Goldman Sachs

Goldman Previews The Fed Minutes

The July FOMC statement was a bit more dovish than expected, including (1) an explicit reference to the risks posed by higher mortgage rates, (2) more dovish language on below-target inflation, and (3) a statement that the Committee "reaffirmed its view" that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends. We will read the minutes from the July meeting with an eye toward any clues on the likelihood of near-term tapering and potential changes to the forward guidance.

Is Jackson Hole's 'Agenda-Less' Agenda To Taper Treasuries Before MBS?

There is still no official public schedule for the Kansas City Fed's annual Jackson Hole Economic Symposium, anticipated to begin on Thursday. However, as we noted previously, the schedule will not include a keynote address from a high-ranking Federal Reserve official. Furthermore, as Goldman notes, in contrast to tradition, Chairman Bernanke will not be in attendance (Yellen will but Summer won't). However, Jackson Hole has historically been an event where the latest thinking on monetary policy has been debated by academics and central bankers, and this year will be no different. Perhaps, Goldman points out, most interestingly, some of the research to be presented finds that MBS purchases had a disproportionate effect on depressing MBS yields, while Treasury purchases did not seem to have a similar benefit - perhaps hinting at the form the 'taper' will take.

Frontrunning: August 21

  • Obamacare, tepid U.S. growth fuel part-time hiring (Reuters)
  • Cameron was behind UK attempt to halt Snowden reports (Reuters), Britain defends detention of journalist's partner (Reuters)
  • Goldman Options Error Shows Peril Persists One Year After Knight (BBG)
  • China expresses 'shock' as Japan's nuclear crisis deepens  (Reuters)
  • Inquiry into China insurance firm rattles industry (Caixin)
  • Cheaper rivals eat into Apple’s China tablet share (FT)
  • Exporting fast food: Subway Targets Europe With as Many as 1,000 New Outlets in 2014 (BBG)
  • Reserve Bank of India boosts liquidity to ease pressure on banks (FT)
  • Justice Department Plans New Crisis-Related Cases (WSJ) - Holder doing his cutest attempt to pretend the TBTProsecute aren't
  • Syrian Opposition Alleges Gas Attack, Which Government Denies (WSJ)

We Have Confirmation: This Morning's Market #Fail Brought To You By Goldman Sachs

This morning's debacle in the options pit appears - just as we noted - to be due to Goldman Sachs 'erroneous' trades:

  • *GOLDMAN MAY LOSE AS MUCH AS $100M ON ERRONEOUS TRADES: FT

But, as we also noted earlier, unlike Knight (which was wiped out when its market-making algos went rogue), in Goldman's case:

  • *GOLDMAN SAYS 'WORKING WITH EXCHANGES' TO RESOLVE OPTIONS ISSUE

They get everything DK'ed...

How Phil Falcone Won The Battle Against Goldman, But Lost The War (Or How Not To Manipulate Bonds)

As part of the SEC's consent order with Harbinger's Phil Falcone, we learned that in addition to the previously well-known stuff Falcone was engaging in (using the fund as his taxpaying piggybank, giving preferential gating terms to "friends and family", etc), perhaps what really scuttled the once legendary hedge fund manager is what ended up being an outright war with Goldman, when back in 2006 Harbinger tried to not only take the other side of a short bet put on by Goldman, but literally squeezed Goldman and its clients into absolutely misery with the result millions in profit to Falcone and unknown losses to Goldie. And as one knows, you never fight Goldman and win, without ultimately losing everything.

10 Year Bond Shakedown Continues: Rate Hits 2.873%

It's all about rates this largely newsless morning, which have continued their march wider all night, and moments ago rose to 2.873% - a fresh 2 year wide and meaning that neither Gross, nor the bond market, is nowhere near tweeted out. As DB confirms, US treasuries are front and center of mind at the moment.... the 10yr UST yield is up another 4bp at a fresh two year high of 2.87% in Tokyo trading, adding to last week’s 20bp selloff. As it currently stands, 10yr yields are up by more than 120bp from the YTD lows in early May and more than 80bp higher since Bernanke’s now infamous JEC testimony. We should also note that the recent US rates selloff has been accompanied by a rapid steepening in the rate curve. Indeed, the 2s/10s curve is at a 2 year high of 250bp and the 2s/30s and 2s/5s are also at close to their highest level in two years.

The Only 'Chart' That Main Street Cares About

Presented with little comment aside to note that while every night we are told by how much the Dow closed green, many await the day the chart below flashes anything but red.

Frontrunning: August 13

  • U.S. Regulator Subpoenas Banks Over Long Warehouse Queues (BBG)
  • Apple Said to Prepare Holiday Refresh of IPhones to IPads (BBG)
  • Fed's Yellen Says Stance on Banks Hardened (WSJ)
  • Mexico opens up its energy sector (FT)
  • Spin: Greek GDP marks gradual deceleration of recession (FT) ... spin aside, it dropped 4.6%, and in reality, probably over 10%
  • Made-in-Canada Solution For BlackBerry Avoids Nortel Fate (BBG)
  • America's Farm-Labor Pool Is Graying (WSJ)
  • Video of 'lame' cattle stirs new concern over growth drugs (Reuters)
  • Paulson Bid for Steinway Trumps Kohlberg Offer (WSJ)
  • Egyptian government yet to decide on pro-Mursi vigils (Reuters)

Futures Push Higher On Reflexive, Paradoxical News Ahead Of Key Retail Sales Print

It's only fitting that in a bizarro new normal, the news that passes for positive is either conflicting, reflexive or, well, simply bizarre. Last night was no exception as the "good" news came in the form of speculation that in order to promote its consumption tax hike, the Abe government would consider a corporate tax cut. How that helps the country with the 1 quadrillion yen in debt is not exactly clear, or how it makes consumer tax hikes any more palatable in a nation in which more people than anywhere in the world are retired and elderly, and thus removed from the corporate lifecycle, is just as nebulous. But the market liked it. Just as it liked the good ole' European cop out, of posting a surge in consumer confidence, or relying on reflexive indicators to represent an improvement in the economy, when in reality the only thing "improving" is the stock market. This happened when the German ZEW Economic Sentiment survey soared from 36.3 to 42.0 on expectations of a 39.9 print. So one must buy futures, or that's what the GETCO algo programming says.

Equity Futures Slide More On Resignation Taper Is Just Around The Corner

Despite an overnight surge in the Chinese markets, with the Shanghai Composite closing up 2.4% following reports that China will not only continue with its "liquidity tightening" operation by, paradoxically, cutting RRR for smaller banks, but launch a stimulus for several Chinese provinces and city governments "on the quiet" in the form of jumbo-sized bank loans, and GDP news in Japan that were so bad they were almost good (although not bad enough to close the Nikkei in the green) US futures continue to take on water following the second worst week of 2013 as the market now appears resigned to a Taper announcement in just over 5 weeks (as we have claimed since May). News in Europe continues to be bipolar, with the big picture confirming that only dark skies lie ahead following yesterday's news that a new Greek bailout is just around the corner, or rather just after the Merkel reelection (even though Kotthaus perpetuated the lies and said a second cut in Greek debt is not on the agenda - although maybe he is not lying: maybe only Greek deposits will be cut this time), offset by on the margin improvements in the economic headlines, even as credit creation remains not only non-existent but as the FT reports (one year after Zero Hedge), some €3.2 trillion in financial deleveraging is still on deck meaning an unprecedented contraction in all credit-driven aggregates (one of which of course is GDP).

Goldman Admits Payroll Data Is "Economically Meaningless"

As the disconnect between payroll data and GDP grows, and the schrodinger reality of a non-farm-payroll print and JOLTs data increases; it will not come as a total surprise to Zero Hedge readers that Goldman Sachs has finally been forced to admit that investors have been fooled by the relative importance of jobs data. While the payrolls data has the largest financial market effect of all economic indicators (by a large margin), Jan Hatzius finds that neither payrolls (or Advance GDP) provide any incremental information about the broad strength of the economy.

From JCPanic To JCPandemonium

While outlining the ridiculous spectacle of the last 24 hours news flow on JCPenney is useful for some, a step back to view this charade for what it is - a hedge fund manager massivley under-water, a company careening into bankruptcy, a board desperate to show it has any relevance, and a most senior creditor (Goldman Sachs) chomping at the bit to securitize the firm's T-Shirts and small appliances... the entire 'bounce' from yesterday has been retraced as Ackman and JCP's board fling insults at each other... JCPanic has been downgraded to JCPandemonium... on its way to JCPoof...

Goldman's Top Disruptive Themes

The following eight secular disruptive themes are what Goldman Sachs believe have the potential to reshape their categories and command greater investor attention in the coming years. Critically Goldman focuses on the impact of creative destruction - a term coined by the economist Joseph Schumpeter, which emphasized the fact that innovation constantly drives breeding of new leaders and replacement of the old. These eight themes - through product or business innovation - are poised to transform addressable markets or open up entirely new ones, offering growth insulated from the broader macro environment and creating value for their stakeholders.