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Goldman Issues First Warning On Q3 Results

Remember what Goldman said when it reported atrocious earnings two weeks ago, when it revealed that FICC revenues plunged by 40%? Here is a reminder:

"During the quarter, Fixed Income, Currency and Commodities Client Execution operated in a challenging environment characterized by low levels of volatility, low client activity and generally difficult market-making conditions... During the quarter, Equities operated in an environment characterized by generally higher global equity prices, while volatility levels remained low."

Spot the common theme? Yup: lack of volatility.

Fast forward to today when Goldman became the first bank to warn that Q3 is shaping up to be a continuation of Q2. This is what its CFO Chavez said moments ago, via Reuters:

  • GS CFO CHAVEZ: FICC TRADING MARKET BACKDROP, LOW VOLATILITY WE SAW IN SECOND QUARTER HAS CONTINUED INTO THIRD QUARTER

However, Chavez declines to provide specifics on trading revenue so far this quarter during the company's fixed-income call with investors.

Some other highlights from the ongoing Fixed Income presentation currently taking place, according to which Goldman is increasingly hoping to become a commercial bank. Maybe it can be the next Wells Fargo? It certainly shares the ethics...

  • TREASURER ROBIN VINCE: WE HAVE PLANS TO EXPAND ONLINE DEPOSIT PLATFORM

It sure does: judging by this the once feared Goldman, is happy to be seen as a boring, old deposit gatherer:

Some other comments:

  • Filling out the gap in client coverage in trading business is first priority, he says
  • Excluding treasuries from Goldman’s supplementary leverage ratio would boost it by 70 basis points, Treasurer Robin Vince says on call
  • “We are believers in risk-based” capital requirements, Vince says
  • GOLDMAN CFO MARTY CHAVEZ: WE ARE TRYING TO CLOSE COVERAGE GAPS TO IMPROVE OUR FIXED INCOME BUSINESS
  • GS CFO CHAVEZ: WE'RE ASKING OUR FIXED INCOME CLIENTS HOW WE'RE DOING AND WHAT WE CAN DO BETTER
  • GS CFO CHAVEZ: WE SEE OPPORTUNITY IN BUILDING OUT CASH SERVICES, MORE CROSS-SELLING WITH INVESTMENT BANK AND TRADING

And if the revenues don't materialize soon, taking a page out of the Wells Fargo playbook, Goldman will be just as happy to "cross-sell" you into a long CDO position the next time you deposit $500 with the bank.

Full presentation below: