“We’re going to see more surprises in the fourth quarter, especially when it comes to writing off special idiosyncratic exposures.” – 02:35
Chris Whalen, Chairman of Whalen Global Advisors, the current state of Wall Street, highlighting the strong profits being driven by deal-making, trading, and lending at major banks. She notes that Goldman Sachs, J.P. Morgan, Citi, and Wells Fargo have all exceeded expectations, with Goldman on track for a record year and J.P. Morgan aiming to surpass $50 billion in profit once again.
Chris explains that while the deal-making side of the banking sector is thriving, the credit side remains quiet, especially for consumers. He points out that commercial and private equity sectors are facing significant challenges, and many banks are struggling with cost efficiency, achieving only about a 1% return on assets.
The conversation shifts to the dynamics of the markets, where Chris notes that liquidity is flowing back into public markets as private equity cools down. He highlights that while banks are attempting to focus on positive aspects, there are hidden risks, particularly with institutions like Goldman Sachs dealing with losses from private equity positions.
Remy then transitions to a discussion about the contrasting performances of gold and Bitcoin. She notes that gold has been climbing, recently breaking the $4,200 mark, while Bitcoin has experienced a decline following a sell-off. Chris clarifies that gold and Bitcoin are not correlated, with Bitcoin being more closely tied to stock market movements. He advises investors to consider tangible assets like gold and real estate, especially for those who have made profits in the crypto market.