The name is BOND - shaken, not stirred!

In the Kevin Spacey starrer Margin Call, the head of a fictional Wall St. firm is quoted saying “There are three ways to make a living in this business — be first, be smarter or cheat!”

The poster child of Wall St., Goldman Sachs has lost on all 3 grounds quoted above as it’s famed bond trading team seems to have lost its mojo in this non-volatile environment!

Goldman Sachs isn’t the only one grappling with a trading lull with the VIX Volatility Index at a 23-year low; JP Morgan and Citi that reported their numbers last week, as well as Bank of America, have all seen declines but Goldman’s fall from the top is egregious!

Although Goldman did beat street expectations handsomely and both profit and revenue rose, what worried investors was the 40% decline in its bond-trading arm FICC (fixed income, currency, and commodities). The last time they did this badly was way back in 2008 during the meltdown!

Goldman’s CFO Martin Chavez faced a barrage of questions from worried analysts during the earnings call yesterday mostly on FICC, interest income and Marcus (it’s personal loan portal for consumers that crossed $1 billion in loans).

Trading is in Goldman’s DNA and the firm thrives when there’s uncertainty all around. Remember pre-2008? Goldman was the only firm that saw the financial tsunami coming and washed its hand off toxic mortgage asset. But will this continuous decline in its trading fortunes force it to scale back as was done by its arch-rival, Morgan Stanley? Rumors are already doing the rounds

This story was originally published in AlphaNews newsletter on July 19, 2017. To subscribe to the newsletter, please click here