Here are the first two lines from the Wall Street Journals big Goldman Sachs article today:
A complex bet in the foreign-exchange market backfired on Goldman Sachs Group Inc. during the third quarter, people familiar with the matter said. The previously undisclosed trading mishap played a part in a revenue slump that prompted senior executives to defend the firm’s trading strategy.
[Traders: KCG, formerly Knight Capital, before it blew up, is entering the algo business in a big way.]
How big a part? Dont know. The article says: It isn’t clear how large the trade was or how long it was in place.
And without knowing basic stuff like that, theres no way to tell if theres much of a story here.
But whoever caused this purported mishap, there is no indication in the article that any of the people involved has been tagged with a memorable nickname. So by definition it cant be considered a major trading scandal yet, because almost all the huge ones come with fun nicknames like London Whale or Mr. 5 Percent. But give it time, and maybe some reporters will turn up something.
What if the Feds easy-money policies keep going for many years?
Equities, commodities and housing prices all would rise, while the dollar would lose, writes Michael Casey in a column for Market Watch. All this would be fine if the rising tide lifted all boats, he writes. But perpetually easy monetary policy will create even wider divisions within and between economies. The gap will grow between the few who benefit from financial market advances — those who can now afford to splurge on record-setting Francis Bacon artworks — and the many who dont.
Washingtons insider-trading hysteria gets a reality check
Heres another head-scratcher from the Wall Street Journal. Last spring some politicians and regulators freaked out because it dawned on them that sometimes information about government decisions can move stock prices, and sometimes people figure out or get hold of that information faster than others do, especially if theyre trying to make a living trading stocks or as investment researchers. So then these same politicians and regulators decided they couldn’t let such unfairness stand unchecked and that some small fry needed to be investigated over all of this. Except now theyre finally coming to the obvious realization that there probably was no illegal trading in any of the high-profile examples that first got everyones attention, and that insider trading by people with ties to Capitol Hill is extremely hard to prove, because thats the nature of a free society: Before the government makes big, market-moving decisions, its supposed to seek outside input. And if some well-connected people get an unfair advantage along the way, well, so be it. Anyway, the gist of the Journals story is that these insider-trading investigations into people with Capitol Hill connections seem to be going nowhere.
Jonathan Weil is a Bloomberg View columnist.
