Commentaries
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Goldman, liquidity and VAR
Goldman Sachs’ second-quarter earnings release showed a continued increase in the amount of market risk held on the firm’s trading book. Its risk appetite has continued to expand at a time when extreme turbulence has forced others to scale back.
True, Goldman’s publicly reported figures may overstate its actual positions. But the Wall Street bank also appears to be taking advantage of its access to liquidity from the Federal Reserve to increase risk.
Total value-at-risk (VAR) averaged $344 million, on a gross basis before diversification effects, up from $303 million in the second quarter of 2008 and $226 million in the second quarter of 2007. 
Click chart to enlarge in new window. Additional data available here.
(VAR is a crude measure of the worst loss the firm would expect to report on 19 days out of 20, given prevailing volatility in the market.)
Niche broker-dealer ready to trade IOUs
For those eager to buy or sell California IOUs, SecondMarket, a niche broker dealer that specializes in hard to trade assets, will launch its trading platform for the warrants on Wednesday.
But that doesn’t necessarily mean that trading will start tomorrow.
Buyers such as municipal debt portfolio managers, hedge funds and institutional investors are lining up for the service, according to SecondMarket spokesman Mark Murphy, but sellers not so much.
Bank of Goldman
Lloyd Blankfein, chief executive officer of Goldman Sachs and banker-in-chief of the US/world, didn’t disappoint as his investment firm once again proved that it’s second to none on Wall Street when it comes to printing money and profits.
By now you know the headline news that Goldman generated blowout second-quarter earnings on record net revenues of $13.8 billion. Net revenues from trading and principal investments were $10.78 billion, up 93% from the year ago period.
Goldman should disclose more
Goldman Sachs doesn’t report second-quarter earnings until Tuesday, but some Wall Street analysts aren’t waiting to sing the giant investment firm’s praises.
What’s impressing the analysts the most is Goldman’s ability to again print money like no one else — especially when it comes to trading stocks, bonds, commodities and currencies. Bank of America analyst Guy Moszkowski sounded almost giddy the other day in predicting blowout trading revenues for Goldman, describing the firm as “arguably the most well-respected investment bank.” Moszkowski now expects net trading revenues to top the record $25 billion raked in by Goldman in 2007.
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The Wall
