Lack of trading volatility and volume has negatively affected investment firms. Goldman Sachs, Citigroup (up to a 25% decline in trading revenue) and JP Morgan (20% shortfall) have had to compensate for revenue losses. GS's Gary Cohn won't guess as to the extent of Q2's decline, but noted that the company has been laying off employees as one means to boost earnings in spite of revenue losses. ~ Ilene
Goldman’s Cohn Says Inactive Trading Environment Is Abnormal
By Michael J. Moore at Bloomberg
Goldman Sachs Group Inc. (GS) President Gary Cohn said low volatility and interest rates that are holding in tight ranges have resulted in an “abnormal” trading market.
“The environment for all the firms is quite difficult right now,” Cohn, 53, said today at an investor conference in New York. “What drives activity in our business is volatility. If markets never move or don’t move, our clients really don’t need to transact.”
Citigroup Inc. (C) Chief Financial Officer John Gerspach, 60, said yesterday that second-quarter trading revenue could fall as much as 25 percent from year-earlier levels, and JPMorgan Chase & Co. (JPM) estimated a 20 percent drop earlier this month. Cohn stopped short of forecasting the decline for New York-based Goldman Sachs.
“We think, at the end of the day, it’s economic in nature,” Cohn said of the cause of lower client volume. “We don’t have clear vision of economic growth or lack of growth.”
Full article Goldman’s Cohn Says Inactive Trading Environment Is Abnormal – Bloomberg.
