Finimize - ⭐️ Goldman lost its luster

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Today's big stories

China’s growth stalled in 2022, but its unexpectedly strong fourth-quarter figures gave hope for this year
These three indicators are signaling a comeback for stocks – Read Now
Goldman Sachs’s quarterly results missed expectations by a mile

Hopping And Splashing

What’s Going On Here?

Data out on Tuesday showed that China’s economy expanded by 3% in 2022 – the slowest rate of growth, excluding the pandemic years, for nearly half a century.

What Does This Mean?

Spending most of 2022 cooped up in lockdowns meant that China was always going to have a tough time hitting its ambitious growth target of 5.5%. And let's face it, the 3% that the country did achieve is pretty glacial by its own track record (tweet this). In fact, last year’s growth marked the first time in decades that the world as a whole outpaced China’s economic performance. But it’s not a total sob story: the country had a bit more pep in its step as the year drew to a close, and the fourth quarter’s growth actually outstripped economists’ predictions. So sure, Covid’s still a nuisance in China, but this weekend ushers in the year of the water rabbit, supposedly bringing patience and prosperity – so the country just might have luck on its side.

Why Should I Care?

Zooming out: See-saw.
Now that China’s reopening, there's one worry niggling at economists’ minds: whether this move will help or hinder the fight against inflation. See, some experts think that a reopened, re-invigorated China will be extra-thirsty for resources like oil, sending prices skyward. But others point out that an unfettered China could lead to unclogged supply chains and free-flowing goods, easing price pressures instead. Time will tell which factor packs a bigger punch…

The bigger picture: Baby bust.
China's one-child policy was scrapped in 2016, so you might expect the birth rate to be booming – especially given the boredom and pent-up energy that lockdowns entail. But China's population actually fell for the first time in 60 years in 2022, and that’s a problem. Just ask Japan: now labeled “the land of the setting sun”, its slipping population has held economic growth back for a generation. Maybe it’s time for a three-child policy.

You might also like: With less to drag on China’s economy, here’s where to look for opportunities.

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Analyst Take

Stocks May Be Ready For A Breakout, According To These Three Indicators

By Russell Burns, Analyst

We’re only a couple of weeks into 2023, but the S&P 500 is already dropping hints that this year could be an interesting one.

And if – like me – you’re obsessed with charts, you might have already noticed this.

If not, let me show you three major technical indicators, and explain what they say about the potential for a stock market rally.

That’s today’s Insight: the three technical indicators that are pointing to a higher S&P 500.

Read or listen to the Insight here

New Year, new economy

Well, maybe.

The threat of a portfolio-busting recession is sticking around, so you might want to hold some defensive stocks – that’s ones like defense, tobacco, and pharmaceuticals.

But headache-inducing inflation is expected to let up later this year, as are stock-denting interest rates. In that case, you might want to pick up some so-called recovery stocks.

That leaves you with a heap of options, so maybe this will help: IG has released its top defense and recovery picks for the upcoming year.

Get the rundown today: discover what IG’s backing this year.

Find Out More

Disclaimer

Your capital is at risk. The value of shares, ETFs, and ETCs can fall as well as rise, which could mean getting back less than you originally put in.

All That Glitters Is Not Goldman

What’s Going On Here?

Investment bank Goldman Sachs reported some seriously disappointing fourth-quarter results on Tuesday.

What Does This Mean?

Goldman Sachs isn’t alone in laying off workers, but it has been wielding the job-cutting ax with particular gusto compared to other Wall Street residents. And now we know exactly why: the firm missed profit expectations by a country mile, which had a lot to do with slumping investment banking and asset management fees. That’s probably why the firm’s trying its best to Ctrl Z the hiring spree it went on when dealmaking was at its height – slashing jobs and other costs left, right, and center. But that frenzy’s come a bit late in the day, and some investors might not be impressed by Goldman’s Johnny-come-lately cost-cutting antics.

Why Should I Care?

For markets: No rush for gold.
The world of investment banking is cyclical, and trading revenues and advisory fees ebb and flow – so by the time the results roll in, last quarter’s earnings are already ancient history. That means it’s not the quarterly sprint that counts: it’s all about the multi-year marathon. So sure, last quarter’s numbers were a disappointment – but Goldman’s a finely-tuned long-distance runner, and there isn’t any finish line in sight. Long-term shareholders know that too, which could be why the firm’s share price is still trading near all-time highs.

The bigger picture: Banks bounce back.
After the financial crisis hit, experts worried that investment banks’ best days were behind them, and predicted they’d never see pre-recession profit levels again. But the Wall Street titans clawed their way back, and of the five most famous banking firms, only Citigroup’s share price has been outstripped by the S&P 500 over the last ten years. That’s quite a feat for the industry, especially given that it seems to have ditched the profitable but questionable moves that landed it in hot water before.

You might also like: Blackstone expects these nine surprises in 2023.

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💬 Quote of the day

“To follow, without halt, one aim: there’s the secret of success.”

– Anna Pavlova (a Russian prima ballerina)

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Key phrases

other Wall Street residents three major technical indicators three technical indicators temperamental digital assets strong fourthquarter figures half a century unclogged supply chains stock market rally stockdenting interest rates asset management fees disappointing fourthquarter results slumping investment banking total sob story ambitious growth target

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