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Goldman's FX Team Generates 40% Annualized Loss For Clients Per Its Latest Disastrous Recommendation

Tyler Durden's picture




 

And another humiliating notch on Goldman's "client facing" FX team's bedpost... And another win for the firm's prop desk.

Recall from June 29: Goldman Tells Soft Dollar Paying Lambs To Go Long AUDJPY With A 90 Target:

With Goldman having recently downgraded its outlook on China, it was
only a matter of time before its FX team came out with a completely
nonsensical and inverted call on the first derivative of a Chinese
slowdown: the AUD. As of tonight Goldman is advising clients that its
prop desk has a lot of AUDJPY to sell up until 90, and will buy
everything below 84, in other words Thomas Stolper says to go tactically
long the AUDJPY until 90, with an 84 stop. Of course, this makes all
the sense in the world if China is slowing down. As a reminder, Stolper
is the same guy whose call track record in 2010 was about 0 out of XXX.
On account of it being a long day we refuse to even attempt to deduce
how many level of reverse psychology are involved in this call. Needless
to say, any time a hedge fund tells you to buy a bridge it probably has
one to sell.

Well, it didn't even take three full weeks for our cynical and jaded outlook on life to once again be validated. As of 5 minutes ago:

Trade Update : Stopped out of long AUD/JPY with a potential negative return of 2.3%

On June 29, 2011 we recommended clients go long AUD/JPY on a normalization of rate expectations in Australia and a recovery in risk appetite, part of a broader shift in our trading stance that saw us take more directional risk, including via our short 5-year UST recommendation and long position in the GS Wavefront Growth basket.

Yesterday we were stopped out of our recommendation, with the AUD/JPY trading below our stop of 84. The trade idea suffered as rate expectations in Australia were pared back even further from when we initiated the trade (from 9 bp in cuts over the next year as of June 29 to 53 bp in cuts as of today) and as the risk appetite deteriorated on further spread widening in the Euro periphery, notably in Spain and Italy in recent days. Macro data has remained mixed as well and disappointed relative to our expectations. The potential loss on this trade idea is around 2.3% including carry.

2.3% in 3 weeks. That's, uh, carry the four.... 40% annualized, which incidentally is the P&L that Goldman's head FX prop, pardon flow, trader just booked on his P&L. Why, you didn't think Goldman wasn't on the other side of the trade now did you?

 

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Mon, 07/18/2011 - 22:39 | 1468931 TruthInSunshine
TruthInSunshine's picture

Goldman Sachs' cherished, prized and valued clients, getting advice and guidance of the highest caliber, accuracy and integrity.

Just ask those who were encourage to buy Abacus, Timberwolf, Hudson & Anderson CDOs by Goldman Sachs (which was shorting the MBS contained therein).

Only the best for clients of Goldman Sachs!

Mon, 07/18/2011 - 23:08 | 1468992 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It is surprising they still have clients.

Mon, 07/18/2011 - 23:38 | 1469047 knukles
knukles's picture

Gentlemen, please.
Years ago Goldilocks abandoned the reference with whom they engage in economic transactions as "clients", replacing it with "counter-parties".

You see, the term "client" implies some reasonable level of care, a sense of charge, of fealty, a whiff of a commercial effort, whilst "counter-party" denotes a hands off, detached, liaise faire level of engagement, implying the mutual risks associated by the parties to a transaction of "caveat emptor" at its very basal soul.

No.  If for a moment you wonder if or why they do or do not have clients, you have not been listening. 
To them. 
They have only, "counter-parties". 
With, perhaps the exception of God, for they are engaged in His Work, by their very own words, delivered in a House of Worship.

No; there are no "clients" at Goldman. 

And what is even more interesting is that there are indeed, many who in delusion view themselves as "clients". 
Mayhaps there are others who are true clients of whom we do not know names, titles or positions of influence who reside in such an elevated clime that we shall never, ever know.  

Tue, 07/19/2011 - 00:21 | 1469164 Bananamerican
Bananamerican's picture

 

"another humiliating notch on Goldman's "client facing" FX team's bedpost... And another win for the firm's prop desk" ....it's "The Talent"™

 

Tue, 07/19/2011 - 00:27 | 1469173 Manthong
Manthong's picture

Yeah, they're doing God's work alright… on a bloody altar, complete with human sacrifice.

Mon, 07/18/2011 - 22:40 | 1468933 Freddie
Freddie's picture

Mugabe 2 will bail them out.

Mon, 07/18/2011 - 23:34 | 1469055 Seize Mars
Seize Mars's picture

Mugabe 2 will bail them out.

 

This guy would bail them out?

http://www.youtube.com/watch?v=tOrI6uqS-vk

Mon, 07/18/2011 - 22:58 | 1468977 scratch_and_sniff
scratch_and_sniff's picture

I was watching a documentary on GS the other night and seen that they are still flying two American flags outside their offices…someone over there should liberate those flags immediately, if only for their shitty FX calls alone.

Mon, 07/18/2011 - 23:01 | 1468981 Freddie
Freddie's picture

Well they are the US Treasury Dept so I guess they get two flags.

Tue, 07/19/2011 - 08:02 | 1469525 Bartanist
Bartanist's picture

Do they have gold fringe? If not, then they should. Goldman flying American flags without the fringe is a farce.

Mon, 07/18/2011 - 22:59 | 1468979 Western
Western's picture

The Goldman Sack is actually a psychological pilot experiment to see how long sheeple will continue trusting a perpetual loss machine.

Mon, 07/18/2011 - 23:11 | 1468991 Fazzie
Fazzie's picture

  They get you with the double reverse psychology. Like this.

Goldmand reccomends long AUD/JPY:

" Oh I get it you want me to fade that call....hmmmm.. WAIT A MINUTE....nice try squid but Im not falling for that, Im backing up the truck on AUD/YEN crosses right now!"

Mon, 07/18/2011 - 23:40 | 1469072 Seize Mars
Seize Mars's picture

Oh I get it you want me to fade that call....hmmmm.. WAIT A MINUTE....nice try squid but Im not falling for that, Im backing up the truck on AUD/YEN crosses right now!

Iocaine powder!! Never go up against a Sicilian, when death is on the line!!

Mon, 07/18/2011 - 23:00 | 1468980 Fazzie
Fazzie's picture

  Plain ol simple reverse psychology disguised as quadruple double reverse.

 And they would have gotten away with it it wasnt for that meddling fight club!

Mon, 07/18/2011 - 23:11 | 1469003 Temporalist
Mon, 07/18/2011 - 23:14 | 1469006 Fazzie
Fazzie's picture

 In a related story, everyone with a brain replies "no shit".

Mon, 07/18/2011 - 23:35 | 1469056 TruthInSunshine
TruthInSunshine's picture
by Temporalist
on Mon, 07/18/2011 - 23:11
#1469003

 

Goldman says recession risk rising

 http://finance.fortune.cnn.com/2011/07/18/goldman-says-recession-risk-ri...

 

Translation: 

We are jonesing for some more serious POMO/TARPish/TALFish/SugarTaxDaddy Love, bitchez! We are starting to get the heebies and jeebies of withdrawal.

Don't be cruel, bitchez! Give us some dragon vapors, at least!


Mon, 07/18/2011 - 23:12 | 1469004 chump666
chump666's picture

goldman, set major shorts on the AUD after the 27th AUST CPI....China appears to want to sell also, rating agency out of China -  Dagong just took a crap on the AUD (global liquidity crunch will send the AUD into hell)

Dow Jones wires, maybe ZH got the link

Mon, 07/18/2011 - 23:17 | 1469013 Atomizer
Atomizer's picture

When the snake starts eating it's tail, propaganda salesman have a difficult task to sway new ponzi peasant taxpayer investors.

The American Dream - FULL LENGTH

http://youtu.be/a6OQzH07u0U

Mon, 07/18/2011 - 23:26 | 1469035 SovietCong
SovietCong's picture

Can someone please explain it to me why someone would follow GS's advice or, worse, pay for it or, even worse, give them his money to manage? I understand the Squid can offer some trades or insider opportunities others don't normally have, but methinks they usually offer those to themselves first. Even a dog can learn the proper response to repeated stimulus, so...?

Mon, 07/18/2011 - 23:40 | 1469071 knukles
knukles's picture

A lack of sanity, defined as "clarity of thought" oft best characterized as delusions. 

Mon, 07/18/2011 - 23:43 | 1469079 Freddie
Freddie's picture

My guess is GS does what every con does.   They allocate their good trades to the "house" account and the customers get the garbage.

Mon, 07/18/2011 - 23:30 | 1469043 RobotTrader
RobotTrader's picture

Funny how Goldman's "Kickstart" is posted here every weekend.

They are supposed "experts" in some cases???

Tue, 07/19/2011 - 00:00 | 1469109 scratch_and_sniff
scratch_and_sniff's picture

That’s because FX is a different animal, though when you consider that if you give a monkey a 50/50 choice of long/short FX he would probabilistically do better than GS, then heads must be scratched? Besides, recommending an FX trade based on broad fundamentals with only a 400pip or so profit target is highly suspect, and one has to wonder, are they giving their reasons just to window dress the trade and make it sound plausible, hence just fucking with people, or are they just genuinely clueless? Lets face it, if they were actually trading you would think that they wouldn’t have the time to be putting this muck out, so the later option isn’t beyond the realms of possibility - but they obviously are traders, so they are entitled to feed you any old crap they want to get their offers filled - since when were GS philanthropists? Its not even a big surprise, its probably the only reason they leak the document to begin with.

Mon, 07/18/2011 - 23:41 | 1469074 Widowmaker
Widowmaker's picture

I've often taken beatings over 120% annualized loss before my first cup of coffee.

I can't stand Galdamn Snakes either, but this sauce needs more meat.

Mon, 07/18/2011 - 23:49 | 1469087 user2011
user2011's picture

Can someone help me to understand this ?    I thought FX is highly leveraged.   1:50 or even 1:100.  So, for a lost of 2.3% of the AUD/JPY,  shouldn't that translate into close to 100% lost of initial investment ?

Mon, 07/18/2011 - 23:54 | 1469102 JohnG
JohnG's picture

Yeah.  Or even more.  Gone.

Tue, 07/19/2011 - 00:03 | 1469111 Freddie
Freddie's picture

Sort of doesn't matter cause they have a blank checkbook with taxpayers money.

Tue, 07/19/2011 - 00:57 | 1469228 chump666
chump666's picture

FX trading essentially is gambling with leverage.  Hence the retail FX platforms springing up everywhere.  The Japanese love it, the margin traders who are at 50:1 are now forced to be at 25:1.  FX trading produces the biggest losses on a trading account.  Lethal.

The goldman sachs of the world will hedge losses on something else, these investment banks are acting like government supported hedge funds, they did in prior to 2008, and they are worst now. 

Investment banks/banks love trade FX on interest differentials, they are obsessed with high yielders due to the volume they pump in...the best bit?  WHen hedge funds start to short the high yielders and the banks panic and cut longs.

Tue, 07/19/2011 - 00:45 | 1469202 jack stephan
jack stephan's picture

Tue, 07/19/2011 - 00:47 | 1469203 jack stephan
jack stephan's picture

I shall be closer to you for the next few days, which will be the last of your miserable lives, than that bitch of a mother who first brought you screaming into this world! I did not pay good money for your company. I paid it so that I might profit from your death. And just as your mother was there at your beginning, I shall be there at your end. And when you die - and die you shall - your transition will be to the sound of...
[claps his hands]

Tue, 07/19/2011 - 00:45 | 1469206 jack stephan
jack stephan's picture

Tue, 07/19/2011 - 00:44 | 1469208 jack stephan
jack stephan's picture

Pinhead: Ah, no more boxes, Kirsty?
Female Cenobite: No more teasing, Kirsty, it's time to play.
Pinhead: Time to play...
Kirsty Cotton: Wait!
Pinhead: No more deals child, it is your flesh we want to experience, not your skill at bargaining.
Kirsty Cotton: No deals, just information, just information!
Pinhead: Go on... but trick us again child, and your suffering will be legendary even in Hell!
Pinhead: [Kirsty hands Pinhead picture of Capt. Spencer] What's this?...
[looks at picture]
Pinhead: Someone else you think escaped us, like Frank?
Kirsty Cotton: He didn't escape, he's you!
Pinhead: [pauses] Nonsense, I...
Kirsty Cotton: It is you! You weren't always this way, you were human once. You were all human! Remember your fear, your confusion!
Female Cenobite: Enough!
Pinhead: [to Female] Wait!... I remember...

Tue, 07/19/2011 - 01:01 | 1469236 Lmo Mutton
Lmo Mutton's picture

I guess it is kinda like crackhos asking the dealer if he has any more of that "good stuff".  How can it be good if it turns you into a crackho?

Tue, 07/19/2011 - 01:21 | 1469265 Havana White
Havana White's picture

There's the matter of denial.

Tue, 07/19/2011 - 02:45 | 1469340 AldousHuxley
AldousHuxley's picture

Anyone at this point who believes anything Goldman pitches (aka. lying legally where legality itself is defined by ex-Goldmanites), is a fool. Fool and his money are soon parted.

 

Tue, 07/19/2011 - 04:52 | 1469386 Pretorian
Pretorian's picture

If I was Goldman I would buy banner on ZeroHedge for 1 m $ monthly just not to have Tayler spreading reality around.

Tue, 07/19/2011 - 05:43 | 1469411 HITMAN56
HITMAN56's picture

TD or anyone care to comment on the bbg article Re: Zeti Akhtar Aziz..."Another global recession is unlikely and risks to growth probably wont materialize. The chances of an economic contraction is less in Asia. Right now there are risks but we dont envisage these risks to materialize"

Tue, 07/19/2011 - 05:44 | 1469413 nathan1234
nathan1234's picture

Goldman has record trading profits on it's own and all days are trading profits. Very easy to understand how. For every loss there is a profit in trading.

Where the client's losses went is very evident or very "Elementary: as Sherlock would put it to Dr Watson.

Only fools and bribed officials in istitutions would ask Goldman to handle their oney

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