GS - The Goldman Sachs Group, Inc.
| Previous Close | 249.72 |
| Open | 250.23 |
| Bid | 248.46 x 4000 |
| Ask | 249.45 x 900 |
| Day's Range | 248.00 - 250.46 |
| 52 Week Range | 180.73 - 250.46 |
| Volume | 2,917,172 |
| Avg. Volume | 2,379,712 |
| Market Cap | 88.331B |
| Beta (5Y Monthly) | 1.37 |
| PE Ratio (TTM) | 11.86 |
| EPS (TTM) | 21.03 |
| Earnings Date | Apr 12, 2020 - Apr 16, 2020 |
| Forward Dividend & Yield | 5.00 (2.00%) |
| Ex-Dividend Date | Nov 27, 2019 |
| 1y Target Est | 262.48 |
- Yahoo Finance
Strong bank earnings boosted by the American consumer — and heavy buybacks
The big U.S. banks reported earnings for the fourth-quarter of 2019, seeing decent top-line growth as a result of a strong U.S. consumer. But the bottom line earnings were helped by share buybacks.
- Simply Wall St.
The Goldman Sachs Group, Inc. Yearly Results Just Came Out: Here's What Analysts Are Forecasting For Next Year
Investors in The Goldman Sachs Group, Inc. (NYSE:GS) had a good week, as its shares rose 3.0% to close at US$249...
- Zacks
Top STock Analyst Reports for Microsoft, American Express & Others
Top STock Analyst Reports for Microsoft, American Express & Others
- ETF.com
Key Trends In ETF Issuer Growth
The ETF market is growing, and the rising tide lifts all boats—but not evenly.
- Reuters
Happy ending still elusive in Italian broadband drama - sources
Telecom Italia's efforts to recruit investors to help it to create a national broadband champion with Open Fiber have stalled, sources close to the matter say, as it is proving hard to hammer out a deal structure. The former Italian telecoms monopoly has been talking since last June with utility Enel and state lender Cassa Depositi e Prestiti (CDP) on ways of combining their fibre broadband operations. In a bid to get the ball rolling, Telecom Italia (TIM) asked infrastructure funds in December to evaluate an investment in the potential future combined fibre-optic entity.
- Bloomberg
U.S. Firms Could Win Lucrative Job of Cleaning Up China's Bad Debt
(Bloomberg) -- One surprising part of the trade deal struck between U.S. President Donald Trump and Beijing is that U.S. investors won a direct shot at the potentially lucrative job of helping China clean up its heap of bad debt.China is embracing foreign capital as it grapples with a tide of soured debt. Some estimate it to have topped $1 trillion as the trade war weighed on economic growth and a long crackdown on shadow banking choked off liquidity.The Communist Party-ruled nation is trying to instill more discipline in the market as corporate defaults have hit records for two straight years and its vast regional banking network struggles to cope. Growing participation by foreign investors could relieve pressure on the mainly state-owned firms that so far have been the front-line in dealing with the bad debt problem. It could also result in a more market-driven pricing of soured borrowings.U.S. firms including Oaktree Capital Group and Bain Capital Credit have already been pushing into one of the world’s biggest distressed debt market. The trade deal will allow financial services companies from the U.S. to apply for licenses to buy non-performing loans, or NPLs, directly from banks, cutting out the middle man they have to go through now.“China’s NPL market is large and growing, and opportunities for deeply discounted investments are enticing foreign firms with NPL experience in other markets,” said Brock Silvers, managing director at Adamas Asset Management in Hong Kong.Gaining access is one thing, but succeeding is another. Top-down run China can be an arbitrary place to do business, and local knowledge and contacts are required in the 1.4 billion person nation. Foreign firms have often grappled with unpredictable courts, fraud and challenges of sourcing bad loans. A web of local enterprises are often closely connected to regional banks and the local government, making it hard to navigate.The market has grown significantly in recent years. But lack of experience has been an obstacle and many firms that stuck their toe in eventually pulled back because of difficulties in working out bad loans in China’s system, according to Benjamin Fanger, a managing partner at ShoreVest Partners, a distressed debt firm.“Some foreign investors are still continuing to push forward to try to learn and this new agreement opening to direct deals with banks might add more interest again,” he said. “But doing Chinese NPLs requires a very significant commitment of time and resources to build up local sourcing, underwriting and servicing/exit capability.”The sheer pace in the buildup in soured debt is proving a potent lure. Bad debt held by commercial banks jumped almost 20% in the first nine months of last year to 2.4 trillion yuan, according to the China Banking and Insurance Regulatory Commission.Data shows that overseas purchases of bad loan portfolios nearly tripled in 2018 to 30 billion yuan, Savills has said in a report. Active international players include Oaktree, Loan Star, Goldman Sachs, Bain, PAG and CarVal, according to the real estate and research firm.Savills said the overseas investors typically target loan books as large as $100 million, compared with domestic investors who seek to buy small batches of about $30 million. Targeted returns are usually 12-15%, unleveraged, or 17-22%, with leverage.China’s recent financial tightening has also led to opportunities for some foreign investors since some local investors are struggling to conclude deals, according to Savills.While the trade deal applies to U.S. financial services firms, the government could potentially broaden the scope to include European firms in time, according John Xu, a Shanghai-based partner at Linklaters that advises international funds on buying nonperforming loans.“The challenge is that there is a quota on the licenses per province, so there may not be sufficient licenses in some of the main provinces,” said Xu.ShoreVest Partners wasted no time in moving ahead and is in talks “with several provincial and municipal governments” about the new agreement and what the first steps would be toward obtaining an asset management company license, according to Fanger, a China bad debt veteran who speaks fluent Mandarin.But further steps will be needed to tame the unpredictability of the Chinese market.“If Beijing is to eventually get a handle on China’s over-indebtedness, it will have to allow for a predictable, rule-based nonperforming loan enforcement process,” said Silvers at Adamas in Hong Kong.\--With assistance from Alfred Liu and Emma Dong.To contact Bloomberg News staff for this story: Denise Wee in Hong Kong at dwee10@bloomberg.net;Tongjian Dong in Shanghai at tdong28@bloomberg.netTo contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net, ;Andrew Monahan at amonahan@bloomberg.net, Jonas BergmanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Financial Times
Wall Street M&A fees drop by more than $500m in 2019
Top Wall Street banks suffered a $558m drop in fees from advising on mergers and acquisitions in 2019, as a fall in overall dealmaking and lucrative cross-border transactions ate into their revenues. Bank of America, Citi, Goldman Sachs, JPMorgan Chase and Morgan Stanley generated $10.28bn in advisory revenues last year, down 5 per cent from the $10.84bn they reported the previous year, disclosures this week from the five banks showed.
- Financial Times
Bonuses at risk as M&A fees slide
The drinks are still flowing at Le Bernardin and The Grill in Manhattan, but the bankers spending lavishly there may soon notice that their wallets are not being refilled as rapidly as their glasses. Bonus pools are expected to be lower at some of Wall Street’s top banks after merger and acquisition advisory fees dropped $558m last year, several top dealmakers tell DD.
- Bloomberg
Toshiba Touts Algorithm That’s Faster Than a Supercomputer
(Bloomberg) -- Follow Bloomberg on Telegram for all the investment news and analysis you need.It’s a tantalizing prospect for traders whose success often hinges on microseconds: a desktop PC algorithm that crunches market data faster than today’s most advanced supercomputers.Japan’s Toshiba Corp. says it has the technology to make such rapid-fire calculations a reality -- not quite quantum computing, but perhaps the next best thing. The claim is being met with a mix of intrigue and skepticism at financial firms in Tokyo and around the world.Toshiba’s “Simulated Bifurcation Algorithm” is designed to harness the principles behind quantum computers without requiring the use of such machines, which currently have limited applications and can cost millions of dollars to build and keep near absolute zero temperature. Toshiba says its technology, which may also have uses outside finance, runs on PCs made from off-the-shelf components.“You can just plug it into a server and run it at room temperature,” Kosuke Tatsumura, a senior research scientist at Toshiba’s Computer & Network Systems Laboratory, said in an interview. The Tokyo-based conglomerate, while best known for its consumer electronics and nuclear reactors, has long conducted research into advanced technologies.Toshiba has said it needs a partner to adopt the algorithm for real-world use, and financial firms have taken notice as they grapple for an edge in markets increasingly dominated by machines. Banks, brokerages and asset managers have all been experimenting with quantum computing, although viable applications are generally considered to be some time away.Why Quantum Computers Will Be Super Awesome, Someday: QuickTakeArbitrage OpportunitiesToshiba said its system is capable of calculating arbitrage opportunities for currencies in microseconds. The company has hired financial professionals to work on the project and aims to complete a real-world trial by March 2021.“Finance is the most familiar application,” Toshiba Chief Executive Officer Nobuaki Kurumatani said in an interview. “But there are so many uses. This is a technology with real potential.”Toshiba’s algorithm seems to outperform rival approaches on mathematical benchmarks, but how it will perform on real-world problems is anyone’s guess. Access to the company’s backtesting in currency trading and portfolio optimization isn’t publicly available and adopting the technology to a new problem would likely require rebuilding the algorithm from scratch.“There is a lot of talk about applications of quantum computing in finance, but it’s not very clear where it would be all that necessary,” said Takanobu Mizuta, a fund manager and senior researcher at Sparx Group Co. Optimizing a portfolio is not something that needs to be done in microseconds and calculations involved in high-frequency trading, where speed counts, are not very complicated, Mizuta said.Toshiba may choose to use the algorithm for areas outside finance. Other applications could include things like plotting complex shipping and logistics routes and developing new drugs with molecular precision, according to the company.First IdeaThe idea first arose in 2015, when senior research scientist Hayato Goto was exploring how the qualities of some complex systems can suddenly change with additional input, a phenomenon he describes as bifurcation. But it took him two years, he said, to realize the discovery could be used to craft algorithms that can efficiently sift through a huge number of possibilities -- like a quantum computer without the onerous requirements to run one.Goto partnered with Tatsumura, whose semiconductor expertise was crucial in making the calculations work on multiple processors in parallel.“We will see some ideas for specific applications of quantum computing coming out over the next five years,” said Masayuki Ohzeki, an associate professor at Tohoku University whose research focuses on the technology. “But real implementation will depend on when there is a good match between improvement in performance and techniques that simplify the calculations.”Toshiba revealed its Simulated Bifurcation Algorithm in April, initially garnering little attention outside the scientific community. In October, the company announced that its model had identified potential arbitrage opportunities in currency trading in just 30 microseconds -- fast enough, it claimed, to give it a 90% chance of making profitable trades. That triggered inquiries from financial institutions in Japan and abroad, Toshiba said.Quantum ComputingInvestment banks are already eyeing quantum computing as an opportunity and a threat. Goldman Sachs Group Inc. has been building an in-house research team and late last year joined forces with startup WC Ware to speed up the search for a “quantum advantage.” Japan’s Nomura Holdings Inc. has partnered with Ohzeki’s lab at Tohoku University to explore applications in asset management using a machine made by Canada’s D-Wave Systems Inc.“Right now, what you can do with it is still hypothetical,” said Kazuyuki Takeda, a general manager at Mizuho-DL Financial Technology Co., a research arm of one of Japan’s biggest financial groups. “It will take quite a bit of time before we have practical uses of quantum computing. At least 10 years or so.”Alphabet Inc.’s Google claimed in October that its quantum computer -- built on a custom processor with bespoke cryogenic cooling -- could perform a task in 200 seconds that would take today’s fastest supercomputer 10,000 years. Researchers at IBM have countered, saying that their supercomputer can match Google’s Sycamore processor “in a matter of days.” But that cluster of machines occupies an area the size of two basketball courts inside the Oak Ridge National Laboratory. In either case, the cost of quantum-like computational capability appears to still be prohibitively high for most applications.In the meantime, Toshiba is hoping it will succeed in commercializing its new algorithms -- whether in finance or elsewhere -- by delivering a computational edge with existing technology.“We give ourselves about a one-year lead for the stuff that we release publicly,” Goto said. “The more cutting-edge knowledge we have internally gives us confidence that we won’t be easily caught up with.”(Updates with expert comment and latest developments in quantum computing.)\--With assistance from Michael Patterson.To contact the reporters on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net;Grace Huang in Tokyo at xhuang66@bloomberg.net;Shoko Oda in Tokyo at soda13@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Vlad Savov, Tom RedmondFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- American City Business Journals
High Times to open first retail stores in L.A., Las Vegas
The owner of High Times magazine, which covers the cannabis industry, plans to launch flagship retail stores in Los Angeles and Las Vegas.
- GuruFocus.com
US Indexes Continue Gains Thursday
Dow Jones closes at 29,297.64 with a gain of 0.92% Continue reading...
- Barrons.com
Morgan Stanley Reported Solid Earnings. That’s Not Why the Stock Soared.
Morgan Stanley reported profits of $1.30 a share for the quarter on $10.9 billion in revenue, both topping analyst expectations of earnings of $1.02 a share on $9.8 billion.
- MarketWatch
Dow's 240-point climb highlighted by gains in Cisco, Home Depot shares
DOW UPDATE Led by strong returns for shares of Cisco and Home Depot, the Dow Jones Industrial Average is climbing Thursday afternoon. The Dow (DJIA) is trading 240 points (0.8%) higher, as shares of Cisco (CSCO) and Home Depot (HD) are contributing to the blue-chip gauge's intraday rally.
- Reuters
U.S. investment firm StepStone taps banks for IPO -sources
StepStone Group LP, one of the world's biggest investors in alternative assets such as private equity and real estate, has hired investment banks for an initial public offering (IPO) that could take place as early as the first quarter of this year, people familiar with the matter said on Thursday. StepStone's listing would follow peer Hamilton Lane Inc's $190 million IPO in 2017. Hamilton Lane shares have quadrupled in value since then, as the management fee revenue the firm generates from allocating investments to private equity funds makes it attractive to stock market investors.
- Benzinga
What Big Bank Earnings Are Saying About The Economy, Market
Following a big beat by Morgan Stanley (NYSE: MS) Thursday, most of the largest U.S. banks have now reported their fourth-quarter numbers. Investors saw a mixed bag from bank stocks this quarter, a trend that may carry over to the remainder of earnings season. Morgan Stanley is up 7.3%.
- Zacks
Will Dow ETFs Continue to Surge as Q4 Earnings Unfold?
With most blue-chip companies' earnings scheduled over the coming weeks and sentiments being mixed, investors should closely monitor the movement of the Dow ETF.
- Bloomberg
Morgan Stanley’s 126% Bond-Trading Surge Is Electric
(Bloomberg Opinion) -- Wall Street’s bond traders deserve a lot of credit for an impressive earnings season for the biggest U.S. banks. After all, fixed-income trading revenue easily blew past analysts’ estimates across the board.But shareholders might want to show some respect to the machines, too.Consider Morgan Stanley, which reported earnings on Thursday that were so impressive that its shares soared 7.6% when the stock market opened, the biggest intraday gain since November 2016. The bank, with a smaller fixed-income, currency and commodities desk than the likes of Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., posted a whopping 126% increase in FICC trading revenue in the fourth quarter, the biggest of any of the companies reporting this week. Even before Morgan Stanley’s release, Wall Street was looking at the largest surge in fixed-income trading revenue in more than eight years.Now, an important part of the fixed-income trading story is that at this time a year ago, banks were reeling from sharp declines in FICC revenue — Morgan Stanley most of all. So a comeback was hardly unexpected. Still, the fact that bond traders raced past estimates, building upon a third quarter in which they looked like the MVPs of Wall Street, suggests there could be something more sustainable afoot, particularly given that volatility in U.S. Treasuries did nothing but decline in the final three months of 2019 while credit spreads only squeezed tighter.The secret sauce might very well be a continued push toward “electronification” in fixed income. It’s become something of a buzzword for Morgan Stanley’s leadership, though analysts on Thursday’s conference call didn’t bring it up. For example, here’s Chief Executive Officer James Gorman in June:“There's clearly more electronification going on within fixed income. It's becoming a more efficient platform for us. And there's a lot of share moving around the world right now. There's a lot of available share and we've picked up some of that.”And here’s Daniel Simkowitz, head of investment management at Morgan Stanley, at the Bank of America Merrill Lynch Future of Financials Conference in November:“Morgan Stanley is a real leader in electronification. If you go back to the equity markets, we're now applying that into the fixed income trading markets. So we have capabilities here to really help us maybe be a leapfrog player in quant in fixed income.”It’s not just Morgan Stanley, either. Stephen Scherr, chief financial officer at Goldman Sachs, noted in an earnings call a year ago that in fixed income, “there’s an element of platform electronification as a means of which you can drive higher volumes” as bid-offer spreads narrow. And he added that “as we progress the initiative to build out those platforms, we’ll realize greater margin.” Overall, electronification in bond trading is going to be a “big story we’re going to see more of in 2020,” Bloomberg Intelligence senior analyst Alison Williams said.A Greenwich Associates report this week put some numbers to the narrative. It showed that electronic trading in investment-grade corporate bonds rose to 34.4% of daily volume in November, from 24.7% just 10 months earlier. On the one hand, that’s still a relatively modest slice of the market. On the other hand, that suggests more room to run. And more than half of it study participants executed a so-called credit portfolio trade, a strategy pioneered by Goldman Sachs.“The slow and steady change that has occurred over the past decade will ultimately be seen for the revolution that it brought about,” wrote Kevin McPartland, head of research in Greenwich Associates’ market structure and technology group. “Market uncertainty in 2020 should only help this train accelerate.”The trend runs parallel to the view of Wells Fargo analyst Mike Mayo, who has been wearing hoodies during television appearances as a way of drawing attention to banks’ investments in technology. Usually, though, he and others are thinking about digital banking and electronic payments.Fixed-income trading, though, can seem at times to be about as slow to adapt to technological changes as an average retail bank customer. At a U.S. Treasury market conference in September, for instance, panelists including Amherst Pierpont’s Paul Murphy, Cantor Fitzgerald CEO Howard Lutnick, Citadel Securities’s Paul Hamill and Guggenheim Partners CIO Scott Minerd robustly debated whether direct price streaming in bonds was good or bad for the market. My takeaway was that there’s still a feeling among longtime denizens of the bond market that nothing is broken, so nothing needs to change.The big U.S. banks might feel differently. It’s no secret that investors are scrutinizing the companies’ efficiency goals and how they’re balancing crucial investments with cost containment. To the extent that the banks can squeeze more out of fixed-income trading with electronification — a well that’s effectively run dry in equities — I’d expect they’re going to go for it.To contact the author of this story: Brian Chappatta at bchappatta1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
Morgan Stanley (MS) Q4 Earnings Top on Trading, Underwriting
Improvement in trading and investment banking performance, and decent loan growth support Morgan Stanley's (MS) Q4 earnings.
- MarketWatch
Home Depot, Apple Inc. share gains lead Dow's 161-point jump
DOW UPDATE Shares of Home Depot and Apple Inc. are trading higher Thursday morning, propelling the Dow Jones Industrial Average into positive territory. Shares of Home Depot (HD) and Apple Inc. (AAPL) have contributed to the blue-chip gauge's intraday rally, as the Dow (DJIA) is trading 161 points (0.
- Zacks
Zacks Earnings Trends Highlights: JPMorgan, Wells Fargo, Bank of America, Citigroup and Goldman Sachs
Zacks Earnings Trends Highlights: JPMorgan, Wells Fargo, Bank of America, Citigroup and Goldman Sachs
- Bloomberg
Oil Climbs the Most in Two Weeks as Trade Deals Boost Optimism
(Bloomberg) -- Oil posted its largest gain in almost two weeks, swept along in a broader equities rally as the preliminary U.S.-China trade truce and an accord between America, Canada and Mexico fueled optimism about economic growth.Futures settled 1.2% higher Thursday, as stocks hit record highs. Under the initial settlement between the world’s largest economies, China pledged to increase purchases of U.S. commodities. Also, the Senate approved President Trump’s U.S.-Mexico-Canada (USMCA) trade accord that revamps the 1994 NAFTA agreement.“The China-U.S. agreement and the Senate passing of USMCA,” will help to boost the economy, said Michael Lynch, president of Strategic Energy & Economic Research Inc. in Winchester, Massachusetts. “After 3 years, here is the first two bits of good news for the economy.”Prices bounced back after sinking to a six-week low Wednesday when the Energy Information Administration reported domestic petroleum stocks had expanded to the highest levels in four months.The market would have appeared to have risen more Wednesday if price hadn’t fallen sharply before the U.S.-China trade signing, said Lynch. “The market had worked harder to get prices off that low.”The Paris-based International Energy Agency in a report forecast China’s oil demand would average 14.1 million barrels a day this year, compared with 13.6 million last year. “China was a source of worry, and concerns were that its demand would slow. But that doesn’t appear to have been the case,” Lynch said.West Texas Intermediate crude for February delivery rose 71 cents to settle at $58.52 a barrel on the New York Mercantile Exchange after earlier rising the most since Jan. 8.Brent for March settlement rose 62 cents to $64.62 on the ICE Futures Europe exchange. The global benchmark crude traded at a $6.09 premium to WTI for the same month.See also: Commodity Markets Shrug at China’s $95 Billion Purchase Pledge\--With assistance from James Thornhill, Elizabeth Low and Grant Smith.To contact the reporter on this story: Sheela Tobben in New York at vtobben@bloomberg.netTo contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine TraywickFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
U.S.-China Pact Leaves Currency Watchers Mostly Unimpressed
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. The U.S.-China trade deal includes a foreign-exchange agreement that reaffirms the nations’ commitments to avoid competitive devaluations. Currency watchers were mostly unimpressed.The two-page currency chapter of the broader accord signed in Washington on Wednesday lays out an enforcement mechanism if either side fails to adhere to International Monetary Fund and Group-of-20 commitments.The U.S. and China agreed to publicly disclose data including foreign-exchange reserves and figures on imports and exports as proof that neither side is manipulating exchange rates. But the general take from most analysts was that it offered little news on the currency front.“It still remains to be seen on enforcement of the exchange-rate component and the deal overall,” said Torsten Slok, chief economist at Deutsche Bank AG. “So we have to stay tuned with regard to the yuan.”In what analysts saw as a concession to China before the signing, the U.S. Treasury on Monday said China is no longer a currency manipulator. At President Donald Trump’s direction, Treasury Secretary Steven Mnuchin in August made an unusual move to name China a currency cheat as trade tensions rose, before removing the tag this week.A commitment from the Americans to make a public promise to remove that label at a later date was rejected by the Chinese, according to one person familiar with the matter.“Nothing new on disclosure, that’s disappointing,” said Brad Setser, who worked at Treasury during the Obama administration and is now at the Council on Foreign Relations. “The rest is mostly a reiteration of China’s existing IMF and G-20 commitments.”Optimism ahead of the agreement signing and after Treasury’s removal of China from its currency watch list drove the yuan on Tuesday to its strongest since July. The offshore yuan was little changed after the signing, at 6.88 per dollar.Treasury’s foreign-exchange policy report released Monday said China “needs to take the necessary steps to avoid a persistently weak currency.”If issues arise between the two countries and there’s a failure to arrive at a resolution, either may request the IMF to undertake “rigorous surveillance” of the policies agreed to, or initiate formal consultations and provide input, according to Wednesday’s deal.Yuan MovesThe onshore yuan is likely to stay just below 7 per dollar following the trade pact, according to Raymond Lee, a money manager at Kapstream Capital in Sydney. “With this deal that’s been done and China telling the U.S. that they’ll watch their currency, I don’t think they’ll allow it to get above 7.25,” he said.Mark Sobel, a former Treasury and IMF official, said the agreement does appear to give the U.S. administration a way to penalize China if it doesn’t follow the mandates.“What is new involves the relationship between the currency chapter and the bilateral dispute resolution mechanism,” he said. “In essence, the text indicates that if the U.S is unhappy over some aspect of FX policy, it can unilaterally make recourse to the provisions of that mechanism, including tariffs.”Currency policy has emerged as a tool for Trump to rewrite global trade rules that he says have hurt American businesses and consumers. Foreign-exchange policy is a key piece of trade pacts with Mexico, Canada and South Korea.The Trump administration has considered measures to counter the dollar’s strength, including direct intervention, though at one point last year officials said that step had been ruled out. Still, Trump has continued to lament the greenback’s strength, which is a drag on U.S. companies’ overseas earnings.Less SubstanceFor Michael Cahill at Goldman Sachs Group Inc., the accord has less substance on exchange rates than the U.S. trade deal with Mexico and Canada.“I don’t see a lot new here and it’s less relative to what’s in the United States-Mexico-Canada Agreement, particularly given there is no agreement to publish intervention data,” said the strategist. “There’s nothing in it that significantly alters our outlook for the yuan. We see the currency moving to 6.85 in three months -- so close to flat.”The signing of the long-awaited deal might have helped the market mood on the fringes but UBS Wealth Management cautions that the agreement still has its limitations. The disruptions to business investment and supply chains inflicted by tariff wars are unlikely to be undone any time soon, according to Mark Haefele, the global chief investment officer at UBS Wealth.“We see the deal as representing a partial calming rather than an end to trade tensions,” Haefele said in a client note on Thursday. “This should be sufficient to allow risk assets to advance, and we are overweight emerging-market equities and U.S. dollar-denominated sovereign bonds. Looking past a phase-one deal, we cannot rule out that U.S.-China tensions flare up again.”(Adds UBS Wealth comment in last two paragraphs)\--With assistance from Ruth Carson and Anooja Debnath.To contact the reporters on this story: Saleha Mohsin in Washington at smohsin2@bloomberg.net;Liz Capo McCormick in New York at emccormick7@bloomberg.netTo contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, ;Alex Wayne at awayne3@bloomberg.net, Mark TannenbaumFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
