Chillin' out till it needs to be funded
The crisis that went by had a lot going for it, with some great contrarian stands from Goldman Sachs and even Dimon’s fledgling JPMorgan, now a de facto twin gold standard in the industry with GS. Goldman Sachs in particular has been in hot soup, floating and even sounding brilliant at times answering the senate committee and the SEC cogently and in detail of the services offered, the risk management position and the trading wins at Goldman Sachs thru end 2006, 2007, shorting of peers in 2008 and selling those bonds and those off balance sheet tricks to Greece and many mnore throughout thee world.
But much a s no one saw the crisis coming, no one saw GS as a villain of the piece in 2008 and no one saw any further crises in the US markets after today’s GDP call coming in at a good 3.2% driven by fresh sales..Still, when BofA ML dropped a coopted bomb de-rating Goldman Sachs itself, the markets responded taking it down 10% in morning trades. And that shows what comes of normalisation of this house of cards. After the deeds have been done, the blame game will probably cost a couple of executives and some new regulation will be closely proscribed to minimising extraordinary profits from structured products and other smart trades that have been the hallmark of both JP Morgan and Goldman Sachs.
In Asia, where the capital markets issuance is big, GS has been under the weather, Merrill Lynch a torn house after the sale and a lot of Indian divestment and retail lifestyle biggies across India China and even Japan already rostered with the best and the brightest in the deal tables. In Latam, Citi sems to have a competing presence. In Europe, many boutiques if not a recovering Barclays and Deutsche Bank would count as threats in the investment banking business. GS in turn is globally seen more as a leader in structuring and trading and with OTC been looked down upon, headinds have surely caught my favourite employment prospect in a swirl today morning!
In its favor, GS has its commitment to executing the full service banking model as it needs access to funds and it also has the capability to shine on despite the reduced leverage. But the public perception is fragile as this morning shows, and therein lies the nub.