Finance

“Ever since the Chinese housing bubble burst,” said Richard Koo of the Nomura Research Institute in a recent talk, “I’ve been getting tonnes of calls from Chinese journalists, economists, investors and sometimes policymakers asking me, ‘Are we going the way of Japan?’”Mr Koo is a good person to ask: he has devoted his career to studying the aftermath of financial excess. When the American economy’s recovery from the first Gulf War faltered in 1991, his then boss at the New York Federal Reserve, Edward Frydl, began to worry about an overhang of debt and commercial property. This was “feeding a pervasive financial and economic conservatism among businesses and consumers”, Frydl argued. Demand for credit was subdued, because firms were “directing their efforts toward balance-sheet restructuring”. To describe these strains, he coined the term “balance-sheet recession”.Mr Koo later realised that Japan was suffering from the same overhangs, only far worse. After its stockmarket bubble burst in 1989, share prices plunged by 60% in less than three years. Property prices in Tokyo fell for over a decade. Deflation, by some measures, persisted even longer. Even the price of golf memberships—tradeable on organised exchanges in Japan—tumbled by 94%. Many companies, which had borrowed to buy property or shares in other firms, found themselves technically insolvent, with assets worth less than liabilities. But they remained liquid, earning enough revenue to meet ongoing obligations. With survival at stake, they redirected their efforts from maximising profit to minimising debt, as Mr Koo put it.In a healthy economy, corporations use funds provided by households and other savers, ploughing the money into growing their businesses. In post-bubble Japan, things looked different. Instead of raising funds, the corporate sector began to repay debts and accumulate financial claims of its own. Its traditional financial deficit turned to a chronic financial surplus. Corporate inhibition robbed the economy of much-needed demand and entrepreneurial vigour, condemning it to a deflationary decade or two.So is China going the way of Japan? Chinese enterprises have accumulated even more debt, relative to the size of the country’s gdp, than Japan’s did in its bubble era. China’s house prices have begun to fall, damaging the balance-sheets of households and property firms. Credit growth has slowed sharply, despite cuts in interest rates. And flow-of-funds statistics show a narrowing in the financial deficit of China’s corporations in recent years. In Mr Koo’s judgment, China is already in a balance-sheet recession. Add to that a declining population and a hostile America and it is easy to be gloomy: will it go the way of Japan? It should be so lucky.Look closer, though, and the case is less conclusive. Much of the debt incurred by China’s corporations is owed by state-owned enterprises that will continue to borrow and spend, with the support of state-owned banks, if required by China’s policymakers. Among private enterprises, debt is concentrated on the books of property developers. They are reducing their liabilities and cutting back on investment in new housing projects. But in the face of falling property prices and weak housing sales, even developers with robust balance-sheets would be doing the same.The end of China’s property boom has made households less wealthy. This is presumably breeding conservatism in their spending. It is also true that households have repaid mortgages early in recent months, contributing to the sharp slowdown in credit growth. But surveys show that household debts are low relative to their assets. Their mortgage prepayments are a rational response to changing interest rates, not a sign of balance-sheet stress. When interest rates fall in China, households cannot easily refinance their mortgages at the lower rates. It therefore makes sense for them to repay old, relatively expensive mortgages, even if that means redeeming investments that now offer lower yields.What about the switch in corporate behaviour revealed by China’s flow-of-funds statistics, which show the corporate sector moving to a financial surplus? This narrowing is largely driven by the crackdown on shadow banks, points out Xiaoqing Pi and her colleagues at Bank of America. When financial institutions are excluded, the corporate sector is still demanding funds from the rest of the economy. Chinese businesses have not made the collectively self-defeating switch from maximising profits to minimising debts that condemned Japan to a deflationary decade.Japanese lessonsThese differences show China is not yet in a recession akin to Japan’s. And Mr Koo is himself keen to emphasise one “huge” difference between the two countries. When Japan was falling into a balance-sheet recession, nobody in the country had a name for the problem or an idea of how to fight it. Today, he says, many Chinese economists are studying his ideas.His prescription is straightforward. If households and firms will not borrow and spend even at low interest rates, then the government will have to do so instead. Fiscal deficits must offset the financial surpluses of the private sector until their balance-sheets are fully repaired. If Xi Jinping, China’s ruler, gets the right advice, he can fix the problem in 20 minutes, Mr Koo has said.Unfortunately, Chinese officials have so far been slow to react. The country’s budget deficit, broadly defined to include various kinds of local-government borrowing, has tightened this year, worsening the downturn. The central government has room to borrow more, but seems reluctant to do so, preferring to keep its powder dry. This is a mistake. If the government spends late, it will probably have to spend more. It is ironic that China risks slipping into a prolonged recession not because the private sector is intent on cleaning up its finances, but because the central government is unwilling to get its own balance-sheet dirty enough. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Cryptocurrency company Ripple announced on Friday it will acquire Fortress Trust, a startup specializing in crypto infrastructure, for an undisclosed sum.
The deal will give Ripple a license in Nevada and allow it to expand beyond its core bread and butter of blockchain-enabled payments.
In May, Ripple agreed to buy Metaco, a Swiss provider of crypto custody services, for $250 million.

Brad Garlinghouse, chief executive officer of Ripple, speaks during the CoinDesk 2022 Consensus Festival in Austin, Texas, US, on Saturday, June 11, 2022.
Jordan Vonderhaar | Bloomberg | Getty Images

Cryptocurrency company Ripple announced on Friday it will acquire Fortress Trust, a startup specializing in crypto infrastructure, giving it a license in Nevada and allowing it to expand beyond its core bread and butter of blockchain-enabled payments.
Ripple did not disclose the terms of the deal.

Founded in 2021 by Scott Purcell, an entrepreneur with a background in equity and debt crowdfunding, Fortress Trust aims to help large enterprises interact with digital currencies. Purcell was formerly CEO of Prime Trust, a crypto custodian which shut down after BitGo abandoned a deal to acquire the firm.
Ripple is mostly known for its role as a cross-border payments firm. The company uses a blockchain-based messaging system, akin to SWIFT, to approve speedy transactions between a network of banks and other financial institutions.
Ripple’s partners include Britain’s Modulr, Singapore’s Nium and Japan’s SBI Remit.
The company also uses XRP, a cryptocurrency it owns a significant portion of and has become closely associated with, for cross-border payments between banks and other financial institutions.
XRP didn’t move substantially on the news. The token was up about 0.4% in the past 24 hours, trading at a price of 50 cents.

Ripple has struggled in recent years, with the U.S. Securities and Exchange Commission targeting the firm with a lawsuit alleging XRP should be considered a security and that its executives sold over $1 billion worth of the token to investors in an illegal securities offering.
Ripple had previously partnered with MoneyGram, which used XRP in a pilot to make instant transfers, using XRP as a “bridge” currency to move funds without the need for pre-funded accounts. Following the lawsuit, MoneyGram and Ripple abandoned their partnership in March 2021.
In July, though, Ripple secured a key victory as a judge ruled that the XRP token was “not necessarily a security on its face.”
Ripple has seen momentum in its business build recently — particularly outside the U.S., where most of its clients are based. Asked whether the ruling meant that American banks would return to Ripple to use its ODL product, Stu Alderoty, Ripple’s chief legal officer, told CNBC, “I think the answer to that is yes.”
Fortress is Ripple’s second acquisition this year. In May, the company agreed to buy Metaco, a Swiss provider of crypto custody services, for $250 million.
A Ripple spokesperson declined to comment on the size of the deal but said that it is less than the sum Ripple paid to buy Metaco. Ripple was a minority investor in Fortress Trust’s seed funding round.
Ripple said the deal would “support our existing lines of business — specifically in terms of improving the customer experience within our payments and liquidity solutions.”
Ripple also obtained a Nevada trust with its acquisition of Fortress Trust, adding to its growing list of regulatory permits globally. A company spokesperson said this would enable the firm to “provide regulated services — for both fiat and crypto —  to certain customers in the U.S.”
Ripple already holds a New York BitLicense, which lets it engage in regulated virtual currency activities in the state of New York, as well as 30 money transmitter licenses across the U.S. and an in-principle Major Payment Institution License from the Monetary Authority of Singapore, the country’s central bank. The company told CNBC previously it was also looking to get an e-money license with the Irish central bank.
“Longer term, we anticipate there will be ways we can leverage the technology to support new initiatives on our roadmap and enable Ripple to serve a broader segment of customers and use cases,” a Ripple spokesperson told CNBC via email.
Ripple is one of many players in the so-called “crypto custody” space, meaning it’s focused on helping companies and individual users store their tokens in a secure, decentralized address without requiring all the technical knowhow.
Fortress Trust uses application programming interfaces, or APIs — programs that allow different apps to interact with each other — to allow companies to pull data from other bits of software, such as wallets holding cryptocurrencies and nonfungible tokens.
Per Fortress’s website, the startup works with “crypto exchanges, NFT marketplaces, tokenization platforms, corporate brands, agencies, securities exchanges, real estate, healthcare, neobanks, sports and entertainment celebrities, musicians, influencers and other innovators.” More

Indian Prime Minister Narendra Modi and U.S. President Joe Biden pledged to deepen the partnership between both countries in their second bilateral meeting in less than six months.
With both Russian and Chinese presidents absent at this weekend’s G20 leaders’ summit, hopes were low that a binding agreement among member states would be forged since both countries objected to the reference to Russia’s war in Ukraine.
India and the U.S. hope to present themselves as a viable alternative to China for the Global South at a time of shifting global geopolitical alliances.

Indian artist Jagjot Singh Rubal gives final touches to an oil painting of U.S. President Joe Biden, at his workshop in Amritsar on September 5, 2023, ahead of the two-day G20 summit in New Delhi.
Narinder Nanu | Afp | Getty Images

NEW DELHI — Indian Prime Minister Narendra Modi and U.S. President Joe Biden pledged Friday to deepen the partnership between their countries in their second bilateral meeting in less than six months, as Delhi prepares to host a meeting among leaders of the Group of 20 leading industrialized and developing countries.
The two leaders met shortly at Modi’s official residence after Biden’s arrival in Delhi and then issued a 29-point statement that highlighted the depth and breath of their relationship at a time of evolving global alliances — from building resilient strategic technology value chains and linking defense industrial ecosystems, to collaborating on renewable and nuclear energy, climate financing and cancer research.

The two leaders “reaffirmed the importance of the Quad in supporting a free, open, inclusive, and resilient Indo-Pacific” and “expressed their appreciation for the substantial progress underway to implement the ground breaking achievements of Prime Minister Modi’s historic June 2023 visit to Washington.” The Quad is an informal security alignment of Australia, India, Japan and the U.S., which came about in response to China’s rising strength in the Indo-Pacific region.

This closed-door meeting with Biden was the third — after meetings with leaders from Mauritius and Bangladesh — that Modi convened on the eve of the G20 leaders’ summit and part of the dozen or so bilateral meetings planned for this weekend, underscoring India’s strategic ambitions as a key global player connecting the developed world and the Global South.
The summit is an important one for Modi, whose government has turned the normally sedate rotating G20 presidency into a branding vehicle to burnish India’s geopolitical importance ahead of national elections next year. Many governments, investors and businesses are also starting to look toward India — as China slows — which the International Monetary Fund expects to be the fastest growing economy this year.

Weekend consensus

This weekend’s agenda includes the expected admission of the African Union as an official G20 member as part of India’s broad focus on elevating the place of the Global South and fostering inclusive and sustainable growth in the multilateral forum founded in 1999 as a platform to address issues afflicting the global economy.
Russian President Vladimir Putin and China President Xi Jinping though won’t be in attendance this weekend.

While Putin is sending Foreign Minister Sergey Lavrov to take his place, China Premier Li Qiang will take Xi’s place — the first time Xi is skipping the G20 meeting in the decade since he became president.

Putin has not traveled outside of Russia since the International Criminal Court issued a warrant for his arrest for war crimes in Ukraine.
The pair’s absence has sparked fears that a communique binding member states may not be issued at the end of a G20 leaders’ summit — undercutting India’s clout and diminishing his domestic messaging.
India’s diplomats have been unable to foster binding agreements in the key discussion tracks since it assumed the rotating presidency in December 2022 — because Russia and China have objected to the wording referring to the war in Ukraine.
A war of words has ensued ahead of this weekend’s meeting.
“The G7 countries (primarily the US, the UK, Germany, and France) have been exerting pressure on India in a bid to have their unilateral approaches to the Ukraine situation reflected in the final documents of G20 forums,” the Russian foreign ministry said in a statement.

At a pre-summit press conference Friday, India’s G20 sherpa Amitabh Kant said the final declaration “is almost ready.”
“I can assure you our presidency has been inclusive, decisive and action-oriented,” Kant said.

Alternative to China

With Putin and Xi conspicuously absent this weekend, India and the U.S. will hope this will be sufficient to persuade member states and other observers from the Global South they represent a more viable proposition from food security to debt resolution.
In their joint statement after their Friday bilateral meeting, Biden and Modi “reaffirmed their commitment to the G20.”
They also “expressed confidence that the outcomes of the G20 Leaders’ Summit in New Delhi will advance the shared goals of accelerating sustainable development, bolstering multilateral cooperation, and building global consensus around inclusive economic policies to address our greatest common challenges, including fundamentally reshaping and scaling up multilateral development banks.”

While Putin has an obvious reason accounting for his absence, Xi, though, has not indicated a reason — triggering speculation the Chinese leader may be snubbing Modi for a variety of reasons.
Despite recently traveling to South Africa for a BRICS meeting, Xi has rarely traveled abroad. Instead, he has tended to receive visiting dignitaries in Beijing — including Zambia and Venezuela in overlapping visits this weekend.
India’s warming ties with the U.S. also sharply contrasts against its standoff with its neighbor, China.
India — along with Malaysia, the Philippines, Vietnam and Taiwan — sharply rebuked China last week for a new national map that Beijing claims contested territories as its own.
India also stands to gain from American companies looking to diversify their supply chains — at China’s expense — as the U.S. ramps up efforts to limit the transfers of strategic technology to China on the grounds of national security.
This would likely be what Modi and Biden conceived as “their ambitious vision for an enduring India-U.S. partnership that advances the aspirations of our people for a bright and prosperous future, serves the global good, and contributes to a free, open, inclusive, and resilient Indo-Pacific.” More

Traders work as screens display the trading information for Kroger Co. and Albertsons Companies Inc. on the floor of the New York Stock Exchange, Oct. 14, 2022.
Brendan McDermid | Reuters

Check out the companies making headlines in midday trading.
Hudson Pacific Properties — The California-based commercial real estate company slid 4.2% after suspending its common stock dividend. Chief Executive Officer Victor Coleman attributed the move to tougher market conditions including the Hollywood strike.

Avid Bioservices — Shares slid 4.7% after the company reported underwhelming quarterly results. Avid reported a loss of 3 cents per share, matching a StreetAccount forecast. The company’s revenue of $37.73 million came in just above estimates.
Planet Labs — The satellite imaging company plummeted 17% after reporting a greater-than-expected loss for the second quarter. Planet Labs lost an adjusted 14 cents per share on revenue of $53.8 million. Analysts polled by LSEG, formerly known as Refinitiv, expected a loss of 8 cents per share on revenue of $54.1 million.
Kroger — The supermarket conglomerate climbed 3% on the back of better-than-expected earnings for the second quarter. Kroger earned an adjusted 96 cents per share, beating an LSEG estimate of 91 cents per share. Second-quarter revenue of $33.85 billion did miss expectations, however.
DocuSign — Shares slipped 2.7% despite an earnings beat a day earlier. DocuSign reported an adjusted 72 cents per share and $688 million in revenue, while analysts polled by LSEG forecast an adjusted 66 cents per share and $678 million in revenue.
Snowflake — The cloud data stock added 3.7% following DA Davidson initiating it with a buy rating. The firm highlighted Snowflake’s potential benefit from growing artificial intelligence application demand.

First Solar — Shares of the solar panel maker gained 1.4% after Deutsche Bank upgraded First Solar to buy from hold, citing the company’s strong ongoing demand. The firm said First Solar is at an “attractive entry point.”
RH — The home goods store slipped more than 13% after a third-quarter earnings miss. Chief Executive Officer Gary Friedman told shareholders he expects macroeconomic headwinds to persist throughout the remainder of 2023, further pressuring the luxury housing market.
Gilead Sciences — Gilead gained 3% Friday after Bank of America upgraded the stock to buy from neutral and raised its target price, noting potential catalysts such as stronger-than-expected sales of its HIV/AIDS treatment medication. The firm said shares look oversold in its view, as the stock has declined more than 11% so far this year.
— CNBC’s Pia Singh contributed reporting. More

Risk capacity and risk tolerance are two concepts for investors to understand when building a portfolio.
Risk capacity measures the ability to take risk with investments. Tolerance is more subjective, assessing comfort with short-term volatility.
Failing to assess them can lead to costly mistakes.

Getty Images

There are two kinds of risk that investors should understand when building a portfolio: risk tolerance and risk capacity.
They describe different aspects of a person’s risk profile — and ignoring them can put investors “in a really bad situation,” said Charlie Fitzgerald III, a certified financial planner based in Orlando, Florida.

Asset classes sit on a risk spectrum from conservative to aggressive.
Safer assets, like cash or money market funds, are stable but have relatively low returns that may not deliver much if any growth after inflation. Riskier ones like stock funds are more volatile — meaning they can experience frequent and violent swings up and down — but deliver higher investment growth over the long term.
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Assessing risk capacity and risk tolerance helps individuals strike an optimal balance.
“They go together” said Fitzgerald, principal and founding member of Moisand Fitzgerald Tamayo. “It’s kind of like yin and yang.”

Risk tolerance is essentially an investor’s comfort level with short-term market gyrations. It’s a willingness to take risk and is personal, subjective and guided by emotion, experts said.
Someone may think they have a high tolerance for investment risk and steely resolve when faced with extreme volatility — but then freak out and dump all their stocks the second after a market selloff. Such a person would have a low risk tolerance.

By contrast, risk capacity describes an investor’s ability to take risk. Put differently: Can they afford to gamble?
“You may want to gamble on roulette, but your income and savings may tell you that you shouldn’t,” according to firm John Hancock. “Risk capacity ignores your wants — that’s your risk tolerance — and focuses on what level of risk is appropriate for you based on your situation and goals.”

Misjudging your investment risk can be costly

There are instances in which investors can misjudge their risk capacity and tolerance and make poor choices as a result.  
Consider these examples from Christine Benz, director of personal finance at Morningstar.
In one case, a 23-year-old starts a new job and doesn’t like the idea of her savings losing value. She invests in her company 401(k) plan but allocates all her money to a stable value fund, the “safest” available option. But this worker has a long time horizon, and therefore a high risk capacity, Benz said.
“Her investments can go up, down and sideways in the months and years to come, but that won’t really matter until 40 years from now, when she’s ready to pull her money out,” Benz wrote. “But she’s letting her low risk tolerance … dictate her decision-making.”
In fact, financial advisors generally recommend young investors have a portfolio geared mostly if not entirely to stocks.

Now let’s take the opposite example. Here, a couple in their 30s are saving for a down payment on a house. They stayed invested in their company retirement plans through the 2008 financial crisis and feel comfortable about their ability to weather future downturns. They put their down-payment money in a global-stock fund.
The couple has a high risk tolerance — but a low risk capacity, Benz said. Subjecting a down payment to stock loss is overly risky: Investment losses leading up to a near-term home purchase could derail their plans.
Ultimately, risk tolerance, while important, is less so than assessing risk capacity and building a portfolio whose holdings “are a good fit for one’s time horizon,” she said. Of course, if an appropriately calibrated portfolio ultimately makes an investor anxious, there’s a chance the investor may be guided by their emotions to make a change at the wrong time, she added. More

The DocuSign website on a laptop in Dobbs Ferry, New York, April 1, 2021.
Tiffany Hagler-Geard | Bloomberg | Getty Images

Check out the companies making headlines in premarket trading.
Kroger — The supermarket chain fell 2.8% following a mixed second-quarter report. Kroger reported earnings per share ex-tems of 96 cents, beating the consensus forecast of 91 cents from analysts polled by LSEG, formely known as Refinitiv. But Kroger posted $33.85 billion in quarterly revenue, under the $34.13 billion anticipated by analysts, and said it would pay as much as $1.2 billion to settle most claims related to opioids.

Planet Labs — The satellite imagery stock slipped 2.6% in premarket trading after delivering a weaker quarterly report than expected on Thursday. Planet Labs posted a loss of 14 cents per share on revenue of $53.8 million in the second quarter, while analysts surveyed by LSEG, formerly Refinitiv, anticipated a loss of 8 cents per share and revenue at $54.1 million. Current-quarter and full-year guidance missed Wall Street estimates.
DocuSign — The electric signature stock advanced 2.4% premarket on the heels of a stronger-than-expected quarterly report released Thursday. DocuSign posted adjusted earnings per share of 72 cents on $688 million in revenue, while analysts surveyed by LSEG forecast earnings of 66 cents per share and revenue of $678 million.
Snowflake — Shares of the cloud data provider rose nearly 2% premarket after DA Davidson initiated research coverage of the stock with a buy rating. The Wall Street firm said Snowflake is in an advantageous position with “best-in-class growth rates” and is set to benefit from increased demand for artificial intelligence applications.
First Solar — Shares added 2.8% in early trading after being upgraded to buy from hold by Deutsche Bank Thursday. The Wall Street firm cited First Solar’s strong growth message during its investors day. It also raised its price target to $235 a share, implying 30% upside.
Adobe — The maker of Photoshop software rose nearly 2% premarket after Mizuho upgraded it to buy from neutral. Mizuho said that accelerating web traffic is reason to become more optimistic on Adobe. The company will report its next quarterly results on Sept. 14.

Gilead Sciences — The maker of antiviral drugs rose 1.6% premarket. On Friday, Bank of America upgraded Gilead to buy from neutral, saying its growing pipeline is unappreciated by investors. The bank also raised its price target to $95 from $88, representing more than 25% upside from Thursday’s close.
RH — The home goods retailer dropped 7.3% premarket after third quarter guidance fell short of analyst estimates, according to FactSet. “We continue to expect the luxury housing market and broader economy to remain challenging throughout FY23 and into next year as mortgage rates continue to trend at 20-year highs, and the current outlook is for rates to remain unchanged until the second quarter of 2024,” CEO Gary Friedman said in a letter to shareholders.  
— CNBC’s Yun Li, Sarah Min, Jesse Pound, Michelle Fox and Scott Schnipper contributed reporting More

The Docusign Inc. application for download in the Apple App Store on a smartphone arranged in Dobbs Ferry, New York, U.S., on Thursday, April 1, 2021.
Tiffany Hagler-Geard | Bloomberg | Getty Images

Check out the companies making headlines in extended trading.
Guidewire Software — Shares slipped 2% in extended trading after the insurance software company reported that revenue for the fiscal first quarter would miss analysts’ estimates. Guidewire is calling for revenue of $197 million to $202 million, while analysts polled by FactSet anticipated $212.5 million.

Smartsheet — Smartsheet’s stock popped 6% after the work management software company beat analyst estimates for second-quarter earnings. The company reported an adjusted 16 cents per share on $235.6 million in revenue, while analysts polled by FactSet forecasted 7 cents per share in earnings and $229.6 million of revenue.
Planet Labs — Shares of the satellite imagery company slid more than 6% after Planet Labs fell short of analysts’ expectations in its latest quarterly report. Planet Labs reported a second-quarter loss of 14 cents per share and revenue of $53.8 million. Analysts polled by Refinitiv called for a loss of 8 cents per share and revenue of $54.1 million. Guidance for the current quarter and the full year also came in below expectation.
DocuSign — Shares climbed 3.6% after the electronic signature company beat on both the top and bottom line in the second quarter. DocuSign reported an adjusted 72 cents per share on $688 million. Analysts polled by Refinitiv forecast earnings of 66 cents per share and $678 million of revenue.
RH — Shares fell nearly 8% after the luxury home furnishings company reported a weak outlook. The company issued lower-than-expected guidance for third-quarter operating margin of 8% to 10% while Wall Street expected 16.1%, according to Street Account. Third-quarter revenues are expected to come in between $740 million and $760 million, while analysts called for $773 million.
VinFast — VinFast stock slipped roughly 2% in after-hours trading. Though shares had taken off after the company’s debut on the Nasdaq in August, the stock’s rally has cooled considerably. Shares are on pace to end the week with a nearly 40% loss.
-CNBC’s Darla Mercado contributed reporting. More

Capital markets could get a boost from upcoming tech IPOs, such as Arm and Instacart, Goldman Sachs CEO David Solomon said.
“Over the course of the next few months, especially if Arm and some of these other IPOs go well, I think you’re going to see a meaningful increase in activity,” Solomon told CNBC’s David Faber.
“It’s not fun, you know, watching some of the personal attacks in the press,” Solomon also said, referring to a recent spate of unflattering articles about him.

The upcoming spate of tech IPOs could help kickstart muted capital markets, Goldman Sachs CEO David Solomon told CNBC’s David Faber.
Firms including chip designer Arm and Instacart have filed to go public, and companies that are mulling listings will watch how those IPOs go, Solomon said Thursday during the interview.

“Over the course of the next few months, especially if Arm and some of these other IPOs go well, I think you’re going to see a meaningful increase in activity,” Solomon said.
A rebound in IPOs and mergers would be welcome for Goldman and the rest of Wall Street, which has dealt with a dearth of activity in the past year. After coming off a record year for revenue in 2021, Solomon has had to contend with internal dissent and criticism over his decisions and leadership style in a series of unflattering articles.

Solomon addressed the negative coverage, saying repeatedly that he didn’t recognize the “caricature’ of himself portrayed in the stories.
“It’s not fun, you know, watching some of the personal attacks in the press,” Solomon said. “I don’t recognize the caricature that’s been painted of me. I have a lot of colleagues and clients I talked to, they don’t recognize that caricature either.”
During the wide-ranging interview, Solomon addressed tougher bank regulation, the paring back of Goldman’s ambitions in consumer finance, and the mergers market. Acquisitions will likely pick up as CEOs regain confidence in the coming months, he said.
“The sentiment that I’m hearing from CEOs globally is trying to get back at it,” Solomon said, though he cautioned that the mergers rebound would trail that of IPOs. More