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Goldman $1 billion loss in FX last quarter
Started:November 20th, 2013 (11:38 PM) by Big Mike Views / Replies:356 / 3
Last Reply:November 24th, 2013 (07:47 AM) Attachments:0

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Goldman $1 billion loss in FX last quarter

Old November 20th, 2013, 11:38 PM   #1 (permalink)
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Goldman $1 billion loss in FX last quarter

Let's Hear It For The Volcker Rule: Goldman Loses Over $1 Billion In FX Trade Gone Bad In Q3 | Zero Hedge

Goldman Sachs Group Inc lost more than $1 billion on currency trades during the third quarter, recent regulatory filings show, offering some insight into why the firm, considered one of Wall Street's most savvy traders, reported its worst quarter in a key trading unit since the financial crisis.

Goldman's currency-trading problems came from the way the bank had positioned itself in emerging markets, two sources familiar with the matter said.

Specific positions could not be learned, but the bank was anticipating that the Federal Reserve would begin winding down its monetary-easing programs, the sources said. When the Fed unexpectedly announced that it would keep its massive bond-buying program in place, Goldman was left with positions that, "absolutely got annihilated," as one person familiar with the matter put it.


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Old November 20th, 2013, 11:38 PM   #2 (permalink)
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Old November 24th, 2013, 06:12 AM   #3 (permalink)
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Look beyond the headlines and the tough-sounding 'annihilated':


When profits from interest rates are up, profits from currencies tend to be down. You can see what Goldman is getting at in its statement about “gains and losses” offsetting each other. Complex trades can be generated by one Goldman business unit, even if they involve multiple legs and products – FX, interest rate swaps, and so on.


Accounting rules, meanwhile, mandate that the bank break those profits down by product.

It’s still kind of a cop-out (Goldman’s currency business clearly did not have a hot quarter, and CFO Harvey Schwartz as much as said so on the Q3 earnings call) but it’s not at all the disaster that a “$1.3bn loss” headline implies.

Source: Goldman’s not-so-great currency caper.

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Old November 24th, 2013, 07:47 AM   #4 (permalink)
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Can't see their positions, but would like to have some responsible and unhindered accounting/ SEC etc. show
to the public some of the cash flow statements for that quarter. (and also for JPM)

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