• Tag Archives Goldman Sachs
  • “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.


  • Goldman Is Allowing Its Clients To Bet On The Next Financial Crisis

    Just over a decade ago, as the S&P was hitting all time highs and there was a line around the block of 30-some year old hedge fund managers, desperate to put other people’s money in various ultra risky investments just so they could pick a few excess bps of yield over Treasurys – a situation painfully familiar to what is going on now – Goldman had an epiphany: create new synthetic products that have huge convexity, i.e., provide little upside (such as a few basis points pick up in yield) versus unlimited downside, link them to the shittiest assets possible and sell them to gullible, yield-chasing idiots (collecting a transaction fee) while taking the other side of the trade (collecting a huge profit once everything crashes). The instruments, of course, were CDOs, and not long after Goldman sold a whole of them, the financial system crashed and needed a multi-trillion bailout from which the world has not recovered since.
    Ten years later, Goldman is doing it again, only instead of targeting subprime mortgages, this time the bank has focused on quasi-insolvent European banks.
    And just like right before the last financial crash, Goldman is once again allowing its clients to profit from the upcoming collapse, or as Bloomberg puts it, “less than a decade after the last major banking crisis, Goldman Sachs and JPMorgan are offering investors a new way to bet on the next one.”
    The trade in question is a total return swap, a highly levered product which is similar or a credit default swap but has some nuanced differences, which targets what are known as Tier 1 , or AT1 or “buffer” notes issued by European banks, and which usually are the first to get wiped out when there is even a modest insolvency event (just ask Banco Popular), let alone a full blown financial crisis.

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


  • 2017 Global Physical Gold and Silver Demand: A Fact Vs. Propaganda Update

    Recently, the western banking cartel media has been out in full force to mislead everyone regarding a narrative of falling and ‘soft’ demand for physical gold and physical silver, as they typically frame the market in the US as representative of the global market when this is patently false. Furthermore, the usual suspects, like Goldman Sachs bankers, have piled on to this misinformation by calling for a plunge in gold prices, but more on that later. First let’s discuss the misleading statistics being disseminated by the mainstream financial media regarding physical gold and physical silver demand. Last month Reuters reported plummeting silver Eagle coin sales for Q3 at 3.7 million ounces, and attempted to frame weak US physical silver demand as weak overall silver demand by calling the silver coins data ‘the lowest in 10 years’. Furthermore, they attempted to frame physical gold demand as weak by referring to the Q3 2017 American gold eagle coins sales of 38,500 ounces as a 80% plunge from the same quarter, prior year. If you were to read just this one article to gauge physical gold and physical silver demand worldwide, you would likely believe that demand was dead and that no one was interested in buying physical gold or silver anymore, as the Reuters journalist literally provided zero context to these numbers. As I’ve repeatedly stated for the past 10 years, anyone can use statistics to present a biased and false picture of reality by stripping presented data of any context. This is precisely what the Reuters journalist did.
    Furthermore, Bloomberg hopped on the ‘no one wants to buy physical gold and physical silver’ Reuters bandwagon as well with a similar narrative of gloomy gold demand by reporting last week that ‘sales of gold coins [in the United States] in the first nine months of the year shrank to the lowest in a decade.’ As well, various mainstream US financial websites prominently reported that demand for US Mint produced gold bullion has fallen off a cliff this year, with the first 5-months of 2017 only generating 185,500 ounces of gold sales, yielding a projected 2017 annual figure of only 445,200 AuOzs sold.

    This post was published at GoldSeek on Thursday, 12 October 2017.


  • “Investing Is Not A Competition… It’s A Game Of Long-Term Survival”

    Authored by Lance Roberts via RealInvestmentAdvice.com,
    Melt-Up Gains Traction Back in November, just following the election of President Trump, I wrote about the market entering into potentially the final ‘melt-up’ phase of the cyclical bull market.
    However, while economic and fundamental realities HAVE NOT changed since the election, markets are pricing in expected impacts of changes to fiscal policy expecting a massive boost to earnings from tax rate reductions and repatriated offshore cash to be used directly for stock buybacks.
    To wit:
    ‘We expect tax reform legislation under the Trump administration will encourage firms to repatriate $200 billion of overseas cash next year. A significant portion of returning funds will be directed to buybacks based on the pattern of the tax holiday in 2004.’ – Goldman Sachs

    This post was published at Zero Hedge on Oct 9, 2017.


  • Kashkari Fed Chair Odds Soar After Gundlach Forecast, Crash After Liesman Denial

    Yesterday, DoubleLine’s Jeff Gundlach, who correctly predicted the election of Donald Trump, unveiled a new surprise forecast: Neel Kashkari would be the next chairman of the Federal Reserve. Speaking Tuesday at a Vanity Fair summit in Los Angeles, Gundlach said Kashkari, president of the Minneapolis Fed, was a strong advocate of easy money. He was envisioning Kashkari’s latest essay from Monday, in which the former Goldmanite uber dove, who was instrumental in putting together the TARP bank rescue package, said the Fed shouldn’t raise interest rates again until inflation hits 2% or there’s a large drop in unemployment.
    “I actually have a very non-consensus point of view. I think it’s going to be Neel Kashkari,” Gundlach said, adding that “he happens to be the most easy money guy that’s in the Federal Reserve system today and that’s why he may win.”
    ‘There’s no chance the president wants Janet Yellen to continue” as Fed chair Gundlach also said and predicted that Gary Cohn, Trump’s chief economic advisor, would not get the nod, due to his background as president of Goldman Sachs.

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


  • Puerto Rico’s Debt Is Quietly Sitting in Mom and Pop Mutual Funds as Trump Says It Will Be Wiped Out

    There was likely a collective gasp at OppenheimerFunds Inc. yesterday when President Donald Trump made another of those market-moving pronouncements, telling Fox News that Puerto Rico’s debt would have to be wiped out. The President’s remarks suggested he thought the losers would be Wall Street banks. The President stated: ‘You know they owe a lot of money to your friends on Wall Street. We’re gonna have to wipe that out. That’s gonna have to be – you know, you can say goodbye to that. I don’t know if it’s Goldman Sachs but whoever it is, you can wave good-bye to that.’
    The reality is that a large percentage of Puerto Rico’s debt is held in tax-free municipal bonds and municipal bond mutual funds, owned not by Wall Street banks or tycoons, but by mom and pop investors seeking tax-free income. (As a result of Congressional legislation, the interest on municipal bonds issued by the Commonwealth of Puerto Rico, its political subdivisions and public corporations, is not subject to Federal, state or local taxes. This has made the individual bonds and mutual funds particularly attractive in places like New York City and to residents of New York counties with high local taxes.)
    According to a semi-annual report made last month at the Securities and Exchange Commission, Oppenheimer Rochester Fund Municipals, a popular tax-free fund held by many New York investors, was sitting on a boatload of Puerto Rico municipal bonds as of June 30, 2017. The SEC filing shows over 100 different Puerto Rico bonds, issued by the Commonwealth and numerous other Puerto Rico issuers like the Puerto Rico Electric Power Authority and the Puerto Rico Sales Tax Financing Corp. (The fund, of course, holds a widely diversified portfolio of other bonds as well.)

    This post was published at Wall Street On Parade on October 4, 2017.