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Goldman Sachs has plans for deep headcount cuts in the new year

Dan DeFrancesco   

Goldman Sachs has plans for deep headcount cuts in the new year
Finance4 min read

Welcome back. Dan DeFrancesco checking in from NYC and hoping you had a fantastic first night of Hanukkah, for those who celebrate.

All eyes are currently on Elon Musk's Twitter, after the billionaire on Sunday posted a poll asking users whether he should step down as the company's head. He also said he would abide by its result. The poll has now closed, with 57.5% voting in favor of Musk stepping down. This is a developing story and we will be keeping you updated with the latest.

Today we've also got stories on how top firms are trying to keep costs down when moving to the cloud, the tropical islands Google cofounder Larry Page keeps buying up, and some last-minute gift ideas.

But first, the Goldman cuts go deep.

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1. Dark days at Goldman.

The vibes aren't very high at Goldman Sachs these days.

On Friday, news leaked that the bank was planning to lay off up to 8% of its staff as soon as January.

Having to enact such deep cuts is just the latest in what has been a string of bad news for one of Wall Street's top banks.

So how did we get here?

First the M&A and IPO market ground to a halt, two areas that typically generate significant fees for the bank, and which eventually led to Goldman cutting dozens of bankers across the globe.

By the summer, insiders were questioning the value of Goldman's push into consumer banking, which eventually led to internal conversations about whether a pivot was necessary. A few months later, CEO David Solomon announced a restructuring of the bank that was an acknowledgement of the struggles the consumer division had faced.

Meanwhile, junior bankers are still upset with work conditions and details of a $12 million settlement to a female partner over claims of sexism and mistreatment were reported. And Solomon's much-publicized side gig as a DJ is starting to wear thin on insiders.

Even the good news can't catch a break. The announcement of Goldman's newest partner class, a typically lauded event on social media, was quickly overshadowed by the implosion of crypto exchange FTX, which occurred the same week.

And it really isn't all that bad. Goldman's annual trading revenue is set to beat last year's mark, and the stock price, while down this year, is outperforming the S&P 500 index and the other large US banks. Goldman's bankers and others on Wall Street still enjoy pay packages that are beyond that of most American workers.

But it shows that even Wall Street's busiest bankers aren't immune to the slowdown in dealmaking and markets volatility that has made this year so difficult.

And we might not be out of the woods yet. Some portion of Goldman's cuts are being made with an eye to 2023 and 2024, suggesting that the firm's leaders don't expect a return to go-go days anytime soon.

Click here to read more about the cuts set to hit Goldman Sachs.

In other news:

2. Move to the public cloud, they said. You'll save money, they said. Migrating off physical servers came with promises of big savings, but finance firms are finding a switch to the public cloud to still come with its own expenses. Here's how top tech execs are trying to keep costs down while using the cloud.

3. Revenge of the "nerds." After a difficult run, Quant hedge funds are having a big 2022 while the rest of Wall Street struggles, Bloomberg reports. Here's why funds like AQR, Man Group, and Aspect Capital are having a big year.

4. Larry Page's super-secret island hideaways. The Google cofounder has a growing collection of tropical islands. Here's more on Page's portfolio of islands.

5. Blackstone's real-estate fund for the wealthy is getting a closer look from regulators. Blackstone Real Estate Income Trust has drawn the interest of the SEC after a string of client withdrawals, Bloomberg reports. Starwood Real Estate Income Trust, which also saw clients pull out money, is also getting attention from the SEC, the website reports. More on why regulators are keen to know more.

6. PE in space. Private-equity firm Advent announced plans to acquire satellite maker Maxar Technologies for $6.4 billion in a deal that included Goldman Sachs, JPMorgan, and Morgan Stanley. Here are the details on the transaction.

7. Wall Street analysts don't think Elon Musk's involvement in Twitter is helping Tesla. Musk has sold $23 billion worth of Tesla stock this year, and one analyst said he's using "Tesla as his own ATM machine to keep funding" Twitter.

8. Fintechs are taking heat for how they handled PPP loans. A new federal investigation points the finger at fintechs for the amount of fraud that occurred with the Paycheck Protection Program. Here's which fintechs are taking heat and why that could spell bad news for small businesses.

9. Too much house to handle. Bigger isn't always better for the rich, who are increasingly skewing away from buying mansions. Here's why the wealthy want to downsize.

10. Fear not, we've got gift ideas for procrastinators. Just because you waited until the last minute doesn't mean you're screwed. Here are 48 last-minute gift ideas.

Curated by Dan DeFrancesco in New York. Feedback or tips? Email, tweet @dandefrancesco, or connect on LinkedIn. Edited by Jeffrey Cane (tweet @jeffrey_cane) in New York and Hallam Bullock (tweet @hallam_bullock) in London.