00:00Walk us through the good, the bad. Why is the stock down more than 2%?
00:04Yeah, Bailey, I mean, today was actually quite a funny, funny day.
00:07I mean, Goldman Sachs reporting earnings the first among big banks, which is, as you say, it's very, very rare.
00:12And obviously, at a moment where, you know, Iran is top of the agenda, private credit is top of the
00:15agenda, AI is top of the agenda,
00:17you know, there's just a lot of chaos to happen, regardless of who's reporting first.
00:21And for Goldman to go first and alone on the first day, David Solomon hasn't had the best day today.
00:26He's even lashed out at the research community, by the way, on the analyst call today.
00:32He said, you know, one of the biggest misses and the headlines that came out today is that the bond
00:36trading desks and the rates traders,
00:38the FIC department, basically the FIC division of Goldman Sachs, missed expectations of analysts by $800 million.
00:45So instead of posting about $4.8 billion for the quarter, they actually posted about $4 billion for the quarter.
00:51Big difference.
00:52It's a big difference. And it's a drop on last year. It's a surprise drop.
00:56Not just missing analysts' estimates, but actually lower than the same quarter in the previous year.
01:00And one of the things that he says is that actually, you know, this was our 10th best FIC quarter
01:05ever.
01:06You know, a lot of this, you know, a lot of this has to do with expectations that are set
01:10in the research community.
01:11Wait, wait, is he right?
01:13Well, I mean, perhaps. But I mean, you know, you can't always blame these analysts for like, you know, not
01:18knowing exactly how the trading volatility is going to plan out and what, you know, Donald Trump is going to
01:22say tomorrow and what that's going to happen to, you know, Citadel and Millennium and what they phone out their
01:26banks to want to do.
01:27I thought management teams that were supposed to talk to the analyst community and it's kind of like behind closed
01:32doors be like, hey, maybe you take this number down.
01:34They do. They do. But I guess to be fair to everyone in this case, right, like this is a
01:38quarter where we've seen like intense volatility in different directions.
01:41You've seen blow ups, big trading blow ups, which potentially you think, you know, you think that's good for banks
01:45and you think it's bad for banks the next day because some hedge fund pod has blown up and you
01:48don't really know.
01:49You don't have great visibility into that when you are dealing with so many trading firms that are private.
01:54And most of the intel that you're getting is through Bloomberg reporting most of the time.
01:58How much is it, though, expectations? I mean, this is a stock that was up 53 percent last year.
02:02I mean, almost 50 percent the year before. Right. Like there's we've seen these big banks do really, really well.
02:07So how much is it just maybe, you know, expectations, evaluation?
02:12Right. Yeah, exactly. And I mean, yeah. Yeah. You're right, Carol, to some degree.
02:15Yeah. All the banks did really well last year. You know, someone's looking for a bit of froth to pop,
02:20you know, to start to start settling again.
02:22So maybe today is the day that that happened to Goldman Sachs, but we'll see the rest of the week
02:26whether that's going to happen to the other banks as well.
02:29But look, you know, you've got JP Morgan reporting tomorrow, City reporting tomorrow, Morgan Stanley Wednesday. We'll see.
02:35Well, are these banks going to be kind of addressing the elephant in the room that is private credit?
02:41Yeah, Bailey. I mean, you know, I think the elephant in the room for like half of Bloomberg might be
02:45private credit.
02:45I think if you phone if you phone the executive teams of Goldman Sachs or Citigroup, I think a lot
02:48of them will start moaning to you and like trying to hang the phone up.
02:51But they have exposure.
02:52They do have exposure. They do have exposure.
02:54And I mean, Goldman Sachs, you know, its own private credit fund.
02:57I mean, Goldman Sachs has its own asset management arm, which is very big, unlike most of the other big
03:00banks.
03:01And that unit itself, one of its funds narrowly escaped a redemption cap of 5%,
03:06which would have meant all sorts of other things that Blue Owl and other firms were exposed to as well.
03:10So they're just kind of eking out here.
03:12But crucially, yes, you're right.
03:13The back leverage that a lot of these private credit firms have, a lot of these private credit firms borrow
03:17from big banks
03:18and then lend on to, you know, potentially less reliable borrowers in the wider market.
03:24And that's where some of the blowups have been.
03:25So being able to understand and fully understand that, you know, tracing that,
03:29the exposure that some of these banks have is one of the things that some of the analysts were concerned
03:33about today.
03:34The banks generally have been trying to put a lid on that kind of worry.
03:39And so far, you know, there's that.
03:41I think on the retail side of that, David Solomon did admit today that that concern is likely to continue
03:45on the retail side of things,
03:47particularly as headlines continue and potentially, you know, as we've seen fraud,
03:52pockets of fraud in the market and the private credit market and, you know, surge in redemptions,
03:56particularly on the retail side.
03:58On the institutional side, it seems to be more mellow so far.
04:01Just really got about 20, 25 seconds left.
04:03Goldman, tell us anything about what we're going to get tomorrow from JP Morgan and the others.
04:07Oh, and I saw it. I actually missed the great headline for Goldman, which, by the way, we had to,
04:11like, rewrite our story.
04:12The $5 billion bond sale?
04:13No, no, no, no, no. The equities record.
04:15So the equities trading record.
04:17The equities traders at Goldman Sachs posted their best three months ever of any bank in Wall Street history,
04:23which surpassed their last record, which was last quarter, by more than a billion dollars.
04:28So it was pretty huge.
04:29So we'll see. Stock trading, I think, will be the theme of the week.
04:31But maybe FIC of more at this point.
04:33High bar for everybody else, yeah.
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