Goldman Sachs

Spot The Goldman And Glencore Aluminum Warehouses

Across the 137 warehouses that the London Metal Exchange has begun tracking, 2 stand out. Having been at the center of allegations of manipulation of the metals markets - most notably Aluminum - thanks to monopolistic warehousing, the following report from the LME will not entirely shock that none other than Goldman Sachs (and Glencore) have simply incredible waiting times for delivery of the base metal. We discussed the monopolization (thanks to lax Fed regulation) here, here, here, and here and as Reuters reports lengthy logjams at warehouses monitored by the LME, the world's oldest and biggest market for industrial metals, prompted bitter criticism by consumers and sparked a wide-ranging reform program at the exchange. With nearly 2-year-waits for Aluminum delivery by Goldman - we are sure regulators will see nothing wrong at all.

A Commodities Trading Titan Staffed With Former Goldman And JPM Employees Is Quietly Growing In Switzerland

If there was any confusion about what may be coming next, now that the bulk of the TBTFs are liquidating their commodities trading divisions having been caught manipulating virtually every physical asset under the sun (except for Goldman: the bank will first stage a mutiny at the Fed before it is forced to spin off its legendary J Aron commodity division which spawned such taxpayer generosity recipients as Gary Cohn and Lloyd Blankfein), the most recent events at Swiss commodities giant Mercuria should clarify "next steps." Because after Mercuria last month acquired JPMorgan's physical commodities trading business for $3.5 billion however without the scandal-plagued Blythe Masters, the Geneva commodities group needed someone to fill in the big enough shoes which may now belong to the world's largest, and very much still under the radar, physical commodities trader.  It picked Magid Shenouda, who was co-head of commodities for Goldman until the end of last year.

Frontrunning: May 12

  • Hillary and Me: The 2008 campaign was a nightmare. Will 2016 be as bad?  (Politico)
  • What Timothy Geithner Really Thinks (NYT)
  • Rebels declare victory in east Ukraine self-rule vote (Reuters)
  • Race for AIG's Top Job Has Two Favorites (WSJ)
  • America on the Move Becomes Stay-at-Home Nation for Millennials (BBG)
  • Old, Fired at IBM: Trendsetter Offers Workers Arbitration (BBG)
  • Bad luck Jonathan: Pressure Mounts on Nigerian President (WSJ)
  • Iran leader slams West's 'stupid' missile stance before talks (Reuters)
  • Conchita Wurst of Austria Wins Eurovision Song Contest (WSJ)
  • Greek Finance Ministry expects Q1 GDP contraction of less than 1.5 pct (Kathimerini)

Japan Balance Of Payments Current Account Collapses To Record Deficit

Any day, week, month, quarter, year now... that J-Curve 'recovery' will come bounding over the horizon and save the Japanese economy from its inevitable death spiral... for now, presented with little comment aside for historical confirmation (as even Goldman Sachs has now given up on hope of a bounce), Japan's largest (seasonally-adjusted) Balance of Payment Trade Deficit ever... For FY2013 as a whole, the current account recorded a surplus of +¥789.9bn but was far lower than the +¥4.2tn in FY2012 and the lowest since comparable records became available in FY1985.

The Top Three Questions Goldman Clients Ask

In this difficult market, and confusing - for traders, and everyone else - environment, what are the three main questions posed by Goldman's clients had? According to David Kostin, "Three questions dominated our investor dialogue this week given the lack of meaningful data releases.

  1. Interest rates: The recent decline in ten-year US Treasury yields to 2.6%, the forward path of interest rates, and implications for equity valuation;
  2. Capex: the outlook for corporate capital spending in 2014; and
  3. Rotation: The potential for the momentum drawdown of the past two months to reverse and vault high expected sales  growth companies back into a market leadership position.

The All-Time-High In The Dow Jones Industrial Average Is A Hoax

The Dow Jones Industrial Average (DJIA) Index is the only stock market index that covers both the second and the third industrial revolution. Calculating share indexes such as the Dow Jones Industrial Average and showing this index in a historical graph is a useful way to show which phase the industrial revolution is in. Changes in the DJIA shares basket, changes in the formula and stock splits during the take-off phase and acceleration phase of industrial revolutions are perfect transition-indicators. The similarities of these indicators during the last two revolutions are fascinating, but also a reason for concern. In fact the graph of the DJIA is a classic example of fictional truth, a hoax.

Tim Geithner Admits "Too Big To Fail" Hasn't Gone Anywhere (And That's The Way He Likes It)

Never in a million years did we think we’d ever use an article by Andrew Ross Sorkin as the basis of a blog post, but here we are. While probably entirely unintentional, his article serves to further solidify as accurate the prevailing notion across America that former head of the New York Federal Reserve and Obama’s first Treasury Secretary, Timothy Geithner, is nothing more than an addled, crony, bureaucratic banker cabin boy. Simply put, "Geithner is so bad, he actually makes Larry Summers look good."

5 Things To Ponder: Heterogeneous Contemplations

As another week passes by the markets have made no real movement in months. News flow, outside of Yellen's testimony, was also rather slow as first quarter's earnings season begins to come to a close. However, there were a few articles that we read this week that we thought you might find interesting as well... from the dangers of hidden leverage (in the re-burgeoning CDO markets) to the history if bubbles (and their lack of logic) and the demise of the US small business.

Futures Fail To Ignite Overnight Ramp In Quiet Session

It has been a very quiet session so far, and despite the slow-mo levitation in the USDJPY, its impact on US equity futures has been minimal if not negative. In fact, following yesterday's latest late day tumble, which Goldman summarized as follows, "Equities tried and failed again to break 1885, it continues to be the level that we can’t escape"... it would appear we are increasingly changing the trading regime, and as Guy Haselmann explained simply, markets are slowly but surely coming to the realization that the Fed's crutches are being taken away (that they may well return following a 20%, 30%, or more drop in the S&P is a different matter entirely) and that the economy will not grow fast enough to make up for this. Perhaps the most notable "event" is the sheer avalanche of banks pushing up their forecasts for an ECB rate cut (and or QE start) to June following Draghi's yesterday comments. And so the 1 month countdown begins until the end of forward guidance, or until the ECB "shatters" its credibility as expained yesteday.

Frontrunning: May 8

  • China’s Trade Unexpectedly Rises (BBG)
  • 'We're already not in Ukraine' - rebel east readies secession vote (Reuters)
  • Pro-Russian Separatists in Ukraine Reject Putin's Call to Delay Vote (WSJ)
  • Vietnam’s Stocks Post Biggest Loss in Decade on China Tensions (BBG)
  • Hedge Funds Extend Their Slide (WSJ)
  • Carney Looks to Untested Tools as House Prices Boom (BBG)
  • New Draghi Era Seen on Hold at ECB as Euro Area Recovers (BBG)
  • Woman With Printer Shows the Digital Ease of Bogus Cash (BBG)
  • Regulators See Growing Financial Risks Outside Traditional Banks (WSJ)

Guest Post: False East/West Paradigm Hides The Rise Of Global Currency

Despite popular belief, very few things in our world are exactly what they seem. That which is painted as righteous is often evil. That which is painted as kind is often malicious. That which is painted as simple is often complex. That which is painted as complex often ends up being disturbingly two dimensional. Regardless, if a person is willing to look only at the immediate surface of a thing, he will never understand the content of the thing. This fact is nowhere more evident than in the growing “tensions” between the elites of the West and the elites of the East over the crisis in Ukraine. The centralization of power is best achieved during moments of bewildering calamity. The conjuring of crises is one of the oldest methods of elitist dominance. Not only can they confuse and frighten the masses into malleability, but they can also ride to the public’s rescue as heroes and saviors later on. The Hegelian dialectic is the mainstay of tyrants.

Frontrunning: May 7

  • Alibaba files for what may be biggest tech IPO (Reuters)
  • Early Tap of 401(k) Replaces Homes as American Piggy Bank (BBG)
  • Developers Turn Former Office Buildings Into High-End Apartments (WSJ)
  • Thai court orders Yingluck Shinawatra to step down as PM (Guardian)
  • German industry orders fell 2.8% in March, the biggest drop in one and a half years (RTE)
  • Ukraine Bulls Scatter as Death Toll Mounts (BBG)
  • China Property Slump Adds Danger to Local Finances (BBG)
  • Stein Says Fed May See Bouts of Volatility as It Approaches Exit (BBG)

Goldman Bails Out Steve Cohen (Again) With Art-Backed Loan

It seems Goldman Sachs is willing to do pretty much anything when it comes to maintaining SAC Capital (now Point72) Steve Cohen's liquidity. On the heels of last year's "stand by your man" moment in the midst of the insider-trading scandal, Goldman has kindly offered to provide Cohen another lifeline of liquidity - this time backed by his $1 billion art collection. As Bloomberg reports, Cohen pledged “certain items of fine art” under a security agreement which didn’t specify how much money was borrowed. As one art "investor" noted, this is not unusual, "hedge fund guys who manage their money wisely... look to put their art collections to work... If you can get liquidity out of your collection and pay only 250 basis points...it just makes sense." Sense, indeed!