Just because Goldman refuses to get it, and wishes to inflict even more pain on itself with more and more public appearances, here is Lloyd on Charlie Rose last night. More of the same: "We did well because we had the disciplined hedging [on housing]."Paraphrase: "Thank you Paulson for letting us steal your idea and have our prop book go $10 billion short two months before HSBC and New Century went tits up. Also thank you for reminding us to short hundreds of millions worth of Bear stock." Also, the amount of money put into Goldman by the government was not important for us. Ok Lloyd, please refund all the $2 billion in CDS profits you made by shorting AIG immediately. And again Lloyd blatantly misrepresents the truth, by saying that doing away with prop trading would only cost the firm 10% of the firm's revenue (so why the massive fight against the Volcker rule?). Forget all this market maker, liquidity provider generic fallback bs and mumbo jumbo. How about some disclosure on just how you classify prop trading Lloyd? Because something tells us that at least 50% of your flow and correlation desk is purely Prop (and certainly serves to bolster prop profits instead of putting clients "first" as we have disclosed about 10 times in the past week alone), as the 901 pages in Goldman discovery make only all too obvious (we will post on that soon). Hey Lloyd, here's an idea - how about instituting P&L stop limits on all your OTC FICC prop trades just like RBS? Oh yes, we'll go there... and in much more detail. Soon.
Eric King reports the breaking news that in a letter obtained by Ted Butler, the DOJ's Antitrust department is considering launching an investigation into silver market manipulation by JP Morgan. Should an announcement of a full formal probe of manipulation by JPM follow, it would be tantamount to a confirmation of what numerous individuals have been claiming over the years, that JP Morgan, the LBMA, the CFTC, various banks, and even that kindly old grandpa who was so much against derivatives except when he was about to lose money as a result of regulation that he is spending the whole weekend telling his investors in Omaha to run, not walk, to Borsheim's, and buy all their massively overpriced trinkets (you can't be a quadrillionaire without first being a trillionaire), are nothing but a borderline criminal cabal that traffics in wealth extraction courtesy of a few monopolist players. As Eric King discloses in its letter the Anti-Trust division announces that "it will carefully consider the issue of silver market manipulation by JP Morgan and other traders. Generally the CFTC investigates these types of market manipulations. However, the suggestion that JPMorgan Chase may be signaling other traders, warrants further analysis. The DOJ will carefully consider the issue you raise, and you can be assured that if we conclude that silver traders have engaged in anti-competitive conduct, we will take appropriate enforcement action."
Spreads were decidedly wider this week with HY notably underperforming IG but equity underperforming credit in general. US HY underperformance was the standout in credit markets with Europe ending very marginally wider in corporates as we suspect some of the technicals impacting index compression in the US started to unwind as risk appetites shrank.
Whether you like it or not, Goldman is THE scapegoat for what is perceived as capitalism's failures. Goldman was not the cause of the boom or the bust, but Congress is looking for heads. The threat of criminal indictment hangs over Wall Street. Let the bloodletting begin.
Anyone (I'm talking to you, Larry Summers) who says that giant banks aren't bad for the economy should be sent this list ...
Just connecting the dots. You tell me.
The noose is tightening, even though one could speculate the one doing the tightening ought to be on the other side of the rope as well. That said, we sure miss the days when Dick Bove used to provide instacommentary on Wells and Goldman, typically of the buy every dip format. That beard makes him look so wise and grizzled... That, or in dire need of grooming.
Can You Believe There Are Still Analysts Arguing How Undervalued Goldman Sachs Is? Those July 150 Puts Say Otherwise, Let’s Take a LookSubmitted by Reggie Middleton on 04/30/2010 12:01 -0500
Remember, practically everybody poo-poohed my research and opinion in 2008 when I said Goldman was drastically overvalued. Those 600% to 1,000% gains on put options proved otherwise. Speaking of which, look at those July 150 puts… Can you smell what old school, fundamental analysis (you know counting profit and discounting for risk) is cookin’???
- Asian stocks advance as earnings improve, Greek debt crisis eases.
- Greece has agreed with the IMF and the EU to take additional austerity measures.
- Japan Household Spending, Wages rise as consumer prices tumble for the 13th month.
- Steel futures in Shanghai heading for biggest monthly drop since January on demand woes.
- UK consumer confidence falls to three-month low as election approaches.
- Yen weakens as Greece aid talks, economic outlook revive demand for yields.
- Barclays' Q1 net rises 29% to $1.7B, helped by growth at its investment banking operations.
- Brazil's Embraer posts Q1 net profit of $35.3M vs. year-ago loss of $23.4M.
- Bristol-Myers' Q1 profit rises 16%, but outlook slips on reform costs.
- China Construction Bank plans to raise $11B in Asia’s biggest-ever rights offer.
Reading a 901 page Goldman document production (cover to cover) at 36,000 feet has proven to be both relaxing and quite productive. Among the plethora of emails, documents and memoranda, we may have stumbled upon something that could prove to be an even "bigger short" for John Paulson than RMBS: a $2 billion position in Bear CDS initiated prior to January 2007, as well as all other financial firms. Additionally, we discover that arguably the world's richest hedge fund manager (for a reason) was prophetically putting on bank counterparty hedges as early late 2006, up to and including Goldman Sachs itself. Most relevantly, in what could be damaging disclosure by Fabrice Tourre, the Frenchman notes that as a result of Paulson's mistrust of Goldman's counterparty risk, the Abacus AC1 deal was structured in a novel way in which "they would be acting as protection buyer, facing the ABACUS SPV (as opposed to a structure where Goldman is protection buyer as is usually the case)." This little legalistic variation could make a world of difference in an Attorney General's hands. It may be time to very carefully read the indenture of AC1 and compare it with those of 2006 and earlier "Abaci."
Time for the media circus to go nuts. The AP reports that the Feds have just opened a criminal probe into Goldman: now it is getting interesting. And everyone was thinking that Eric Holder is a toothless puppet (well, that still has to be refuted).
All assets are going up, period. Fundamental research has become an irrelevance. Is Obama a moderate in liberal clothing? The Fed’s need to inflate new bubbles to rescue us from the old ones. Listen to the wakeup call, and adjust your risk controls accordingly. Keep a hair trigger on your mouse for when the dreaded “Risk Off” trade hits.
In light of the fact that Goldman Sachs actively trades against its clients, it is now high time for the U.S. federal prosecutors probe into Goldman’s trading practice of Baidu IPOs as well.
Where were you on March 4th? It was an important date in history. It might just have been a tipping point.