• Tag Archives Goldman Sachs
  • Tech Stocks Slammed Last Week: How Scary Is This Market?

    Mark this date on your calendar: Friday, June 9, 2017. That’s the date that the big downward move in the largest tech stocks began. The day also saw a rotation into big bank stocks (which is like swapping a land mine for a hand grenade – there’s going to be an explosion, it’s just a matter of degree).
    The selloff on Friday was triggered by a research report from Robert Boroujerdi of Goldman Sachs. The report compared today’s FAAMG tech stocks (Facebook, Apple, Amazon, Microsoft and Google-parent Alphabet) to the highfliers in the tech bubble that crashed in 2000: Microsoft, Cisco, Intel, Oracle and Lucent.
    Boroujerdi used a lexicon that the market did not want to hear: ‘death,’ ‘extremes,’ and ‘difficult to decipher risk narratives.’ The exact sentence went like this:
    ‘This outperformance, driven by secular growth and the death of the reflation narrative, has created positioning extremes, factor crowding and difficult-to-decipher risk narratives (e.g. FAAMG’s realized volatility is now below that of Staples and Utilities).

    This post was published at Wall Street On Parade on June 19, 2017.


  • DOJ Moves To Seize DiCaprio’s Picasso, Rights To “Dumb and Dumber To” As Part Of 1MDB Case

    As part of the ongoing money-laundering probe of Malaysia’s sovereign wealth fund, 1MDB, which is perhaps best known for Goldman’s enabling and participation in what may end up being one of the world’s biggest, multi-billion, cross-border embezzlement schemes, on Thursday the DOJ moved to seize a Picasso and Basquiat paintings given to Leonardo DiCaprio, as well as rights to two Hollywood comedies, in complaints filed to recover about $540 million they say was “stolen” from 1MDB (with Goldman’s help).
    The DOJ filing was the latest in a long series of legal actions tied to money laundering at the fund set up by Malaysian Prime Minister Najib Razak in 2009 – who still remains in power – to promote economic development. In the complaint filed overnight, the department alleged that more than $4.5 billion was taken from 1MDB by high-level fund officials and their associates. Fraud allegations against 1MDB go back to 2009 and the fund is subject to money laundering investigations in at least six countries, including Switzerland and Singapore.
    “This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people,” Kenneth Blanco, acting assistant AG said in a statement. The name of Goldman Sachs, which participated and directly profited from many of the 1MDB transactions, was oddly missing from today’s filing.
    Najib has denied taking money from 1MDB or any other entity for personal gain, after it was reported that investigators traced nearly $700 million to bank accounts that were allegedly in his name.
    And while we won’t hold our breath to learn why Goldman’s involvement was mysteriously dropped, Reuters reported that Leonardo DiCaprio has turned over an Oscar won by Marlon Brando to U. S. investigators probing the 1MDB money laundering. DiCaprio also initiated the return of other, unidentified items that the actor said he accepted as gifts for a charity auction and which originated from people connected to the 1MDB wealth fund, they said in a statement.

    This post was published at Zero Hedge on Jun 15, 2017.


  • The Tech-Wreck – A Shot Across The Bow For “Passive Indexers”

    I wanted to pick up on a discussion I started in this past weekend’s missive, with respect to both Friday’s rout in technology stocks as well as Monday’s rather nasty open. While the issue seemed to be a simple short-term rotation in the markets from large capitalization Technology and Discretionary stocks into the lagging small and mid-capitalization stocks, the sharpness of the ‘Tech Break’ on Friday revealed an issue worth re-addressing. To wit:
    ‘Both Discretionary and Technology plunged on Friday as a headline from Goldman Sachs questioning ‘tech valuations’ sent algo’s running wild. The plunge was extremely sharp but fortunately regained composure and shares rebounded. A ‘flash crash.’
    One day, we will not be so lucky. But the point I want to highlight here is this is an example of the ‘price vacuum’ that can occur when computers lose control. I can not stress this enough.
    This is THE REASON why the next major crash will be worse than the last.’
    I am not alone in this reasoning. Just recently John Dizard wrote for the Financial Times:
    ‘The most serious risks arising from ETFs are the macro consequences of too much capital being committed in too few places at the same time. The vehicles for over-concentration change over time, such as the ‘Nifty Fifty’ stocks back in 1973, Mexican and Argentine bonds a few years after that, internet shares in 1999, and commercial property every other decade, but the outcome is the same. Investors’ cash goes to money heaven, and there is a pro-cyclical decline in productive investment.

    This post was published at Zero Hedge on Jun 13, 2017.


  • Sergey Aleynikov, Jailed by Goldman Sachs, May Be Just the Man to Stop Russian Hacking of U.S. Voting Systems

    If Goldman Sachs thinks this Russian computer genius is worthy of endless prosecution for the past eight years, despite two courts overturning their efforts, perhaps he’s just the man the Department of Homeland Security and FBI need to stop the Russian assault on the U. S. election system.
    This morning Bloomberg News is reporting that in the leadup to the Presidential election of 2016, Russian hackers hit voting systems in a total of 39 states, confirming other reports that the U. S. public has not previously been made of the extent of Russian hacking into state voting systems.
    In testimony before the Senate Intelligence Committee on June 8, former FBI Director James Comey stated in regard to Russian interference in our elections that ‘They’re coming after America,’ adding that ‘They will be back.’
    This is where computer experts on Wall Street could help the FBI and the Department of Homeland Security. Wall Street technology experts know something that, apparently, our government doesn’t: Many of the smartest programmers and hackers in the world are from Russia. If you want to catch one, you’d better hire one.

    This post was published at Wall Street On Parade on June 13, 2017.


  • LTCM Is Back: One Hedge Fund Uses 25x Leverage To Beat The Market

    Before we start, a little history lesson…
    At the beginning of 1998, Long-Term Capital Managementhad equity of $4.72 billion and had borrowed over $124.5 billion with assets of around $129 billion, for a debt-to-equity ratio of over 25 to 1.
    It was run by finance veterans, PhDs, professors, and two Nobel Prize winners. Everyone on Wall Street wanted a piece of their profits.
    But by 1998, that firm was primed to expose America’s largest banks to more than $1 trillion in default risks. The demise of the firm, LTCM, was swift and sudden. In less than one year, LTCM had lost $4.4 billion of its $4.7 billion in capital.
    The disaster had all the players – the Federal Reserve, which finally stepped in and organized a bailout, and all the major banks that did the heavy lifting: Bear Stearns, Salomon Smith Barney, Bankers Trust, J. P. Morgan, Lehman Brothers, Chase Manhattan, Merrill Lynch, Morgan Stanley, and Goldman Sachs.
    In desperate need of a $4 billion bailout, the crumbling firm was at the mercy of the banks it had once snubbed and manipulated.

    This post was published at Zero Hedge on Jun 11, 2017.


  • Bilderberg: The world’s most secretive conference is as out of touch as ever

    Say what you like about Bilderberg, but they’ve got a sense of humour. The agenda for this year’s secretive summit of the global elite is full of in-jokes. They get big laughs straight off the bat by describing themselves as ‘a diverse group of political leaders and experts’.
    They’re trumpeting the diversity of a conference where less than 25% of the participants are female. Which would be a huge step forward, if it were currently 1963.
    And as for racial diversity, there are more senior executives of Goldman Sachs at this year’s Bilderberg than there are people of colour.
    Perhaps by ‘diverse’ they mean that some of the participants own hedge funds, whereas others own vast industrial conglomerates. Some are on the board of HSBC, others are on the board of BP. Some are lobbyists, others are being lobbied. That sort of thing.
    Dafter still is the agenda item: ‘Can globalisation be slowed down?’ You think that the assembled heads of Google, AT&T, Bayer, Airbus, Deutsche Bank, Ryanair, Fiat Chrysler, and the Frankfurt Stock Exchange want to see a brake on globalisation? It’s the air that they breathe.

    This post was published at The Guardian


  • Russian Bank Chairman Met With Kushner, Citigroup and JPMorgan Chase

    Headline writers at the New York Times need to sharpen their pencils. Yesterday’s New York edition carried a front page article that links two of the biggest Wall Street banks, Citigroup and JPMorgan Chase, to the Jared Kushner affair with the Russian banker, Sergey Gorkov, Chairman of the state-owned Russian bank Vnesheconombank (VEB) which has been under U. S. sanctions since 2014. But readers would have missed that completely if they only read the softball headline, which failed to mention either bank.
    Everyone on Wall Street has been waiting for the next shoe to drop in the Jared Kushner episode. Kushner is under FBI and Congressional probes over allegations that he met in December with Gorkov while simultaneously attempting to set up a secret channel to communicate with Russia using its equipment inside its own embassy – ostensibly to thwart U. S. intelligence snooping. Kushner then failed to list that meeting, as well as one or more meetings with the Russian Ambassador, Sergey Kislyak, on his form for security clearance until the meetings became public knowledge.
    That shoe has now dropped. Wall Street On Parade reported on May 30 that some of the biggest names on Wall Street are sitting with hundreds of millions of dollars of that sanctioned Russian bank’s bonds and notes in their mutual fund portfolios. (See related article below.) Yesterday, the New York Times reported that when Gorkov came to Manhattan to meet with Kushner in December, he also ‘met with bankers at JPMorgan Chase, Citigroup and another, unidentified American financial institution.’ The article notes that ‘Goldman Sachs bankers also tried to arrange a meeting but ultimately had a scheduling conflict.’

    This post was published at Wall Street On Parade on June 6, 2017.


  • Central Banks Now Own A Third Of The Entire $54 Trillion Global Bond Market

    Two weeks ago we asked a question: maybe behind all the rhetoric and constant (ab)use of sophisticated terms like “gamma”, “vega”, CTAs, risk-parity, vol-neutral, central bank vol-suppression, (inverse) VIX ETFs and so forth to explain why despite the surging political uncertainty in recent years, and especially since the US election…
    ***
    … global equity volatility, both implied and realized, has tumbled to record lows, sliding below levels not even seen before the 2008 financial crisis, there was a far simpler reason for the plunge in vol: trading was slowly grinding to a halt.
    That’s what Goldman Sachs found when looking at 13F filings in Q1, when it emerged that the gross portfolio turnover of hedge funds had retreated to a record low of just 28%. In other words, few if any of the “smart money” was actually trading in size.

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


  • When Does Buying Gov’t Bonds Support Corrupt Governments?

    The president of Venezuela’s opposition-run Congress led by Julio Borges came out and accused Goldman Sachs of ‘aiding and abetting the country’s dictatorial regime’ after a report that Goldman had bought $2.8 billion in bonds from the cash-strapped country at 31 cents on the dollar. They paid $865 million.
    There have been two months of opposition protests against President Nicolas Maduro in which almost 60 people have been killed. The collapse of the country’s socialist economy has left millions of people struggling to even eat. This is the problem with ‘socialism’ that it is incapable of managing the economy from any centralized government. They hate people who make money, but government is just incompetent to manage anything. It takes an individual on the front lines to manage any operation.

    This post was published at Armstrong Economics on May 31, 2017.


  • Goldman Accused Of Funding Maduro’s Dictatorship

    In late April, the Venezuela opposition slammed attempts by the Maduro regime to liquidate some/all of the nation’s gold in order to buy his crumbling regime some additional time with much needed liquidity.
    As we reported then, in a letter sent by National Assembly President and head of the Venezuela opposition to US banks, Julio Borges, the politician wrote that ‘the national government, through the central bank, is going to try to swap gold held as reserves for dollars to stay in power unconstitutionally. I have the obligation to warn you that by supporting such a gold swap you would be taking actions favoring a government that’s been recognized as dictatorial by the international community.’
    Fast forward to this weekend, when the Wall Street Journal reported that Goldman Sachs had bought some $2.8 billion in bonds issued by state oil company PDVSA that mature in 2022, paying 31 cents on the dollar or around $865 million. The price represented a 31% discount to trading Venezuelan securities that mature the same year, and would result in a staggering annual yield of more than 40%.
    The purchase came as Maduro’s detractors have been pleading with international financial institutions to avoid any transactions that might help a government accused of human-rights abuses. It also prompted Julio Borges to accuse bank Goldman Sachs of “aiding and abetting the country’s dictatorial regime.”
    “Goldman Sachs’ financial lifeline to the regime will serve to strengthen the brutal repression unleashed against the hundreds of thousands of Venezuelans peacefully protesting for political change in the country,” wrote Julio Borges in a letter to Goldman Sachs President Lloyd Blankfein.

    This post was published at Zero Hedge on May 30, 2017.


  • GOLDMAN SACHS IS FINANCING VENEZUELA’S SOCIALIST DISASTER

    Nothing to see here. Just another failed attempt at socialism. The opposition forces are finally figuring it all out too. The government is in control, not the people, and Julio Borges is blaming Goldman Sachs for financing the all-but-failed democratic socialist nation.
    The president of Venezuela’s opposition-run Congress on Monday accused Wall Street investment bank Goldman Sachs of ‘aiding and abetting the country’s dictatorial regime’ following a report that it had bought $2.8 billion in bonds from the cash-strapped tyrannical country. The Wall Street Journal on Sunday said Goldman paid 31 cents on the dollar for bonds issued by state oil company PDVSA that mature in 2022, or around $865 million, citing five people familiar with the transaction.
    Known as the world’s worst oil company, for being completely run by the tyrannical government in Venezuela, PDVSA is the socialist nation’s government. The oil company’s exports account for 93% of the country’s exports. And socialist opposition forces are now blaming the Wall Street bank, Goldman Sachs, for propping up the regime by buying the bonds. Julio Borges, President of the National Assembly and Deputy of the Venezuelan coalition of opposition parties wrote a letter to Goldman Sachs president, Lloyd Blankfein, and calmly stated to him that his financial contributions are propping up the ‘brutal regime’ that’s killing its own people through starvation and violent clashes.

    This post was published at The Daily Sheeple on MAY 30, 2017.


  • Goldman Sachs Accused of ‘Aiding and Abetting’ Venezuela’s ‘Dictatorial Regime’

    A very risky deal with a huge yield.
    It didn’t take long for sparks to fly after the Wall Street Journal reported on Sunday that, ‘according to five people familiar with the transaction,’ the asset management division of Goldman Sachs had bought Venezuelan bonds with a face value of $2.8 billion from the Central Bank of Venezuela that it had held as part of its international reserves.
    The sale of the bonds – issued by state-owned oil company Petrleos de Venezuela S. A. (PDVSA) in 2014 and due in 2022 – was completed on Thursday, according to the sources. That day and on Friday, the central bank’s international reserves jumped by $749 million, to around $10.86 billion, Reuters reported today. According to Reuters’s sources, including one at Goldman – oh my, all these leaks – the negotiations took place via middlemen in Europe.
    This cash, as the Wall Street Journal put it, is ‘a lifeline to President Nicols Maduro’s embattled government as it scrambles to raise funds in the midst of widening civil unrest.’ The Journal describers the economic and social situation the Maduro regime is presiding over this way:
    Mr. Maduro’s increasing authoritarianism coupled with critical food and medicine shortages have spawned two months of almost-daily street demonstrations, costing at least 60 lives. The economy is also suffering, having shrunk 27% since 2013. Venezuela is saddled with what the International Monetary Fund estimates will be an inflation rate of 720% this year.

    This post was published at Wolf Street on May 29, 2017.


  • Bannon, Priebus Return To Washington As Trump Trip Continues

    For clarification, this is not a Satanic ritual. pic.twitter.com/CccP39fqN4
    — The Church Of Satan (@ChurchofSatan) May 22, 2017

    For Trump’s two main White House policy advisors (aside from Goldman Sachs, of course) chief of staff Reince Priebus and chief strategist Stephen Bannon, the confusion over the “orb” event may have been too great.
    That, or perhaps there was another fallout between Trump and his two key advisors.
    Whatever the reason, according to CNN, both Priebus and Bannon returned to Washington after just the first leg of Trump’s global tour, when the President concluded his visit to Saudi Arabia on Sunday.
    “He was planning to come for the first stop and then head back for the budget roll out,” White House spokeswoman Sarah Huckabee Sanders said about the return. To avoid the perception of another breakdown in relations between Trump and the two men, White House officials told CNN that Bannon’s departure was also planned. A Trump adviser said Priebus wanted time to get ready for Trump’s return to the U. S.

    This post was published at Zero Hedge on May 22, 2017.


  • Minneapolis Fed Pres Says Keep Those Bubbles Inflated

    Minneapolis Fed President Neel Kashkari said the central bank should keep the bubbles inflated.
    OK, he didn’t say that exactly. But that was the message reading between the lines of a speech Kaskari delivered this week. Specifically, the Minneapolis Fed president said the Federal Reserve should not raise interest rates in an effort to prevent bubbles.
    Given the challenges of identifying bubbles with any confidence and the costs of making a policy mistake, I believe the odds of circumstances ever making sense to use monetary policy to try to slow asset prices down are very low. I won’t say never – but a whole lot of evidence would have to line up just right for it to be the prudent course of action.’
    The former Goldman Sachs Group executive was the lone dissenter when the Fed raised interest rates in March.
    Artificially low interest rates inflate bubbles. (For an in-depth explanation of bubbles, click HERE.) They incentivize borrowing that wouldn’t otherwise occur. From the central bankers’ perspective, that’s the point. They want to ‘stimulate’ spending and ‘jump-start’ the economy. All of that easy money has to go someplace, so it flows into various assets. Where the bubbles inflate depends on the overall economic and government policy environment at the time. In the 1990s, easy money flowed into the dot-coms. In the years leading up to 2008, it rushed into the housing market.

    This post was published at Schiffgold on MAY 18, 2017.


  • Goldman Turns Less Confident On June, September Rate Hikes

    Following disappointing CPI prints for two months in a row, even such stalwart believers in the Fed’s tightening cycle as Goldman Sachs (recall Hatzius warned recently that the Fed may need to “shock” markets to tighten monetary conditions in light of the S&P relentless grind higher despite rising rates) are suggesting that the Fed’s rate hike trajectory for the rest of 2017 is suddenly in question.
    In a note released overnight, Goldman chief economist Hatzius writes that “despite sharply weaker core inflation in the last two months, we continue to expect rate hikes in June and September followed by an announcement of balance sheet runoff in December, as well as a funds rate path well above the forwards in 2018 and beyond.” And whil he sayd that the firm has not “made any changes to these forecasts because the negative inflation surprise has coincided with a roughly equivalent upside labor market surprise” he adds that “the risk to our near-term funds rate view is now slightly greater, largely because the range of plausible outcomes has widened. We have shaved our subjective odds of a June rate hike to 80%, from 90% earlier, and have also become a bit less confident in a September hike. If the outlook deteriorates significantly, the committee might simply delay any further tightening steps.”
    What does this mean for the sequence of proposed events between the Fed’s potential balance sheet reduction announcement and future rate hikes: according to Hatzius it means that “even a more modest deterioration could prompt the committee to pull forward the announcement of balance sheet runoff to the September meeting and delay the third 2017 rate hike until December.”

    This post was published at Zero Hedge on May 16, 2017.


  • Some Of The Funds Losing Billions In Puerto Rico’s Historic Bankruptcy

    In the aftermath of Puerto Rico’s historic bankruptcy, a clearer picture of losses accrued by U. S. mutual funds on their holdings of Puerto Rican debt is beginning to emerge: the WSJ has calculated the red ink at as much as $5.4 billion over the last five years on total holdings of $14.6 billion. Wall Street’s paper of record lists the funds who have piled up losses, both realized and unrealized, on the trade. These include: Franklin Resources, Oppenheimer, Vanguard, Goldman Sachs Asset Management, Western, Lord, Abbett, AllianceBernstein and Dreyfus.
    Of these, Franklin and Oppenheimer are the biggest losers, according to Morningstar data cited by the Journal. Oppenheimer has lost as much as $2.1 billion, and Franklin as much as $1.6 billion. That’s compared with AUMs of $230 billion and $741 billion, respectively.
    Meanwhile, six other fund families managed by Vanguard, Goldman, Western Asset, Lord Abbett, AllianceBernstein Holding and Dreyfus have racked up between $100 million and $200 million in losses each.
    Of course, in the grand scheme of the funds’ AUMs, the losses so far are negligible, so before retail investors assume that Meredith Whitney’s prediction is finally coming true, resulting in another muni fund panic, it is worth recalling that all these funds have at least $100 billion each in muni-bond assets under management. Furthermore, these investors are likely in better shape than some of their hedge fund colleagues as the damage done to mutual funds, and by extension the retirees and middle-class savers to which they cater, will be an important factor in the court-mandated restructuring of the island’s debt, which begins Wednesday with a hearing in San Juan.
    As a reminder, earlier this month, the island’s governing body petitioned for – and its federal oversight board approved – its own version of bankruptcy protection under Title III of a rescue law passed by Congress late last year.

    This post was published at Zero Hedge on May 15, 2017.


  • Why Goldman Thinks You Should Go Long On Oil

    As pessimism sweeps over the oil market, a few prominent voices are unbowed, arguing that the market is well on its way towards balance.
    Goldman Sachs’ head of commodities Jeff Currie said at an S&P Global Platts Conference in London this week that investors should probably be going long on crude oil because the market is already in a supply deficit. He pointed to the futures market, where the curve could be headed into backwardation – a situation in which near-term oil futures trade at a premium to contracts further out. That structure points to concerns about a deficit in the short run, which is why front month contracts would trade at a higher price than deliveries six or twelve months away.
    But the backwardation is also a symptom of fears over long-term oil prices. Goldman Sachs has consistently argued that crude prices could remain relatively low for years to come as the cost of production has shifted lower. So, lower long-term prices have pushed the back end of the futures curve lower, with near-term prices trading higher.

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


  • Just These Ten Companies Account For Half % Of The S&P’s 2017 Returns

    Two weeks ago – as of April 28 – we presented readers with a striking statistic from Goldman Sachs, showing just how much breadth in the market has collapsed and how dominant a handful of large cap companies have become in terms of both overall profitability and market impact:
    Year to date the top 10 contributors have combined to account for 37% of the S&P 500 index return (more than double their market cap representation of 17%). The concentration among the top five is even greater, with those firms – AAPL, FB, AMZN, GOOGL, and MSFT – accounting for 28% of the return and 12% of market cap
    Fast forward less than two weeks later when the breakdown has shifted even more dramatically, and according to the latest breakdown from Goldman, as of May 10, just 10 companies are responsible for half, or 46% to be exact, of the entire S&P’s rally YTD.

    This post was published at Zero Hedge on May 11, 2017.