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Tag Archives: Goldman Sachs

Stock Buybacks Imperil Corporate Viability

Goldman Sachs just completed an analysis of corporate balance sheets and found that dividend and stock buybacks accounted for 103.8% of their free cash flow. Meaning that they were paying more out in cash than they had on hand!  Over the last year, free cash flow has dropped 15 %, while debt is up 8 %. This corporate balance sheet squeeze is unprecedented; it is the worst cash flow crisis since 1980 and is unsustainable.  Corporate executives have turned to excessive borrowing levels...

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Goldman Sachs on Corporate Debt: Myopic or Self-Serving?

“The biggest problem that most people have is that they read Wall Street research reports and they believe the Wall Street hype… Wall Street analysts are very, very easy to fool, they’re generally parrots for what management tells them.” – Sam Antar, former CFO Crazy Eddie In 2018, Goldman Sachs underwrote 513 corporate debt issuance deals totaling $94.5 billion. They were paid an average fee of 0.48% or approximately $453.6 million for those efforts. In a recent research report...

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From TIC’s Big March Number Right To Powell’s Future Rate Cut(s)

Perhaps it shouldn’t come as a surprise. After all, during the first quarter of this year several key banks announced they had had enough. Goldman Sachs, Nomura, Credit Suisse, as well as others, they all broadcast cuts to key operations. The FICC stuff, or bond trading to put it euphemistically. The very place the world actually gets dollars. Only, they aren’t dollars so much as shadow dollars or eurodollars. A credit-based global currency therefore requires a credit base, meaning bank...

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‘Bond Trading’ Exodus, The Global Economy’s Q4 Landmine

It isn’t just US or European banks which are shrinking. The nature of this post-August 9, 2007, world is just that – global. Sure, there are regulations which have made investment banking more expensive. But there isn’t a rule or law that Wall Street (really Lombard Street) wouldn’t “discover” a way to circumvent it if they all thought it was worth the trouble. Bond trading, a euphemism for all this FICC money dealing stuff, didn’t need an LCR to look at the world differently. It only needed...

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Being An Economist Means Never Having To Say Deflation

In January 2017, there was a lot of praise for Goldman Sachs especially in London. This stood in obvious contrast to another global peer being savaged. While Deutsche Bank couldn’t pull its name out of the sewer, GS’s London unit was heralded for standing up when the market needed it. Brexit was a fascinating story in ways that had absolutely nothing to do with the politics. You look on any market chart and you can easily pick out when the vote happened. It was as much about pounds and LIBOR...

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Chinese Robots, New York Heartburn, and Goldman Sach’s Central Role

In the continued absence of regular data, as the US federal government attempts to get back up to speed before the next lull, it is perhaps appropriate to continue on with this week’s parade of anecdotes. Here I’ll discuss three of them, each seemingly unrelated to the others. To begin, we start with Chinese robots. It is the age of great economic uncertainty. Nobody really knows why, and in the absence of any explanation people will fill in the blanks with their imaginations. One nightmarish...

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As Seen On Forbes: The Market Bubble Helped Goldman Fix Its Image

As seen on Forbes by RIA’s Jesse Colombo: “Goldman Has Rehabbed Its Reputation And All It Took Was This Huge Bubble“: During the Global Financial Crisis and a few years after it, investment bank Goldman Sachs became Public Enemy #1 for its role in the mid-2000s housing bubble, mortgage crisis, and related scandals. The bank took on a reputation as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” In the...

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Fortress TIC

Goldman Sachs reported FICC revenues of just $1 billion in Q4 2017. That was the lowest for the Wall Street firm, technically a bank, since it converted from properly a securities business to one during the worst of 2008. That was 50% less in “bond trading” than Goldman had produced during Q4 2016. You start to get the sense that these banks can only make money here during obvious and rapid “reflation.” They were not alone in their Q4 struggles. Predictably, other large firms once very active...

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The Seven Questions Goldman’s Clients Have About “Rational Exuberance”

In mid-November, just days after Barclays released its 2018 equity outlook with the title "Rational Exuberance"... ... Goldman's David Kostin decided that imitation was the sincerest form of unveiling a non-contrarian year-end forecast, and in presenting his revised S&P price target for 2018 of 2,850 - which accounts for GOP tax reform - "borrowed" the Barclays title for his own year ahead preview... ... despite admitting that valuations have never been higher, thus suggesting that...

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In Dramatic Reversal, Top Senate Republicans Now Want To Repeal AMT They Passed Just Days Ago

When we laid out the key highlights of the Senate tax plan passed just before 2am on Saturday morning, we made one thing clear: nobody had read the massive 479-page bill which had several pages with handwritten revisions in the margin. I was just handed a 479-page tax bill a few hours before the vote. One page literally has hand scribbled policy changes on it that can’t be read. This is Washington, D.C. at its worst. Montanans deserve so much better. pic.twitter.com/q6lTpXoXS0 — Senator Jon...

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