Let's take a deep look into the S&P 500's top sector for the third quarter of 2023 - Energy - and its high flyers MPC, PSX, HAL, VLO and APA. The third quarter of 2023 was a tough one for Wall Street. In particular, the S&P 500 — which tracks the biggest U.S.-listed companies — closed down around 4% in what was brought about by a severe setback consecutively in August and September.Market participants expressed significant worry as the Fed warned of an additional 25 basis point rate hike before the year-end, indicating a prolonged period of higher interest rates to fight the stubborn inflation. Consequently, the major U.S. equity indices were caught up in a selloff even as the war between Russia and Ukraine continues to drag on.But through the stock market’s first quarterly loss of 2023, the Oil/Energy sector stood out, with oil prices within spitting distance of the $100-a-barrel threshold and some of the companies being the biggest winners of the July-September period. The standout performers of the third quarter were Marathon Petroleum MPC, Phillips 66 PSX, Halliburton HAL, Valero Energy VLO and APA Corporation APA.Energy Stands Tall Amid Broad-Based DeclineAlthough the S&P 500 finished the quarter in the red, a particular group of stocks stood out.On the sectoral front, it was energy that topped the S&P standings for the period with an outsized gain, while most others lost value. The space has comprehensively outperformed the market, with the Energy Select Sector SPDR’s (an assortment of the largest U.S. energy companies, popularly known by its ticker, XLE) impressive gains, primarily fueled by a tight supply picture and the geopolitical premium. To be precise, the energy index generated a total return of 11.3% in the third quarter against the S&P 500’s decline of 3.7%.Much of this can be attributed to Saudi Arabia's June declaration of a unilateral reduction in oil output by 1 million barrels per day. This production cut, initially extended through August and September and subsequently continued for the rest of 2023, has served as the primary driver of the increase in oil prices.In addition to Riyadh's efforts, recent data from the Energy Information Administration revealed a significant decrease in U.S. commercial crude inventories. Since July, these inventories have fallen by almost 42 million barrels. To put that in context, total domestic stock now stands at 416.3 million barrels — 3.3% less than the year-ago figure and 4% less than the five-year average.Furthermore, supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) have now dropped to 22 million barrels — the lowest since July 2022.In response, WTI oil prices topped $95 last week for its highest intraday level since August of last year. While there are jitters over high inflation and stuttering economic growth, these have more than offset the tightening supply outlook.Most energy investors have had something to cheer about in the September quarter, but some stocks certainly performed better than others. The five largest contributors to the quarterly sectoral gains were Marathon Petroleum, Phillips 66, Halliburton, Valero Energy and APA Corporation.Will these winners maintain their run in the last quarter of 2023, too, or will they eventually run out of steam? Here's a summary of them:Marathon Petroleum: The company is a leading independent refiner, transporter and marketer of petroleum products. MPC’s $23.3 billion acquisition of Andeavor has integrated the premier assets of both companies, bolstering the scale and leadership position of the combined entity in the United States. As it is, Marathon Petroleum's access to a lower cost of crude in the Permian, Bakken and Canada helps it to benefit from the differentials.MPC handily outperformed all but one stock and was up 29.8% during the period, ranking second on the S&P 500 list. While Marathon continues to generate strong cash flows amid a disciplined capital strategy and increasing shareholder returns, this Zacks Rank #3 (Hold) downstream operator’s further price gains could be limited by operational issues and an unpredictable refining macro backdrop.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Phillips 66: Another major refiner in terms of size, efficiency and strength, Phillips 66 buys, sells and refines crude oil and other feedstocks at its refineries. PSX, with a throughput capacity of 2 million barrels per day, owns an interest in 12 refineries in the United States and Europe. Moreover, it owns 7,110 branded U.S. outlets and 1,700 international ones.Phillips 66, carrying a Zacks Rank of 3, rallied 26% last quarter. With its vast pipeline network, the company is also a big player in the midstream business, generating stable fee-based revenues. Higher commodity prices have driven upstream investments, thereby increasing volumes for midstream operators. However, due to lower demand for refined petroleum products, the firm might miss the potential gain in refining margins. Thus, Phillips 66 is likely to witness a decrease in its total capacity utilizations. Hence, we expect pre-tax income from refining business to be lower this year.Halliburton: It is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. Halliburton operates in over 80 countries. Founded in 1919, Halliburton employs more than 40,000 people and operates under two main segments: Completion and Production, and Drilling and Evaluation.This stock was the third-best sector performer on the S&P 500 Index, with shares appreciating 22.8% in the past quarter. But it will be a bumpy ride in the near-to-medium term. While the company’s significant global presence exposes it to worldwide geopolitical risks, the rapidly rising labor and material costs are cutting margins. Finally, the Zacks Rank #4 (Sell) energy company’s above-average debt-to-capitalization and low dividend yield are other negatives in the HAL story.Valero Energy: Among all the independent refiners, Valero offers the most diversified refinery base with a capacity of 3.1 million barrels per day in its 15 refineries located throughout the United States, Canada and the Caribbean. The majority of VLO’s refining plants are located in the Gulf Coast area, from where there is easy access to export facilities.This Zacks Rank #3 stock ended 20.8% higher in the last three-month period. The Gulf Coast presence helped it to expand export volumes over the past years and gain from high distillate margins. Valero is expected to capitalize on the rising demand for distillate fuel. However, there are concerns about Valero’s high debt levels, which leave it vulnerable to any volatility in commodity prices. Also, higher oil and gas prices can lead to increased input costs for Valero, thereby putting pressure on the profit margins. This suggests a tricky risk/reward profile and limited upside potential VLO.APA Corporation: It is one of the world's leading independent energy firms engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Geographically, the company’s operations are in the United States, Egypt and the North Sea of the United Kingdom. APA also holds acreage in offshore Suriname (South America) and other international locations.This stock, with a Zacks Rank of 3, ended 20.3% higher in the July-September period. APA’s slew of discoveries in offshore Suriname, through its joint venture with TotalEnergies, is a major positive catalyst for the company. Over time, Suriname is expected to become one of APA’s major assets with significant cash flow potential. However, the company's high leverage restricts its financial flexibility. Moreover, APA’s significant exposure to forex currency and the associated risks might put off some investors. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s credited with a “watershed medical breakthrough” and is developing a bustling pipeline of other projects that could make a world of difference for patients suffering from diseases involving the liver, lungs, and blood. This is a timely investment that you can catch while it emerges from its bear market lows. It could rival or surpass other recent Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Halliburton Company (HAL): Free Stock Analysis Report APA Corporation (APA): Free Stock Analysis Report Valero Energy Corporation (VLO): Free Stock Analysis Report Marathon Petroleum Corporation (MPC): Free Stock Analysis Report Phillips 66 (PSX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

The 10-year bond yield continues to be an albatross around the neck of equities trading, currently bringing returns of 4.71%. Pre-market futures are down again; somehow, merely changing pages on the calendar hasn’t yet changed the fortunes of the stock market. The Dow, down now five of the past six sessions, is -180 points at this hour. The Nasdaq, the only of the major indices to be in the green over the last week of trading, is -125 points. The S&P 500, which contains all of the Dow 30 and many of the 2500 stocks on the Nasdaq, is -30 points currently.The 10-year bond yield continues to be an albatross around the neck of equities trading, currently bringing returns of 4.71% — a nice safe-haven after mid-year stock market levels had brought +46% on the Nasdaq, +19% on the S&P, etc. — which is the highest we’ve seen since August 2007, more than a year before the financial crisis brought down everything, including the global economy.We do see a slimmer inverted yield curve between 2-year and 10-year treasuries these days at roughly -0.43%; back in July that inversion was around 100 basis points. But with higher rates for longer from the Fed, we may finally see that inversion go away, albeit at higher yield levels than most analysts had been considering. We’ve had an inverted yield curve — which often pre-dates an economic recession — since July of 2022.Kicking off Jobs Week today (after no employment data released yesterday), the Job Openings and Labor Turnover Survey (JOLTS) report for August will be out at 10am ET this morning. Expectations are for a flat read month-over-month, to 8.8 million job openings for the last full month of summer. This is a long way down from cresting at 12 million job openings back in early 2022, and we’ve coming crashing through the 10 million level we last saw this past spring.Should today’s figure come in line with expectations, we’ll remain at levels we haven’t seen since early 2021, when JOLTS headline numbers were in the midst of a huge post-Covid upswing. The couple years pre-Covid, we saw job openings roughly 1000 units lower per month than where we are currently. We were at 6 million-ish back in 2016-17, off Great Recession lows just over 2 million job openings per month.Job Quits last time around were 3.55 million, the lowest monthly tally in 2 1/2 years. Job Quits are a good gauge for employee confidence — if more people are quitting their jobs, usually there is a higher likelihood they’ll find a better job in the near future. All-time highs in this metric were from late 2021 and early 2022 at around 4.5 million, and we were still over 4 million job quits per month as recently as May. As of the July number, we’re close to pre-Covid levels.Wednesday’s ADP ADP private-sector payrolls and Friday’s Employment Situation report are the other two components of Jobs Week for this month. Because we don’t have a Fed monetary policy meeting this month, we’ll see another Jobs Week in November. By then — and including the lion’s share of Q3 earnings season, which has yet to yield meaningful amounts of data — will set the table for the Fed to decide on interest rates going forward. All this is to say: we’re not there yet.Questions or comments about this article and/or author? Click here>> Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s credited with a “watershed medical breakthrough” and is developing a bustling pipeline of other projects that could make a world of difference for patients suffering from diseases involving the liver, lungs, and blood. This is a timely investment that you can catch while it emerges from its bear market lows. It could rival or surpass other recent Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Automatic Data Processing, Inc. (ADP): Free Stock Analysis Report Invesco QQQ (QQQ): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports SPDR Dow Jones Industrial Average ETF (DIA): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Market Awaits JOLTS Report for August. Pre-market futures are down again; somehow, merely changing pages on the calendar hasn’t yet changed the fortunes of the stock market. The Dow, down now five of the past six sessions, is -180 points at this hour. The Nasdaq, the only of the major indices to be in the green over the last week of trading, is -125 points. The S&P 500, which contains all of the Dow 30 and many of the 2500 stocks on the Nasdaq, is -30 points currently.The 10-year bond yield continues to be an albatross around the neck of equities trading, currently bringing returns of 4.71% — a nice safe-haven after mid-year stock market levels had brought +46% on the Nasdaq, +19% on the S&P, etc. — which is the highest we’ve seen since August 2007, more than a year before the financial crisis brought down everything, including the global economy.We do see a slimmer inverted yield curve between 2-year and 10-year treasuries these days at roughly -0.43%; back in July that inversion was around 100 basis points. But with higher rates for longer from the Fed, we may finally see that inversion go away, albeit at higher yield levels than most analysts had been considering. We’ve had an inverted yield curve — which often pre-dates an economic recession — since July of 2022.Kicking off Jobs Week today (after no employment data released yesterday), the Job Openings and Labor Turnover Survey (JOLTS) report for August will be out at 10am ET this morning. Expectations are for a flat read month-over-month, to 8.8 million job openings for the last full month of summer. This is a long way down from cresting at 12 million job openings back in early 2022, and we’ve coming crashing through the 10 million level we last saw this past spring.Should today’s figure come in line with expectations, we’ll remain at levels we haven’t seen since early 2021, when JOLTS headline numbers were in the midst of a huge post-Covid upswing. The couple years pre-Covid, we saw job openings roughly 1000 units lower per month than where we are currently. We were at 6 million-ish back in 2016-17, off Great Recession lows just over 2 million job openings per month.Job Quits last time around were 3.55 million, the lowest monthly tally in 2 1/2 years. Job Quits are a good gauge for employee confidence — if more people are quitting their jobs, usually there is a higher likelihood they’ll find a better job in the near future. All-time highs in this metric were from late 2021 and early 2022 at around 4.5 million, and we were still over 4 million job quits per month as recently as May. As of the July number, we’re close to pre-Covid levels.Wednesday’s ADP ADP private-sector payrolls and Friday’s Employment Situation report are the other two components of Jobs Week for this month. Because we don’t have a Fed monetary policy meeting this month, we’ll see another Jobs Week in November. By then — and including the lion’s share of Q3 earnings season, which has yet to yield meaningful amounts of data — will set the table for the Fed to decide on interest rates going forward. All this is to say: we’re not there yet. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s credited with a “watershed medical breakthrough” and is developing a bustling pipeline of other projects that could make a world of difference for patients suffering from diseases involving the liver, lungs, and blood. This is a timely investment that you can catch while it emerges from its bear market lows. It could rival or surpass other recent Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Automatic Data Processing, Inc. (ADP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

   The transcript from this week’s, MiB: Gary Cohn, Director of the National Economic Council, President of Goldman Sachs, is below. You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ This is Masters in… Read More The post Transcript: Gary Cohn appeared first on The Big Picture.    The transcript from this week’s, MiB: Gary Cohn, Director of the National Economic Council, President of Goldman Sachs, is below. You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ This is Masters in Business with Barry Ritholtz on Bloomberg Radio [Barry Ritholtz] 00:00:07 This week on the podcast, what can I say? Gary Cohen with just a stellar career at Goldman Sachs, where he spent 25 years rising through the ranks, commodities trading, fixed income currency, eventually running equity, and soon after becoming President and Chief operating officer at Goldman, soon after he’s tapped by the White House to become director of the National Economic Council and Chief Economic Advisor to President Trump. Starting at the beginning of the administration in 2017. Really a fascinating career, a really, really interesting person. We dive deep into all sorts of things about running businesses, managing risk, and then when we began talking about his public sector service, we went deep into the Tax Cuts and Job Act of 2017. If you’re at all interested in that, you’ll find this to be an absolutely masterclass in how legislation is assembled, how it’s shepherded through the house, through the senate, through all the competing interest groups. I found this discussion just really to be absolutely fascinating, and I’m positive you will also, with no further ado from the White House and Goldman Sachs, Gary Cohen, [Gary Cohn] 00:01:34 Barry, it’s great to be here. [Barry Ritholtz] 00:01:36  It’s great to have you. So let’s start out talking a little bit about your background and your career. I never would’ve guessed you began at US Steel. Tell us when was that and, and what’d you do there? [Gary Cohn] 00:01:47 So, it was a very short career at US Steel. So, you know, I I, I, I graduated college in 82 and I, I thought I was gonna take a, a few months off and regroup, and my dad didn’t think that was part of the agenda. So he, you know, woke me up my first Monday morning home at 6:00 AM through the lights on, asked me what I was gonna do with the rest of my life, and I think I made some wise crack. And he said, go [Barry Ritholtz] 00:02:13 To Europe, gonna spend a few weeks [Gary Cohn] 00:02:14 Away. Yeah, I, I, I think I told him, I, I, I said, I think I told him you’re looking at it. And he said, yeah, not in my house. So I went out and tried to find a job locally. This is when I was still living in Cleveland, and I got a job with the home building Products division of United States Steel, which was a company that United States Steel had acquired in Cleveland, called All Side. They sold replacement windows, vinyl siding, aluminum siding, gutter coil, things like that. I ended up starting there in the summer of 82, and by the fall of 82, I was gone. Now, there was one really important part of, of that as part of my job training, I was sent to the big sales offices to learn how the product was sold. One of the big sales offices was out in Long Island in Garden City. And so in my second week in the sales office in Garden City, I said to the, the gentleman I was working with, I said, you know, I think we’re gonna work really hard Monday to Thursday, and I’m gonna go in the city Friday. And he said, that’s a really good idea. So I went in the city on Friday, and that’s how I found my way down to the commodities exchange, the commodities floor. And that’s where I got my job, and that’s how I turned my career into a financial career. [Barry Ritholtz] 00:03:33 So I had a wildly incorrect assumption. I just pictured you working with the various input commodities to steal iron plus energy, plus manganese, nickel, chromium, carbon  all those things, and said, Hey, I could move to the commodities exchange and, and make a killing trading. Nothing like that happened. [Gary Cohn] 00:03:52 Nothing like that. [Barry Ritholtz] 00:03:53  How did you find your way to the Comex? [Gary Cohn] 00:03:56  So two years earlier, and now we’re going back in time, the summer of 80, for those of you that remember the summer of 80, the Hunt brothers at that point were silver, were exactly, were trying to corner the gold and silver market. I was doing an internship at a local brokerage office in Cleveland, Ohio, and I did the typical internship, you know, a week in the back office, a week in equities, a weak in fixed income and weak in commodities, a weak in bonds, and then four weeks, wherever you’d like to go. And of course, where I would like to go is where the guys are screaming and yelling in the back corner, which were the commodity guys. So I ended up being allowed to go sit with the commodity guys. And at the time they were doing the Chicago, New York gold arbitrage. They had sent, set up a gold arbitrage desk, meaning [Barry Ritholtz] 00:04:46 That the slight difference in prices between the two exchanges, they would help bring ’em into line and maybe pocket a few cents on each exchange. [Gary Cohn] 00:04:54 Exactly. And at the time, they weren’t slight differences. Oh, really? Yeah, because it, the, the, the Hunt brothers, when they came into the Comex at the time, they were only buying one market. They were buying the, the Comex market. So the Comex market would move, you know, 10, 20, $30, and the Chicago market would lag dramatically behind. Wow. So there were these five plus dollar disparities in the price of gold. And so they would sit there and trade. And so after a week there, I, I said to the guys on desk, Hey, can I open an account and do this? And they said, you know [Barry Ritholtz] 00:05:27 Hey, how hard could it be? [Gary Cohn] 00:05:28  Be? Yeah, you’re, you’re, you’re allowed to open an account. So I opened an account and I sat there and I traded the, the New York Chicago Gold arbitrage for the next sort of close to month. And I said, wow, this is the most amazing thing I’ve ever seen. They’re just giving away free money.  I was making cash while I was sitting there. So I decided that point. I said, oh, I, I, I, I gotta go to the floor of the exchange. This is really interesting. This is a really interesting opportunity. And I really did not want to go back to college. You know, I had a, a long discussion with my dad, you know, I said, dad, this is silly that I go back to college. There’s this unique opportunity. I don’t know how long it’s gonna last, and I’m gonna sit here and trade this. There’s gold arbitrage. And he said, no, no, you’re going back to college. I don’t care what you do. So I did the best thing I could do. I went back and did my next three years of school in two years, and then I got myself to the floor of the exchange by the end of 82. [Barry Ritholtz] 00:06:26 And then what were you doing on the, what were you trading on the floor and how did you stay long? Did you stay as, as a floor trader? [Gary Cohn] 00:06:32 So, in, in many respects, I got lucky in my first job offer because the Comex had just started to trade options on futures. It was brand new. No one on the floor knew the options market. So one of the large firms there approached me and said, Hey, do you know anything about options? Can you help us trade options? And I said, of course, even though I knew nothing about options, [Barry Ritholtz] 00:06:59 But nobody knew anything about Options on Futures. They, their brand spanking knew, [Gary Cohn] 00:07:03 Right? No one, no one had traded ’em on the floor. There were no option traders there. The big option, trading firms from the other option, trading Exchange hadn’t come down to the floor. They hadn’t become members, they hadn’t rented seats. So it was, there was no real knowledge there. So literally in the course of five days, I went out and tried to learn how to trade options, and I got lucky enough to get a job. I stood behind one of the brokers for one of the large firms, and I was literally saying, okay, buy that call, sell that, put, go sell those futures. And he goes, what’d I do? Well, you locked in, you know, $4 an ounce. He goes, how how’d I do that? I said, well, here’s how you do that. How do I get out of it? I said, okay, we’re gonna work our way out of it. And I stood behind that person for the better part of a year. And then after a year, you know, I, I, I said, this is kind of silly. I’m sitting here telling this guy what to do, right? I gotta figure out how to get my own seat and trade my own account. And so, about a year into my experience on the floor, I went out and, and got a seat on the floor of the Comex. [Barry Ritholtz] 00:08:04 What do you remember what they cost back then? [Gary Cohn] 00:08:06  About 150,000 bucks. Okay. It was a, it was a 00:08:09 [Barry Ritholtz] Real money in ’82. [Gary Cohn] 00:08:10  It was a substantial amount of money. Now, the good news is you could lease ’em, you could lease seats on a, on a monthly basis. So I went and got a floor, and I, and I opened up a, an account with a clearing member when the clearing member guarantees your trades. Right. And I started trading for my own account. And so I traded my own account from sort of the end of 83 until I left the floor of the exchange. [Barry Ritholtz] 00:08:32 And that was how much later. [Gary Cohn] 00:08:33 So I, I stayed on the floor till, till basically 1990. And, you know, ended up moving from trading options to trading more and more futures, you know, the futures markets were, were expanding, they were growing. It was a interesting time, right. But I, I, you know, I would trade almost anything that was volatile that day. And it was an inter, it was really an interesting experience learning how a fundamental terminal market works. [Barry Ritholtz] 00:09:00 So I’m glad you mentioned you shifted somewhat from options to futures options. Your risk is predefined. However much you’re putting up, that’s as much you can lose. Well, [Gary Cohn] 00:09:10 Unless you, unless you sell a naked call, oh, 00:09:12  Okay, fair enough. You sell a naked call, you [Barry Ritholtz] Right. It’s, it’s no different But, but inherently in futures, a whole lot more leverage, a whole lot more risk. How fundamental was that to your learning about investing, trading risk management, starting with futures? So, [Gary Cohn] 00:09:29  It, it was important where I found a real niche on the floor, and everyone finds their little niche on the floor and, and being on the floor. It’s an interesting environment because everyone’s there for their own little specific reason. And where I found the niche is at that time, because things have changed dramatically. You know, the, the futures exchange is listed about 24 months of futures contracts. You know, the, the first and second delivery months traded 90% of the volume. But then you had people that wanted to trade the outdated months, you know, they wanted to trade the one year forward or the 18 month forward. Where I really specialized and where I spent my time is figuring out how to price the one year forward or the 18 month forward, and making prices in those markets. There were only two or three of us on the floor that did that. So when any of the orders came in to buy the non-active months, there were only two or three of us that would make a price. And so I carved out a, a, a unique opportunity. There was some other people, I wasn’t the only one doing it on the floor. And, and it was a unique opportunity to really learn more of the fundamentals of the business. It also brought in, you know, interest rates and interest rates expect, because the forward curve is a function of interest rates [Gary Cohn] 00:10:52 . You’re doing a lot of math in your head on the Fly. I’m doing, I’m doing an awful lot of math in my head on the fly. And to hedge your position, you know, how do you hedge, you know, a a long dated future versus a short dated future? It’s not one-to-one. There’s mathematical formulas on to, on how to hedge your book and count your months of exposure and look at your interest rate exposure, look at your underlying exposure, look at your present value of your future cash flows. It becomes much more interesting than just trading the spot month in and out. So that’s where I really learned how to trade and how to think about cash flows and think about supply demand. [Barry Ritholtz] 00:11:28 It’s a fairly obvious transition from the floor of the Comex to Goldman Sachs. How, how did you meet Goldman? What, how did, how did that next step come about? So, [Gary Cohn] 00:11:40  By the time I was sort of at the end of my career in 80, 89, 90, you know, I’d become a fairly large trader on the floor. And when you’re a fairly large trader on the floor, that means you’re taking the other side of the institutional business flow. The institutional business flow at the time was probably the biggest player was, was, was Goldman Sachs. It was j Aaron, Goldman Sachs, Morgan Stanley, a little bit of a I g a little bit of JP Morgan, you know, and then a bunch of the, the funds. So I knew all of the Goldman traders because when they came in to move volume, I was there to, to, to make prices. And, and, and so we had a, you know, we had a a, a good relationship with each other. 00:12:26 [Speaker Changed] I’m gonna assume you weren’t taking the other side of the trade all that often with them, or, 00:12:30 [Speaker Changed] Oh, I was taking the other side of the trade all the time. Oh, really? Okay. But remember, we, we had completely different things we were trying to accomplish. Goldman had clients on the other side. They were trying to make their clients a ahead price and get hedged, and they were gonna walk away from the trade. I was making a price, and I may be out of it in 30 seconds or 40 seconds or 50 seconds. I was trying to figure out, you know, what was the price I needed for the next five minutes to clear the volume, got it, and move it around. And if I traded something, where could I move it? What could I, what could I, what could I buy or sell against it to make myself as, as risk reducing as possible? So we had different motives and, and so I was able to do my job. 00:13:13 They were able to do their job. And that’s what a, a terminal market does. It allows the different factors or the different people trying to get done what they need to get done, a place to meet. And, and, and so I had become closer and closer to the Goldman Sachs people. I’d become closer to the a i g people. I’d become close to everyone in, in, in, in 1990, Goldman had partner elections, and the, the gentleman who was running the medals trading desk, you know, called me in the office one day. And I just thought we were gonna have a conversation about the markets. And you know, what, what I was thinking, what he was thinking. And he said to me, he said, Hey, look, you know, I just became partner here. I think there’s a great opportunity. I’m gonna really continue to build this business. 00:13:56 And instead of you just taking the other side of our business all day long and fighting with us, why don’t you come up here and join us? At the time, it was the farthest thing from my mind. But the more I thought about it, and the more I saw the trends of what was going on in the industry, and the industry had changed quite dramatically over the prior five years. It had gone from a fairly, fairly heavy retail business to a very institutional business. No, no individual was really trading commodity features. If you wanted that exposure, you were giving your money to a professional, a commodity trading advisor, or some hedge fund. So it was becoming very institutionalized. So it was harder and harder to make money, or I was taking more and more risk to make the same amount of money. So when this individual, Jim Riley came to me, I said, you know, this is, this is not the craziest thing I’ve ever heard of. And he and I came to an agreement that I could keep my seat, if I ever wanted to go back, I could do a few things to make sure that if the transition upstairs from the floor environment to the trading desk environment didn’t work, that I felt like I had a safety net. Well, I never really needed that safety net, but it was nice to have that safety net. Huh. 00:15:04 [Speaker Changed] Really quite fascinating. You, you then spend what the next 25 years at, at Goldman Sachs. You rose through the ranks, eventually becoming president and c o o pretty good decision leaving the floor of the comics. 00:15:19 [Speaker Changed] I think it was one of my great decisions in life, really. So besides, besides getting married and a few other things, I, I, I, I can’t really just tell tell you what other better decisions. 00:15:28 [Speaker Changed] So you run commodities for a while at Goldman. What was that like? And do you still like, look at what’s going on today in energy when you look around? Do you get that itch? Do you feel like, I wanna, I wanna, I wanna do some futures trading, or Yeah. 00:15:43 [Speaker Changed] Look, once a trader, always a commodity trader, right? So I look at prices of commodities every day, and I have views on the markets every day. I don’t know if they’re sophisticated enough that I would trade futures, but, you know, trading underlying equities and trading, you know, equities that have high correlation to commodities is something I, I’m comfortable with. It was a unique opportunity at the time, because if you go back to that early nineties period, you know, commodities were somewhat in a bull market. It was a, it was a pretty bull market environment. And, you know, there were a lot of hedge funds talking about how to, how they were making 20, 30, 40% returns in commodities. Well, the team at Goldman Sachs had figured out if you bought like one gold future contract for the year, you would’ve made 30%. So, you know, we, we, we got involved and created a benchmark, a commodity indices at the time. 00:16:40 So there was a way to judge yourself. Did you actually outperform the market? You know, I had the interesting opportunity to be part of the team that built a commodity index. I, once I got done building it, I, I was the one that traded that index. So I got exposure to 18, 18 markets, many of which I’d never traded in my life. So that was really unique. It allowed me to build some new, a new business allowed, it allowed me and Goldman to expand into a lot of new markets where there was huge business opportunities for our clients. Hmm. Really, 00:17:12 [Speaker Changed] Really intriguing. So let’s talk a little bit about what makes Goldman Sachs so special. You spent most of your career there. Why is it so unique? 00:17:24 [Speaker Changed] So, when I went to Goldman in, in, in 1990, it was a small private partnership. I mean, it was a really small private partnership. Looking back, 00:17:35 [Speaker Changed] 500 partners, 00:17:37 [Speaker Changed] Oh, less, substantially less, really? Yeah. I, I think the most interesting document that I pull up from time to time is the SS one from the public filing of Goldman Sachs, which was in the, in the late nineties. If you look at the, if you look at the filing and you look at the size of the company and the revenue, the entire yearly revenue numbers would be a bad quarter right? Now. That’s unbelievable. It just tells you. And, and so there was so much growth going on in Goldman when I went there in the nineties, and I had a unique seat, you know, in, in, in, and the partners there provided me a unique seat, and they gave me enormous amount of latitude and responsibility to keep building businesses. So a as you said, I I, I, I joined the firm as part of j Aaron. 00:18:35 At that point, J Aaron still was a quasi quasi standalone business. It was wholly owned by Goldman Sachs, but we hadn’t quite integrated into the Goldman Sachs culture. So the first thing that happened in my career there is, you know, j Aaron became part of fixed income. So we, we became, we went from fixed income and j Aaron to thick fixed income currency and commodities. That was a big move, taking these, you know, crazy commodity guys, right? And putting ’em in with these very sophisticated fixed income guys. So part of that transition, and that was, that was a big move to create thick. And, and it didn’t happen overnight. There was a lot of natural tension in involved in that. And then even when we were combined by name alone, we still ran ourselves independently. So then I got the unique opportunity to be the, i, I would call it Guinea pig. 00:19:34 I was the, the, the commodity guy. The got put into running a fixed income business. I didn’t lose my responsibility of running the commodity business, but we moved the emerging market business down to what used to be the j Aaron floor. On the j Aaron floor was the commodity businesses as well as the FX business. So we had the, you know, the metals business, we had the oil business, we had the grain business, we had the coffee business, we had a coffee roasting room. We had a tasting room, and then we had the FX business. And in the middle, we decided, which made sense to put the emerging market debt business, all, all 00:20:12 [Speaker Changed] Related currency. Yeah, commodities and EmTech 00:20:15 [Speaker Changed] Made sense to us. Yes. Made sense. At the time, the Mexican, after the Mexican restructuring, they had, they had Mexican bonds with an oil option embedded in them. You had a lot of currency forwards trading, which made se made sense. So we moved emerging markets down, and I was asked to run the emerging markets business. So I was the first sort of guy that went from being a pure j Aaron Guy to making that crossover to commodities and a fixed income business. 00:20:43 [Speaker Changed] So prior to that, have you had any management experience or leadership experience that’s a big raucous floor, and I would imagine that desk was, was a handful to deal with. What, what was it like stepping into that role? 00:20:57 [Speaker Changed] So I had been running the commodities business. So I had been managing the commodities business. We had built some new businesses. We had built our, our Goldman Sachs commodity index business. So, so I had had, you know, a lot of responsibility building a business and, and, and, and building it out quite well. I had spent four years in London building our commodity business there. So the management piece of it was not what was the challenge to me, the challenge to me was I had never been involved in a fixed income business. You know, to me, I remember the moment, you know, where, where, where, where I had to learn something new for the first time I had, I spent my whole life in supply demand. So this is supply, this is demand, you know, this is how you look at supply demand. And all of a sudden I am in this world where, okay, we’ve got the, you know, Mexico 23 bond trading X, y, Z, and it’s 1 0 2, 1 0 3, 1 0 4. Like this thing is under value, we should buy it. And the guys go, no, no, no, no, no. I go, why won’t we buy it? We gotta own this thing. They go, they can turn around and issue more tomorrow. And I go, oh man. Like the whole supply demand fundamentals, right? I had to change my whole thinking. 00:22:06 [Speaker Changed] There’s on, there’s only so much gold and silver around, right? But bonds how much you want, right? Bonds, you got 00:22:11 [Speaker Changed] All you, we can call, you want bond, you know, the government of Mexico can turn around and reissue can, can open the issue or reissue a new bond tomorrow. So the amount of Mexican sovereign bonds can change tomorrow, which all of a sudden was a whole new way of thinking about the world. That the supply demand fundamentals of a commodities market are not the same as the supply demand fundamentals of a fixed income market. So, you know, the, the, the opportunity to bring that emerging markets desk down to into the j Aaron world worked out fairly well. I got the opportunity to go from the emerging markets world into the mortgage world. So they, they, they, they sent me into the next beast, which is the mortgage world. And, 00:22:50 [Speaker Changed] And I have to interrupt you and just point out, 1990, when you start, think about the timing. You’re halfway through an 18 year equity bull market, which we’ll talk about in a minute. You’re a decade into what’s gonna end up being a four decade fixed income bull market mortgages are really starting to ramp up and becoming very tradable. Your timing couldn’t have been been any better when were you promoted to global co-head of equities and fixed income. 00:23:21 [Speaker Changed] So it went something like this. So I end up going into the mortgage businesses, end up building a big mortgage business. We ended up becoming a very big trader and pass throughs end up, end up doing in mortgages. What we’ve now done in all of our commodities business, what we’ve done in the emerging markets, we then really have a fixed income currency, commodities business run as one business. So we, we managed to make that work. We managed to crosspollinate. We, we run ’em as a business. We no longer have fixed income guys and commodity guys. We now have a, a, a division and, and, and it’s working quite well as you’re right. We, we had some very good markets going on in, in the mortgage space. We had some very good markets going on in the commodity space, and we were able to capitalize on those things in the early two thousands after I would say the.com bubble had burst, you know, I was asked to go over and run the equities business. 00:24:23 [Speaker Changed] So obviously somebody looked at you and said, Hey, this guy’s talented. He knows how to run a team. He knows how to manage risk, and he knows how to trade for a profit for a p and l. So clearly your background was well suited. Yeah. 00:24:37 [Speaker Changed] Look, may maybe lucky, maybe good, most likely a combination of both. Right. Never 00:24:43 [Speaker Changed] Hurts. I had, I I always assume good is table stakes at a place like Goldman. Lucky never hurts. 00:24:49 [Speaker Changed] Yeah. I look always take, I I I’ll always accept the good luck. If you want to give me some, I’ll take it. So look, I, I had had a very good track record of building businesses from rebuilding our commodities business, emerging markets business, mortgage business. You know, I had gone through business by business, by business and, and, and, and, and helped build and helped transition them into much more client facing, client friendly, bigger risk taking businesses, bigger client facilitation businesses where we had a brand and reputation on the street as the go-to shop in fixed income currency, commodities, our equities business was really good going into the.com crisis, like it was a big business. We dominated, dominated, 00:25:29 [Speaker Changed] Did a lot of syndicate, a lot of underwriting, a lot of IPOs we did. 00:25:32 [Speaker Changed] And then all of a sudden that world changed and that world changed dramatically. And so I was asked to go over to the equities division and you know, I I, I went in knowing absolutely nothing about the equities world. But look, I had done that. I knew nothing about emerging markets. I knew nothing about mortgages. I knew nothing about government bonds. I knew nothing about anything in that world. So I just said, look, it’s another learning experience. I’m gonna learn about it. And realized that, look, we had one of the most unbelievable capital markets syndicate shops. Like we could place new issues better than anyone. The problem was the new issue, market and calendar was gone, right? And we had to transition from a new issue, capital market syndicate shop, to a secondary trading facilitation, one delta derivatives shop. And so I, I went into the equities and with some help of some, some really smart people, we transitioned that business to look much more like we, what we had built in the fixed income currencies and commodities business. 00:26:37 And that was done in the early, you know, the early two thousands. And then, you know, as, as as we had, as I had done in other businesses, and we had done, you start realizing the synergies between different businesses and all of a sudden you realize like the, the one delta or the equities business, their trading specific company names, but so are the corporate bond guys, the corporate bond guys are trading company names, corporate names. And a lot of the underlying factors that are affecting corporate bond trading are affecting equity trading. So then we decided, look, look, maybe we should put all of these businesses together and create a securities division. And the corporate bond people should sit on the same floor as the equities salespeople. And so they can talk about companies, you know, if you, if if you got something going on in company X, it’s not just affecting the equity, it’s affecting the converts, it’s affecting the preferreds, it’s affecting the corporate bonds. And those traders, it, when we started, they were in different buildings. They didn’t even know who they were. Wow. And so should we put them all on one floor, which we did. And that’s how we created the securities division. 00:27:48 [Speaker Changed] That, that makes a lot of sense. ’cause you would imagine everybody is looking at a, the six blind men describing the elephant. Everybody’s seeing a different part. And that intel has to be useful for, for the rest of the floor, whether it was preferred convertibles, corporate bonds, or, or equity. 00:28:04 [Speaker Changed] Absolutely. Yeah. So I, I remember the first time we were on the equity desk and, you know, and equity was getting sold off hard. And I said, I picked up the phone and called, you know, the guy over on the, on the, on the corporate desk desk and said, Hey, what’s going on this name? And he said, nothing like, you know, no, no nothing. And all of a sudden I sat there think, okay, what, what we, we need to learn by this. We need to understand is this a liquidation of a big position? Right? You know, should we, should we be going out to the market and selling this and getting people into the name? We have to learn by the whole capital structure because it is a capital structure. 00:28:38 [Speaker Changed] Hmm. That’s really intriguing. And you continue working your way up. You obviously did a, a pretty good job there. You continue working your way up eventually in oh six, becoming appointed president and co-Chief Operating officer, you end up as a member of the firm’s board of directors as well as chairman of the firm-wide client and business standards committee. Tell us a little bit about what it was like to get kicked upstairs to the C-suite. 00:29:06 [Speaker Changed] So that was 2006. I had, you know, it, it had come after we’d put all the trading businesses together. We now had the securities business. So we had put everything together, which, which made a lot of sense. We, we had, had, had done a, a very good job of that. Hank Paulson had left to go become treasury secretary. Right? And all of a sudden, you know, we’re, we’re, I’m sitting in the executive office floor and you go from sitting on a trading desk where you know exactly what’s going on, or you think you know exactly what’s going on in every market moment to moment, minute to minute. And all of a sudden you’re sitting in an isolated office trying to figure out how to run a big global firm that’s not just a, a, a securities trading business. You’ve got a big asset management business that you care about. 00:29:57 You’ve got a big banking business that you care about, and you’ve got a lot more aspects of the company that you care about. So, you know, it, it, it, it became another moment in time where I sort of take a deep breath and say, okay, how can I contribute most to Goldman Sachs? And I felt like there were a few different unique opportunities at the time. We did not have the strongest West Coast banking presence. So, you know, I saw what some of our competitors were doing. You know, I’ll be honest, Morgan Stanley had a really dominant banking presence in, in California, in West Coast and Silicon Valley, 00:30:37 [Speaker Changed] Mary Meeker Yeah. Absolutely dominated that 00:30:39 [Speaker Changed] Space. Yeah. They had a dominant position. They really did. And it was hard to deny that. And, you know, every time there was a, a, a big capital markets deal, or a big I p o coming outta there, we were, you know, begging to get to be the number three of a number four and number five. And I said, you know, to the team out there, I said, look, we’ve gotta go build this. This is something I can take on. So, you know, I found niches where I felt like I could contribute to growing the firm, helping the people in the firm while taking on my responsibilities to really manage the firm and operate the firm on a day-to-day basis. You know, my, my number one priority was to operating the firm on a day-to-day basis. But I felt my, my, my importance to the firm and the way you create clout and the way you create the ability for people to listen to you and follow you at Goldman is you still have to be a revenue leader or near the revenue. I don’t think you can get disconnected from revenue. You can’t be a sit in your office manager at Goldman, at least in these times. So I wanted to be a valuable part of the revenue driving machine, which also made my ability to manage and drive the organization that much more impactful. So 00:31:51 [Speaker Changed] That, that’s pretty unusual, isn’t it? Typically when you’re in the C O O President slot, you have subordinates reporting to you from different divisions. It’s un is it unusual to roll up your sleeves and say, Hey, I’m gonna help build this out? Or did it just help you better understand what everybody else was doing in the company? 00:32:11 [Speaker Changed] I think it helped me better understand. So I spent enormous amount of time on the road. I spent enormous amount of time with our coverage people. I was out seeing clients, you know, as many days of the years I possibly could really without, you know, without, you know, sort of putting the firm in, in, in any apparel or any jeopardy, making sure the firm was well run, dealing with all the bigger issues of the firm. But I felt the time I spent outta the office in other locations, in other offices with our senior most people and with their clients, was the most valuable thing I could do for the firm. 00:32:47 [Speaker Changed] You mentioned Hank Paulson, one of the few people who comes outta the financial crisis reputation intact. So you’re, you’re president and c o o and what, two, two and a half years later, suddenly the world starts to unravel and everything goes to hell in the hand basket. Although I think Goldman held up better than most. What was that era like for you? 00:33:11 [Speaker Changed] You know, look, it was tough. You know, it, it was a tough period in time. You know, you, you could see to some extent what was going on, even though you could see what was going on. There were certain things you couldn’t avoid. You know, you, you have certain structures, you have certain securities, you have certain assets on your balance sheet or that you’ve created. And you can’t un-create them, even though you said, wow, what, you know, I wish we hadn’t done that. Well when we did it six months or a year ago, different world. It seemed like a rational thing to do. And you’re, you’re sitting there, you’re watching, you know, you’re, you, your fellow competitors, whether it be a Bear Stearns or a Lehman Brothers, you know, get in trouble and, and, and you’re watching what’s going on and you’re understanding the fragility of an industry. 00:34:03 You’re understanding that, look, you have a lot of the risks that they do. You know, funding a, a a a a institution or funding a bank is really important. As I, as I always used to say to people, you know, these banks or these financial institutions, they don’t run outta equity. They run outta liquidity. So liquidity becomes such a crucial part of the organization. How can you finance yourself? How can you fund yourself? How can you make sure that you have liquidity? And how can you reassure clients that you have liquidity? And so we at Goldman as, as a team, we spent enormous amount of time and we took our best and most important people and said, look, drop what you’re doing. Make sure that we are dealing with our own situation and make sure that we are doing everything we possibly can to make sure we have liquidity almost at any cost. What, 00:35:01 [Speaker Changed] What was the date on that? Because for a little context, I want to say the markets peaked sometime October oh seven, something like that. But really it didn’t feel like they were rolling over till first quarter of, of oh eight when, and, and lots of competitors were doing a slow bleed Yep. And not exactly publicizing it. When did you say, Hey, this could get really bad. We need to, we need to be proactive. You 00:35:28 [Speaker Changed] Know, we went, I don’t remember the dates exactly, but, you know, we were watching the, the mortgage banks, the mortgage originators, right? And remember there were, I think it’s about 32 mortgage banks, mortgage origins. They didn’t make it through 2008. You know, we had done business with basically almost all of them. They originated mortgages, they sold them to us, we repack them, sold to everybody, right. Sold ’em to everyone. Like we weren’t, we weren’t unique. But, you know, just watching what was going on on a day-to-day basis and having conversations with those organizations and, and, and seeing what was going on, and understanding what was going on at the agencies that Fannie and Freddy, and understanding what their positions were, and understanding what was going on at a i g and, and, and understanding what was going on with some of our private equity credit clients. You know, I, I think there was a seminal moment. I think it was July 4th weekend. 00:36:31 I remember getting a phone call at, you know, like six o’clock at night from a very large private equity firm that, that also ran a big credit fund. And the credit fund had bought a debt security from one of the, their private equity’s own deals. Oh. And he was reneging on the deal to himself. He was reneging on the, the debt deal. ’cause he couldn’t get it funded in the secondary market. Wow. I said, you know, you’re reneging on your own deal. Like this is your paper from a company that you guys own. That was a seminal moment. Right. I can imagine that was a moment where I said, oh, like the world is changing dramatically right now. When, when, when someone won’t fund paper from a a, an in-house deal for a major private equity player. So there were, there were moments along the line, you know, and then you get into disputes on what things are worth. 00:37:27 And certain, you know, really major companies are disputing margin calls because they’re disputing what a security is worth. Like I never in my career had a major corporate disputed a margin call on what a security is worth. Like, it, it, it really didn’t ma it really was unprecedented. It was unprecedented. Right. It was unprecedented. So there were, there were a lot of signs along the way that liquidity was getting tighter and tighter and people were, you know, hoarding liquidity if they had it and protecting it if they didn’t have it. And, and, and, you know, we as a firm, we were conscientious of this to the point where we actually went out and issued a bunch of debt and equity early on. Yeah. We went out and did that big Warren Buffet deal. Yeah. 00:38:19 [Speaker Changed] So the, the Warren Buffet story could be my favorite story of the whole financial crisis because as much as people said, what, what was it like a 9% or 11%? It was a big note. Everybody kind of forgets Buffet offered that to Dick fold and Lehman months before and fold said, no, too expensive. Yeah. It could be the single biggest error of the entire crisis. Yeah. They might still be around, who knows. Buffet 00:38:46 [Speaker Changed] Offered it to us in the morning and said, you can let me know by five o’clock tonight. And we, and and we said, don’t worry, we’ll be back to you and all we have to do is get our board together. We got our board together. And we said, done. And we did a big secondary equity raise around 00:39:01 [Speaker Changed] It following that. I remember 00:39:02 [Speaker Changed] That. You know, and, and the only conversation we had from people in the secondary raise is everyone said, well, I would’ve done the buffet deal. And I said, the only problem is you’re not Warren Buffett. That’s 00:39:10 [Speaker Changed] Right. That’s exactly right. And, and it was one of those moments where God bless Warren Buffett. Yeah. It, it really made a huge difference to everybody. Even though there was more downside in the equity market, it’s, Hey, we’re not all gonna go down the drain. Well 00:39:25 [Speaker Changed] Then, then a week or two later, I think it was within a week or two, that’s when treasury decided they were gonna put tarp money into all the banks, regardless of those that had raised capital or not. And but by the way, I don’t disagree with them either. They, they, they were trying to infuse capital in the system and, 00:39:41 [Speaker Changed] And not single out any specific bank which would cause a run. Right. So yeah, really it was a, it was, you know, I I’m always reminded of the scene from, from Apocalypse Now where they’re surfing, Hey, one day this war’s gonna end. And it’s, it’s really when you were in that moment, it was really, really one of a kind, which all of which leads to the question, given the breadth of that experience at Goldman through everything from really the bull market and bonds and equities to the dotcom implosion to the financial crisis, how did that experience set you up to become a leader in the public sector? 00:40:23 [Speaker Changed] So a lot of those skills are very transferable. You know, my job at goldman net net, when you boil it down, was dealing with crisis or opportunity e every day. And by the way, most days I was dealing with both, you know, and, and, and some opportunities became crises and some crisis became opportunities. So I I, I consider myself being the crisis management or opportunity management business because when you’re running a very large balance sheet globally with lots of people committing capital and lots of people making promises or commitments or underwritings, you’re gonna have problems. It’s just the nature of the business. No matter how well intentioned people are, there’s gonna be mistakes and clients are gonna get unhappy and, and and, and you just have to deal with them. So, you know, having spent the last almost 11 years of my life at Goldman, and I’d done it before being a, a crisis manager, and that’s really what I did. It was a crisis manager trying to look for opportunity. You know, I think it prepare, prepared me well to go into the government because I, I was always trying to figure out how do we create a solution? How do we create something that works? What is the compromise? What is the way out of this situation? Is there, there, because there’s a way out of every situation. So, you know, I never believe there wasn’t way out of a situation. So, so 00:41:47 [Speaker Changed] Let’s break that down before we spend a little time in the public sector. Let’s stay with crisis management. ’cause I kind of get the sense reading your background, you created a, I don’t wanna say formulas to is probably overstating it, but you seem to have created a structure where every time there’s a crisis, you followed a few specific steps. So crisis shows up on your desk. What, what is the Gary Cohh three or five step response? What’s the playbook 00:42:19 [Speaker Changed] Be? I i, I don’t know if there’s a playbook ’cause they’re 00:42:21 [Speaker Changed] All different. They’re all different. 00:42:23 [Speaker Changed] I, but 00:42:23 [Speaker Changed] There’s some themes that seem to be consistent 00:42:25 [Speaker Changed] Is, as I used to always say, is, you know, we at Goldman, we’re, we’re very creative in the problems we have. We’ll never usually have the same problem twice because we’re, we’re, we’re really good at fixing the last problem we had. We’re not good at, we’re, we’re not as good as anticipating the next problem, but we’re good at fixing the last problem. 00:42:43 [Speaker Changed] Okay. So in, in my, I’m gonna interrupt you and say in my research into you, one of the things, and some of the speak people I spoke with, Gary will own the problem. Yeah. Apologized for it. Yeah. Here’s what we’re gonna do to fix what took place and here’s how we’re gonna make sure this doesn’t happen again. That’s what I was referring to. Okay. Did I putting words in your mouth or is that 00:43:05 [Speaker Changed] Not fair? Yeah. No, no, you’re not, you’re not putting words in my mouth at all. So look, I always believe you have to own the problem. I mean, ownership is, is 90% of the battle. You know, I, I never had a problem where I did where I would say, it’s not my problem. Because if you’re the chief operating officer, the president of Goldman Sachs, every problem is your problem. Yes it is. It’s, it’s my problem. It’s my problem. And it’s, and and, and it’s my job to make sure it gets solved. So a I would always start with ownership. B I would always need the facts. So, you know, if you really wanna go through the chronology of a, of a problem, you know, okay, problem arises, number one, get all of the facts into the room. Try and agree upon the facts. You know, one of the hardest things sometimes is agree upon the facts. 00:43:54 You know? And, and, and, and my job was to sift through the facts and sit, not just sift through the facts from my, my team’s perspective. I needed to talk to the other side. If there wasn’t other side, you know, I need, I needed both sides of the opinion. And, and I always trusted, you know, in, in the words of Ronald Reagan, trust, but verify. You’ve gotta trust but verify everything. So go through it, understand the facts, understand what, what happened. Own the problem. Try and fix the problem. And, and, and be realistic. And, and, and I always thought, if I go to the people and tell ’em exactly what happened, tell ’em the truth. Tell ’em how we’re gonna rectify it. 95% of the time it’s gonna solve the problem. ’cause really people understand there’s gonna be problems. They just want to understand what actually really happened. 00:44:47 [Speaker Changed] And everybody walks away happy after that. 00:44:49 [Speaker Changed] Yeah. Look, they, they walk away as happy as they can be. Right. I don’t, I don’t wanna sit here and tell you, oh yeah, every time people walked away happy, they walk away as happy as they, they walk away. How about this? They walk away 00:44:58 [Speaker Changed] Satisfied. Right? Well, these are complex problems with big money involved. And occasionally people are gonna argue about, Hey, who has this loss? Or who has this profit? And sometimes that leads to disputes. Yeah. 00:45:10 [Speaker Changed] If it, if it’s just a loss, if it’s just money, sometimes those are easy to cure, right? I, I don’t wanna be cavalier, but if it, you know, if it’s just a money problem, it’s, it’s sometimes not a big deal. It’s like a deal can’t get done and someone blames someone for something. Okay, now we got a problem. 00:45:28 [Speaker Changed] Now you got personality and ego, right? And turf wars and everything else. 00:45:32 [Speaker Changed] And, and, and why can’t the deal get done? And now people are, are pointing fingers, well, the deal can’t get done because this happened. You didn’t do this or you did do this, or you shouldn’t have done this. And now all of a sudden it’s like, okay, now I, like money’s not gonna solve the problem. I’ve gotta get people back to a position, understand why the deal can’t get done. Maybe the deal never could have gotten done. Maybe someone just never explained to the client. Maybe, maybe, maybe they told the client things that they just wanted to hear. Which is, which again, I have to own that and say, look, my team didn’t do a good job. My team should have told you six weeks ago this couldn’t get done or this wasn’t gonna get done, or for this to get done, these five things had to happen and none of these five things happened. 00:46:12 [Speaker Changed] So I don’t really think of c o o as a fixer, but really what you’re saying is you are a free safety and anything that could go awry, you’re on top. You have to be responsible for, 00:46:24 [Speaker Changed] I think in a firm like Goldman Sachs, you have to, you have to, when you’re in a transactionally driven business where your clients are depending upon you for advice, capital and, and really the future of their company, in many respects, you have to, as, as, as a senior person, you have to, you know, be there as the free safety and help make sure you guide these things to, to the, to the softest landing. You can if, if and when there’s a problem. Now the, the good news is the vast majority of the time these things just run their course. And the teams are so good that they all happen by themselves. 00:47:01 [Speaker Changed] You, you are there for the, for the ones that, that aren’t self-repairing. Exactly. Really intriguing. So let’s talk a little bit about that period. Your chief economic advisor to the president. You managed the administration’s economic policy agenda and you spearhead the Wage and Tax Reform Act, which was a, a substantial policy success in the Trump White House and a pretty substantial rejiggering of the tax code emphasizing small businesses, LLCs, tell us a little bit about what was life like in the White House? 00:47:40 [Speaker Changed] Well, life in the White House is fascinating. It was probably of, of all the things I’ve done in my career, the most fascinating experience I’ve had. And, and, and I’m very thankful that I had the opportunity, very thankful that I did it. You know, wall Street is a, is a good preparatory class for Washington. You know, it’s, it’s long arduous days, which are, which you’re used to. You know, my my day was, was was pretty simple in many respects and pretty chaotic in other respects. But no different than a day at at Goldman Sachs. You know, I used to say my days at Goldman Sachs is about 20% of it. I have an idea what’s gonna happen about 80%, I have no idea. And I just hope and pray it’s not too crazy. And I would say the White House was pretty similar. About 20% of the day, I sort of had an idea of what was gonna happen. And the rest of the day we were gonna deal with the issues or the problems or the opportunities of the day. You know, my days would start early in the morning with the presidential daily brief. C i a would come in and brief and, you know, you’d see what 00:48:46 [Speaker Changed] C i a comes in and briefs that, that. So I imagine at Goman you have great business intel. What’s it like getting briefed by by the spooks? 00:48:54 [Speaker Changed] It’s, it’s pretty interesting. Yeah. I mean, look, we’ve, we’ve, we’ve got a, we’ve got a really interesting, you know, intelligence network around the world and it’s their job to make sure those of us discussing policy in the White House have the information we need and that we’re all have the same information. And so there’s a, a group of us that get the, the, the daily brief and, you know, you can get it, you know, I think most of us got it fairly early in the morning and you can get it when you want. And so I used to start my day with it early in the morning, and that was how I started then, you know, I would go from there to the, most of the chiefs of staff would have a staff meeting in the morning. So the, the, the senior White House people would get together in the morning around 8:00 AM or so, seven 30 or eight, discuss the issues for the day, discuss the opportunities for the day, discuss the messaging for the day, you know, you’d get done with that. 00:49:55 Then I’d have my staff meeting around nine o’clock or whenever the senior staff meeting was over, you know, I relay to my staff what the messages for the day that we would discuss what problems we’re working on. And, and then we would go into our more, you know, day to day agenda depending on what we were working on from a policy standpoint. We spent a lot of time up on Capitol Hill working with various members of different committees, both in the House and the Senate. ’cause at the end of the day, you know, a lot of what we’re trying to do is get legislation done, which as, as we know, it takes 60 and 60 in the Senate, 2 35 in the house and a presidential signature. There’s ways around that during reconciliation for budget bills and things like that. But the overall legislation, you know, you’re, you’re trying to do regular way or normal way and, and you’re working on trying to get legislation done. And, you know, I think it’s the, the, the job of the White House to drive normal way process legislation working with either majority or minority leaders in the Senate or, or, or, or in the house. You have a really intricate working relationship with them on their agenda. And, you know, they have a pretty good idea who stands where on what pizza of legislation. So we’re attacking, you know, the, the, the various constituents on on who needs time, who needs effort, who needs persuasion, who they 00:51:26 [Speaker Changed] Have the headcount, you know, who to go to, 00:51:28 [Speaker Changed] Who needs handholding, who who, who’s solidly in your camp, who’s solidly against you, who’s on the fence. And you know, that’s sort of a typical day, but intertwined in there. You’re at the beck and call of the president, and the president, you know, can decide at any moment of the day, basically, he wants you tear 00:51:48 [Speaker Changed] Up the script and go this way. 00:51:50 [Speaker Changed] Yeah. He wants you in the Oval Office, he wants you some meeting, he wants you involved in something. And like, you know, at a Goldman Sachs, your entire calendar, your entire schedule can get, you know, blown up in 30 seconds or less. And that’s, that’s what, that’s the way it works. And you know, one of my, I I think one of my important attributes is, you know, I made sure that I sat down with the president every day, you know, I sort of knew the times the day to go in and see him. And I tried to spend, you know, an hour or so, a day alone when he wasn’t distracted with other people coming in and out, right. And say, Hey, look, this is what we’re trying to get done. Here’s where we are. What are your thoughts? You know, you okay with where we’re where we’re going? ’cause you know, you always want to be on the same page as the ultimate decision maker 00:52:40 [Speaker Changed] To, to say the least. So let’s talk about probably the biggest economic legislative success of the entire administration, the, the T C J A. Yep. Tell us a little bit about how this came together, how the parameters were formed, who was really driving the different aspects of that? It, it, it’s really a fairly comprehensive package and very different than previous tax cuts that were just, Hey, we’re just gonna play around with the different rates. 00:53:11 [Speaker Changed] So it, it’s very comprehensive. We started on that plan in December of 16. So I had agreed to join the administration sort of beginning of December of 16. And by the middle of December we’re already starting to talk about taxes. We know that we want to get tax done. And look, one of the reasons I went into this job was taxes. I felt that we had a tax policy in the United States that was hindering growth and deterring US corporations from investing in the United States and penalizing them to do things that they actually wanted to do that were positive for the US economy and positive for US jobs. And to me, I felt this was a huge opportunity and there was an opportunity to fix this. 00:54:10 [Speaker Changed] And, and let me just remind everyone of the timeline. So the election, November, 2016, December of that year, you’re teeing it up, president’s sworn in January 20th and you’re hitting the ground running. 00:54:23 [Speaker Changed] We’re hitting the ground running already in December. Wow. So by December, me and, and other members of the team at this point, it’s a large team, you know, like, like everything. It’s a large team. ’cause everyone wants to be involved. 00:54:37 [Speaker Changed] Did you bring people over from Goldman with you or was 00:54:39 [Speaker Changed] No, I didn’t bring any, just 00:54:40 [Speaker Changed] Stood up a brand new team. 00:54:41 [Speaker Changed] I didn’t, I stood up a brand new team. I look, the first thing I did, let, let me back up ’cause this is really important. The first thing I did when I accepted the, the, the N E C hijab is I went out and I hired a world class and I mean a world class team of experts. And, and, and I looked at it like, this is Goldman Sachs. Like, I need the best people in the world in each of the roles. And the n e C job is really interesting because it touches the broadest spectrum of economic policy. 00:55:11 [Speaker Changed] And, and feel free to name drop who, who’d you, who’d you stand up with that group? No. 00:55:15 [Speaker Changed] Like, like I went out and hired Jeremy Katz to be my deputy. You know, Jeremy was amazing. He had worked in the White House before. He really knew the right people to go out and hire. He understood the roles, he understood what could get done and what couldn’t get done. He knew that I really wanted to get taxes done. He told me, look, there’s a woman by the name of Shahir Knight, you’ve gotta go out and hire Shahira if you want to get taxes done. Like Shahir is your person. We went out, we got Shahir hired, you know, but then you’ve gotta go out and hire people in the healthcare space. You’ve gotta go out and hire people in the energy space. You’ve gotta go hire people in the technology space. You’ve gotta go out and hire people in the agricultural space. Jeremy knew all those people to hire. 00:56:01 He went out, he brought me in the best people ever. And it was, it was kind of interesting to me because it, it was interesting and really rewarding because, you know, Jeremy would bring these people in. He’d do the first and second round interviews, and then I’d meet ’em and Jeremy says, look, you gotta meet these people. They wanna meet you before they come to work for you. And I would sit down and talk to ’em and, and they were all amazing. They were amazingly talented. And I would si.....»»

Oil futures finished higher on Tuesday, recouping a small portion of the price losses seen after three consecutive session declines. The path of least resistance is still higher for oil right now “although the counter-trend pullback is not necessarily over just yet,” said Tyler Richey, co-editor at Sevens Report Research. “Eventually it will be time to ‘sell the recession news’ in oil as demand tends to fall off sharply amid the onset of an economic downturn, but the evidence does not definitively suggest we are at that point just yet, and another run towards $100…is a possibility depending on the news flow and economic data trends in the near term.” November West Texas Intermediate crude CLX23 added 41 cents, or 0.5%, to settle at $89.23 a barrel on the New York Mercantile Exchange.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

The futures contracts will trade on the Montreal Exchange and will be cash-settled and denominated in U.S. dollars, the exchange said......»»

BTC traded just over $27,600 in Asian afternoon hours on Tuesday, while Ether dropped 3.5% amid a dismal first day of ETH futures ETF trading in the U.S......»»

It's Deja Vu All Over Again: Futures Tumble As Yields Surge In a deja vu repeat of Monday's open, and really a carbon copy of most mornings in the past month, what was a modest attempt to push futures higher has crashed and burned with US equity futures sliding to session lows as yields resumed their surge once again, the 10Y rising up to a new 16 year high of 4.74%, with 30Ys also rising to the highest since 2007, hitting 4.856%. As a result what was a modest 0.3% gain in spoos turned into a 0.4% loss as S&P futures dropped to session lows of 4,307 as of 7:35am with Nasdaq futures dragged 0.5% lower. The Bloomberg Dollar Spot Index followed yields tick for tick and rose to an 10-month high, pressuring most Group-of-10 currencies. The selloff rippled across equity and commodity markets, with Europe’s Stoxx 600 sliding to a six-month low as WTI traded near $89 a barrel and gold and Bitcoin fell. In US premarket trading, HP gained after BofA double upgraded its rating on the PC maker to buy from underperform, with positive commentary expected at next week’s analyst day. MSP Recovery rose as much as 26% in premarket trading on Tuesday as its Chief Legal Officer Frank Carlos Quesada reported a purchase of stock to the US Securities and Exchange Commission. Here are some other notable premarket movers: ALX Oncology surges as much as 149% in premarket trading Tuesday, erasing an earlier drop, after reporting interim mid-stage data from a trial of its drug evorpacept for the treatment of advanced gastric cancer. McCormick slides 3% in premarket trading, after the spice maker reported net sales that trailed the average analyst estimate and a larger-than-expected decline in product volume. Sales in the consumer segment in the Asia-Pacific region were particularly weak, which the company attributed to a slower-than-expected economic recovery in China. Oddity Tech Ltd. rallied 18% in premarket trading after Truist Securities analyst Youssef Squali raised the recommendation to buy from hold based on the firm’s preliminary third quarter results and its “compelling” valuation. Point Biopharma surges 85% in premarket trading Tuesday after Eli Lilly & Co. agreed to buy the biotech firm for $12.50 per share in cash in a bid to expand its oncology capabilities into radioligand therapies. Wall Street strategists are warning about the impact that elevated interest rates on equities, with Goldman Sachs, Morgan Stanley and JPMorgan all saying there’s a risk of further stock-market declines. Currently, traders are pricing roughly a one-in-three chance of a rate hike in November. “We had not anticipated such an increase in rates,” said Vincent Juvyns, global market strategist at JPMorgan Asset Management. “This is something which will at least slow down, or even reverse the progress of equity markets.” And indeed all eyes are on rates this morning, as Treasury yields extend to fresh cycle highs in 5-year out to long-end of the curve, as the selloff gathers pace in early US session. Futures volumes pick up as 10-year tenor breaks through earlier session lows and through the 107-00 level. In the long-end of the curve 30-year yields breach 4.855% and onto highest levels since 2007. In Treasury options demand seen for bearish plays targeting higher yields, matching the early price action. US yields cheaper by up to 6.5bp on the day across long-end of the curve; breaking through 4.856% in 30-year tenor and onto highest yield to highest since 2007 Selloff extended as 10-year futures breached 107-00 level to the downside reaching as low as 106-30+; into the move around 22,000 Dec23 contracts traded over a one-minute period, highest volumes of the session In Treasury options early demand seen for downside protection as yields continue to climb higher; flows have included TY Nov23 107.00/106.00 put spread bought in 3,500 at 24 ticks says London trader Some information comes from rates traders familiar with the transactions, who asked not to be identified because they are not authorized to speak publicly This week’s Treasury selloff came after US lawmakers managed to avert a government shutdown, prompting traders to increase bets that the Fed could raise rates in November. Comments from two Fed policymakers reinforced that view, with Cleveland Fed president Loretta Mester saying on Monday that one more rate hike was likely needed and Governor Michelle Bowman urging multiple increases. “The market is probably evenly split on whether central banks will need to continue raising rates or not so the bond marker is testing investors,” said Brian O’Reilly, head of market strategy at Mediolanum International Funds. “With 10-year yields around 4.6%, the asset allocation decision for equities is getting quite difficult.”  European stocks were also lower, spooked by the surge in rates. The Stoxx 600 is down 0.7% at session lows, led by declines in the utility sector; retail stocks were dragged down on a warning from online retailer Boohoo Group Plc, which fell 10%. Here are the biggest European movers: AstraZeneca shares rise as much as 1.1% after the drugmaker agreed to pay $425 million to settle US product liability lawsuits related to heartburn and stomach acid treatments Nexium and Prilosec Novo Nordisk shares rise as much as 2.8% after the drugmaker won denial of a challenge to two US patents backing semaglutide Sika shares gain as much as 1.1% after Swiss chemicals company raised its annual sales growth and Ebitda margin targets for medium term Burberry falls as much as 4.7% in London to hit the lowest level since Nov. 2022, after the luxury stock was cut to sell from neutral at UBS Greggs shares slip as much as 3.2% after Tuesday’s third-quarter trading statement, with analysts taking an overall positive view but noting the lack of any guidance upgrade Eramet lost as much as 4.5% in early Paris trading on Tuesday after AlphaValue/Baader cut its rating for the French mining group, arguing there is further downward potential for the stock Boohoo shares tumble as much as 11%, to the lowest since August 2015, after the online fast fashion retailer cut its revenue forecast for the year Aker Carbon Capture drops as much as 7%, to lowest in almost five months, after Citi cuts to neutral due to perceived risks Earlier in the session, Asian stocks declined as hawkish signals from the Federal Reserve spurred risk-off sentiment, while losses in Hong Kong intensified as traders returned from a holiday. The MSCI Asia Pacific Index fell as much as 1.6% to reach its lowest since late December. The Hang Seng China Enterprises Index fell more than 3% in the region’s worst performance among major gauges, dragged lower by tech stocks Meituan and Alibaba. Mainland China remains shut for Golden Week holiday, while South Korean markets are also closed. The broad selloff came as the latest commentary from Fed officials stirred concerns that the central bank will continue to raise interest rates. Traders boosted bets on a November rate hike to a roughly one-in-three chance, up from the 25% likelihood priced on Friday. Positive Chinese travel data did little to lift sentiment as investors focus on uncertainties lingering in the world’s second-largest economy.  Hang Seng was the worst hit on return from holiday amid losses in property, tech and energy with developers suffering despite an early spike in Evergrande shares by around 35% on resumption of trade. Nikkei 225 weakened with all industries pressured and energy firms leading the broad declines. ASX 200 was dragged lower by underperformance in the mining-related sectors due to the recent declines in commodity prices and with headwinds from the rising yields after Australia’s 10yr yield rose to its highest since 2011, while the RBA decision to keep rates steady provided no major fireworks. In India, key stock gauges in India slid, tracking weakness in regional peers, with lenders and energy sector companies leading the selloff. The S&P BSE Sensex fell 0.5% to 65,512.10 in Mumbai, while the NSE Nifty 50 Index declined 0.6% to 19,528.75. The MSCI Asia Pacific Index was down 1.5%. Banks, energy and automakers were among the worst sectoral performers during the session. HDFC Bank contributed the most to the Sensex’s decline, decreasing 1.2%. Out of 30 shares in the Sensex index, 11 climbed, while 19 fell. In FX, the Bloomberg Dollar Spot Index rises 0.1%, hitting a fresh 10-month high and the euro falling to its lowest against the dollar since last December at 1.049. The Australian dollar extended declines after the Reserve Bank of Australia held its cash rate; AUD/USD dropped as much as 0.9% to 0.6306, weakest since November The euro and the pound were also little changed after erasing earlier losses against the greenback The yen swung between gains and losses, staying near cycle lows amid intervention speculation USD/JPY is hovering just below 150. In rates, Treasuries are trading at the lows of the day, with 10-year yields rising 6bps to 4.74%, while gilts outperform their German counterparts after data showed UK shop price-inflation fell to a one-year low in September. UK two-year yields fall 3bps to 4.95%. Treasury yields once again rose to session highs across the curve with futures under or near Monday’s lows; 10- to 30-year yields reached fresh multiyear highs. Gilts outperform Treasuries on the back of supportive food inflation data. US 10-year yields around 4.75%, cheaper by ~5bps on the day near session high; gilts outperform by nearly 5bp in the sector as they unwind a portion of Monday’s losses. US 2s10s curve steeper by 4bp on the day with front-end slightly outperforming; spread breached -41bp, least inverted since May 5. Fed-dated OIS continues to price around 35% odds of a 25bp rate hike for the November policy meeting; Cleveland Fed President Loretta Mester said late Monday that one more rate hike may be needed this year. Dollar IG issuance slate empty so far after five names priced $5b Monday; a slow week is expected with many companies entering earnings blackout periods. US session highlights include August JOLTS job openings data and comments from Fed’s Bostic. In commodities, crude futures are little changed with WTI trading near $88.90. Spot gold falls 0.1%. Bitcoin is under pressure after experiencing a marked upside in recent sessions, which took BTC to near USD 29k. Currently, residing around the USD 27.5k mark but well within recent ranges. Looking to the day ahead now, and the main data highlight will be the US JOLTS release of job openings for August. Otherwise, central bank speakers include the ECB’s Simkus, Lane and Villeroy, along with the Fed’s Bostic. Market Snapshot S&P 500 futures up 0.2% to 4,332.75 MXAP down 1.4% to 154.63 MXAPJ down 1.3% to 485.09 Nikkei down 1.6% to 31,237.94 Topix down 1.7% to 2,275.47 Hang Seng Index down 2.7% to 17,331.22 Shanghai Composite up 0.1% to 3,110.48 Sensex down 0.4% to 65,585.91 Australia S&P/ASX 200 down 1.3% to 6,943.42 Kospi little changed at 2,465.07 STOXX Europe 600 up 0.1% to 446.12 German 10Y yield little changed at 2.90% Euro little changed at $1.0485 Brent Futures down 0.3% to $90.45/bbl Gold spot up 0.0% to $1,828.42 U.S. Dollar Index little changed at 106.99  Top Overnight News Several Taiwanese companies are helping Huawei build infrastructure for a secret network of chip plants across southern China, a Bloomberg investigation found. At a time when China regularly threatens Taiwan with military action, the island's tech firms risk spurring a backlash by potentially helping US-sanctioned Huawei effectively break an American blockade. BBG India has told Canada to withdraw dozens of diplomats from the country, in an escalation of the crisis that erupted when Prime Minister Justin Trudeau said New Delhi may have been linked to the murder of a Canadian Sikh. FT ECB’s Chief Economist Philip Lane warned that there is still work needed to be done to fully tackle the EU’s inflation problem. BBG Switzerland’s core CPI for Sept dips to +1.3%, down from +1.5% in Aug and below the Street’s +1.5% forecast (headline inflation ticked up to +2% from +1.9% in Aug. BBG British shoppers enjoyed the first monthly drop in food prices in more than two years as retailers cut the cost of dairy products, fish and vegetables amid “fierce competition” between stores, a survey found. BBG Federal Reserve Bank of Cleveland President Loretta Mester said the US central bank will likely need to raise rates once more this year and then hold them at higher levels for some time to get inflation back to its 2% target. BBG Rep. Matt Gaetz (R-Fla.) on Monday night filed a formal motion to eject the speaker Kevin McCarthy, a maneuver last attempted in 1910 and never successfully completed. The House must act by Wednesday on the matter — and while McCarthy may yet survive depending on how Democrats vote, even a failed challenge to his speakership weakens him going forward. Politico The slide in Treasuries has been excessive given recent economic data and Federal Reserve policy, suggesting it’s instead being driven by fears over the swelling US deficit. BBG America’s shale pioneers have vowed to keep a lid on drilling even if oil hits $100 a barrel, citing a need to maintain capital discipline and what they claim is a “war” on fossil fuels waged by the Joe Biden administration. FT In the new ‘higher for longer’ rates environment, the key risk for S&P 500 ROE will be higher interest expenses and lower leverage. Our rates strategists recently raised their forecast for the nominal 10Y UST and now expect rates to end 2023 at 4.3% and then rise to 4.6% in 1H 2024 before receding back to 4.3% at the end of 2024. Although the long-maturity, fixed-rate debt structures of S&P 500 companies generally insulate them from higher rates, borrow costs for S&P 500 companies have ticked up on a year/year basis by the largest amount in nearly two decades. GIR A more detailed look at global markets courtesy of Newsquawk APAC stocks declined amid the rising global yield environment and the continued absence of some key markets, while the focus turned to central bank announcements beginning with the RBA. ASX 200 was dragged lower by underperformance in the mining-related sectors due to the recent declines in commodity prices and with headwinds from the rising yields after Australia’s 10yr yield rose to its highest since 2011, while the RBA decision to keep rates steady provided no major fireworks. Nikkei 225 weakened with all industries pressured and energy firms leading the broad declines. Hang Seng was the worst hit on return from holiday amid losses in property, tech and energy with developers suffering despite an early spike in Evergrande shares by around 35% on resumption of trade. Top Asian News RBA kept the Cash Rate Target unchanged at 4.10%, as expected, while it reiterated that some further tightening of monetary policy may be required and that the Board remains resolute in its determination to return inflation to the target. Furthermore, it stated that returning inflation to the target within a reasonable timeframe remains the Board’s priority and recent data are consistent with inflation returning to the 2–3% target range over the forecast period but also noted significant uncertainties around the outlook.. "(China) has seen a recovery in consumer spending in terms of trips and transportation, with market confidence and vitality both on the continuous rise" following the first four days of the Chinese holiday, according to Global Times. European bourses have been mixed but are currently a touch softer, Euro Stoxx 50 -0.2%; newsflow is relatively light and markets remain focused on yields. Sectors are similarly mixed, featuring outperformance in Banks and Insurance names while Utilities and Basic Resources are the relative laggards. Stateside, futures are modestly firmer, ES +0.2%, with recent pressure being attributed to yields but action comparably more contained thus far in today's session ahead of JOLTS and Fed's Bostic & Mester. For reference, APAC trade remains limited given mass holiday closures though the return of the Hang Seng saw it experience marked pressure and close with downside of circa. 3.0%, with the move similarly attributed to recent yield action. Top European News EU is to assess risks of four critical technologies being used by third countries such as semiconductors, AI, quantum technologies and biotechnologies, while the EU aims to take measures next year to mitigate risks to these technologies, according to an EU official cited by Reuters. Brussels will unfreeze about EUR 13bln in EU funding to Hungary as it seeks help for Ukraine, according to FT. ECB's Lane says they have reached the interest rate level that will help tame inflation; the key is to maintain this rate level for as long as needed; seeing wage data coming in lower is very important. Would not focus on December as a critical decision; December is not the end of the inflation challenge. Says he welcomes September inflation data, but we need to see further progress. ECB's Valimaki (sitting in for ECB's Rehn) says further rate hikes cannot be ruled out, appears as if a wage-price spiral can be avoided. ECB's Simkus says rates need to stay restrictive to tame prices; prompt response of monetary policy was effective; inflation still faces many lines of resistance; inflation shock is not over. FX Dollar resumes bull run before running into chart and round number resistance, DXY probes Fib at 107.170 and fades within 107.210-106.930 range. Yen continues to defend 150.00 vs. Buck, but barely and with 1.1bln option expiries helping, Euro eyes expiry interest at 1.0495 against Greenback after a bounce from 1.0461 and Sterling pivots Fib retracement between 1.2062-96 parameters. Aussie lags post-on hold RBA and Kiwi down in sympathy awaiting RBNZ to follow suit, AUSD/USD and NZD/USD cling to 0.6300 and 0.5900 handles respectively. Franc deflated after softer than forecast Swiss CPI, USD/CHF hovers above 0.9200. Japanese Finance Minister Suzuki said it is important for currencies to move in a stable manner reflecting fundamentals and they will take appropriate steps on FX moves with a sense of urgency, while he added that they will stand ready to respond while closely watching FX moves. Furthermore, he said currency interventions are not targeting FX levels and whether to carry out FX intervention is determined by volatility, according to Reuters. Fixed Income EGB underperformance gradually spills over as Bunds retreat from 127.95 to 127.45 and BTPs reverse through 109.00 within a 109.49-108.86 range. Gilts and T-note suffer contagion between 93.18-92.68 and 107-14/06 respective parameters ahead of Fed's Bostic and JOLTS US job openings. Orders for the new 5-year BTP Valore have reached EUR 5bln since the beginning of the offer, via Reuters citing Bourse data. Commodities Crude benchmarks are little changed overall having lifted incrementally off initial lows as the USD moves below the 107.00 mark while crude specifics have been light as attention turns to this week's JMMC. Currently, WTI and Brent are trading in USD 87.76-88.71/bbl and USD 89.50-90.46/bbl respective ranges. Spot gold is essentially flat intraday with the yellow metal holding around USD 1825/oz while spot silver is a touch firmer after Monday's pronounced pressure, finally base metals have seen similar directional action to crude with the metals off lows as the USD eases a touch. Spain's Energy Minister showed support for the Dutch call to phase out fossil fuel subsidies. India's petroleum minister says an oil price above USD 100/bbl is not going to be in anyone's interest. Poland and Ukraine announced a breakthrough on Ukrainian grain transit, according to AFP. Geopolitics Israel carried out an air attack on Syrian armed forces positions in the vicinity of Deir al Zor, according to Syrian state media. India told Canada to withdraw dozens of diplomatic staff whereby it must repatriate around 40 diplomats by October 10th, according to FT. US Event Calendar Sept. Wards Total Vehicle Sales, est. 15.4m, prior 15m 10:00: Aug. JOLTs Job Openings, est. 8.82m, prior 8.83m Central bank speakers 08:00: Fed’s Bostic Speaks on Economic Outlook, Inflation DB's Jim Reid concludes the overnight wrap It might have been a brand new quarter, but yesterday was another challenging day for markets, especially with the bond sell-off showing no sign of letting up. In fact, the 10yr Treasury yield (+10.8bps) closed at a post-2007 high of 4.68%, whilst the 10yr real yield (+9.7bps) closed at a post-GFC high of 2.33%. And despite some better-than-expected data, risk assets came under pressure alongside WTI crude (-2.17%) falling back beneath $90/bbl. Equities were weak in Europe and down for much of the day in the US but a late rally left the S&P 500 (+0.01%) flat by the close. Europe’s STOXX 600 (-1.03%) fell to a 6-month low, and the German 10yr real yield (+12.1bps) hit a post-2011 high of 0.58%. The main event today is the US JOLTS data as we see how tight the labour market still is under the surface. Starting with markets and there were several factors driving the latest sell-off. First up, the lack of a US government shutdown over the weekend was seen in a more bearish light as the day progressed, as it removed a tangible risk for the economy and was seen as raising the likelihood of more rate hikes. For instance, futures raised the likelihood of a hike at the next meeting in November from 19% on Friday to 28% yesterday. And looking at the prospect of a hike by December, the likelihood rose from 39% last Friday to 51% by yesterday’s close. Second, the sell-off then got added fuel from the latest ISM manufacturing print for September, which was notably better than expected. The headline print came in at 49.0 (vs. 47.6 expected), which was the highest since November 2022. And there was lots of good news at the component level as well, with new orders (49.2) at a 13-month high and employment (51.2) back in expansionary territory. That was echoed by the final manufacturing PMI as well, where the final reading was revised up to 49.8 (vs. flash 48.9). So there were several signs that the economy was proving more resilient than expected. Third, comments from numerous Fed speakers reiterated the higher-for-longer narrative. Governor Bowman, one of the more hawkish FOMC members, suggested that multiple further rate hikes may be needed while Cleveland Fed President Mester saw another hike this year as likely. Comments from Vice Chair of Supervision Barr erred on the more cautious side, saying that the more important question was “how long we will need to hold rates at a sufficiently restrictive level”. Overall, despite the more encouraging recent inflation data, the latest Fed commentary shows no signs of a downshift from the September median dot plot view of another rate hike by year-end. Speaking of US economic resilience, our own US economists have just released an updated set of forecasts overnight. Their baseline still sees a recession taking place, but they now see that starting a bit later in Q1 2024, and only lasting two quarters. Their view is that the soft landing case has strengthened over recent months, but there are still plenty of headwinds, including depleted savings, tightening credit conditions, and a return of student debt payments. For the Fed, they continue to see the tightening cycle as over now, albeit with the risk of another hike. And they now expect the Fed to start cutting rates from June 2024, with 175bps of cuts next year. See their full update here. With some more positivity about the economy, bonds continued to sell off throughout the day, with yields on 10yr Treasuries up +10.8bps to a post-2007 high of 4.68%. The 30yr yield (+8.9bps) also pushed higher to close at 4.79%. It was real yields that drove the increase in rates, with the 2yr real yield (+7.3bps) at a new post-GFC high of 3.07%, and the 10yr real yield (+9.7bps) at 2.33%. At the same time, the 2s10s curve continued to steepen, with a +4.9bps increase to -42.8bps. On one level, that might be seen as a positive sign given the 2s10s is a classic recessionary indicator, but then again, the last 4 cycles saw it move out of inversion territory just before the recession began. Over in Europe, there was a similarly strong bond sell-off, with yields on 10yr bunds (+8.2bps), OATs (+7.8bps) and BTPs (+2.6bps) all moving higher. But it was gilts that led the moves, with the 10yr yield up +12.7bps to 4.56%, whilst the 30yr gilt yield (+11.4bps) surpassed its mini-budget peak yesterday to close above 5% for the first time since 2002. Similarly to the US, it was real yields that led those moves, and the German 10yr real yield (+12.1bps) hit a post-2011 high of 0.58%. The bond sell-off created a tough backdrop for equities. The S&P 500 traded around half a percent lower for most of the day, but a rally in the last hour of the US session left it flat on the day (+0.01%). Tech stocks were a big winner though, with the FANG+ Index (+1.38%) going against the broader trend to advance for a 4th consecutive session. The breadth of losses outside of tech was highlighted by the equal weight index declining -1.11% with only 22% of the S&P 500 constituents up on the day despite its flat headline performance. Small caps also underperformed with the Russell 2000 index down -1.58%. Back in Europe there were larger losses, leaving the STOXX 600 (-1.03%), the DAX (-0.91%), the CAC 40 (-0.94%) and FTSE 100 (-1.28%) lower on the day. Across other asset classes, the dollar was a key beneficiary, with the broad index (+0.69%) rising to a 10-month high and the euro falling to its lowest against the dollar since last December at 1.049. Meanwhile, oil declined for third day in a row, with WTI crude falling back below $90/bl (-2.17% to $88.82/bl). Both WTI (-5%) and Brent (-6%) have seen their sharpest 3-day decline since the oil price rally started in June. So some evidence that uncertainty over the demand outlook is weighing on the strong recent oil rally. Overnight in Asia, regional equities are also selling off with the Nikkei 225 down -1.43%. The Hang Seng is down -2.98% after reopening post Monday's holiday. Many other markets remain closed in this holiday week. There was also an RBA decision overnight, with the central bank keeping rates at 4.10% with much of the statement identical to the last one. S&P 500 futures are almost unchanged (-0.06%), with Treasury yields up less than a basis point across the curve. Elsewhere yesterday, the main data highlight came from the final manufacturing PMIs, although they mostly echoed the initial impressions from the flash reading. Indeed, the Euro Area PMI was exactly in line with the flash print at 43.4, and Germany’s was revised down slightly to 39.6 (vs. flash 39.8). Otherwise, the Euro Area unemployment rate was back at its recent low of 6.4% in August, which is its joint-lowest level since the formation of the single currency. To the day ahead now, and the main data highlight will be the US JOLTS release of job openings for August. Otherwise, central bank speakers include the ECB’s Simkus, Lane and Villeroy, along with the Fed’s Bostic. Tyler Durden Tue, 10/03/2023 - 08:14.....»»

Oil futures inch higher Tuesday, a day after a three-session decline pulled prices to roughly three-week lows......»»

Tuesday's top analyst upgrades and downgrades included AppLovin, Block, ConocoPhillips, Datadog, FedEx, Nvidia, Okta, PayPal, Rivian Automotive, Toast and Zscaler. The futures traded lower on Tuesday, after a decidedly mixed start to the final quarter of 2024 in the wake of a last-minute budget deal averted a government shutdown over the weekend. The Dow Jones industrials closed lower on Monday, and the S&P 500 eked out a small gain, while the tech-heavy Nasdaq closed higher after some bullish commentary on the Magnificent 7 from Goldman Sachs. The biggest equity loser on the day was the small-cap Russell 2000, which was hammered, closing down 1.6% at 1,756.82. One big concern mentioned over the course of trading Monday was tightening financial conditions starting to affect the economy. Treasury yields soared once again, with some maturities trading up by double digits. The 10-year yield closed the session at 4.69%, after jumping 50 basis points higher in September. The two-year paper closed the day at 5.11%. The inversion between the two still suggests that a recession could be on the way in 2024. After jumping almost 10% in September, both Brent and West Texas Intermediate crude closed lower on Monday. Analysts noted that OPEC’s production actually grew for the second straight month in September, despite the cuts from Saudi Arabia. Increases from Nigeria and Iran were cited for the increase. Brent closed Monday down 1.8% at $90.56, while WTI was last seen at $88.79, down 2.0%. Natural gas was also lower, closing at $2.85, down 2.66%. Gold continued its downward spiral to start off the quarter, as the December contract closed lower by 1.07% at $1,846.20 per ounce. Strategists cited the improving ISM Manufacturing Index, which came in at 49.0% versus expectations for a 47.9% print. While better than expected, readings under 50% indicate slowing economic growth. Bitcoin was a big winner and then a loser Monday, as the cryptocurrency surged higher and at one point was by up over $1,000, before plummeting to close at $27,872, down 0.44% for the day. 24/7 Wall St. reviews dozens of analyst research reports each weekday with a goal of finding fresh ideas for investors and traders alike. Some of these daily analyst calls cover stocks to buy. Other calls cover stocks to sell or avoid. Remember that no single analyst call should ever be used as a basis to buy or sell a stock. Consensus analyst target data is from Refinitiv. These are the top analyst upgrades, downgrades and initiations seen on Tuesday, October 3, 2023. AppLovin Corp. (NASDAQ: APP): Zacks selected this as its Bull of the Day stock, citing its AI-enhanced offerings and improved outlook. Shares last closed at $40.82, which is up more than 58% year to date. Block Inc. (NYSE: SQ): Monness Crespi & Hardt started coverage with a Buy rating and a $70 target price. The consensus target is $81.58. Shares closed at $43.18 on Monday. Chubb Ltd. (NYSE: CB): J.P. Morgan cut its Overweight rating to Neutral with a $250 target price. The consensus target is $240.11. The shares were closed on Monday at $206.32. 24/7 Wall St. 5 Damaged Dow Jones Industrial Dividend Leaders Have Huge 2024 Comeback Potential wallst_recirc_link_tracking_init( "909919008651c25c45cab1", "graphic" ); Clorox Co. (NYSE: CLX): D.A. Davidson upgraded the stock from Neutral to Buy with a $152 target price. The consensus target is $152.18, and Monday’s close was at $130.32. ConocoPhillips (NYSE: COP): Jefferies reiterated a Buy rating with a $143 target price. The consensus target is $134.91, and Monday’s final trade was for $117.12 a share. Datadog Inc. (NASDAQ: DDOG): As Piper Sandler upgraded the shares to Overweight from Neutral, its $88 target price popped to $115. The consensus target is $105.34. The stock closed on Monday at $91.84. FedEx Corp. (NYSE: FDX): Susquehanna’s upgrade was to Positive from Neutral, and the $225 target price jumped to $315. That compares with a $281.46 consensus target and Monday’s $265.10 closing share price. Sponsored: Find a Qualified Financial Advisor Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now......»»

The launch of several Ether futures ETFs was pretty much of a bust on Monday. Facebook and Instagram are proposing a subscription price for EU users who want an ad-free social media experience. After touching a multi-month high around $28,500 Monday morning, Bitcoin futures slipped all the way back to $27,100 before righting the ship. The cryptocurrency traded at around $27,600 Tuesday morning. Rising bond yields get some of the blame. A guaranteed return of 4.7% on a 10-year U.S. Treasury note is stiff competition for a risky play like Bitcoin. A barely lukewarm launch of seven Ether futures ETFs did not help. Ether, the second-most popular cryptocurrency, began trading on Monday. Here is the list, along with the first day’s performance and Tuesday’s premarket showing: BitWise Ethereum Strategy ETF (AETH): -3.22%; -1.86% Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP): -2.83%; -0.43% ProShares Ether Strategy ETF (EETH): -2.98%; -0.53% ProShares Bitcoin & Ether Equal Weight Strategy ETF (BETE: -2.58%; +4.59% Bitcoin & Ether Market Cap Weight Strategy ETF (BETH): -2.39%; +1.44% VanEck Ethereum Strategy ETF (EFUT): -7.58%; -0.24% Trading volume for the funds varied between around 1,500 and 24,000. Not a very auspicious start. Bitcoin investors have been pinning their hopes on SEC approval of a spot Bitcoin ETF, but the poor response to the Ether ETFs’ launch may indicate that the crypto market is weaker than many people believe. The beginning of Sam Bankman-Fried’s trial on Tuesday will not help lure new money into crypto either. Meanwhile, across the pond, Meta Platforms Inc. (NASDAQ: META) has proposed charging a monthly fee to European users of Instagram and Facebook as a workaround to the EU’s rules limiting personalized, targeted advertising. According to a report in the Wall Street Journal, Meta has proposed charging €10 ($10.50) for each social media site and an additional €6 to add the other one for an ad-free version of the app. The monthly fee for a mobile device would be about €13 to factor in the commissions charged by Apple and Google’s app stores for in-app payments. Is Meta using this offer to drive more revenue? How much revenue does the company make every month from advertising that is served to each user? Meta had 3.003 billion Facebook users in the second quarter and generated revenue of nearly $32 billion in revenue. That is just under $10 a quarter per user, not $10 a month. Instagram’s 2.4 billion users generated just over $14 billion in revenue in the second quarter. Again, the per-user total is less than $10 per month. Meta is sure to get some pushback from EU regulators on the steep price. The regulators are sure to argue that the ad-free service is too pricey for most people. Should personal privacy be based on a person’s ability to pay? 24/7 Wall St. 5 Damaged Dow Jones Industrial Dividend Leaders Have Huge 2024 Comeback Potential wallst_recirc_link_tracking_init( "114325417651c08453f29b", "graphic" ); Meta is going to have a hard time pushing this through — and that may be the point. Sorting those who can pay for the stuff advertised on Facebook or Instagram from those who cannot or will not pay, does not matter much if everyone gets ads. But if only those who can afford to pay for the ad-free experience choose to pay the monthly subscription rates, the pool of app users suddenly gets poorer, and ad rates will be forced down. Subscribers have to make up the lost revenue. Is Facebook or Instagram worth around $125 a year? Really? Sponsored: Find a Qualified Financial Advisor Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now......»»

Early indications suggest another day of lackluster trading after two months of subdued market activity. Index futures point to a modestly higher opening on Tuesday, while 10-year Treasury yields have surged to over 4.70%, adding to uncertainty about interest rates. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) data and an upcoming Federal Reserve speech could influence today’s trading. Cues From Monday’s Trading Monday’s trading saw mixed performance in the stock market. Rising bond yields continued to weigh on sentiment, despite the passage of a stop-gap bill by Congress. Economic data showed resilience in the economy but also rekindled rate hike fears. The Nasdaq Composite had a mostly positive day, extending its four-session winning streak. The S&P 500 closed slightly in the green after a late uptick, while the Dow Industrials ended slightly lower. Small-cap stocks, represented by the Russell 2,000 Index, were hit the hardest, closing down 1.58%. This index is down about 0.25% for the year-to-date period, reflecting the struggles of small-cap stocks amid economic uncertainty. US Index Performance On Monday Index Performance (+/-) Value Nasdaq Composite +0.67% 13,307.77 S&P 500 Index +0.01% 4,288.39 Dow Industrials -0.22% 33,433.35 Russell ...Full story available on Benzinga.com.....»»

Two hurricanes hitting Florida and a devastating crop disease have sparked a massive surge in OJ prices. Orange juice prices have soared 270% since the start of 2020, according to data from Refinitiv.Business Insider/Hayley Peterson Orange juice prices have skyrocketed 270% since January 2020, per data from Refinitiv. The rapid spread of the citrus greening crop disease has led to supplies cratering. Other breakfast staples like eggs and bacon are becoming less expensive, though. OJ has never been so expensive, with prices nearly tripling since the US recorded its first coronavirus case.The rapidly spreading citrus greening crop disease and multiple hurricanes in Florida have hammered the supply of oranges in recent years, driving up the cost of the breakfast staple.Orange juice futures have climbed from under $1 per pound at the start of 2020 to $3.50 per pound as of Friday, according to data from Refinitiv:!function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r=0;r.....»»

BTC traded just over $27,600 in Asian afternoon hours on Tuesday, while Ether dropped 3.5% amid a dismal first day of ETH futures ETF trading in the U.S......»»

U.S. stock futures traded mixed this morning on Tuesday. Here are some big stocks recording losses in today’s pre-market trading session. read more.....»»

Index futures point to a modestly higher opening on Tuesday, while 10-year Treasury yields have surged to over 4.70%, adding to uncertainty about interest rates. read more.....»»

Oil futures were flat to slightly higher early Tuesday, steadying after a three-day pullback to roughly three-week lows......»»

U.S. stock futures were struggling for momentum as the recent surge in bond yields continued to suppress investor sentiment.....»»

With U.S. stock futures trading higher this morning on Tuesday, some of the stocks that may grab investor focus today are as follows: Wall Street expects McCormick & Company, Incorporated (NYSE: MKC) to report quarterly earnings at 65 cents per share on revenue of $1.70 billion before the opening bell. McCormick shares fell 0.1% to $74.70 in after-hours trading. Delta Apparel, Inc. (NYSE: DLA) said it received ...Full story available on Benzinga.com.....»»

How does one convince investors to look at an asset whose price has gone nowhere for three years? It’s not ... Read more How does one convince investors to look at an asset whose price has gone nowhere for three years? It's not easy, especially as gold's glitter has all but faded in an era of fast-money fantasies and self-directed speculation. Yet, I invite you to weigh gold's true value as a diversifying force and a time-tested preserver of wealth. If it was good enough for pharaohs and kings - and remains a standby holding of central banks around the world - then just maybe, gold can earn a place in your long-term portfolio. The Gift That's Rarely Accepted Unlike silver, which is cheaper and consequently tends to make fast and furious price moves, gold is more of a "steady Eddie" type of asset. Certainly, it's possible to get some leverage to the gold price's fluctuations through futures and options contracts, or by owning gold-mining stocks such as Barrick (NYSE:GOLD) or Newmont (NYSE:NEM). In contrast, the go-nowhere price trajectory of gold during the past three years has caused the yellow metal to be relegated to the back pages of financial publications, when it's mentioned at all. This has been particularly frustrating to income-focused investors as gold, like other raw commodities, pays no dividend. This isn't to say that the gold price hasn't moved at all. Indeed, it has moved, but not in the way that "gold bugs" would prefer; gold's most recent series of lower highs and lower lows has led it from $2,000 in May to $1,850 at the beginning of September. Contrarians should view the price dip as a gift, but few actually will. Shiny as it is, gold has garnered scant attention lately - but then, that's typical. Counterintuitive as it may be, the line to buy gold at $2,000 is long but you can be the first in line to buy it at $1,850. The Best Reasons to Own Gold Now Rather than a producer of income (like a dividend stock) or a fast mover (like silver), gold is typically viewed as a hedge against crisis situations and the deterioration of fiat currencies such as the U.S. dollar. When established institutions fail, gold will remain tangible and, hopefully, reliable as a wealth-preservation vessel. There is certainly some truth to this viewpoint. Unlike government and corporate bonds, which involve a measure of counterparty risk (though the government is unlikely to renege on its promise to pay back a bond's maturity value with interest), gold doesn't require a compact with any established entity to have value. As long as people are willing to pay for shiny objects, gold will be worth something. There's also a sense that in an Armageddon scenario, physical gold would be the best financial asset to own. Granted, if the power grid were to go down for an extended period of time, I'd probably rather have gold bars than stocks or futures contracts. Whether such a disturbing scenario is actually likely to occur is the topic of an entirely different discussion, however. To me at least, gold's greatest purposes are to maintain their value when the dollar's purchasing power diminishes. Sure, the greenback might be strong at any given moment, relative to other fiat currencies; yet, over the long term, the force of inflation will inevitably destroy its value for buyers of goods and services. Gold, meanwhile, should theoretically increase in value compared to the dollar over the long term. Just bear in mind that there will likely be some value slippage since it typically costs money to properly store and insure physical gold. Be Ready for Just About Anything with Gold Then, there's the crisis-hedge angle. I'm certainly not suggesting that gold necessarily maintains its value, relative to the U.S. dollar, during a crisis situation; the COVID-19 pandemic showed that when worse comes to worst, precious-metal prices can collapse along with stocks. However, the gold price staged a sharp post-pandemic recovery, just like stocks did. Instead of viewing gold as a crisis shield, it's probably better to consider it a non-correlated asset for diversified portfolios. Gold doesn't always move in the same direction as large-cap stocks, and this attribute should appeal to investors seeking to avoid concentration risk. Finally, and perhaps most importantly, gold has history on its side. No matter what company you might invest in - even if it's Cola-Cola (NYSE:KO) or MacDonald's (NYSE:MCD) - I can guarantee that it's not as old as gold. It's a commodity and (sometimes) a form of money that has truly withstood the test of time. Therefore, as long as you know what gold's true purpose is and how it can provide some peace of mind, feel free to add a few ounces and keep them for generations to come......»»