Goldman Sachs CEO David Solomon has stated that the prospect of a recession “has increased” due to the uncertainties of a trade war and challenges facing CEOs. In its first quarter results, Goldman Sachs reported higher revenue and profits despite investment banking fees dropping 8%. The firm’s corporate and investing clients are concerned about significant uncertainty, which amounts to material risk for the US and global economy.
Solomon warned that economic growth had been slowing down before new trade policies from President Trump’s administration, which “reset the prospect of forward growth pretty significantly all over the world.” Other Wall Street giants, including JPMorgan Chase, BlackRock, and Morgan Stanley, have also expressed concerns about economic uncertainties ahead.
Their warnings come as hedge funds are receiving steepest margin calls since the 2020 COVID-19 crisis, and banks worry about an economic slowdown sparked by a trade war. The uncertainty has led to IPOs and mergers being put on hold, and leverage loan deals being pushed to the sidelines.
Solomon urged caution, stating that “markets will likely continue to be volatile” as long as policy evolution is unknown. Goldman Sachs’ trading revenue rose 27% in its best quarter since 2009, but dealmaking pulled back due to market volatility. The firm’s CEO believes a gradual policy process can lead to considered negotiations with countries, but the outcome remains uncertain.
As Wall Street navigates these challenges, investors are advised to be cautious and consider protective measures during economic turmoil.
Source: https://finance.yahoo.com/news/goldman-ceo-solomon-says-prospect-of-a-us-recession-has-increased-112818640.html