Monday, July 13, 2009

Financial earnings on deck

The NY Times on Goldman:

"Up and down Wall Street, analysts and traders are buzzing that Goldman, which only recently paid back its government bailout money, will report blowout profits from trading on Tuesday...

“They exist, and others don’t, and taxpayers made it possible,” said one industry consultant, who, like many people interviewed for this article, declined to be named for fear of jeopardizing business relationships.

Goldman Sachs is betting on the markets...embrace risks that its rivals feared to take.."

The WSJ take on Goldman's embracing of risk is correlated to GS' high frequency trading.

"Goldman is known on Wall Street for its sophisticated computer-trading platform. It has become a dominant player in high-frequency trading, in which computers use complex formulas to conduct rapid-fire trades in markets around the world...

High-frequency trading has become one of the fastest-expanding strategies on Wall Street, accounting for more than 73% of stock-trading volume in the U.S. this year, up from 59% in 2008, according to Tabb Group, a New York research firm.

In 2008, when nearly every other strategy lost money, it was one of the most profitable trading tactics, according to market participants.

Because it can earn money in up and down markets, a number of firms see it as a reliable way to make money."

The good thing of looking at high frequency trading, is that investors get to ignore what else is on bank's balance sheets!

So Meredith Whitney will remind us of that this morning on CNBC.

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