| Goldman Sachs is rewriting its story again. It's not a question of whether the iconic Wall Street bank can continue its success in the highflying worlds of investment banking and trading. Rather, it's long been a question of how to build up other businesses that can keep its fees stable in a down market. When I spoke to John Waldron, president and chief operating officer for Goldman Sachs Group Inc., this week for Bloomberg Television, he said: "If there's a 2.0, it's really talking about having two market-leading businesses—global banking and markets, and asset and wealth management."  John Waldron. Photographer: Paul Miller/Bloomberg That means Goldman is taking its calling card to investors around the world and leaning harder into its asset and wealth business, where it has about $2.5 trillion under supervision and a goal to raise billions through next year. "We have scale in active asset management, we're a top-five player in global alternatives. I'm not aware of another platform that has our kind of scale in both," Waldron said. Now do investors buy Goldman's story? On Tuesday's investor day—only the second in the bank's 154-year history—the stock was the worst performer in the Dow Jones Industrial Average. Questions loom around its "platform solutions" business that isn't expected to turn a profit for at least two more years. Goldman has already burned billions in its shift to consumer banking, and the worsening economic conditions have made it so Goldman, like other banks, has had to start setting aside hundreds of millions in provisions for bad loans. It's a difficult equation, because rising interest rates also mean that banks have the chance to start making much more money off loans. Goldman is considering "strategic alternatives" for some of these consumer businesses. That's banker-speak that often includes weighing asset sales. Goldman agreed in 2021 to buy a lending business called GreenSky, which offers payment plans for home projects, for more than $2 billion. Selling it off would undo a deal for a unit that CEO David Solomon has said he's owned for just "five minutes." Goldman's 2.0 model doesn't come without competition. Morgan Stanley, for example, has a much larger wealth management business and has struck multiple deals in recent years to expand its asset manager. Waldron said Goldman has significant fundraising goals and plans to expand management fees by about $1.2 billion next year. "Back to your 2.0 question, this is a very important growth opportunity for the firm," he said. And of the plan to hit $10 billion in management fees, "We're clearly well on our way to hitting that target, and that target is not the limit of our ambitions." The Cost of 12% The lure of private credit has been double-digit returns. "Unlevered, we're getting about a 12% yield to maturity, so I think it's fairly compelling," Tony Tutrone, the global head of alternatives at Neuberger Berman, told Bloomberg Television in an interview. But that 12% return comes at a cost. "There is a lot of risk when you're investing in private credit, and as rates go up, obviously it squeezes the cash flows of the companies." There's a re-underwriting process happening as interest rates jump. The 10-year yield blew past 4% this week. As my colleague Dan Curtis points out, a nearly 80-basis-point move in 20 days is the fourth such surge in the past year, showing just how furiously the market is planning for central bank hawkishness. Part of the private markets is starting to show real cracks. KKR's co-head of private credit Dan Pietrzak says there are worries in subprime consumer credit, he told us in a television interview. Meanwhile, real estate giant Blackstone defaulted on a portfolio of notes backed by offices and stores that were hobbled by Europe's plunging property values. It's small relative to the firm's whole business, but, more broadly, office buildings are under "tremendous pressure," Tutrone said. To the extent that there's a canary in the coal mine, he said: Some of the more aggressive deals on the private equity side that were done in 2021, for example, I think you could see some stress in the system, and again I think it's for weaker businesses where too much leverage was applied. So I think you'll start to see some problems occurring.
Who's News Coinbase CEO Brian Armstrong is on a mission to keep crypto onshore. Losing it, he says, would be a "terrible mistake for the United States." Here's his interview with me for Bloomberg Television. … Jeff Solomon explains his expansion plans at TD Cowen after the Canadian bank closed its acquisition of the US investment banking firm, telling me in an exclusive television interview that he sees a revival in mergers and IPOs this year. … SEC Chair Gary Gensler says he's open to tweaks to his sweeping overhaul of equity market structure as criticism abounds, he told Bloomberg's Katherine Doherty. ... And no matter what, don't miss this Businessweek feature of how Fugees artist Pras Michél became a central figure in one of the greatest financial scandals of our time, 1MDB. —Sonali Basak, Bloomberg News | 
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