Goldman Sachs Loses $1 Billion On Bad ‘No Taper’ FX Trade first appeared on FloatingPath
Typically Goldman Sachs Group Inc (NYSE:GS) comes out on top, unscathed and looking smarter than its competition, but after last quarter’s results, it’s become evident that the bank lost over $1 billion on bad currency bets.
While the quarter was a mixed bag of results for banks when it came to currency trading according to Fed data, the results at Goldman were in fact the worst. It is worth noting that the Federal Reserve’s data may differ slightly from actual currency trading results.
According to Fed data, Goldman had negative revenue of $1.3 billion in currencies, while JPMorgan Chase & Co was $65 million in the red. Morgan Stanley reported $594 million in currency revenue, Citigroup Inc reported $558 million and Bank of America Corp reported $215 million.Exclusive: Third Point is diving into the private and SPAC markets [In-Depth]
Dan Loeb's Third Point returned 11% in its flagship Offshore Fund and 13.2% in its Ultra Fund for the first quarter. For April, the Offshore Fund was up 1.7%, while the Ultra Fund gained 2.3%. The S&P 500 was up 6.2% for the first quarter, while the MSCI World Index gained 5%. Q1 2021 hedge Read More
No specific positions have been divulged but according to Reuters, Goldman was on the wrong side of emerging market currencies. The bank was fully expecting the Federal Reserve to reduce asset purchases in September, and was completely caught off guard when the “No Taper” news was released.
Goldman was left with positions that, “absolutely got annihilated,” as one person familiar with the matter put it.
The only official mention of difficulty came on the company’s conference call when CFO Harvey Schwartz noted the weak currency revenue was due to “difficulty managing inventory.”