I that this is a company to watch. And I think, you know, the bi's view that it could be a tale of two halves for for Disney, where you know, the second half is the stronger of the two. Okay, well, if you're gonna talk about Disney, we should talk about Netflix. Um, because Netflix

also on the list. Why why did Netflix make it? Uh? In that same conversation, since obviously it's been the dominant streaming video provider. Yeah, that's true, And I think this is an interesting one where um B I Z going

in on net Netflix is ads supported pricing tier. For the longest time, it's been a company that's dependent on um subscriptions but not advertising, and so Ba's view is that the market isn't fully recognizing the additional revenue and sales growth that could come from that advertising, which which they see as supporting higher average revenue per user and

offsetting cannabalization of subscription revenue from customers downgrading to cheaper plans. Okay, so worth mentioning that to US companies perhaps you've heard of them? Right. The other thing I love about this project, though, Rebecca, is how global it is. Right, So, in addition to some marquee American names, tell us about ones that people outside of the US might not even heard of. Yeah, well,

this one was an interesting one for me. I think, you know, we often hear about China being, you know, the world's manufacturing center, but we don't often know the names of the companies that make the stuff that we use, and one of the ones featured here is t s m C. It is the world's largest semiconductor foundry. And you know, with with the recession looming, with with um the economy taking a beating, worldwide, chip making is slowing down.

But blub intelligence view is that t s MC is placed to better weather the cyclical market downturn than it's piers because of its dominant industry position. Yeah, I mean it is a juggernaut, right yeah, joel Um, what about your favorite on this list? Okay, well, I'll stick with tech Um and I'm gonna I'm gonna say sons Um, the little speaker company that could. Yeah, it's truly, as we say in the blurb, it is a David versus Goliath moment. There's a patent case. It's been wrestling with

Google for a really long time. As we write b I is optimistic. Optimistic sons succeed in the dispute, which goes to a jury trial in May. Uh. This has been a long time coming. Uh, this showdown has been it's years in the making. Um so nos UH has

has has had its share of some challenges. If your son's user, like I am, there's some software decisions that will make you pull your hair out, like that Apple bit of which app because there's multiple apps actually in order to use different devices that don't talk to each other always. You know, is there more to talk about here? Yes? There is? But so I like this so nos one, Um, but you know that's another American company. We've done tech

a little bit. Now, Rebecca, what's another international company that that jumped out to you? Okay, I'm just looking down the list I've got, which was Porch. Let's talk about Porsche exactly, which I thought. So this company went public this year. VW spent out, which is just also just an incredible I p O. But now they actually have to, like, you know, make some evs and autos I think are

just a really interesting kind of your head story. We're seeing obviously the pressure on Tesla, and we're gonna have more automakers sort of show up and an attempt to hit velocity like Tesla has proven. Um, what what what a successful company can look like? And now they have to like wade through some challenges. Yeah, it's a fantastic list. Go ahead, go ahead, reaty seconds. If I could just throw one quick one back in there. We talked a lot about companies that are poised to do well on

the e V game. One of them that is maybe poised to fair worse off is Allison Transmission UM, another US company. Uh, it's a truck transmission supplier. And what you may have heard about EVS is that you know, it's not just regular cars, it's also trucks. So there's heightened competition in that truck space, which is going to be at some pressure to Alison Transmission. Well, I think we only talked about ten percent of the companies that are on this list. Check it out. It's at Bloomberg

dot com Slash business Week. It's also available on the Bloomberg terminal. Big thank you to Rebecca Pentty. She's Solutions and Strategy Senior editor for Bloomberg Business Week, joining us on the phone from the UK this evening for her. Also to Joel Webber, the editor of Bloomberg Business Week. He's with us right now in the Bloomberg Interactive at Broker's studio. Check out Joel on Twitter at Joel Weber Show. Rebecca's there are penty on Twitter. You're listening to Bloomberg

business Week. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messier and Tim Stenevic on Bloomberg Radio. Brazil's capital of Brazilia recovering today from an insurrection by thousands of supporters of ex president Jayra Bilsonaro, who stormed the country top government institutions, leaving a trail of destruction and testing the leadership of Louise and Nascio Lula da

Silva just a week after he took office. Rioters ransacked Congress, the presidential palace and the top court in Brazilia on Sunday, hoping to trigger a military intervention. It took hours for security forces to regain control of the main government buildings. Hundred were arrested throughout the night, thousands that of bolson Our supporters remained in the area. For more. We turned out to Julia Lachi, Brazil country chief for Bloomberg News.

She joined us on the phone from South Holo, Brazil. Julia, good to have you with us this afternoon. Just want to get from you the latest on on what we understand about this, uh, these insurrectionists yesterday. Hi, thanks for

having me. So Brasita is in really recovery. Mode Um police are gathering evidence and really um booking thousands of protesters who came back to a militant like they have been camping in front of a military facility about eight kilometers from where the protests took place, UM, and they walked back there. Thousands of them walked back there after the protests, and today they were removed and taken to

police for questioning and booking. And really it's a it's a swath of evidence that police East and the and the ministries now have to go through. Lula meanwhile, is reasserting his power. He met with the chiefs of Congress, the chiefs of the Supreme Court UM today really putting up united front against these protests and Luters really and Julia this is coming of course, as Billsonarow is I believe hospitalized as well. Can he gives a little more

contact with us, right? Yeah? Here in the States, Yeah, that is right. UM. Bolsonado flu to Florida right before at the end of December, right before Blula was inaugurated, which was last Sunday, UM, and he has been really just taking pictures with supporters. There's been videos of him in supermarkets at KFC. UM so really just on vacation in Florida, and today we heard that he has been hospitalized,

which has been confirmed by his wife. And really Billsonado has been hospitalized many times since he was stabbed UM in eighteen on the campaign trail. It's usually UM abdominal problems that he has. SILVER were monitoring that situation and what does that mean in terms of his response. Has he responded to the protests that he's seen or has

he been kind of out of commission here? He has, although he has been mostly silent since losing the election on October both UM skipping public events and on social media, which is where he always had a huge presence with

him and his family. He did tweet last night UM saying these kinds of riots, these sort of demonstrations are not within the rules of the democracy, and very quickly trying to distance himself from protests because there were immediately allegations UM that he was UM you know, he helped stoke protesters and and was behind the E section. So he was very quick to deny that. UM. So we

shall see what happens next with that. UM. The Justice ministers said that for at the moment he cannot be um legally responsible for what happened yesterday, but he did say politically unequivocally responsible for some of what happened yesterday. I think a lot of people when they first saw images of this, they thought of January six here in the United States, And you know, some similarities between between the two Julia UM. A different part of the conversation though,

has to do with the demands of these insurrectionists. What was the commonality that tied them together, sort of apart from the idea that that Bilsonaro was the one who won the election. Yeah, I think that's the main threat they wanted to UM. You know, they refused to accept the result of the election, and they were asking for the military to intervene and keep you know, and take Lula out of office. UM. And and that was when you're right. The images were very similar to what we

saw in the Capitol two years ago, almost to the date. UM. One difference that UM we saw was police initially did not really resist the protesters, unlike in the US. So they ran rampant for about two hours before reinforcements arrived and really started taking people out of the buildings. But by then, you know, the damage to work of art and really to the building structure was just countless. Another difference that that I noticed was the fact that so

many protesters insurrectionists were actually arrested immediately. This is not something that happened here in the US. What do we know about the people who have been arrested and the consequences that they could face if they do if they if they are indeed found guilty. Yeah, that's right. A lot of people were arrested kind of on the act um. I think a couple of hundred. The numbers varied depending on on the the government agency that is commenting on it.

But you know, it was all over social media. People were posting selfies and videos while they weren't booting the buildings. So it is a trove of evidence that police now has to go through and just keep um, you know,

finding these people and arresting them. Although a lot of videos have been erased, even social media accounts have been wiped, but the Supreme Court last night ordered um that these the evidence be preserved and really started going after these people and not just the people who were there, but

people who financed the act. That's been a very key point um from all authorities commenting about the aftermath of this is that they really want to go after the people who bust thousands of Boston NATO supporters over the past two days. Too busy there for these protests. So Julie talked to us a little bit about the market reaction here. Demian sasaur Our, Bloomberg Intelligence Chief Emerging Market strategist, um kind of said the look, these are emerging markets.

A lot of the stupolue whole risk is actually priced in. Bloomer Economics on the other hand, saying like there could still be a lot of pain. It could shave off seven tenths of one percent when it comes to economic activity in the month of January. Is that something the markets are responding to. So when markets opened, it was really looking like a horrible day, especially considering it was such a risk one day abroad, So both stocks and

the currency were underperforming massively. As the day we're on things that improved. Both the mood here improved and the risk on sentiment that we were seeing abroad kind of fade at a little bit. So in the end it

wasn't as bad as it could have been. But you know, Brazilian assets have been under performing since Lola Um won the election, really because investors have begun to worry that his comments on how much he's going to spend and comments from cabinet members that he just appointed about revoking, you know, the labor reform and the pension reform, both of which investors really see a key keeping government accounts

and check are really weighing on us. It's so it's a bit longer than just today, Julia, what are you watching for now? What's the smart question that our investing audience needed needs to be asking as Brazilia continues to recover from US. I think there are a few things. UM. One is will that will this happen again? Right? Um, authorities say this will never happen again, but there are

still thousands of people in Brazilia. UM, so it really needs to We really need to be on the watch for a resurgence of violence and then whatever comes out of these Supreme Court requests and inquiries. There are several arrest warrants that have already been issued. We don't have names yet, but it really could shake things up in politics and in the system, depending on what they find

in terms of who financed and who stoked protesters. So I think those are the main things that we're watching for, all right. Julia late Chi, Brazil country chief for Bloomberg News, joining us this afternoon on the phone from sal Pallo, Brazil. Just to update our audience. If you're just now joining us. We were speaking to Julia about Brazilia, the capital of Brazil, reeling after anti Lula rioters stormed Congress over the weekend.

A big thank you to Julia for taking a time and joining us to bring us the latest from there. I'm roam a journal but you let me drive. Oh no, no, no, no, who's going to drive home? Honey? Please? I'll do the ride gravels. I want to drive. It's the question. This is the drive to the globe to music well down on Bloomberg Radio. It is the drive to the close. Tim Stanebec and Creedy Gupta in for Carol Master this afternoon.

We're just about seventeen minutes away from the close of equity trading here on this January three, and we're seeing markets roll over quite a bit. The SP five hundred since high as hired by as much as one point four two percent earlier. Now it's just up just for actionately less than one tenth of one percent. Really eager to hear what our next guest has to think of, not just today's trade, but of the outlook for the year. We've got Gina Bolvan with us, president of Bolven Wealth

Management Group. She joins us this afternoon on the phone from Boston. Gina, how are you hi? How are you? Thank you for having me and Happy New Year. Happy New Year to you too, Thanks so much for joining us. Well, let's talk a little bit about the trade moving forward, because if the theme of last week and the year has been and it continues, uh, how high will inflation go? Is it? Has it indeed peaked? And how high will the federal funds rate have to go in order to

tamp down inflation? What's top of mind for you at Boven Well Management Grow? Oh well, you know, yes, last week was such a good week for the market. Um. You know what kicked it off as a job's report and there was something for everyone there and it was it was surprising to the upside um when we still have that boken record of oh of um, bad news

is good news, good news is bad news. A slower wage growth which helps bring inflation down was good for investors because it gave investors hope finally that the stead may may not have to raise rates as much and as long, and maybe they might even have to cut rate and there's a glimmer of hope of a soft landing. So that's what happened last week. And we also saw the I s M survey um was surprising with the service industry contracted for the first time in two and

a half years. So we're starting to see that the interest rate plakes are making their way into the economy and most of the work the state had to do to slow the economy maybe behind us. Well, Gina. One of the historical trends that has really kind of thrown me for a loop here is that after midterm elections, people tend to buy in for Lago remarket for a

lot of the bulls waiting on the sidelines. I think they were waiting for some sort of gridlock in Washington to come to fruition before hopping back into the market, and we haven't really seen that with the same conviction we've seen it in the past years. Any idea why, well, I think that one of the reasons is because we've had seven interest rate hikes and we've had forty year inflation high high, so UM, but I do think that

we are going to see it. When you know, when you look at history, UM, that is one of the trends that we see is that UM after the mid terms, no matter who wins, there has an average game gain of about fourteen percent in the market. So that is one of the reasons why we think the market this year will be up double digits, twelve to fifteen percent. But it's just going to take all year to get there.

What's more important to you technicals like that, the sort of farmer's almanac statistics that you you know, look back on over the last what years or so, or what you're actually seeing. When it comes to fundamentals, well, I think you can. You can't ignore either, right, I mean, the only thing we have to go by is history. But UM in history is very strong. But when you look at fundamentals, that's strong as well. We've seen this is the most UM expected recession we've ever seen or

talked about. And because of that, you know, it just may not be as bad as everyone thinks. Because we're why though, because we're preparing for it, because we're so prepared for it, like one of the like when you look at the financial services sector, when you look at banks, um, they've they've been preparing for a recession. Think of all the stress tests they've had to think of what happened in the Great Recession of two thousand and nine. So

the banks are very much prepared for recession. And you know, everybody's been talking about this recession that's going to happen. So consumers and businesses, I would say, you're somewhat compared, and they may they are prepared, and they may be more resilient than you think. Well more resilient, But I wonder what that then means for perhaps some of the consumptions, some spending patterns not necessarily intoe. But when that's I feel like what the markets are now pricing in it's

no longer this year kind of story. Well, I think, um, when we talked about what's being priced into the market, I think that's what happened Friday is you know, the worst case scenario has already been faced in So if we get any type of good news, you know, like earning season is starting taking off Friday with the big banks, If we get any type of good news. The market takes it in once with it. Yeah, look at what we saw on Friday, I think that is a perfect

way to describe it. With that kind of perfect jobs report that many people saw as being a goldilocks report. We saw the rally, it's given up a little bit of steam today is the S and P five hundred just continues to move lower, down about eight one hundreds of one per cent. So, Gina, does that mean that you think markets have bottomed at least in this cycle? Well, I think it's really hard to um call a bottom. You don't. You don't always know where the bottom is

until it's over, until it's in hindsight. But I think we have more of an upside than a downside at these levels, more downside on these levels. You know, it's interesting to me that a lot of people are expecting this turnaround story to happen at the halfway point, the back half of the years, when you're going to see a lot more green on the screen. Gina, why not earlier? Well, I think we need to get a signal from the Fed. Right, the Fed still very hawkish, um and I think that's

part of their campaign. It's not what they're doing it, talks of what they say, and so you you know, the FED is on one side, the markets on the other side, and we need to see a little bit of the FED coming to the middle to meet the market or acknowledging because they really haven't yet, and they need to acknowledge that inflation is coming down and they

are closer to the end of the right hyps. And we don't hear a lot of that from FED speakers, including the that's right, and they're all in Unison, all in Unison, and they're all talking the same talk, walking the same walk, and um, you know that's why we think it's going to take longer. Hey, Gina, just in the last twenty seconds that we have with you, give us a couple of areas that you're investing in. Just

got twenty seconds left. We like financials. We like financials because of you know, good good it ends and um, you know, if there's no recession, they'll do well because of economic activity. If there is a recession, as I mentioned, they have in really good shape. They have valuations and we like healthy if the dividends and they have a good tip demographic. Kale wind all right, Gina Bolvin, President of boldn Wealth Management Group, liking for three healthcare and financials.

Gina joining us this afternoon from Boston. Follow her on Twitter at Gina Bolvin. You're listening to Bloomberg Business Week and this is Bloomberg Radio. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio or stream us live on YouTube and Bloomberg dot com