Goldman Advises Clients To Front Run The Fed Via POMO
by ilene - October 22nd, 2010 12:37 am
Goldman Advises Clients To Front Run The Fed Via POMO
Courtesy of Tyler Durden, Zero Hedge
After a few months of breaking down what the simplest trade in the world is, that would be frontrunning the Fed for the cheap seats, Zero Hedge is happy to advise our readers that finally Goldman Sachs itself has capitulated and is now indirectly telling its clients to frontrun Ben Bernanke via POMO. No complicated value investor nonsense, no pair trades, no cap structure arbitrage, no hedging, no levered beta plays. Buy ahead of POMO. Sell. Rinse. Repeat.
From a GS distribution to clients:
On the interplay between the FED and STOCKS: Since Sept 1 – when QE was becoming a mainstream focus – if you only owned S&P on days when the Fed conducted Open Market Operations (in US Treasuries), your cumulative return is over 11%. in addition, 6 of the 7 times when S&P rallied 1% or more, OMO was conducted that day. this compares to a YTD return of 5.8%. the point: you would have outperformed the market 2x by being long on just the 16 days when – this is the important part – you knew in advance that OMO was to be conducted. The market’s performance on the 19 non-OMO days: +70bps.
And there you have it – the top in frontrunning the Federal Reserve is now in.
The most recent Fed POMO calendar is linked (there is one tomorrow). Frontrun away.
Oh, and Ben, your criminal organization will one day pay for making a complete manipulated travesty out of capital markets.
Goldman To Clients: We May Be Front-Running You
by ilene - January 12th, 2010 1:54 pm
Goldman To Clients: We May Be Front-Running You
Courtesy of Courtney Comstock and John Carney at Clusterstock/The Business Insider
It looks like Goldman Sachs was starting to worry about all those stories claiming that the firm trades against clients’ interest, takes positions that are different from what they told clients, and favors some clients with advance word of its market views.
So it sent an email making it perfect clear: Goldman is totally doing those things.
A senior Goldman executive sent an e-mail to clients on Tuesday warning that the firm may have shared investment ideas with the firm’s proprietary trading group or some clients before sharing them with others. It said it may trade ahead of disclosing those idea to clients, and may trade out of positions or change its mind about the ideas without warning.
Andrew Ross Sorkin at the New York Times obtained a copy of the email.
It was basically a big fat caveat emptor to clients. Some highlights:
- "We may trade, and may have existing positions, based on Trading Ideas before we have discussed those Trading Ideas with you."
- "We will also discuss Trading Ideas with other clients, both before and after we have discussed them with you."
- "You should not consider Trading Ideas as objective or independent research or as investment advice."
- "Any opinions that we express when we discuss Trading Ideas with you will be our present opinions only and we will not have any obligation to update you in the event of a change of circumstances or a change of our opinion."
Via Dealbook, here’s the full memo:
Dear client,
We may from time to time discuss with you Trading Ideas generated by our Fundamental Strategies Group. As part of our commitment to managing conflicts of interest appropriately, this message is to explain how the Fundamental Strategies Group interacts with other parts of our organisation and how that impacts on the Trading Ideas.
The Fundamental Strategies Group is a group of cross-capital structure desk analysts employed by our Securities Divisions to assist our traders. They develop Trading Ideas in conjunction with traders. We may trade, and may have existing positions, based on Trading Ideas before we have discussed those Trading Ideas with you. We may continue to act on Trading Ideas, and may trade out of any position, based on Trading
Goldman Sachs Posts Record Number Of $100 Million Days
by ilene - August 5th, 2009 10:01 am
Goldman Sachs Posts Record Number Of $100 Million Days (GS)
Courtesy of Joe Weisenthal at Clusterstock
We knew Goldman has an awesome quarter with respect to trading, but the steadiness of the bank’s profits in this area are something to behold.
Bloomberg: Goldman Sachs Group Inc. made more than $100 million in trading revenue on a record 46 separate days during the second quarter, or 71 percent of the time, breaking the previous high of 34 days in the prior three months. Trading losses occurred on two days during the months of April, May and June, down from eight in the first quarter, the New York-based bank said today in a filing with the U.S. Securities and Exchange Commission. The company made at least $50 million on 58 of the 65 trading days during the quarter, or 89 percent of the time.
Of course, conspiracy theorists will think this has something to do with them stealing money, or frontrunning or engaging in High-Frequency Trading. But they said yesterday that HFT-related gains accounted for just 1% of annual revenue (so about $500 million), which means there’s no way that can account for so many $100 million days.
That being said, nobody has offered an explanation of how they pull this off so steadily.
Goldman: We Don’t Frontrun Our Clients, And HFT Is Negligible To Us
Goldman Sachs Nails The Oil Trade (GS)
Goldman’s Brand Is Officially Trashed (GS)