Jul 23, 2020
The reverse RobinHood effect is in full bloom. Goldman sees record trading profit and same with the other major banks. Liquidity and cheap money is what it all seems to be about. The big banks added $19 billion in bad debt write-offs. Take on as much debt as possible and hope the music doesn’t stop. There’s so much uncertainty and the system is coming apart at the seams. Where will the merry-go-round end? Duct tape economics is the rule of the day. John says let it die and let us be born again. The economy comes down to behavior of ordinary people interacting in the marketplace. It’s not going back to the way it was. 54% of Americans don’t have resources past 30 days.
The full force of the Fed helped rescue markets reeling from the outbreak and government stay-at-home orders, which had ground economies to a halt around the world. Policy makers’ emergency measures sent companies racing to tap funding sources, and the biggest quarterly stock gains in more than two decades fueled demand for trading services.
The firm’s fixed-income trading revenue more than doubled to $4.24 billion, the highest in nine years, while the equity unit had its best showing in 11 years. The gains propelled revenue to the second-highest mark ever and net income to a slight surprise increase from a year earlier. Profit was $2.42 billion, or $6.26 a share, compared with analysts’ estimates for $3.95 per share.
Shares of Goldman Sachs, down 3.5% this year, advanced 3.3% to $221.04 at 9:48 a.m. in New York. There’s lots more here.