Breakfast News: Recession Risks Rise
April 1, 2025
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Monday's Markets |
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| S&P 500 5,612 (+0.55%) |
| Nasdaq 17,299 (-0.14%) |
| Dow 42,002 (+1%) |
| Bitcoin $82,772 (+0.26%) |
1. Goldman Anticipates Short-Term Pain
Strategists at Goldman Sachs (GS -1.74%) have revised down their forecast for the S&P 500 to 5,300 points for the coming three months, an almost-6% fall from current levels. They cite concerns around inflation and weaker economic growth.
- Still see the S&P 500 rising over next 12 months: However, the research teams expect the index to rise to 5,900 points a year down the road. This speaks to the Foolish mindset of looking past short-term volatility when trying to find long-term investment returns.
- Recession probability up to 35%: The economics team increased the probability of a recession from 20% to 35% over the next 12 months. This is partly triggered by the potentially negative impact of widespread tariffs, due to be announced tomorrow. A recession over the next year or two is not a certainty, but it pays to be prepared since one eventually is guaranteed.
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3. Intel CEO Presses the Reset Button
Lip-Bu Tan, the new CEO of Intel (INTC -2.90%), promised to take on honest client feedback, give employees more freedom to innovate, and recruit top talent as part of his remarks during the keynote speech at the Intel Vision event.
- "I believe harsh feedback is most valuable": Tan requested brutally honest comments from customers, acknowledging the business has previously not met expectations or kept up in recent years with the progress of competitors.
- "We're going to really drive some new ideas, giving engineers freedom to innovate from within": Rumors exist Tan is planning to restructure the bloated middle-management layer, increasing autonomy for engineers to pursue ideas. If realized, this could help to reduce costs while helping to boost innovation at the same time.
4. Klarna Buckles up For Next Ride
After filing for an IPO with a valuation estimate exceeding $15 billion two weeks ago, investors could be in for a rollercoaster ride when Klarna does hit the public markets. CEO Sebastian Siemiatkowski has said he's crazy enough "to think that Klarna can become the next Google in size."
- The charismatic co-founder: Siemiatkowski recently caused a stir around unnecessary debt accumulation with the tie-up with DoorDash (DASH -1.10%), offering payment installments for food deliveries. His comments around an AI chatbot doing the work of 700 full-time employees didn't go down well with the public, either.
- Rocky road to profitability: After a 2020 funding round valued the company at $46 billion, it fell to $6.7 billion in 2022 due to rising inflation and interest rates. Yet 2024 results showed a net profit of $21 million, a reversal from the net loss of $244 million from the year prior. Such momentum could help Klarna to generate an IPO buzz when it sets the date to go public.
5. Foolish Fun
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