00:00Anything that stood out for you from what David Solomon told Bloomberg's Tom McKenzie on the U.S. economy or other?
00:07You know, I have to start by saying that...
00:10You like the spinning?
00:11Well, I certainly like the spinning, but having watched, followed David Solomon for the better part of a decade or at least the last 10 years,
00:18at least his public life at Goldman Sachs when he became co-president, then the CEO,
00:22it just feels like he is in the most relaxed, engaging, non-defensive phase of his life.
00:29Those would not have been terms you would have associated with David Solomon five years back, three years back, or even two years back.
00:35I have to assume that the Goldman Sachs stock at $800 a share probably has a lot to do with that.
00:42When he took over, it was around $200.
00:44It was a little bit of a circuitous route to get here, if we remember the...
00:49There was a period, right, where we talked about his future, his tenure.
00:53Mostly, I would say that it was a Goldman senior partner class that was constantly talking about his future, his tenure there.
00:59Unhappiness with the place and the consumer banking misadventure.
01:02But to their credit, they acknowledged the mistake.
01:04David Solomon acknowledged that it wasn't working, cut his losses, and went back to focusing on the things that really work well for Goldman Sachs.
01:12And the results are there for everyone to see.
01:15This year, the stock's up 40%.
01:16It's one of the best performers in the last year, the last three years, the last five years.
01:20It is doing well, and that perhaps is playing a huge role in Mr. Solomon's outward-facing personality.
01:29But also look at the underlying commentary from him out in Italy.
01:31He talks about the banking environment.
01:33He talks about resilience in the U.S. economy.
01:37When we talk about pickup and deal-making activity, it is already running hot relative to last year.
01:43But most of that gain is coming in North America.
01:46According to our numbers, you've seen a roughly 39% year-over-year increase in deals that have been announced.
01:53When you think about mega-cap deals, and this is a stat that he threw out there, David Solomon.
01:57When you think about mega-cap deals that are deals bigger than $10 billion, that is Goldman's sweet spot.
02:04Those deals are up 100% year-over-year.
02:06And the reason it's Goldman's sweet spot is any company that's thinking about doing a big, transformative deal, management would never go wrong.
02:15Even if the deal goes bust, if they showed up in quarter, if they showed up in front of anyone trying to look into why they made such a decision,
02:21if they were to raise their hand and said, well, we hired Goldman Sachs to do it because they have the reputation of being the best in the business.
02:26And in that segment of the market that's doing so well, it obviously helps Goldman Sachs.
02:32So their investment banking performance is great.
02:34Volatile markets and generally markets heading up are good for the Goldman trading business.
02:39And in the asset management space, they're doing well.
02:40So out and out, good year for Goldman Sachs so far.
02:44We're going to hear, as Carol mentioned, from Goldman, JPMorgan, and Wells Fargo on October 14th.
02:49Those banks and other competitors to Goldman Sachs.
02:52What is Goldman Sachs doing better or has done better?
02:55And how have they done it over the last three to five years?
02:58The key themes in market, the things that have really worked play to Goldman's strength, right?
03:04And they have focused their effort around their investment bank, which involves deal making and the trading businesses and around the asset management businesses.
03:11And these are things where we talk about these trends in the market out there.
03:15The biggest players, it's the best in the business.
03:18Every business is going to sort of consolidate around the top five to 10 players.
03:22There might be way too many players out there, especially if you think about the asset management space.
03:27And there will be a little bit of a shakeout.
03:29Losers will have to, you know, shut down perhaps and fade away.
03:33But for players like Goldman Sachs, Blackstone, Apollo, Carlyle, KKR, if you're thinking in the asset management space, BlackRock, they're going to continue to do well.
03:41And when you think about an improving deal making environment and a trading environment where everyone's doing well, Goldman is always going to be part of the mix.
03:50And that's why you're seeing it reflected in the stock market as well.
03:53All right.
03:54So we kind of teased and kitted that there might be a firm that folks like David Solomon might be watching in the financial sector.
04:03And I'm not sure if they technically are on Wall Street.
04:06It's not a firm we talk about a lot, although a couple of years ago we talked about it a lot in regard to crypto and Samuel Bankman-Fried.
04:15This is an incredible story that you wrote, and it's been among the most right on the Bloomberg.
04:20Tell us about the individual at Jane Street that is just kind of hitting it out of the park.
04:25Right.
04:26For our viewers and listeners, you're obviously talking about Rob Granieri, the last remaining founder at Jane Street.
04:32Jane Street has obviously been in the news quite a bit.
04:35And you're right.
04:35About a year or two ago, this firm was really best known as being this early launchpad for Sam Bankman-Fried's career.
04:43Of course, Sam Bankman-Fried then went on to become this global crypto wonder king now in prison.
04:49That's not really great PR for the firm.
04:51But when it comes to the plumbing of markets, and again, Jane Street is part of this core group of firms that have sprung up in the last 20 to 30 years in concert with the electronification of markets,
05:03in concert with the embrace of exchange-traded funds, the ETF market, that have been able to benefit from their expansive use of technology and technological resources in a way that they are out there outperforming the banks.
05:19And part of their reason is capital constraints for the big banks has also forced them to pull out of certain sections of the market,
05:26leaving voids where Citadel Securities and Hudson River Trading and Jane Street and the Susquehannas of the world have jumped in.
05:32But no one seems to be doing it better than Jane Street.
05:35And the numbers are quite stark.
05:362016.
05:37Yeah.
05:37Let's pull up the numbers for those who are watching on TV and YouTube and Bloomberg Originals, for those on radio.
05:42Walk us through, Shree, because there's a chart in this story about Jane Street by the numbers, but it in particular looks at the second quarter trading revenue numbers.
05:52Second quarter trading revenues.
05:53Jane Street, $10.1 billion.
05:54This is the first time ever that they have done better than every other major Wall Street bank and every other competitor that they have in their space.
06:02They're much better than Citadel and Hudson River Trading.
06:05I mean, J.P. Morgan had $8.9 billion.
06:07Yeah, $8.9 billion.
06:08That is fortress America when it comes to the biggest U.S. banks.
06:12That is Jamie Dimon's bank, and they're doing better than them.
06:15That is pretty extraordinary.
06:17This has also been a rough year for Jane Street.
06:19Let's not gloss over that, the fact that they've been accused in India of goosing the world's largest options market.
06:24So they have to deal with that as well.
06:27And they're about to fight those claims.
06:29But while they're dealing with that, there is no denying the numbers they've been putting up.
06:33And that's why we decided to focus on the last remaining founder of that firm right now.
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