This post was published at jsnip4
This post was published at jsnip4
Several representatives of the elitists have been warning about a major global financial crisis. Recently the former Head of the Monetary and Economics Department at the Bank of International Settlements, the Central Bank of Central Banks, warned that there are ‘more dangers now than in 2007.’
Goldman Sachs commodities analyst, Jeff Currie, who is infamous for incorrectly predicting gold would drop to $800 about three years ago, recently advised anyone listening to own physical gold: ‘don’t buy futures or ETFs…buy the real thing. . .the lesson learned was that if gold liquidity dries up along with the broader market, so does your hedge, unless it’s physical gold in a vault, the true hedge of last resort.’
This post was published at Investment Research Dynamics on Dave Kranzler.
Last month, Reuters reported that Goldman Sachs was planning ‘to begin’ using personality tests to assist it in hiring personnel ‘in its banking, trading and finance and risk divisions.’
It’s highly unlikely that Goldman Sachs is just beginning to use personality tests since other major firms on Wall Street have been using them for at least three decades – and not in a good way.
The Reuters article was penned by Olivia Oran, who also wrote in June of 2016 that major Wall Street firms such as Goldman Sachs, Morgan Stanley, Citigroup and UBS were ‘exploring the use of artificial intelligence software to judge applicants on traits – such as teamwork, curiosity and grit.’ The article further noted that one of the goals of the artificial intelligence software is to ‘avoid the expense of problem hires and turnover…’
All of the firms mentioned have experienced employees that, in their view, were ‘problem hires.’ The public, however, has viewed those same employees as public interest-motivated whistleblowers.
This post was published at Wall Street On Parade on September 12, 2017.
Last week we heard optimistic noises coming from some of the top executives in the world of mortgage finance at the Americatalyst 2017 event. Falling interest rates have managed to get new applications for mortgage refinancing even with purchase loans for the first time in months, this as the 30-year mortgage has fallen back to pre-election levels. We’re still calling for the 10-year Treasury to go to 2% yield or lower.
The good news for Q3 ’17 earnings is that production volumes and spreads are improving for many lenders after a dreadful start of the year. Bad news is that falling yields on the 10-year Treasury implies a significant mark-down for mortgage servicing rights (MSRs). The movement of benchmark interest rates, coupled with significantly lower lending volumes and surging prices for collateral, could make Q3 ’17 a very interesting – and treacherous – earnings period for financials with exposure to MSRs and other aspects of residential housing finance.
Away from the blissful consideration of the housing sector, tongues were set wagging late last week when Liz Hoffman at The Wall Street Journal reported that Goldman Sachs (NYSE:GS) commodities head Greg Agran will leave the firm. ‘Mr. Agran’s departure follows the worst slump in Goldman’s commodities unit since the firm went public in 1999. Bad bets on the prices of natural gas and oil contributed to a second quarter in which the unit barely made money,’ The Wall Street Journal reported.
This post was published at Wall Street Examiner on September 11, 2017.
Over the years, the clients of Goldman Sachs have periodically found themselves on the verge of panic.
In March of 2015, we said that Goldman’s clients were most worried about the then-relentless crash in the EUR and how the resulting strong USD would hit US earnings (which, in retrospect, is ironic now that the tables have fully turned). Then In November 2015 we reported that “Goldman’s Clients Are Suddenly Very Worried About Collapsing Market Breadth” (and with good reason, the market was about to crash precisely for that reason). Several months later, Goldman’s clients were again confused – and worried – this time demanding that all their questions be answered before BTFD.
Then, in July 2016, Goldman’s clients again had a burning question: they were struggling to reconcile how extreme valuations of both equities and bonds can co-exist. As David Kostin explained one year ago, “client discussions reveal low portfolio risk coupled with concern that the rally lasts. Most investors have been skeptical of the valuation expansion and have not participated in the 8% rebound from the post-Brexit low on June 27. Upside call buying has been a popular strategy to insure against upside risk.” Additionally, Goldman clients were very worried that this remains a market without any earnings growth, and that much of the S&P upside has been due multiple expansion: “the S&P 500 forward P/E has already expanded by 70% during the past five years, exceeding all other expansion cycles except 1984-1987 (up 111%) and 1994-1999 (up 115%). Both prior extreme P/E multiple expansion cycles ended poorly for equity investors.”
While it is unclear if said clients got over their concerns and got on with the BTFD program, what we do know is that since last July, already extreme valuations have only gotten more extreme, and as a result, Goldman clients are once again very worried, this time about an “imminent equity downturn” (banker euphemism for crash).
This post was published at Zero Hedge on Sep 9, 2017.
This weekend Hurricane Irma is set to unleash hell over Florida, resulting in devastation and damages worth tens of billions of dollars… and many hedge funds are on the hook ahead of their own coming balance sheet “catastrophe.”
On Wednesday we reported that as a result of the imminent destruction to befall Florida, investors in catastrophe bonds – among them prominently one Stone Ridge Capital – could be facing a total wipeout on their investments (those unfamiliar with (Cat)astrophe bonds and Insurance-LInked Securities are urged to read the original article, especially since this will be a very prominent topic in the weeks to come). As a quick reminder, as their name suggests, catastrophe, or cat, bonds are a bet (by the buyer) that a catastrophic event such as a hurricane won’t take place, instead allowing them to clip 3 years work of generous coupons and get principal repayment at maturity; they are also a bet (or insurance) by the seller that a catastrophic event will take place, in which case the bonds contractually default, and as much as the entire principal amount could be forgiven.
In short, cat bonds are a form of securitized “reinsurance”, sold to hedge funds, catastrophe-oriented funds, and various other return-starved “alternative” asset managers and offer diversification as they are uncorrelated with other risks such as equity market risk, interest rate risk, and credit risk.
It will probably not come as a surprise to anyone, that the firm behind catastrophe bonds is, drumroll, Goldman Sachs:
This post was published at Zero Hedge on Sep 8, 2017.
When Gary Cohn criticized Trump’s response to the Charlottesville tragedy, he set off a sequence of events which not only reportedly cost the former Goldman COO his future position as Fed chair, but – according to an overnight report from Reuters – his job as Trump’s chief economic advisor.
Extending on recent reports from the WSJ that Gary Cohn has lost Trump’s good graces in recent days, Reuters focuses on that the newly fraying relationship between U. S. President Donald Trump and top White House economic adviser Gary Cohn, which has raised questions about how long Cohn will stay in his job, according to two people with close ties to the White House. Several sources quoted by Reuters said Cohn had long planned to stay in his post for at least a year. But one source said concern had grown among Cohn’s allies over the past 24 hours that he might be pressured to leave.
The recent concerns stem from a report in the Wall Street Journal that Cohn was unlikely to be nominated by Trump as a potential successor to Fed Chair Janet Yellen. Trump had mentioned Cohn in July for the job. Cohn resigned as president of Goldman Sachs to join the new administration. ‘The calculus has shifted for Gary. He’s gone, essentially, from untouchable to possibly being bounced out,’ the source said. ‘The message is clear that suddenly Cohn’s job in the White House has real downside risk.’ As reported at the time, the formerly sterling relationship between the two men broke down last month when Cohn crossed Trump, critizing the president in a Financial Times interview for his response to the violence at a rally organized by white nationalists in Charlottesville, Virginia, in which one woman died.
This post was published at Zero Hedge on Sep 8, 2017.
In 1869, a 48-year old Jewish immigrant from the tiny village of Trappstadt in Germany’s Bavaria region hung a shingle outside of his small office in lower Manhattan to officially launch his new business.
His name was Marcus Goldman, and the business he started, what’s now known as Goldman Sachs, has become the preeminent investment bank in the world with nearly $1 trillion in assets.
They didn’t get there by winning any popularity contests.
Goldman Sachs has been at the heart of nearly every major banking scandal in recent history.
The company has settled lawsuits on countless charges, ranging from exchange rate manipulation, stock price manipulation, demanding bribes from their own clients, front-running retail customers, and just about every shady business practice that would put money in their pockets.
Yet throughout it all, Goldman Sachs has been protected from any serious punishment by its friends in highest offices of government.
This post was published at Sovereign Man on Santiago, Chile.
– ‘Things have been going up for too long…’ – Goldman Sachs’ CEO
– Lloyd Blankfein, Goldman CEO ‘unnerved by market’ (see video)
– Bitcoin bubble is no outlier says Bank of America Merrill Lynch
– Bubbles are everywhere including London property
– $14 trillion of monetary stimulus has pushed investors to take more risks
– We are now in a new era of bigger booms and bigger busts – BAML
– ‘Seeing signs of bubbles in more and more parts of the capital market’ – Deutsche Banks’ John Cryan
– Global debt bubble and China very vulnerable too – warns Steve Keen
– Bubbles, bubbles everywhere … lots of potential pins … got gold?
Editor: Mark O’Byrne
The B word is something which is almost whispered in financial circles. To acknowledge there might be a bubble somewhere is like admitting the proverbial elephant is in the room.
But, like many taboo words, it seems the mainstream are coming around to the idea that it is ok to mention the word ‘bubble’ and express their concerns about the possibility of at least one existing.
This post was published at Gold Core on September 7, 2017.
Private equity firms did it again. Brick-and-mortar retail meltdown strikes again – this time, Toys R Us. In what is a classic sign, the company has hired mega law firm Kirkland & Ellis, whose bankruptcy-and-restructuring practice is considered a leader in the now booming bankruptcy-and-restructuring industry.
Toys R Us, with 1,694 stores globally, has $5.2 billion in long-term debt, according to its latest quarterly report, and sports a negative equity of $1.3 billion. Quarterly sales declined 4.8% year-over-year, to $2.2 billion. This isn’t a one-quarter dip: sales are down 15% from the same quarter in 2012. And the net loss jumped 30% year-over-year to $164 million.
The company needs to restructure its debts, particularly $400 million that is coming due in 2018, and a bankruptcy filing is one of the options, ‘sources familiar with the situation’ told CNBC on Wednesday.
The company, long teetering under its massive pile of debt, has been trying to refinance its capital structure. In early 2016, it disclosed that it was working with the biggest investment banks on Wall Street – BofA Merrill Lynch, Goldman Sachs, and Lazard – to do so. Last year, it was able to refinance some of its debt, but that wasn’t enough. Now lenders are shying away from overleveraged brick-and-mortar retailers, given the ongoing meltdown of overleveraged brick-and-mortar retailers, particularly those owned by private equity firms and hedge funds.
This post was published at Wolf Street on Sep 6, 2017.
– Physical gold is ‘the true currency of the last resort’ – Goldman Sachs
– ‘Gold is a good hedge against geopolitical risks when the event leads to a debasement of the dollar’
– Trump and Washington risk bigger driver of gold than risks such as North Korea
– Recent events such as N. Korea only explain fraction of 2017 gold price rally
– Do not buy gold futures rather ‘physical gold in a vault’ is the ‘true hedge’
What’s increasing the demand for gold? Is it Kim Jon-Un’s calls for nuclear war? Trump’s tough tweets on government and trade and unleashing ‘fire and fury’ on North Korea? The threat of World War III?
Possibly not, according to Jeff Currie of Goldman Sachs. This is more to do with the market mechanics underlying such events.
Currie released a note arguing that gold’s strong performance of late is less to do with the current perceived risk in the geopolitical sphere and instead from the currency debasement that arises from central banks printing money.
This post was published at Gold Core on September 6, 2017.
In a day when gold is surging to the highest level since the Trump election, what better way to hedge what happens next than to issue two separate price targets. We bring this up, because that’s precisely what Goldman Sachs did today.
First, in a note discussing the relative merits of gold as a “currency as a last resort”, and which eyed the suitability of the yellow metal as a hedge to an escalating North Korean crisis (discussed earlier), Goldman’s chief currency strategist, Jeffrey Currie issue the following trade recommendation:
In coming months, the unfortunate aftermath of hurricane Harvey suggests that Washington is going to have to overcome their differences, pass spending bills, try harder to avoid a government shutdown and pursue infrastructure projects sooner than later. Our economists believe the probability of a government shutdown has declined further from their prior assessment of 35% and now put it at around 15%. As a result, we are maintaining our end-of-year gold price forecast of $1250/toz barring a substantial escalation in North Korea. So on one hand Goldman is expecting a drop of nearly $100 in the coming three months. Fair enough, Goldman’s bearish bias on gold has been duly noted on these pages in the past.
What, however, makes Goldman’s stance confusing is that just a few hours after the Currie report was released, Goldman’s chief technician issued an analysis which concluded something completely different.
In her daily “Today’s Top Tech” report focusing on precious and base metals, Goldman’s Sheba Jafari writes that “Gold, Silver and Copper are all three showing potential to continue higher” and adds that “Gold and Silver have targets in the area of 1,375-1,380 and 18.97.” And some more details:
This post was published at Zero Hedge on Sep 5, 2017.
There is something much more sinister going on behind the curtain. I have warned that you really are taking your life in your hands doing business in New York City with a bank because NOBODY ever wins against the bankers no matter what they do. This begs the question about why are banks paying huge fines, yet nobody goes to jail, and there is never a trial while class action suits are summarily dismissed? Something is seriously wrong here. To discover the answer, as always, just follow the money!
Back in 2003, Judge Milton Pollack dismissed two class action suits against Merrill Lynch for putting out bogus research during the DOT. COM Bubble after the investment bank plead guilty and paid huge fines. Judge Pollack wrote a 43 page decision protecting banks even when they produce intentional fake research. The judge said that investors were eager to take that risk and were to blame for their own losses. Pollack then dismissed another 25 lawsuits against the bankers. Similarly, another judge dismissed suits against Credit Suisse First Boston, Goldman Sachs, and Morgan Stanley. Why is it impossible to sue the bankers in America where justice is supposed to exist for all?
This post was published at Armstrong Economics on Sep 4, 2017.
After being effectively shut out from global financial markets – a situation that was made more precarious by US sanctions prohibiting purchases of Venezuelan debt (unless you’re buying them off Goldman Sachs, should the bank’s asset-management arm desire to liquidate its $3 billion ‘hunger bond’ position) – Venezuela is drawing ever-nearer to what the Financial Times describes as potentially the ‘messiest debt restructuring in history.’
So far, Venezuela has managed to forestall a default by stripping assets from its state-owned oil company, Petroleos de Venezuela, commonly referred to as PVDSA, and shaking down local institutions of spare dollars – not to mention the explicit financial support of China and Russia. Recently, Rosneft, the largest Russian oil company, helped support its troubled ally, which enjoys the largest crude reserves in the world, by offering billions of dollars in advance payments for future crude supplies. Thanks to a deal brokered by deceased former President Hugo Chavez, Venezuela has for years been Rosneft’s largest foreign supplier of crude. Last year, the oil giant accepted a 49.9% stake in PVDSA’s US-based subsidiary, Citgo, as collateral for a $1.5 billion loan.
This post was published at Zero Hedge on Sep 1, 2017.
Authored by Nick Cunningham via OilPrice.com,
The skies are clearing over Houston, but the damage from the remaining elements of Hurricane Harvey has spread east to Port Arthur and Lake Charles along the Texas-Louisiana border. That has knocked more refineries offline, including the largest refinery in the United States.
In the aftermath of the storm, the most serious threat to the energy industry is the extended outage of refineries and pipelines, according to Goldman Sachs. The problem actually looks worse than it did earlier this week as the deluge has shifted towards Port Arthur, another refining hub. Motiva, which runs the U. S.’ largest refinery in Port Arthur, began to completely shut down its 600,000 bpd facility on Wednesday.
Goldman says the refinery shut downs, as of August 30, have spiked to 3.9 million barrels per day (mb/d), although upstream oil production outages have dropped below 1 mb/d. More ports are now closed – in addition to Corpus Christi and Houston, the ports of Lake Charles, Beaumont, and Port Arthur have shut down.
These outages, the investment bank says, will mean that the ‘ongoing recovery in production will only be partial.’ The refinery and pipeline closures are ‘leaving the oil market long 1.9 mb/d of crude vs. last Thursday, short 1.1 mb/d for gasoline and 0.8 mb/d for distillate.’
This post was published at Zero Hedge on Sep 1, 2017.
Back in April, we showed that according to a Goldman Sachs report, the current run of chronic active manager underperformance began shortly after the launch of QE in 2009.
As discussed earlier today by Matt King in his report on “one-way” markets resulting from QE and ETFs, this period has been marked by “stubbornly low volatility and dispersion”, something Goldman first observed four months ago:
This post was published at Zero Hedge on Aug 27, 2017.
When the White House announced on Friday that Trump had signed an executive order deepening the sanctions on Venezuela, and confirming the previously rumored trading ban in Venezuelan debt that earlier in the week had sent VENZ/PDVSA bonds tumbling, we made what we thought at the time was a sarcastic comment that in light of the recent scandal involving Goldman’s purchase of Venezuela Hunger Bonds, that Lloyd Blankfein’s hedge fund, which now controls the presidency and next year will also take over the Fed courtesy of Gary Cohn, would be exempt from the trading ban:
So all bonds owned by Goldman are exempt from the Venezuela sanctions until Goldman can sell them?
— zerohedge (@zerohedge) August 25, 2017
And, as it so often happens in a world controlled by Goldman (as a reminder, in 2018 the world’s three most important central banks, the Fed, the ECB and the BOE will be run by former Goldman employees: Gary Cohn, Mario Draghi and Mark Carney), sarcasm has a way of chronically turning into truth, and as Bloomberg confirmed overnight, one of Venezuela’s largest bondholders is “breathing a sigh of relief.”
That would be Goldman Sachs Asset Management, which infamously bought $2.8 billion of notes issued by state oil company PDVSA in May, and has since faced sharp criticism for a deal that appeared to supply fresh funds to President Nicolas Maduro. Confirming our initial “sarcastic” reaction, while observers thought the Goldman bonds would be a prime target for new penalties, they were exempt from the order. In fact, the only bonds covered by the trading ban are notes due in 2036 that appear to never have been sold outside Caracas.
This post was published at Zero Hedge on Aug 26, 2017.
No, I am not talking about ‘Hurricane Harvey’ which will likely be the first hurricane to strike the Texas coast since 2008, but rather the potential for another ‘debt ceiling’ debacle brewing in Washington.
Just recently, Goldman Sachs raised its odds for a government shutdown from 33% to 50% which was further supported by recent statements from President Trump that he would be willing to risk a Government ‘shutdown’ to get his border wall funded. However, as Axios.com noted yesterday:
‘A top Republican source put the chance as high as 75%: ‘The peculiar part is that almost everyone I talk to on the Hill agrees that it is more likely than not.’
This may all come down to Trump’s mood. As Swan puts it: ‘Trump is spoiling for a fight and the [conservative House] Freedom Caucus haven’t had a fight for a while. That’s a dangerous dynamic.’’
While a Government shutdown is often used as a mechanism to force legislative action by threatening default on the national debt. Let me just assure, the Government WILL NOT default on its mandatory spending requirements which includes the social welfare system and interest payments on the debt. Given those items comprise 75% of the budget, the remaining 25% of discretionary categories could see cuts such as the temporary furloughs of some 900,000 government workers considered to be ‘non-essential.’
This post was published at Zero Hedge on Aug 25, 2017.
While Europe’s economy and capital markets have been spared any major shocks in the past year, and in fact European GDP has been on a surprisingly resilient uptrend in recent quarters led higher by the relentless German export-growth dynamo (courtesy of the very, very low Deutsche Mark and a lot of broke Greeks), an old and recurring problem has re-emerged, one which threatens the stability and cohesion of the European Union itself: the latest surge of refugees which, arriving mostly from North Africa in recent months, has made Italy its primary landfall target resulting in a surge in migrant arrivals on Italian shores. However, with the rest of Europe largely shutting its borders to this refugee influx forcing Rome to deal with what many in Italy see as an unwelcome presence, a distinct sense of bad-will has been floating around Europe in recent months as Rome’s pleas for more solidarity from its European peers have been stubbornly ignored. Meanwhile, Italy has accepted nearly 100,000 refugees in the first six months of the year and the number is rapidly rising.
Now, a new report issued by Goldman Sachs will likely pour even more gasoline on the fire, as it finds that just as Rome alleges, “Italy has the lowest capacity to absorb migrants among the major EU economies. This is measured using three indicators of integration: (1) economic integration; (2) social integration; and (3) policy effectiveness.”
While hardly new for regular readers, this is how Goldman lays out the problem:
This post was published at Zero Hedge on Aug 22, 2017.