• Tag Archives Goldman Sachs
  • U.S. Treasury Becomes a Laughing Stock

    U. S. Treasury Secretary Steven Mnuchin appears to have inaugurated a perpetual bring your wife to work day. It’s become so farcical that it frequently feels like the United States Treasury Department has morphed into a low-budget, badly scripted reality TV show where the female star is so out-of-touch that she must continually scurry about in her haute couture erasing the haughty things she has written about the little people on multiple continents. We’ll get to that shortly, but first some background:
    It all started back on January 19 when actress and then fiance Louise Linton sat by her man during his Senate Finance Committee confirmation hearing to become U. S. Treasury Secretary. At the hearing, Democratic Senator Ron Wyden of Oregon had this to say about his repugnance to see Mnuchin fill the post as U. S. Treasury Secretary:
    ‘Mr. Mnuchin’s career began in trading the financial products that brought on the housing crash and the Great Recession. After nearly two decades at Goldman Sachs, he left in 2002 and joined a hedge fund. In 2004, he spun off a hedge fund of his own, Dune Capital. It was only a few lackluster years before Dune began to wind down its investments in 2008.
    ‘In early 2009, Mr. Mnuchin led a group of investors that purchased a bank called IndyMac, renaming it OneWest. OneWest was truly unique. While Mr. Mnuchin was CEO, the bank proved it could put more vulnerable people on the street faster than just about anybody else around.

    This post was published at Wall Street On Parade By Pam Martens and Russ Marte.


  • Draghi Knew About Hiding Losses by Italian Banks

    The Bank of Italy, when it was headed at the time by Mario Draghi, knew Banca Monte dei Paschi di Siena SpA hid the loss of almost half a billion dollars using derivatives two years before prosecutors were alerted to the complex transactions, according to documents revealed in a Milan court.
    Mario Draghi, now president of the European Central Bank, was fully aware of how derivatives were being used to hide losses. Goldman Sachs did that for Greece, which blew up in 2010. It is now showing that Draghi was aware of the problems stemming from a 2008 trade entered into with Deutsche Bank AG which was the mirror image of an earlier deal Monte Paschi had with the same bank. The Italian bank was losing about 370 million euros on the earlier transaction, internally they called ‘Santorini’ named after the island that blew up in a volcano. The new trade posted a gain of roughly the same amount and allowed losses to be spread out over a longer period. We use to call these tax straddles.

    This post was published at Armstrong Economics on Nov 13, 2017.


  • Goldman’s Top Strategist Reveals The Two Biggest Risks To The Market Today

    The past few months have been a very nervous time at Goldman Sachs, and not just because Gary Cohn wasn’t picked to replace Janet Yellen as next Fed chair.
    Back in September, Goldman strategist Peter Oppenheimer wrote that the bank’s Bear Market Risk Indicator had recently shot up to 67%, prompting Goldman to ask, rhetorically, “should we be worried now?” The simple answer, as shown in the chart below, is a resounding yes because the last two times Goldman’s bear market risk indicator was here, was just before the dot com bubble and just before the global financial crisis of 2008.

    This post was published at Zero Hedge on Nov 10, 2017.


  • Banks Warn London Facing Brexit “Point Of No Return”

    During his trip to London this week, US Commerce Secretary, Wilbur Ross, wasn’t only defending revelations in the Paradise Papers that he’d invested in a shipping company with ties to the Putin family. He also attended a ‘closed-door meeting’ with executives from JPMorgan, Goldman, HSBC and other banks. The meeting took place over lunch in the exclusive St James’s District (hedge fund land these days) at Wiltons restaurant. Wiltons, if you’re not familiar with it, started as an oyster stand in 1742 before developing a clientele of English aristocrats and foreign dignitaries and latterly, bankers. Ian Fleming, creator of the James Bond novels and bon vivant, listed it as one of his top 10 restaurants in the 1950s.
    During lunch, the banks warned Ross that time is running out for the UK government. The failure to provide clarity on Brexit means that they will be forced to start moving jobs out of London. According to the FT:
    A group of large financial institutions with big London operations, led by Wall Street’s pre-eminent banks, have told the US commerce secretary that Britain’s unstable government and slow progress in Brexit planning may force them to start moving thousands of jobs out of City in the near future. The warnings came on Friday during a closed-door meeting between executives from the banks, which included JPMorgan Chase, Goldman Sachs and HSBC, and Wilbur Ross during the US commerce secretary’s visit to London, according to people briefed on the discussions.

    This post was published at Zero Hedge on Nov 8, 2017.


  • Goldman’s Asset Arm Takes Big Hit On Venezuelan Bond Bloodbath

    The fallout from the Venezuelan bond restructuring has claimed a major victim in Goldman Sachs Asset Management, or rather some of the ‘muppets’ who trusted Goldman to invest their money. However, the route which led Goldman to losing a chunk of client money wasn’t just a case of bad judgement, being riddled with the usual mixture of greed, questionable ethics and government intervention. As we detailed in ‘Goldman Accused Of Funding Maduro’s Dictatorship’.
    Goldman controversially purchased $2.8 billion of 2022 bonds in May 2017 in the state-owned oil producer PDVSA, for about $865 million – or about 31 cents on the dollar. This prompted Julio Borges, President of the National Assembly and head of Venezuela’s opposition, to accuse Goldman of ‘aiding and abetting the country’s dictatorial regime.’Borges threatened that any future democratic government would not recognise or pay on the bonds. In true Goldman fashion, however, the deal was just too lucrative to pass up, or so it seemed at the time, as Goldman paid a then 30% discount to other Venezuelan bonds with a similar maturity. Goldman’s ‘defence’ was that it did not buy the bonds directly from PDVSA, consequently it did not transfer funds directly to the Venezuelan regime.

    This post was published at Zero Hedge on Nov 7, 2017.


  • “It’s A Vicious Cycle”: Goldman Abandons Equity Options Market-Making As Vol Collapses

    October is historically the most volatile month of the year, but in 2017 – the average volatility of US equity markets dropped to an all-time record low…

    … And you know something’s wrong when, just like in early 2007 when the crash in vol killed the swaptions industry – just before all hell broke loose – Goldman Sachs is pulling back from U. S. options market-making on exchanges.

    This post was published at Zero Hedge on Nov 4, 2017.


  • Goldman: Global Capex Is Accelerating (But It Might Not Be Good News)

    In ‘Capex complex: Seeking a revival in global capex’, Goldman Sachs is reversing its bearish stance and getting bullish on global capex prospects.
    Global capex has hit a trough. After three years of declines, aggregate capex for Goldman Sachs’ coverage of c.2,500 companies is set to grow by c.4% yoy in 2017 according to our analyst estimates, in line with c.4% real growth in global GDP and an 8% rise in aggregate sales. However, to call this the beginning of a recovery in ‘growth capex’ seems premature.

    We’ll return to the issue of growth versus maintenance capex below but, at the aggregate level, each of the four constraints Goldman previously identified – low nominal GDP growth, overcapacity, uncertainty and technology – is easing.

    This post was published at Zero Hedge on Nov 1, 2017.


  • Gold vs. Bitcoin: Goldman Sachs Weighs In

    Authored by James Rickards via The Daily Reckoning,
    I write and speak a lot on gold. In contrast – and this surprises some people – bitcoin is my least favorite topic. I’m made my views known many times.
    Still, interviewers love to get into the ‘gold versus bitcoin’ debate. I continually get dragged into discussing bitcoin in interviews on TV, radio and the internet. So I discuss it whether I want to or not.
    ***
    From my perspective, you might as well discuss gold versus watermelons or bicycles versus bitcoin. In other words, it’s a phony debate. I agree that gold and bitcoin are both forms of money, but they go their own ways.
    There’s no natural relationship between the two (what traders call a ‘basis’).
    The gold/bitcoin basis trade does not exist. But people love to discuss it, and I guess Goldman Sachs is no different.

    This post was published at Zero Hedge on Nov 1, 2017.


  • Goldman: “Short-Term Unemployment Is At Levels Not Seen Outside Of Major Wartime Mobilizations”

    When it comes to the US labor market, it’s a tale of two extremes according to a recent report by Goldman Sachs.
    At one end, the rate of short-term unemployment, defined as those unemployed fewer than 15 weeks, is lower than at any point since the Korean War and is already 0.4% below the bottom reached in the late 90s boom, with half of the gap likely due to demographic change. According to Goldman economists, “from the perspective of workers transitioning briefly between jobs whose attachment to employment is high, this is already a very tight labor market.”
    At the other end, the pool of struggling workers at the margins of the labor market remains larger than in past expansions. In particular, the rate of medium- to long-term unemployment, defined as those unemployed at least 15 weeks, remains 0.75% higher than the low reached in the late 90s boom, and almost none of that gap is attributable to demographic change.
    The delta between the two labor markets is shown in the chart below.

    This post was published at Zero Hedge on Oct 31, 2017.


  • It’s a Phony Debate: Jim Rickards Weighs in on Bitcoin Vs. Gold

    Financial guru Jim Rickards weighed in on the Bitcoin vs. gold debate and came down firmly on the side of the yellow metal. In fact, he’s said there really shouldn’t be a debate. Bitcoin and gold are two totally different things.
    Rickards responded to a recent note published by Goldman Sachs declaring that Bitcoin is not the new gold in a column published at the Daily Reckoning. He said he doesn’t really like talking about Bitcoin and doesn’t think there is any real comparison between the cryptocurrency and gold.
    From my perspective, you might as well discuss gold versus watermelons or bicycles versus bitcoin. In other words, it’s a phony debate. I agree that gold and bitcoin are both forms of money, but they go their own ways. There’s no natural relationship between the two (what traders call a ‘basis’). The gold/bitcoin basis trade does not exist. But people love to discuss it, and I guess Goldman Sachs is no different.’

    This post was published at Schiffgold on OCTOBER 31, 2017.


  • Record Surge in Riskiest Loans Fattens Wall Street Banks

    Crackdown efforts by bank regulators are put on hold.
    The volume of leveraged loans – the riskiest loans Wall Street banks provide – has surged 38% year-over-year and has already beaten the full-year record set in 2013, according to Dealogic. Total of leveraged loans outstanding has reached $1.25 trillion.
    Nine of the 10 largest banks in the leveraged-loan business have already surpassed their respective 2016 full-year totals, according to Bloomberg data, cited by the Financial Times, including Bank of America (about $120 billion in leveraged loans so far this year); JP Morgan (about $110 billion), Goldman Sachs ($79 billion); and Barclays ($72 billion). Of the top ten, only Wells Fargo ($69 billion) is still lagging behind last year.
    The fees that the banks are raking for putting these loans together are also record-breaking: $8.3 billion so far this year, just 6% below the full-year total of 2016.

    This post was published at Wolf Street on Oct 30, 2017.


  • Gold Is Better Store of Value Than Bitcoin – Goldman Sachs

    – Gold is better store of value than bitcoin – Goldman Sachs report
    – Gold will continue to perform well thanks to uncertainty and wealth demand
    – Bitcoin’s volatility continues to impact its role as money
    – Gold up 12% in 2017, bitcoin over 600%
    – BTC is six times more volatile than gold – see chart
    – Gold’s history and physical property shows it meets requirements as a medium of exchange and store of value
    Since the birth of bitcoin there has been one question that has repeatedly grabbed headlines and led debates all over the world – will bitcoin replace gold?
    The latest to weigh in on this question is Goldman Sachs which, in a research note entitled ‘Fear and Wealth’, has concluded that gold is better than bitcoin.
    Examining gold and bitcoin against the key characteristics of money, the report concludes that ‘Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield… They are neither a historic accident or a relic.’
    Goldman Sachs looked at four key properties of a long-term store of value – durability, portability, intrinsic value and unit of account – concluding that the reasons why gold was originally adopted remain relevant to today.

    This post was published at Gold Core on October 24, 2017.


  • Are ICOs Replacing IPOs?

    Last week I was in Barcelona speaking at the LBMA/LPPM Precious Metals Conference, which was attended by approximately 700 metals and mining firms from all over the globe. I found the event energizing and stimulating, full of contrary views on topics ranging from macroeconomics to physical investment markets to cryptocurrencies.
    My keynote address focused on quant investing in gold mining and the booming initial coin offering (ICO) market. I’m thrilled to share with you that the presentation was voted the best, for which I was awarded an ounce of gold. I want to thank the London Bullion Market Association, its members and conference attendees for this honor.
    Speaking of gold and cryptocurrencies, the LBMA conducted several interesting polls on which of the two assets would benefit the most in certain scenarios. In one such poll, attendees overwhelmingly said the gold price would skyrocket in the event of a conflict involving nuclear weapons. Bitcoin, meanwhile, would plummet, according to participants – which makes some sense. As I pointed out before, trading bitcoin and other cryptos isdependent on electricity and WiFi, both of which could easily be knocked out by a nuclear strike. Gold, however, would still be available to convert into cash.
    It’s a horrific thought, but the poll results show that the investment case for gold as a store of value remains favorable. Goldman Sachs echoed the idea last week, writing in a note to investors that ‘precious metals remain a relevant asset class in modern portfolios, despite their lack of yield.’ The investment bank added that precious metals ‘are still the best long-term store of value out of the known elements.’

    This post was published at GoldSeek on Tuesday, 24 October 2017.


  • Trump’s Fed Picks? More of the Same!

    This week President Trump revealed his final five candidates for Federal Reserve chair. Disappointingly, but not surprisingly, all five have strong ties to the financial and political establishment. The leading candidates are former Federal Reserve governor and Morgan Stanley banker Kevin Warsh and current Fed governor, former investment banker, Carlyle Group partner, and George H. W. Bush administration official Jerome Powell. Gary Cohn, current director of the president’s National Economic Council and former president of Goldman Sachs, is also on Trump’s list.
    Trump is also considering reappointing Janet Yellen, even though when he was running for president he repeatedly criticized her for pursuing policies harmful to the middle class. Of course candidate Trump also promised to support Audit the Fed and even voiced support for returning to the gold standard. But, he has not even uttered the words ‘Audit the Fed,’ or talked about any changes to monetary policy, since the election.
    Instead, President Trump, in complete contradiction to candidate Trump, has praised Yellen for being a ‘low-interest-rate-person.’ One reason Trump may have changed his position is that, like most first-term presidents, he thinks low interest rates will help him win reelection. Trump may also realize that his welfare and warfare spending plans require an accommodative Fed to monetize the federal debt. The truth is President Trump’s embrace of status quo monetary policy could prove fatal to both his presidency and the American economy.

    This post was published at Ludwig von Mises Institute on Oct 23, 2017.


  • Is Bitcoin the New Gold? Goldman Doesn’t Think So

    A recent note to clients authored by Goldman Sachs analysts, including Jeffrey Currie and Michael Hinds, emphasized the continuing importance of gold and silver to investors, saying precious metals remain a relevant asset class in modern portfolios. The report focused on precious metals’ durability and intrinsic value, noting they are neither a historic accident nor a relic, even with new assets such as cryptocurrencies emerging.
    The use of precious metals is not a historical accident – they are still the best long-term store of value out of the known elements.’
    The note also focused on Bitcoin, saying investors shouldn’t consider cryptocurrencies the ‘new gold.’
    Gold wins out over cryptocurrencies in a majority of the key characteristics of money.’
    As summarized by Bloomberg, the Goldman note emphasized that both uncertainty and wealth creation drive investment in gold.

    This post was published at Schiffgold on OCTOBER 19, 2017.


  • Get Ready To Party Like It’s 2008

    Apparently Treasury Secretary, ex-Goldman Sachs banker Steven Mnuchin, has threatened Congress with stock crash if Congress didn’t pass a tax reform Bill. His reason is that the stock market surge since the election was based on the hopes of a big tax cut. This reminded me of 2008, when then-Treasury Secretary, former Goldman Sachs CEO, Henry Paulson, and Fed Chairman, Ben Bernanke, paraded in front of Congress and threatened a complete systemic collapse if Congress didn’t authorize an $800 billion bailout of the biggest banks.
    The U. S. financial system is experiencing an asset ‘bubble’ that is unprecedented in history. This is a bubble that has been fueled by an unprecedented amount of Central Bank money printing and credit creation. As you are well aware, the Fed printed more than $4 trillion dollars of currency that was used to buy Treasury bonds and mortgage securities. But it has also enabled an unprecedented amount of credit creation. This credit availability has further fueled the rampant inflation in asset prices – specifically stocks, bonds and housing, the price of which now exceeds the levels seen in 2008 right before the great financial crisis.
    However, you might not be aware that western Central Banks outside of the U. S. continue printing money that is being used to buy stocks and risky bonds. The Bank of Japan now owns more than 75% of that nation’s stock ETFs. The Swiss National Bank holds over $80 billion worth of U. S. stocks, $17 billion of which were purchased in 2017. The European Central Bank, in addition to buying member country sovereign-issued debt is now buying corporate bonds, some of which are non-investment grade.

    This post was published at Investment Research Dynamics on October 19, 2017.


  • These Are The Wall Street Jobs Most Threatened By Robots

    Cashiers at fast food restaurants aren’t the only workers who should fear being imminently replaced by kiosks and artificial intelligence. Advances in machine-learning software could soon render many high-paying Wall Street jobs obsolete – jobs that will no doubt quickly disappear as electronic trading in equities and foreign exchange markets squeezes trading revenue, forcing banks to seek cost savings elsewhere.
    As Bloomberg points out, ‘the fraternity of bond jockeys, derivatives mavens and stock pickers who’ve long personified the industry are giving way to algorithms, and soon, artificial intelligence.’
    Indeed, firms are already rolling out machine-learning software to recommend trades and hedging strategies. And while many of these tools will undoubtedly help the employees who remain vastly improve productivity (if history is any guide), one day soon, the machines may not need much help.
    But as anyone in the industry has probably noticed, banks have stepped up recruiting of tech talent since the financial crisis. Of the jobs Goldman Sachs’s securities business posted online in recent months, most were for tech talent.
    Billionaire trader Steven Cohen is reportedly experimenting with automating his top money managers. Venture capitalist Marc Andreessen has said 100,000 financial workers aren’t needed to keep money flowing.

    This post was published at Zero Hedge on Oct 18, 2017.


  • The S&P 500 Is Now Overvalued On 18 Of 20 Metrics

    With the market now stuck in the “Icarus Rally” melt-up predicted earlier in the year by BofA Michael Hartnett, in which EFTs, algos and desperate carbon-based hedge fund managers are all chasing performance, i.e. beta, in the last weeks of the year, at least until the inevitable “Humpty Dumpty great fall“, some have been naive enough to ask just how overvalued are stocks as of this moment.
    Yesterday we showed one answer, when according to Goldman Sachs, the average stock is in the 88th percentile of all historical valuations and 98% from if one uses median stocks to eliminate huge outliers such as Apple; the number would be even higher if one excluded cash flow-based valuation metrics, which are artificially boosted due to the collapse in capex and investment spending.

    This post was published at Zero Hedge on Oct 18, 2017.


  • Goldman Sachs Says Gold Is Better Than Bitcoin

    ‘Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield,’ analysts including Jeffrey Currie and Michael Hinds wrote. ‘They are neither a historic accident or a relic.’ Looking at properties such as durability and intrinsic value, they are still relevant even with new materials discovered and new assets emerging, such as cryptocurrencies, they said (LINK)
    Here’s what blows my mind: When gold ran from $250 to $1900, the entire western mainstream financial media called it a bubble. Bitcoin has run from $250 to $5500 and price momentum-chasers and the usual hypster con artists exclaim that it’s going to $100,000. Qu’est-ce que c’est, Rudolph Havenstein?
    This is typically what a bubble looks like:

    This post was published at Investment Research Dynamics on October 17, 2017.


  • Global Stocks Hit New Record High, Dollar Mixed After Dovish Fed

    In a trend observed every day this week, S&P futures are slightly in the red ahead of a post-open ramp with the VIX rising to 9.91, as Asian shares climb, European stocks are little changed. WTI crude pares recent gains, slipping below $51 after API showed an unexpected crude build. Earnings season launches with bank earnings reports from JPMorgan and Citigroup, while Economic data include PPI figures, jobless claims.
    As Reuters notes, broader investor risk sentiment has improved this week after Catalonia dialed back plans to break away from Spain, with MSCI’s 47-country world stocks index reaching a record high. Global equities now appear to be taking geopolitical developments such as the secessionist push in Spain and tensions on the Korean peninsula in their stride, to reach those record tops.
    Analysts will be keeping a close eye on banks Q3 reports: Trading probably dropped from the same period a year earlier. Executives from JPMorgan, Citigroup and Bank of America Corp. told investors last month to expect declines ranging from 15 percent to 20 percent. Goldman Sachs Group Inc., coming off its worst first half for the trading business in more than a decade, said the third quarter remained challenging. Subdued volatility, especially compared with the turmoil from Brexit and the U. S. election a year earlier — made the period particularly tough.

    This post was published at Zero Hedge on Oct 12, 2017.