It always had the potential to go wrong. In the same way that Goldman Sachs’ stock – and all the deferred Goldman bonuses denoted in the stock – benefited disproportionately from the Trump boom, Goldman’s stock is now suffering disproportionately from the Trump bust.
Goldman’s stock was down 5.3% on Wednesday, a drop that Marketwatch says was its biggest one day rout since the UK voted to leave the European Union in June 2016. Along with J.P. Morgan, whose stock fell 3.8% yesterday, Goldman contributed to a 20 point fall in the Dow Jones Industrial Average. After driving markets higher, Goldman Sachs is now dragging them back down.
What’s gone wrong? The clear answer is President Donald Trump. While Goldman rode the wave of euphoria surrounding expectations of Trump’s $10 trillion stimulus plan, Trump’s suggested repeal of Dodd Frank legislation, and Trump’s willingness to invite the likes of Gary Cohn into the White House, it’s suffering now that Trump’s intentions might not happen. The immediate catalyst is the surprise sacking former FBI director James Comey. For Goldman, the Trump problems are being compounded by an abysmal first quarter plus record low market volatility – given that banks said poor volatility was responsible for its failings in the first three months of the year.
Yesterday’s decline means Goldman’s stock is off 15% from its March 3rd peak. This is bad news for all the Goldman bankers who were standing on the sidelines and watching the value of their deferred bonuses swell, but are now forced to watch them all shrink again. Goldman firm issued around $2bn of stock bonuses to staff in payment for work done in 2016. The first tranche becomes available in early 2018. Recipients need to hope that Trump’s presidency gets back on track well before then.
Separately, you might think that engaging in the art of mindfulness will make you a more relaxed, pleasant and all-round empathetic person, but you could be wrong. New research suggests that if you’re already a narcissist, mindfulness could make you worse. – Instead of spending your mindful time dwelling on the moment, you’ll simply spend it thinking about how wonderful you are. You’ll emerge less empathetic than ever.
Meanwhile:
BNP Paribas says it will only move 300 (10%) of its jobs out of London after Brexit. It will try to protect its remaining London jobs by “finding new clients [who aren’t based in the EU]. “(Reuters)
Social media is killing volatility (and therefore Goldman Sachs’ trading business): “It’s creating confusion with a lot of false news. Ironically, it’s having a calming effect. If you have all this confusing information, and you don’t know which one is true and which one is false, you say, “OK, the heck with it, I won’t do anything.” (Gadfly)
Goldman Sachs has reinvented itself as a U.S. leveraged loan house: “It has moved into acquisition-financing activities historically dominated by the likes of JPMorgan Chase, Bank of America and Citigroup.” Financial Times)
Deutsche hired Jeffrey Change from UBS as head of U.S. high yield trading. (Businesswire)
Mr. Staley also seems not to have absorbed a central paradox of being chief executive, which is that the more power you have, the more restrained you need to be about using it. (New York Times)
Millennium Management alumni sets up new hedge fund with solid title of Shelter Haven Asset Management. (HFM Global)
Why work for an air-conditioned bank when you could work in the amazing new naturally cooled Apple campus building surrounded by 9,000 trees? (Quartz)
The dangers of drinking 30 cups of coffee in short succession. (Vox)
I always thought earning over £80k would make me rich. (Financial Times)
Bank of America Senior Vice President embezzled $7.2m and bought lavish birthday parties and a motorbike. (Charlotte Observer)
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Contact: sbutcher@efinancialcareers.com
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