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Goldman & JPMorgan Analyze Global Economic Situation Ahead
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On Wednesday, top executives from JPMorgan (JPM - Free Report) and Goldman (GS - Free Report) presented their views on economic recovery and its impact on the business, at the 2020 virtual conference hosted by AllianceBernstein Holding LP (AB - Free Report) .
Per Goldman president, John Waldron, on easing of lockdowns related to the coronavirus pandemic and above that the pulling back of stimulus programs by the Government, the global economy could turn out to be in a rough phase.
“The biggest risk we all face is the economic trajectory,” Waldron said. “The risks ahead are that it doesn’t go quite that smoothly, and you have re-emergence of the virus maybe in pockets, you have uneven start-and-stop kind of feeling around the world”, he added.
Notably, Waldron is concerned about the credit risk for corporations and consumers. Also, middle-market lending, which has expanded majorly in recent years through both banks and non-bank lenders are at risk of getting advantage from capital markets or government support. “We are playing close attention to that,” he said.
Per Waldron, consumers would be facing challenges on the W-shaped recovery, particularly on the waning government support, leading to “a lot more destruction” in consumer credit. Remarkably, Goldman holds a small share in lending credit to individuals, with outstanding loan balances of around $7 billion.
Among other measures, Goldman will be operating from offices in the United States and London over the next several weeks. Also, the bank is exploring acquisition opportunities though avoiding large-scale mergers, according to Waldron. Further, Waldron confirmed that the bank would pay 10-35 basis points for physical deposits for its transaction-banking product, citing gains from its new cash-management platform. Last but not the least, Goldman reiterates the medium- and long-term financial targets announced at investor day in January, despite the economic slowdown on the coronavirus-related mayhem.
At the same conference, Daniel Pinto, JPMorgan’s head of the corporate and investment banking division, shed some light on the second-quarter revenues. The bank expects market revenues to be up more than 50% higher than the last year, riding on robust fixed income and equities trading revenues.
In addition, investment banking fees in the June-end quarter are likely to be up by a percentage in the mid- to high teens, while mergers and acquisitions will be "probably 15-20% down."
Per Pinto, trading volumes recording highs across Wall Street banks in March and April will return to more normalized levels and to record flat levels at the end of 2020 compared with 2019.
Earlier this week, at a virtual conference hosted by Deutsche Bank (DB - Free Report) , JPMorgan’s CEO Jamie Dimon voiced his opinion on the current economic situation. Dimon believes there are “pretty good odds” of a fast rebound from the coronavirus-induced economic slowdown starting third-quarter 2020.
Our Take
The coronavirus-induced concerns are expected to keep hampering business activities. Banks have been undertaking strategic initiatives to counter the sinking revenues by foraying into new markets and diversifying income sources.
Shares of Goldman and JPMorgan have lost 5.3% and 23%, respectively, in the last six months.
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Shutterstock
Goldman & JPMorgan Analyze Global Economic Situation Ahead
On Wednesday, top executives from JPMorgan (JPM - Free Report) and Goldman (GS - Free Report) presented their views on economic recovery and its impact on the business, at the 2020 virtual conference hosted by AllianceBernstein Holding LP (AB - Free Report) .
Per Goldman president, John Waldron, on easing of lockdowns related to the coronavirus pandemic and above that the pulling back of stimulus programs by the Government, the global economy could turn out to be in a rough phase.
“The biggest risk we all face is the economic trajectory,” Waldron said. “The risks ahead are that it doesn’t go quite that smoothly, and you have re-emergence of the virus maybe in pockets, you have uneven start-and-stop kind of feeling around the world”, he added.
Notably, Waldron is concerned about the credit risk for corporations and consumers. Also, middle-market lending, which has expanded majorly in recent years through both banks and non-bank lenders are at risk of getting advantage from capital markets or government support. “We are playing close attention to that,” he said.
Per Waldron, consumers would be facing challenges on the W-shaped recovery, particularly on the waning government support, leading to “a lot more destruction” in consumer credit. Remarkably, Goldman holds a small share in lending credit to individuals, with outstanding loan balances of around $7 billion.
Among other measures, Goldman will be operating from offices in the United States and London over the next several weeks. Also, the bank is exploring acquisition opportunities though avoiding large-scale mergers, according to Waldron. Further, Waldron confirmed that the bank would pay 10-35 basis points for physical deposits for its transaction-banking product, citing gains from its new cash-management platform. Last but not the least, Goldman reiterates the medium- and long-term financial targets announced at investor day in January, despite the economic slowdown on the coronavirus-related mayhem.
At the same conference, Daniel Pinto, JPMorgan’s head of the corporate and investment banking division, shed some light on the second-quarter revenues. The bank expects market revenues to be up more than 50% higher than the last year, riding on robust fixed income and equities trading revenues.
In addition, investment banking fees in the June-end quarter are likely to be up by a percentage in the mid- to high teens, while mergers and acquisitions will be "probably 15-20% down."
Per Pinto, trading volumes recording highs across Wall Street banks in March and April will return to more normalized levels and to record flat levels at the end of 2020 compared with 2019.
Earlier this week, at a virtual conference hosted by Deutsche Bank (DB - Free Report) , JPMorgan’s CEO Jamie Dimon voiced his opinion on the current economic situation. Dimon believes there are “pretty good odds” of a fast rebound from the coronavirus-induced economic slowdown starting third-quarter 2020.
Our Take
The coronavirus-induced concerns are expected to keep hampering business activities. Banks have been undertaking strategic initiatives to counter the sinking revenues by foraying into new markets and diversifying income sources.
Shares of Goldman and JPMorgan have lost 5.3% and 23%, respectively, in the last six months.
Both banks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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