Red Alert! Start

**Source:** Wall Street Insights  

When Wall Street's most influential investment banks start hitting the brakes, it's time for the market to get nervous.  

Facing unpredictable tariff policy storms and soaring deficit concerns, Wall Street financial giant Goldman Sachs is making a rare choice to "hunker down"—reducing risk exposure, hoarding cash, and striving to protect itself.  

According to a June 5 report by the *Financial Times*, Goldman Sachs President and COO John Waldron revealed in a podcast released on Thursday that since Trump announced across-the-board tariff hikes on trade partners on April 2, the firm has "modestly adjusted our risk positions." Waldron said:  

*"Whenever there's an opportunity, we reduce risk and try to keep our business operations, capital deployment, and other areas closer to familiar, stable foundational sectors."*  

He noted that this reduced risk appetite would be primarily reflected in capital markets operations and the process of facilitating client transactions. He explained that Goldman Sachs would "cherish liquidity more, retain more buffer funds," and adopt a more balanced strategy rather than excessive aggression.  

As Goldman Sachs' second-in-command, Waldron is widely seen as a strong contender for the next CEO.  

**'Slowflation' Warning: Slowing Growth, Rising Inflation**  

In an interview with the *Financial Times*, Waldron further elaborated on his outlook for the economy. He predicted a "slowflation" scenario—1% to 1.5% growth paired with 3% inflation.  

However, Waldron does not anticipate a severe recession.  

*"I don't think a recession is coming. This isn't stagflation; it's much milder than the high inflation and economic stagnation the U.S. experienced in the 1970s."*  

Although Goldman Sachs and other Wall Street banks benefited from market volatility triggered by Trump's tariff threats in the first quarter of this year, with stock and bond trading revenues surging, policy uncertainty has begun to drag down investment banking operations. Companies have delayed investment and M&A plans, leading to a decline in revenue from M&A advisory and stock issuance fees.  

**Debt Alarm: Wall Street Titans Sound the Warning**  

Waldron joins Wall Street leaders including JPMorgan CEO Jamie Dimon and BlackRock CEO Larry Fink in warning about the outlook for U.S. deficit spending. He said:  

*"Cutting the deficit is a top priority for us. The deficit is becoming quite large, and I don't think it's sustainable to maintain this pace in the foreseeable future."*  

When asked whether investors are pulling out of U.S. assets due to tariff and deficit concerns, Waldron revealed that Goldman Sachs' clients are seeking to "reduce over-allocation to U.S. assets" and hedge their U.S. dollar exposure.  

He warned:  

*"From a fundamental asset allocation perspective, I see this as just a marginal change in behavior. But if policy disruptions persist longer, we're more likely to see more significant shifts."*  

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