Tag Archive for: Goldman Sachs

Goldman’s Rubner ‘Shocked’ by Big Market Moves, Blames Liquidity

It’s getting increasingly more difficult to trade stocks and bonds without affecting their prices.

(Bloomberg) — As banking stress sparked turmoil on Wall Street last week, a familiar bogeyman is being blamed for making things worse: Thin liquidity.

Goldman Sachs Group Inc.’s Scott Rubner, who has studied flow of funds for two decades, calculates the ease of trading S&P 500 futures has plunged 88% over the past two weeks. A similar gauge shows liquidity in Treasury futures dropped 83%. Both measures have reached the lowest since the March 2020 pandemic crisis, according to Rubner’s analysis.

Based on the current wide spread between bid and ask prices, it takes more than $2 million of buying or selling in US stock futures before a trader risks moving the market, compared to a $17 million order book at least around the start of March.

The increasing difficulty to trade stocks and bonds without affecting their prices comes as the collapse of Silicon Valley Bank and hawkish comments from Federal Reserve Chair Jerome Powell battered Wall Street traders.

“I have been tracking flow of funds for the past 20 years, and I am shocked by the magnitude of some of these moves across asset classes,” Rubner wrote in a note to clients. “There are some real size volumes going through and risk transfer, and it is costing a lot to move stuff around.”

Liquidity on 10-year Treasury futures, or the amount of money to move yields by 1 basis point, has dropped to $19,000 from $114,000 this month, according to Rubner.

As worries shifted from inflation to potential contagion across the financial industry, haven assets from government bonds to gold were sought, with a Barclays Plc measure tracking the group posting the largest three-day move on record. Meanwhile, regional banks lost more than one fifth of their share values over the same period.

Of course, liquidity droughts work both ways, with Tuesday marking a mirror image of the past week. Regional lenders bounced back, with an index jumping as much as 11%. Two-year Treasury yields added 22 basis points as of 3:20 p.m. in New York, poised for the largest increase since June.

Haywire Moves

A lack of liquidity is often dragged into discussions of market meltdowns, rightly or wrongly. In December 2018, for instance, when the S&P 500 plunged toward the brink of a bear market, both then-President Donald Trump and strategists from Goldman Sachs flagged it as potentially escalating the selloff.

Many factors, such as the rise in electronic trading and regulations, could have affected the ease of trading. Meanwhile bouts of investor risk aversion make it difficult for dealers to figure out market-clearing prices, raising bid-ask spreads. That pushes against the idea that an ostensible lack of liquidity is the proximate cause for haywire cross-asset gyrations.

Regardless, one thing’s for sure: The rush for shelter of late has created some of the wildest market moves in decades.

Over the three sessions through Monday, two-year Treasury yields sank 109 basis points, the biggest slide since 1987. At the same time, gold prices rallied, while the Japanese yen strengthened against the dollar. All together, their three-day swing was the largest since at least 1976, according to Barclays.

“Safe-havens all posted large sigma moves, underscoring the aforementioned flight to safety,” Barclays strategists including Stefano Pascale wrote in a note.

All that chaos has taken place amid a rise in trading volume. As liquidity ostensibly dried up, investors turned to macro products such as exchange-traded funds as a quick way to make money or hedge against losses. ETFs accounted for roughly 40% of total equity trading volume Friday and Monday, among the highest proportion in history, according to Goldman.

“Record volumes do not equal liquidity,” Goldman’s Rubner said.

Sources: Wealth Management

WANTED! Two Firms Ramp Up Their Interest In Landing Goldman Sachs Advisors (**and open up their checkbooks to prove it)

Traditional wealth management firms have historically found it difficult to accurately price Goldman Sachs advisors and teams. Most notably, there’s been a ‘play it safe’ strategy that focuses on annual W-2 comp versus gross client revenues generated by the advisor.

One firm has figured out that Goldman advisors have an excellent history transferring assets, as they have remarkable client relationships. So putting together a deal based on just W-2 comp doesn’t make sense. Annualized revenue (or how they would value a Merrill team) is the right way to do it.

UBS has been quite effective at grabbing the attention of Goldman teams across the country as of late, and it looks like they’ve taken a key step in making an even bigger splash: deferred compensation.

As we hear it, Goldman plays games with advisors deferred compensation when they leave. UBS has decided to make that a non-issue and is including deferred comp balances for Goldman advisors in every deal they do. Done and done. No more golden handcuffs.

**This is on top of the 200-250% recruiting deal and the 260% retirement deal UBS offers. So if you’re a Goldman team reading this, you read it right – that’s better than 5x on your current annualized gross revenue.**

Oh, and about the second firm we mentioned? They aren’t totally ready to announce their full intentions with Goldman teams, but when they do, we expect them to make waves across the country. (Name rhymes with Rockefeller).

Whose Next? As Private Banking Recruiting Ramps Up Which Wirehouse Is Set To Benefit Next

The ranks of ‘private bankers’ at global investment banks like JP Morgan and Goldman Sachs have become some of the most sought after recruits in 2020. Their relative books of business have been dubbed more portable than previously believed and the market is beginning to reflect it.

We’ve previously discussed that UBS has been committed to and benefiting from recruiting ‘non-traditional’ teams in the past year, but we wonder, who’s next? What firm might be the next to jump into the fray and begin valuing these groups based on their stated revenue as opposed to their W2 personal income?

As of this post, we aren’t sure who it might be, but we think it makes sense for both Wells Fargo and Merrill Lynch (ML has dipped their toe into the private banking waters a bit already). Wells Fargo’s inclusion is obvious – they need the good press, momentum, and to replace the advisors that have walked away from the firm over the past two years.

And Merrill Lynch – it’s well documented that every headline associated with a team leaving BofA/ML isn’t a small fish. Big teams have been leaving ML for years. Adding outsized assets and revenue by way of private banking teams would serve the firm well.

No matter who it is, they aren’t getting anywhere until they begin to adjust their recruiting deals away from W2 income. Someone is going to catch up to UBS – let’s see who gets there first.


Goldman Sachs Updates Wealth Advisor Retirement Structure; Remains Woefully Short Of Rivals

Let’s get right to the point here… Goldman Sachs wildly under compensates its wealth advisors in ways that we still can’t understand. Even faced with defections and ‘in your face’ data that proves the firm is significantly behind versus the likes of Morgan Stanley and UBS, management still doesn’t believe it matters.

Case in point, the production-based changes Goldman Sachs recently announced to retirement packages for wealth advisors. Goldman announced a 3x payout to annualized W2 comp. in other words, if an advisor makes $1.5M in 2021 and chooses to retire, he’d received $4.5M in tiered payments over a few years.

Rival warehouses have programs that range from 180% – 260% of annualized production, not W2 income.

Using round numbers as an example. If an advisor produces $5M annually his retirement package payout would equal $13M bucks. More than 300% more than Goldman’s recently updated retirement package. Goldman Sachs wildly under compensates its wealth advisors. The raw numbers tell the story.

The Goldman Gold Rush Arrives; As Firm Goes Downmarket Its Elite Advisors Are Being Heavily Courted

Goldman Sachs has always been synonymous with wealth in the United States. That almost universal truth will probably never change. When viewing the firm from the outside looking in, you’d think it’s employees, and more specifically, it’s wealth advisors were as satisfied as they’ve ever been. You’d be wrong though.


If anything the firm is going downstream in their services with their interests to merge with traditional B/D’s or small retail firms like United Capital . They also bought Folio Financial—a 20-year-old online brokerage that pioneered the idea of offering fractional shares and customized stock portfolios to investors.


As Goldman has executed several acquisitions over the past 18 months advisors at the firm have begun to wonder why the firm is hell bent on going “downmarket” so aggressively. That term has become a familiar refrain with elite advisors that have left and joined competitors.

It is our belief that the unrest is more widespread than a few departures have shown, and the exodus is about to accelerate. There are more reasons beyond than just a philosophical shift in their customer base.

Competitor firms are offering recruiting deals that have gotten more creative and much larger than Goldman teams are used to hearing. Specifically, AS AN EXAMPLE, ACCORDING TO A RECRUITER SOURSE,  UBS has decided to go ‘all-in’ with Goldman teams and have committed to capital intensive deal components that make it possible to ignore the firm. Needless to say, Goldman teams are listening.

ACCORDING TO ANOTHER RECRUITER SOURSE, Without giving away the full structure of what UBS is doing to command the full attention of long time Goldman loyalists, we do know that they are no longer basing their deal on W2 income; but rather gross annual revenue.

Like we said, Goldman teams are listening.


Goldman Sachs Donut Hole: Advisor Payouts Much Lower Than Previously Believed

Goldman Sachs has an interesting problem on its hands. And it’s a problem that many of its rivals are becoming more and more comfortable exploiting over the past 6-9 months. The problem is one word: payout. It is much worse for Goldman advisors than previously believed.

It has been well known in wealth management circles that Goldman Sachs pays its wealth managers a stunted grid for a couple of reasons – the brand name that brings deep-pocketed clients to the firm, and the deals that flow through one of (if not ‘the’) the most exclusive and well-kown global investment banks in the world. Advisors benefit from both; because of that Goldman essentially caps payouts at 30% for even the best of its earners.

But that isn’t the entire story. A full 25% of an advisor’s grid payout is tagged as deferred compensation. So the top end grid payout is actually closer to 20% – less than half of what some of the best earners at Morgan Stanley, Wells Fargo, First Republic, and others are paid on a monthly basis makes its way to the paychecks of Goldman Sachs wealth managers.

That real disparity is why you are seeing an uptick in “Goldman Sachs team move to …” headlines across the wealth management industry. UBS has been aggressively recruiting Goldman teams and has found significant recent success. The success UBS has had has spurred the interest of other firms in the wired category.

Goldman teams are not being discounted as they once were. Their value is attaining a ‘par value’ alongside other recruited wirehouse teams that firms are engaged within the current environment. The opportunity for Goldman advisors to explore their options have gotten remarkably profitable – in both the short and long term.

Keep an eye on movement out of Goldman; we expect it to continue.


SEI Expands Virtual Advisor Educational Programs

John Anderson, director of practice management solutions at SEI, is all-in when it comes to
digital solutions. “Advisors no longer have to get in the car, drive to the office, find a place to
park, and sit in the office for hours,” he stated in a press release earlier this week.

SEI is trying to lead by example when it comes to digital engagement. They’ve implemented a
shorter meeting format for training and offer it exclusively online. They’ve even gone so far as
to replace the inhouse meal they previously offered with free UberEats delivery.

Surprisingly, many advisors turn down the free meal. UberEats offers that are not redeemed
are donated. SEI has given over $200,000 this year to local food banks.

“This is happening at a client level also,” Anderson claims. “Zoom and WebEx meetings are
shorter and more meaningful. Advisors now have the ability to set meetings where they’re not
just dumping data. They can be more engaging to their clients that way.”

It doesn’t stop there. The new mindset extends to recruiting. Prior to the pandemic, SEI did a
two-day in-house training seminar for new recruits. That’s been changed to a “Discovery Day”
that lasts sixty to ninety minutes in an online format.

For current advisors, SEI runs “Webinar Wednesdays,” offering practice management training
and planning tips for both brick and mortar and virtual advisors.

Schwab Offers Full Time Positions to Virtual Summer Interns

Like most financial firms, Schwab moved their summer internship program into virtual mode
this year. Elizabeth King, the SVP for enterprise learning and talent management, reports that 240 interns in over 130 cities went through the program this summer.

“Everyone’s been working in their kitchens and bedrooms,” King said in an interview with
Business Insider this week. “Many of these interns are aspiring seniors in college who will be
offered full-time jobs at Schwab in the upcoming weeks.”

According to Schwab policy, those offers should number over one hundred, roughly half of the
current class of their Intern Academy Program. The positions will be in finance, investor
services, corporate risk management, and technology.

Goldman Sachs Goes Virtual but shortens Internship Program

Goldman Sachs delayed their virtual internship program this summer, choosing to shorten the
program and start July 6th instead of back in June. It typically takes ten weeks of training, hands-on working, and networking with management to cultivate a top-quality analyst prospect.

With the abbreviated time frame and lack of personal contact, the Wall Street investment bank
is experiencing uncertainty over what the internship program will produce this year.

Citi also ran a shortened five-week virtual internship program this summer. Unlike Goldman,
they are being pro-active about hiring. Earlier this week, the bank guaranteed full-time offers to
interns in New York, London, Hong Kong, Singapore, and Tokyo.

Competing banks and private equity firms started much earlier and are also making hiring
decisions. Morgan Stanley was one of the first to offer a virtual summer internship this year.

“Once we realized what the timeline was for Covid-19, it was an easy decision,” stated Jeff
Brodsky, chief human resources officer at Morgan Stanley. “It’s all about execution now. We’re
preparing to make our full-time job offers in the next few weeks.”


Questions Abound over Santomassimo hire at Wells Fargo

The much-beleaguered Wells Fargo announced a new hire this morning. Mike Santomassimo,
formerly of BNY Mellon, will be taking over the role of CFO, replacing John Shrewsbury, who is
retiring in September. Santomassimo will report directly to CEO Charlie Scharf.

Wells Fargo stock (WFC), down 54% year-to-date, immediately jumped 5.61% in early morning
trading after the news broke. The Aroon indicator is still down trending.

Is this the final piece of the restructuring that was announced back in February or a new
beginning? Santomassimo brings twenty years of experience to the position. That includes four
years at BNY Mellon and eleven years in financial leadership roles at JP Morgan.

CEO Charlie Scharf, just nine months into his role at Wells Fargo, describes his new hire as “a
strategic-minded CFO with success in building and leading global finance teams that help drive
business improvement.” That statement suggests additional changes are coming.

Scharf Shifts Wells Fargo Power Balance to East Coast

In an attempt to reverse a downward spiral caused by the 2016 fake accounts scandal,
organizational restructuring was announced by Wells Fargo earlier this year on February 11th. It
was essentially a personnel shuffle, with various CEOs moving to new positions.

The only new executive hire during the restructuring was Mike Weinbach, former CEO of Chase
Home Lending at JP Morgan Chase. He is now CEO of Consumer Lending at Wells Fargo.

Prior to the restructuring, Charlie Scharf had hired mainly outsiders to separate the bank from
its previous history. On June 18th, he reached outside again and brought in Barry Sommers,
formerly of JP Morgan Chase, to be the CEO of Wealth & Investment Management.

Scharf is a former CEO of BNY Mellon and former CEO of Retail Financial Services at JP Morgan
Chase, so the sources for his new hires are not surprising. The Santomassimo move positions the top three Wells Fargo executives in New York. The company is based in San Francisco.

Consolidation Rumors Continue to Surface

A rumor surfaced in May that Wells Fargo might be contemplating a merger with New York-
based banking giant Goldman Sachs. With a fed-imposed asset cap of $2 trillion still hovering
over their heads, the deal is unlikely to happen, but the rumors are starting to resurface.

Wells Fargo owns more than 10% of all bank deposits in the United States. Goldman Sachs
could add $1.1 trillion to its balance sheet. With both banks tanking in the stock market, it
might be a survival move that’s being seriously looked at.

Goldman’s CFO, Stephen Scherr, has openly stated that the bank would be open to acquisitions
if they can boost their current projects. JP Morgan, where Wells Fargo’s new executive team
originally hails from, has always believed that partnerships can improve customer service.

Assuming that federal regulations are eased after the Coronavirus crisis, is the Santomassimo
hire at Wells Fargo the final move before making a consolidation deal? Or is the beginning of a
new chapter for the struggling bank? Pay close attention to how this plays out.


Did Goldman Knock This Down to Pick It Back Up

Two for two on Apple day trades as well, and I think Goldman Sachs may be up to something fishy right now…

Subject to quite a bit of skepticism, this exact scenario actually happens quite a bit…

Nio Incorporated (NYSE: NIO) is up about 100% over the past 30 days. Unless the company internally implodes or markets crash, the sky seems to be the limit for this electric car company.

But what if some financial professionals missed out on any bullish profits on NIO’s massive spike over the past 30 days or simply want to make the same money twice? What are they supposed to do in order to be offered another chance at making some money on NIO themselves?

Now, I’ve said this before and I’ll say it again… Financial professionals can move markets with one click of a mouse or by issuing one press release.

And the fat cats at Goldman Sachs did exactly that about 22 hours ago by issuing a downgrade on NIO. The stock instantly dropped 4%.

But here’s what makes me really interested…

Just yesterday, option players came in and bought $104k worth of call options on NIO, anticipating NIO’s price-per-share rallies to $7 or higher by tomorrow’s closing bell.

Did Goldman knock NIO’s price down only to pick it right back up at a discount? It actually happens pretty often, and we may be seeing that exact scenario play out on NIO right now.

NIO Daily Chart

While moves of this nature do come with some skepticism from retail traders who cannot manipulate a stock’s price-per-share and move money in or out of it at will, I don’t really care too much…

I’m just looking to make a move or two on NIO in the hours or days ahead and make some money on it myself.

Shown in green in the chart above is NIO’s 20-day simple moving average line (20 sma), a critical support level. If NIO holds, I may buy call options alongside yesterday’s $104k option player for a fast-moving trade opportunity.

Below NIO’s 20-day simple moving average line and I’ll follow the money flow prior to making any decisions. Oftentimes stocks like NIO are knocked down in price only to be picked back up at a discount, and I don’t want to be betting against a stock while a six-figure buyer comes in and makes a potential bullish bet.

I’ll be in touch mid-day with updates and a watchlist.

Let me know how YOU do today!


Yours for TrackStar trading,

Davis Martin
America’s #1 Options Trader