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    Goldman Sachs posts its worst earnings miss in a decade as revenue falls while expenses rise

    Here’s what the company reported: Earnings of $3.32 per share vs. $5.48 estimate of analysts surveyed by Refinitiv
    Revenue of $10.59 billion vs. $10.83 billion estimate
    Shares of the New York-based bank dipped 2.4% in premarket trading.

    David Solomon, chief executive officer of Goldman Sachs Group Inc., during a Bloomberg Television at the Goldman Sachs Financial Services Conference in New York, US, on Tuesday, Dec. 6, 2022. 
    Michael Nagle | Bloomberg | Getty Images

    Goldman Sachs on Tuesday posted its largest earnings miss in a decade amid steep declines in investment banking and asset management revenue.
    Here’s what the company reported:

    Earnings: $3.32 per share vs. $5.48 estimate of analysts surveyed by Refinitiv
    Revenue: $10.59 billion vs. $10.83 billion

    The bank said quarterly profit plunged 66% from a year earlier to $1.33 billion, or $3.32 per share, about 39% below the consensus estimate. That made for the largest EPS miss since Oct. 2011, according to Refinitiv data.
    Revenue held up better at $10.59 billion, down 16% from a year earlier and edging out the estimate.
    Shares of the New York-based bank dipped 2.4% in premarket trading.
    “Widely expected to be awful, Goldman Sachs’ Q4 results were even more miserable than anticipated,” Octavio Marenzi, CEO of consultancy Opimas, said in an email. “Revenues were largely in line with forecasts, but earnings took a big hit. The real problem lies in the fact that operating expenses shot up 11%, while revenues tumbled.”
    More cost-cutting and layoffs at Goldman could be ahead because of that, Marenzi said.

    How long will the investment banking drought last? That’s one of the top questions analysts will have for Goldman CEO David Solomon.
    While the fourth quarter was an ugly one for bankers — Wall Street rivals JPMorgan Chase and Citigroup each posted declines in investment banking revenue of nearly 60% last week — analysts question the odds of a rebound sometime later this year.
    They’ll also want to hear Solomon’s views on headcount and expenses after the bank laid off up to 3,200 employees last week, as well as details about Goldman’s consumer operations as it scales back ambitions there.
    Goldman shares have climbed 8.9% this year going into Tuesday’s trading, compared with a 6.7% advance for the KBW Bank Index.
    Last week, JPMorgan Chase and Bank of America topped profit expectations on surging net interest income, while Wells Fargo and Citigroup posted mixed results.  Morgan Stanley is also scheduled to release results Tuesday.
    This story is developing. Please check back for updates.

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    Prices have not peaked yet, says CEO of one of the world’s largest consumer goods firms

    “For the last 18 months we’ve seen extraordinary input cost pressure … it runs across petrochemical derived products, agricultural derived products, energy, transport, logistics,” CEO Alan Jope tells CNBC.
    Unilever has a global footprint and owns brands including Ben & Jerry’s, Magnum and Wall’s.
    “We might be, at the moment, around peak inflation, but probably not peak prices,” Jope says.
    “There’s further pricing to come through, but the rate of price increases is probably peaking around now.”

    Unilever CEO Alan Jope photographed at the World Economic Forum in May 2022.
    Hollie Adams | Bloomberg | Getty Images

    The CEO of consumer goods giant Unilever said Tuesday that prices would likely continue to rise in the near term, adding that his firm had a playbook for high inflation thanks to its business dealings in markets like Argentina and Turkey.
    Speaking to CNBC’s Joumanna Bercetche at the World Economic Forum in Davos, Switzerland, Alan Jope talked about how his firm was managing its operations in the current climate.

    “For the last 18 months we’ve seen extraordinary input cost pressure … it runs across petrochemical derived products, agricultural derived products, energy, transport, logistics,” he said.
    “It’s been feeding through for quite some time now and we’ve been accelerating the rate of price increases that we’ve had to put into the market,” he added.
    “So far, the consumer response in terms of volume softness has been very muted, the consumer has been very resilient,” Jope said.
    “We do see the prospect of higher volume elasticity as winter energy costs hit, as households’ savings levels come down and that buffer goes away and as prices continue to rise,” he said.

    Last October, Unilever published its third-quarter results for 2022, with the firm reporting price growth of 12.5%.  

    Jope was asked if he foresaw any moderation when it came to inflationary pressures. “It’s very hard to predict the future of commodity markets,” he replied.
    “Even if you press the oil major CEOs, they’ll be a little cagey on giving an outlook on energy prices.”
    Unilever’s view, he said, was that “we know for sure there’s more inflationary pressure coming through in our input costs.”
    “We might be, at the moment, around peak inflation, but probably not peak prices,” he went on to state.
    “There’s further pricing to come through, but the rate of price increases is probably peaking around now.”

    Stock picks and investing trends from CNBC Pro:

    Unilever has a global footprint and owns brands including Ben & Jerry’s, Magnum and Wall’s.
    During his interview with CNBC, Jope touched upon the international dimension of his business and how the experience of operating in a range of markets was steering it through the current climate.  
    “Nobody running a business at the moment has really lived through global inflation, it’s a long time since we’ve had global inflation,” he said.
    “But we’re used to high levels of inflation from doing business in places like Argentina, or Turkey, or parts of Southeast Asia,” he added.
    “So we do have a playbook, and the playbook is that it’s important to protect the shape of the P&L by landing price.”
    “And so it’s not that we’ve taken more price, we just started acting earlier than many of our peers, and the guidance that we’ve been getting from our investors is they support that and feel that that’s an appropriate action.”  
    This, Jope explained, was “something we have learned from being in these high inflationary markets, though … much of that inflation is currency weakness, historically.”
    “But now those markets are having to deal with the combination of commodity pressure and currency weakness. So our instinct is to act quickly when costs start coming through.” More

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    Morgan Stanley’s earnings top Wall Street expectations, helped by record wealth management revenue

    A screen displays the trading information for Morgan Stanley on the floor of the New York Stock Exchange (NYSE), January 19, 2022.
    Brendan McDermid | Reuters

    Morgan Stanley reported fourth-quarter earnings on Tuesday that exceeded Wall Street expectations, boosted by the bank’s record revenues from wealth management.
    Shares of the firm rose more than 1% in premarket trading following the results.

    Here’s what the bank did:

    Earnings: $1.31 a share, adjusted
    Revenue: $12.75 billion, versus $12.64 billion, according to Refinitiv

    In the fourth quarter, Morgan Stanley’s net income fell to $2.11 billion, or $1.26 per share, from $3.59 billion, or $2.01 per share, a year ago. After adjustments, Morgan Stanley said it earned $1.31 per share.
    The company’s wealth management posted record net revenues of $6.63 billion in the latest quarter, 6% higher than a year ago. The result was helped by an increase in net interest income on higher interest rates and bank lending growth, the bank said.
    “We reported solid fourth quarter results amidst a difficult market environment,” Chairman and CEO James Gorman said in a statement. “Overall, 2022 was a strong year for the Firm as our clear strategy and balanced business model enabled us to deliver an ROTCE of 16% despite the complex macro backdrop.”
    The firm’s investment banking suffered a big slowdown amid a collapse in IPOs and debt and equity issuance. Revenues from investment banking came to $1.25 billion in the fourth quarter, down 49% from a year ago. The bank said the decline was due to the substantial decline in global equity underwriting volumes and lower completed M&A transactions.

    Morgan Stanley’s investment management reported a revenue of $1.46 billion, marking a 15% decline from a year ago amid the extreme market volatility brought on by the Federal Reserve’s aggressive rate hikes. The bank’s assets under management shrank to $1.30 trillion from $1.57 trillion last year.
    In the latest period, the bank set aside $85 million for credit losses, compared to just $5 million in the same quarter a year ago.
    The New York-based firm cut about 2% of its staff in December, which impacted about 1,600 of the company’s 81,567 employees and touched nearly every corner of the global investment bank.
    Shares of Morgan Stanley have climbed nearly 8% year to date following a 13% pullback last year.

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    Toyota is investing $35 billion into EVs. But some say it may be too late.

    The world’s largest automaker, Toyota, is battling criticism it is behind rivals on electric vehicles, and is even working to try and block the transition to zero-emission electric fleets.
    But the automaker says it does believe in an all-electric future. It just maintains that future will not reach all of Toyota’s markets at the same time.

    Toyota was once considered a green vehicle pioneer. It introduced the Prius, the world’s mainstream hybrid vehicle in 1997. The Prius combined a gasoline-burning engine with an electric motor and small battery. This allowed drivers to dramatically increase their fuel economy compared to traditional internal combustion engine-powered cars.
    The new technology proved to be a sales sensation: Toyota has offered hybrid versions of much of the rest of its lineup. The automaker has sold a total of 20 million hybrid cars, trucks, and SUVs around the world, and 5.4 million in the U.S. alone.
    But in the meantime, other automakers, spurred by ever stricter government regulation and the success of newcomers like Tesla, began investing in fully electric vehicles.
    For a long time, Toyota’s leaders argued there are fundamental engineering challenges to battery-powered electric vehicles — they take a long time to charge, require heavy and expensive batteries and have still limited range.
    Those criticisms are less valid now given recent improvements in battery technology, auto industry analysts say. More important, companies have found a strong business case for EVs. Tesla is now the leading luxury brand in the United States.

    Toyota’s new $35 billion investment, announced in December 2021, includes a plan to introduce 30 electric models by 2030. That is just under a quarter of the more than 130 models it currently makes.
    At the same time however, Toyota said it would invest an equal amount in hybrids and hydrogen fuel cell vehicles.
    Gartner, an industry research firm, expects gasoline-burning engines will still make up about 50 percent of sales in the early 2030s.
    “We still think that in 10 years, 50% of new vehicle sales will be gasoline,” said Mike Ramsey, a vice president in Gartner’s CIO Research Group. “And if you look at the global footprint, that is almost certainly going to be true, because you’re not going to see in Nigeria, in Iran, in Indonesia, a 50% market share for electric vehicles, period.”
    Watch the video to learn more about Toyota’s singular approach to electric vehicle manufacturing.

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    Stocks making the biggest moves premarket: Goldman, Pfizer, Cheesecake Factory, Alibaba and more

    A Cheesecake Factory restaurant in Louisville, Kentucky.
    Andy Lyons | Getty Images

    Check out the companies making the biggest moves midday:
    Goldman Sachs — The bank slid more than 2% after reporting earnings-per-share and revenue that missed Wall Street estimates Tuesday.

    related investing news

    9 hours ago

    Pfizer — Wells Fargo downgraded the pharmaceutical giant to equal weight from overweight on Monday, saying the company needed a reset from the pandemic for shares to work again. Pfizer was down 1.25% in the premarket.
    Morgan Stanley — Morgan Stanley’s earnings topped Wall Street expectations Tuesday, thanks, in part to record wealth management revenue. Shares were 1% higher in the premarket.
    Vodafone — The U.K. telecommunications company rose nearly 2% in the premarket. On Monday, Ghana approved Vodafone’s sale of 70% of its stake in Vodafone Ghana to Telecel Group. On Thursday, Vodafone was upgraded to buy by Bank of America, which said it was optimistic about the company’s prospects amid CEO Nick Read’s departure.
    Global Payments — Morgan Stanley upgraded Global Payments to overweight from equal weight on Tuesday, citing a more favorable competitive backdrop and attractive valuation, among other things. The company gained 2% in the premarket.
    Church & Dwight — Morgan Stanley upgraded the consumer goods maker to overweight from equal weight and boosted its price target to $91 from $82. Church & Dwight gained more than 1% in the premarket.

    Cheesecake Factory — The restaurant chain slid more than 3% after being downgraded by Citi to neutral from buy, which said shares are near its price target. Cheesecake was also downgraded to hold by Gordon Haskett.
    Bloomin’ Brands — The Outback Steakhouse parent slid nearly 2% after being downgraded to hold by Gordon Haskett, which cited the company’s increasing balanced risk/reward profile.
    Roku — Roku shares dipped 1.8% after Truist downgraded the company to a hold from a buy rating, saying that the streaming stock is hypersensitive to a tough macro environment given that a large chunk of revenues are tied to advertising.
    Snap — JMP Securities downgraded the company to market perform from market outperform, citing declining time spent on Snap and increased competition from Reels and YouTube shorts. Snap slid 1.4% in the premarket.
    Alibaba — Activist investor Ryan Cohen built a stake in the Chinese e-commerce giant, according to the Wall Street Journal. Cohen is pushing the company to increase its stock buyback program, the report said. Shares were higher by 0.5% in the premarket.
    Reynolds Consumer Products — Shares fell about 1.3% after Credit Suisse downgraded the household goods maker to neutral from outperform, saying share gains are now baked into the stock price.
    Whirlpool — Shares dropped 3% after Whirlpool said it will divest a majority of its EMEA business, and form a new business focused on Europe with Turkish household appliances maker Arcelik. Whirlpool will own 25% of the new entity, while Arcelik will own 75%.
    — CNBC’s Sam Subin, Sarah Min and Michael Bloom contributed reporting.

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    SAP CEO says the world is entering the ‘next phase of globalization’

    SAP CEO Christian Klein told CNBC that there have been cutbacks happening in tech and the broader economy, and that CEOs are becoming increasingly cautious about spending.
    Klein said we are entering “the next phase of globalization,” with companies shifting their focus to building up resilient supply chains and improving their sustainability credentials.
    He added that technology is the “solution” to making supply chains more resilient, as companies need a better handle on the data underpinning their businesses.

    The CEO of German tech giant SAP said the world is entering the next phase of globalization — and he’s largely optimistic on the outlook for technology despite challenges posed by higher interest rates and supply chain disruptions.
    “We are entering from my perspective the next phase of globalization,” SAP chief Christian Klein told CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland.

    In this era of change, companies will want to shift their focus toward building up resilient supply chains and improving their sustainability credentials, Klein said.
    He added that firms are coming together to secure their supply chains and tackle corporate responsibility issues by better using data.
    Supply chains have been challenged by a confluence of factors, not least the Covid pandemic. Lockdowns caused major disruptions to economic output, and highlighted a dependency on China for global trade.
    The Ukraine-Russia war compounded those issues, as Russia is a significant supplier of oil and gas, and Ukraine is the source of of vital exports related to food, agriculture and industrials. That has led to upheavals of supply chains and higher prices for consumers and businesses around the world.
    Sanctions on Russia, meanwhile, led companies to rethink where they base their operations — including SAP.

    Despite that, Klein said he’s optimistic about the path ahead.
    “We in the tech sector, we at SAP, we are very confident about the year ahead,” Klein said.
    Reflecting on the gloomy state of macroeconomic conditions, he said that there have been cutbacks in tech, as well as the broader economy, and that CEOs of large enterprises are becoming increasingly cautious about spending.
    There have been waves of layoffs happening in tech, including at the likes of Amazon and Meta, as higher rates and fears of a recession force them to be more prudent with spending.
    “We had for a very long time negative interest rates,” said Klein. That has now changed in both Europe and the United States, with the Federal Reserve, European Central Bank and Bank of England hiking interest rates to tame soaring inflation.

    Tech as a ‘solution’

    Klein added, however, that technology is the “solution” to making supply chains more resilient, as companies need a better handle on the data underpinning their businesses to make more effective decisions.
    “Actually, people still want to invest money, but they really care about where to invest,” Klein said.
    Automotive manufacturers, for example, “want to see how they can build resilient supply chains up from the raw materials up to finishing and producing the car,” he said.
    “It’s about coming together and technology plays a key role in that,” said Klein. “And that’s why in the ERP [enterprise resource planning] in the supply chains space, we see really high spending these days, and there will not be a big change in 2023.”
    SAP’s growth has been expanding as it plots a shift away from traditional computing infrastructure to the cloud, Klein added.
    And that’s helped the company continue to do well despite its exit from Russia, he said.
    Government sanctions on Russia and the solidarity that big corporations showed Ukraine forced many businesses to leave the country, leading to income losses and worsening geopolitical divides.
    But Klein said SAP wouldn’t be as affected as others, thanks to the reprioritization of its business, which now focuses more on cloud computing and recurring revenue streams.
    He suggested the firm would avoid having to lay off workers as many of its peers have done, as it is “in a very strong position.” More

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    John Kerry says ‘money, money, money’ is needed most to tackle climate change

    “I’m convinced we will get to a low-carbon, no-carbon economy — we’re going to get there because we have to,” John Kerry tells an audience at the World Economic Forum in Davos.
    “I am not convinced we’re going to get there in time to do what the scientists said, which is avoid the worst consequences of the crisis,” Kerry says.
    During his speech, Kerry also addressed the net-zero pledges made by companies around the world.

    John Kerry photographed at the World Economic Forum in Davos, Switzerland, on January 17, 2023.
    Fabrice Coffrini | AFP | Getty Images

    The world will eventually move to a low-carbon economy, but it may be too late to avoid the worst effects of climate change, according to John Kerry.
    Speaking at the World Economic Forum in Davos, Switzerland, on Tuesday morning, the U.S. special presidential envoy for climate issued a stark warning about the years ahead.

    “I’m convinced we will get to a low-carbon, no-carbon economy — we’re going to get there because we have to,” he said.
    “I am not convinced we’re going to get there in time to do what the scientists said, which is avoid the worst consequences of the crisis,” he added.
    “And those worst consequences are going to affect millions of people all around the world, [in] Africa and other places. Of the 20 most affected countries in the world from [the] climate crisis, 17 are in Africa.”

    Read more about energy from CNBC Pro

    In his remarks, Kerry also spoke about the task of keeping the goal of limiting global warming to 1.5 degrees Celsius alive.
    “So, how do we get there? Well, the lesson I’ve learned in the last years and I learned it as secretary [of State] and I’ve learned it since, reinforced in spades, is: money, money, money, money, money, money, money. And I’m sorry to say that.”

    The 1.5 degrees goal is contained within 2015′s Paris Agreement, an accord that aims to “limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.”
    Cutting human-made carbon dioxide emissions to net-zero by 2050 is seen as crucial when it comes to meeting the 1.5 degrees Celsius target.
    Over the past few years, many multinational corporations have announced net-zero pledges.
    While such commitments draw attention, actually achieving them is a huge task with significant financial and logistical hurdles. The devil is in the detail and goals can often be light on the latter.
    Kerry addressed the topic in his speech. “Let’s face it, [a] whole bunch of companies in the world have chosen to say, ‘I’m going to be net zero by 2050’,” he said.
    “And you and I, we know they don’t have a clue how they’re going to get there. And most of them are not on track to get there.” More

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    Chinese travelers are returning to Singapore, but a full recovery is not expected this year

    Singapore is welcoming them back, but a full return of Chinese tourists isn’t likely in 2023, Singapore Tourism Board executives said at a press conference Tuesday.
    Singapore Tourism Board’s CEO Keith Tan cited limited flight capacity and the speed of China’s border reopening as some of the reasons a full recovery from Chinese tourists isn’t expected this year.

    Tan told CNBC that travel recovery from China is unlikely to exceed 60% of pre-Covid levels by year-end.
    “We are hoping to get, for the whole year 2023, between 30% to 60% of where we were compared to the whole year 2019,” he said. “In our most ambitious and aggressive scenarios, we hope that things will be almost back to normal by the end of 2023.”
    Currently, the number of flights from Singapore to China is only 10% of what it was pre-Covid. Unlike other countries in Asia, Singapore has not imposed new Covid-related restrictions on travelers from China.
    Singapore’s tourism industry is expected to recover to pre-pandemic levels by 2024, according to its tourism board.

    Competition from Hong Kong

    Tan said he welcomes competition from Hong Kong in terms of MICE — meetings, incentives, conventions and exhibitions.

    Hong Kong “will throw a lot of resources to secure and anchor a whole range of events,” he said.
    “I welcome that competition. I think it is good, and I’m glad that Hong Kong is back in business … but that also means that we have to work harder at securing a good set of events and investments for Singapore.”

    Juliana Kua, assistant CEO of Singapore Tourism Board, added that there is “a strong pipeline of MICE events coming up to attract Chinese corporate travelers.”
    Kua said that a trend observed among Chinese travelers is small group bookings with customized itineraries, rather than off-the-shelf packaged tours. The Singapore Tourism Board is targeting these travelers, she said.
    Singapore’s international visitor arrivals reached 6.3 million in 2022, which is 33% of 2019 levels, according to Singapore Tourism Board’s statistics. About 1.1 million visitors came from Indonesia, the highest number of arrivals from any country.
    Preliminary estimates for tourism receipts are between $13.8 billion and $14.3 billion Singapore dollars ($10.4 billion and $10.8 billion), which is around half of 2019’s tourism revenue. More