Financial giants lay off employees!
阿豆学长长ov
发表于 2024-8-31 15:27:49
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Over the weekend, two things received attention in the global financial community.
According to the latest news from US media, international financial giant Goldman Sachs plans to lay off over 1300 employees worldwide, which is expected to account for 3% to 4% of Goldman Sachs' total workforce in 2024. However, Goldman Sachs Group stated in a response to another media outlet that the aforementioned layoff figures are not accurate. On the secondary market, Goldman Sachs' stock price has recently hit a historic high, rising more than 30% since the beginning of the year, with a latest market value of $161.1 billion (approximately RMB 114 trillion).
At the same time, the "stock god" Buffett has also made big moves. In the past three trading days, Buffett's Berkshire Hathaway sold over 21 million shares of Bank of America stock, cashing out $848 million. Since mid July, Berkshire Hathaway has sold over $6.2 billion worth of shares in Bank of America in seven rounds of stock sales. At present, Berkshire Hathaway's shareholding in Bank of America's outstanding shares has dropped to 11.4%.
Wall Street investment bank reveals layoffs again
According to sources familiar with the matter, Goldman Sachs plans to lay off over 1300 employees worldwide as part of its low performing employee elimination program, as reported by The Wall Street Journal. This layoff is expected to account for 3% to 4% of Goldman Sachs' total workforce in 2024.
The report states that in fact, most of the layoffs were already carried out earlier this year. This is Goldman Sachs' operation to control costs and make room for attracting new talent. During the COVID-19, Goldman Sachs suspended the annual layoff of low performing employees. Last year, the proportion of layoffs was close to the lower limit of the usual range of 1% to 5%.
According to sources familiar with the matter, Goldman Sachs plans to lay off hundreds of employees as part of its annual review process for low performing employees. Reuters reported that a Goldman Sachs spokesperson stated in a statement to the media that the numbers reported by The Wall Street Journal are not accurate.
As of the middle of this year, Goldman Sachs has a total of 44300 employees. Typically, Goldman Sachs lays off 2% to 7% of its total workforce annually based on various performance factors, with specific layoff rates fluctuating depending on market conditions and the company's financial outlook. Goldman Sachs spokesperson Tony Fratto stated that the company's annual talent assessment is normal, standard, and customary, and there is nothing particularly special about it. It is expected that the overall number of employees at Goldman Sachs will be higher by the end of 2024 than in 2023.
Since 2023, many large financial institutions around the world have announced layoffs due to profit pressures caused by capital market volatility and rapidly rising interest rates. According to a report by the six major Wall Street banks, in 2023, in addition to JPMorgan Chase, Bank of America, Wells Fargo, Citibank, Goldman Sachs, and Morgan Stanley will all lay off employees. Among them, Wells Fargo's global workforce will decrease by 12000, Citigroup will lay off 5000, Morgan Stanley will lay off 4800, Bank of America will lay off 4000, and Goldman Sachs will lay off 3200. Overall, major Wall Street firms will lay off nearly 30000 employees in 2023.
The recently disclosed financial report shows that Goldman Sachs' net revenue for the second quarter was $12.73 billion, a year-on-year increase of 17%, higher than the previously agreed market expectation of $12.39 billion. Among them, Goldman Sachs' fixed income, currency, and commodity (FICC) business revenue in the second quarter was $3.18 billion, a year-on-year increase of 17%; Investment banking revenue was 1.73 billion US dollars, a year-on-year increase of 21%; The revenue from stock sales and trading business was 3.17 billion US dollars, a year-on-year increase of 6.8%. In the second quarter, Goldman Sachs' net profit exceeded $3 billion, a year-on-year increase of 150%.
On the secondary market, Goldman Sachs' stock price closed up 0.6% on Friday, and the stock has risen 34% this year, outperforming the overall market and the banking index.
Buffett 'sells' Bank of America
According to a regulatory document released on Friday evening local time, Berkshire Hathaway, owned by "stock god" Warren Buffett, sold over 21 million shares of Bank of America stock between August 28th and 30th, cashing out approximately $848 million.
At present, Berkshire Hathaway's shareholding in Bank of America's outstanding shares has dropped to 11.4%. It is worth mentioning that if Buffett continues to reduce his holdings, Berkshire Hathaway will no longer need to quickly disclose its news of selling Bank of America stocks. According to relevant regulations, if the shareholding ratio exceeds 10%, the trading situation needs to be disclosed within a few days; If the shareholding ratio is less than 10%, there is no need to disclose the trading situation as soon as possible. The latest news may be released to the public after several weeks, usually after each quarter.
Since mid July, Berkshire Hathaway has continued to sell shares of Bank of America: from July 17 to July 19, Berkshire reduced its holdings by 33.89 million shares; Between July 22nd and July 24th, Berkshire Hathaway reduced its holdings by nearly 19 million shares; Between July 25th and 29th, Berkshire Hathaway reduced its holdings by approximately 18.41 million shares; During the period of July 30th to August 1st, Berkshire Hathaway reduced its holdings by 19.22 million shares; Between August 15th and 19th, Berkshire Hathaway sold 13.97 million shares; Between August 23rd and 27th, Berkshire sold 24.66 million shares. Adding to the 21.07 million shares sold between August 28th and 30th, Berkshire Hathaway has sold over $6.2 billion worth of Bank of America stock since mid July.
Buffett, who is 94 years old, began investing in Bank of America by purchasing preferred shares and warrants for $5 billion in 2011. His Berkshire Hathaway eventually became, and remains, the largest shareholder of the bank, with its holdings in Bank of America valued at approximately $36 billion (approximately RMB 255 billion) based on Friday's closing price.
So far, Buffett himself has remained silent on his reasons and intentions for reducing his holdings in Bank of America. However, external speculation suggests that the overvaluation of Bank of America may be one of the reasons. For most of the past 15 years, Bank of America's stock price has been below its book value. Nowadays, its stock price has a premium of 25% to 30% relative to book value, which may be an attractive profit taking point.
In addition, Buffett may also be preparing in advance for the Federal Reserve's monetary policy shift. Bank of America is very sensitive to changes in interest rate cycles, and may even be more sensitive than other banking peers. In March 2022, when the Federal Reserve's most aggressive rate hike cycle in 40 years began, Bank of America gained huge profits from it. At the recent press conference after the Federal Reserve's July interest rate decision, Federal Reserve Chairman Powell almost explicitly stated that he will cut interest rates in September, which means that the net interest income of Bank of America may be more damaged than its peers.
On Friday, a highly anticipated inflation data was released. The data released by the US Department of Commerce on the same day showed that in July, after excluding volatile food and energy prices, the US core PCE increased by 0.2% month on month, unchanged from the previous value; A year-on-year increase of 2.6%, unchanged from June, but slightly lower than the expected 2.7%. Federal Reserve officials generally focus more on core PCE data, believing that it can better measure long-term trends. The core PCE inflation index, which is favored by the Federal Reserve, has risen month on month, indicating a moderate increase in inflation and strengthening the expectation of a 25 basis point rate cut by the Fed in September. Some financial institutions even expect the Federal Reserve to cut interest rates by 50 basis points in September.
Boosted by expectations of interest rate cuts, all three major US stock indexes rose on Friday. As of the close of the day, the Dow Jones Industrial Average rose 0.55% to 41563.08 points, setting a new historical high for closing; The S&P 500 index and Nasdaq index both rose by over 1%.
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Disclaimer: The views expressed in this article are those of the author only, this article does not represent the position of CandyLake.com, and does not constitute advice, please treat with caution.
Disclaimer: The views expressed in this article are those of the author only, this article does not represent the position of CandyLake.com, and does not constitute advice, please treat with caution.
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