Goldman Actively Engaging In "Debt-For-Equity" Swap With Clients After Publishing "Long Good Buy, The Case For Equities"

Tyler Durden's picture

Roughly at the same time Francesco Garzarelli fired the first warning shot against Treasurys on January 23, 2012, telling 'clients' that "We are now of the view that a break to the upside, to 2.25-2.50%, is likely and recommend going tactically short. Using Mar-12 futures contracts, which closed on Friday at 130-08, we would aim for a target of 126-00 and stops on a close above 132-00" a trade which has largely worked which means that the Goldman counter-axe is hurting big (although following the trade snap yesterday this may be over for now), the firm's Peter Oppenheimer started drafting a magnum opus, making a 40 page case, chock full of graphs, charts, bullet points, and footnotes, iPad optimized and likely coming to a Kindle near you, desperate to convince clients to sell their bonds to Goldman, and to buy all of Goldman's inventory of stocks from the firm because "After more than a decade of de-rating, equities are implying unrealistically large declines in growth and returns into the future." As a reminder, this is a deja vu repeat of precisely the same trade that Goldman enacted back in 2011... and then back in 2010... and each of those times was accompanied by lots of pretty charts and fancy bullets. Will this time be different, and is the proper call, as usual, to trade alongside Goldman (sell equities, buy bonds), or to do what Goldman tells the muppets to do? You decide.

Highlights from the report:

  • While future growth may be lower than experienced over the past decade in many parts of the world, we believe this is more than reflected
    in current valuations.
  • Future returns in equities are heavily influenced by valuation. The prospects for moderating risk premium raise the probability that equities
    will embark on a steady upward trajectory over the next few years.
  • The ex-post equity risk premium has been strikingly poor in recent years.
  • Annualized 10 and 20 year relative returns have been at their most negative for over a century.
  • The prospects for future returns in equities relative to bonds are as good as they have been in a generation.

Full report:


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Momauguin Joe's picture

Wish I'd bought more not so long ago when Tulving was selling US Eagles for $385 an oz.

slewie the pi-rat's picture

tulving has sales agents who troll here and keep the "name" up b4 zH

usually anytime anyone mentions PMs

once, well after midnoight on the wCoast, a guy who had written 1-sentece blogs here for almost 2years  "innocently" asked, totally OT,  "why, i'm thinking of buying some silver(!);  can anyone recommend a dealer?"

and there were two very polite tulving recommendations forthcoming in the next five minutes from two peeps who just "happened" to be on the string in the middle of the nite

i took all three of them on, of course, and not very politely, either, joe

they were all innocent;  and very polite even tho i called them, and their mothers, every name in the book

finally (!) one or two other guys cam along, looked at the entire string, and joined me in shutting the tulving sales force the fuk up

can't remember if you were around for that or not, joe;  do you recall, offhand?

i've never traded w/ tulving, and advise others to avoid dealers with large data bases of PM owners' names, addresses, phone numbers, e-mails, and bank/card records.  perhaps you can "imagine" why dealing anon-y-mouse-ly, locally, might theoretically be preferred...

Pegasus Muse's picture

Well I don't work for Tulving but have recommended them here.  I've done business with them several times and found they were honest, prompt, trustworthy, and delivered as promised.

There's enough shysters out there peddling crap that when you find an outfit like Tulving that you can trust you share that info with your ZH friends.  That is unless you're a rat. 


slewie the pi-rat's picture

thxz for the disclaimer

others can say they same about at least 20 companies too!  but, they don't;  i advise as above and do not tout anyone, here, but let zeroHeads find things out for themselves

i have nothing against tulving, but their sales staff does troll here, imo, "innocently pretending" not to be tulving sales staff;  knowing this, personally, i wouldn't go there except to take a big shit and "innocently" forget to flush before i went back to my car;  otherZ, of course will choose them for being "trustworthy",  ethically...

unless one can find a great deal below melt on-line, i suggest learning to deal locally, for cash, leaving only the receipt if there is one;  everyone hasta decide how to conduct his/her own life, down to the smallest details, in respect to PMs, and i, like anyone, learn from my mistakes, and i am still making them, too

you do understand about zip drives and data, don't you?  and that even the most "innocent" salespersons can change "jobs"? or even be approached to sell info?  or blackmailed or extorted?  we're talking about the behavior of salespersons, here, and i'm glad you're a non-sales fan of their sales operations.  i'm truly happy for you!

some don't care to leave personal info lying around, and even the post0ffice and delivery-truck services don't know what they're bringing to one's fuking front door and what it's insured for, if they ARE NOT BRINGING IT

i'm not here for "friends" and "sharing";  too many snitches and trolls everywhere, online, in sites and forums, especially where free speech is championed for the purpose of protecting political speech, one of your primary concerns here, i'd imagine...

i'm here to write and push a button to get published;  in doing that and reading almost all the stuff here, i am learning new thingies and re-evaluating over 60 years of study, also

i'm not a rat, i'm a pi-rat (pirate)

you are, "evolutionarily" much closer to them rats than am i

trust me

poor fella's picture

A 'generational' opportunity in equities huh? It's possible.

If you include 1929, an opportunity to lose your ass.

Doubleguns's picture

I thought it was Sock muppets. LOL  Have you noticed they all smell the same, like dirty feet. Guess I will now be called racist by all the muppets.

LongSoupLine's picture




CNBS doing their part as consistant Goldman/TBTF/Fed "bull"horn.  Interviewing Goldman's Jim O'Neill.  The "throw-up in your mouth" moment came when the pretty CNBS "red banner" read, "Jim O'Neill - Goldman's Rock Star".

You just can't make this f'ing shit up folks.

francis_sawyer's picture

...and the bubble headed bleach blond comes on at 5

poor fella's picture

Bob Janjuah was great on Boomberg this morning (ECB and FED liquidity may fuel bubbles in all asset classes).

Maybe somebody can sit him down with O'Neill while they're both in town doing the rounds? Now that would be some pretty good television.

Howdan's picture

Agreed - Out of all the so called "commentators/analysts" I always enjoy watching Bob Janjuah because he comes across as very honest, open, knowledgeable and realistic. He seems very independent aswell and unlike most of the shmucks like O'Neill etc. he doesn't just parrot whatever the company line is.

I think the presenters on Bloomberg also like Janjuah and seem to respect his honesty.

poor fella's picture

+10 for a thoughtful, well written comment. Makes me want to be a better man.  or not/

I couldn't find a link to part 2. There was another 10 minutes or so with a 3rd interviewer. Oh well. Bob will be asked back for all the reasons you state. cheers.

tmftdoyle's picture

from his tone, he obviously agrees with their assessment of his worth!


ratpack1968's picture

Investing and politics jumped the shark when it all went "mainstream" and the media turned them into entertainment. I don't see how anyone can even watch CNBS or any of the political talk show hacks. Too many people yelling from their Brady Bunch boxes and everything is packaged into sound bites.  It's all bullshit anymore, this country is run amock with morons. The movie Idiocracy is prophetic. It's really too bad that there is little, at this point, we can do to change things and that there is nowhere left to escape to.  

TradingJoe's picture

Muppets are just that...MUPPETS, and they will do whatever the SQUID tells them to do, after all, we're rich schmucks and have enough to lose :()))))), so GS once again will have to whom to unload it's crap, after all, there have to be some other bag holders too not just bloody retailers, eh?!

lizzy36's picture

Remember in December of 2010 "The Year of USA" and good 'ole Jim predicated 4% 2011 GDP growth for the US, and the S&P returning 20% (1475).

Then there was this awesome piece from December 2010 about how the 10 year going to 5% would be awesome for the US:

"I would guess that GDP growth could be above 3 pct, and it would not surprise
me if some start forecasting close to 4 pct soon...checking my simple
stats with Jan Hatzius this weekend, the US stock market would “only” need to
rise by around 19 pct in order for the 168 bps rise in government bond yields to
be entirely neutralized.
..Are 5 pct US 10-year yields and an
S+P of 1475 possible in 2011? We shall see. In my opinion, a 19 pct rise in the
US stock market seems quite likely. As for 5 pct bond yields, I think they are
much less likely, but not impossible. If they did occur, it certainly wouldn’t
have to be for negative reasons

Now waiting for the trifecta of how oil going to $200 is "more bester" for the US equity case.

Sell side strategist, everything is going up, upper, and uppest. 

Btw, for selling that awesome strategy to "muppets" in December 2010 he got a 7 figure bonus. 

Careless Whisper's picture

aawwww, the muppets are so cute. maybe goldman really loves their clients and just wants to give them a big hug.

mendigo's picture

Am baffled by the record margins - why given the economic conditions of the consumer? And is that sustainable? Have corporations canabalized themselves to maintain margins?
I would think than Ben (we) can't afford rotation out of treasuries. Is Goldman forcing the issue an will Ben squeez the shorts?

slewie the pi-rat's picture

hey, mendi!

tyler has put stuff up every quarter at least when the sales and margin data are released;  if i understand, it is due to corporate & labor efficiency "pruning" and marginal productivity increases; so the "consumer's" dollar is just a raw input, really

sustainable?  not according to what i've understood abt tyler's most recent pieces in this area;  i think he sees something of a "reversion" no matter wtf happens next

about the Ts and the benzelbub's bear trap~~~>>>i said the same thing, yesterday;  as far as i know he is on the rocord for twist till the end of next year [at present] and most of his recent stuff doesn't seem to indicate any reason to change that FED POLICY, to me

he isn't responsible for Treasury borrowing levels;  those policies are set by other centralPlanners;  all he has said is he will sell short and buy long w/ his 1.6 $Tril in Ts; as far as i know, right now. that is really the only FED policy beyond trying to plug capaital holes with paper and liquidity to avoid or defer a deflationary m2m-caused collapse of the entire hamky-panky-engineered, post glassSteagal "system"

cnhedge's picture

but I though goldman was saying the gdp growth will be lower in q1. Why the sudden shift?


dontgoforit's picture

They're a sinking ship, too.  Bail, bail, bail...

Terminus C's picture

I always do what Goldman tells me... it has worked for me every time.  If you were smart you'd follow their advice because their advice got me to where I am today.



Barry O

Comay Mierda's picture

barton biggs bullish as hell, gs trying to offload their entire equity portfolio on muppets, vix at multi year lows, this cant end well

resurger's picture

Hope Injections

SwingForce's picture

So bonds can't go up any higher, BUY EQUITIES!  Makes sense, blue chips are 70%+ Closely Held. A small amount of the cash on the sidelines could propell the market much higher, ZeroHedge itself said this a week ago.

chinaboy's picture

Nurse G: Drug time. Long good buy.

Client M: Great. I want to dream rich.

Nurse G: 'at a muppet.

Sutton's picture

Tyler, keep up the good work on Goldman.

You'll get them RICO'd, sooner or later.

If these shysters tried their tricks where I hang out, they'd be destroyed.

They're like the Phil Silvers character from "It's a Mad Mad World."

Lost Wages's picture

I'm long on both bonds & stocks, so no matter what happens I'll break even. (Haha, can't keep a straight face when I say that.)

Dre4dwolf's picture

Dumped our equities a day before they started to stink like the actualy shit they are.


Long Gold & Silver .  . . its cheap at current prices. 30~ 32 is the new bottom IMO.

Mercury's picture

I'd certainly rather be long equities and short/flat bonds in the medium-longer term than the opposite if those were the only two choices.

Inflation and interest rates won't stay low forever.

tok1's picture

the whole markets been getting short treasuries.. the feds buying every day this week 7-10ys or 30ys,  and most of next week as part of twist .. with only 2-7y auctions next week.. This is how they squeese it.. Its like the BOJ.. they step back (or like Bernanke comments last meeting) let the shorts build then use them for fodder to squeese market higher.. No long end supply and their buying around 22 bill over next few days,, IF equities tick town who's left to sell..  Given bunds / JGB's are both sub 2% foreign central banks will be tempted as well sun 2,25%.. The Govt needs to reduce the level of the defict to allow FED to step back (same for BOJ) ie the people need to accept less spending.. the FED's helping support congress.. its the people's desire not the FED.. and now slightly weaker home sales.. I wouldn;t go short tres them..

carbonmutant's picture

Pull the other one...

tok1's picture

I am pulling,.10Y up 8bp and US hasnt come in yet...and seen China / EU data...