Those of you who assumed that Goldman’s perfect, no-money losing quarter HAD to be the result of something nefarious best go back to Roswell and come up with a new conspiracy theory — cause the Gold-men have got company.

Bank of America, Citigroup, and JPMorgan Chase also pitched perfect quarters:

“It is the Wall Street equivalent of a perfect game of baseball — 27 up, 27 down, the final score measured in millions of dollars a day. Despite the running unease in world markets, four giants of American finance managed to make money from trading every single day during the first three months of the year.

Their remarkable 61-day streak is one for the record books. Perfect trading quarters on Wall Street are about as rare as perfect games in Major League Baseball. On Sunday, Dallas Braden of the Oakland Athletics pitched what was only the 19th perfect game in baseball history.

But Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase & Company produced the equivalent of four perfect games during the first quarter. Each one finished the period without losing money for even one day.

Their showing, disclosed in quarterly financial filings, underscored the outsize — and controversial — role that trading has assumed at major financial institutions. It also drives home the widening lead that a handful of big banks are enjoying over lesser rivals on post-bailout Wall Street.”

A super steep yield curve, ZIRP, and a rip roaring market make trading easier than usual . . .

>

Source:
4 Big Banks Score Perfect 61-Day Run
ERIC DASH
NYT, May 11, 2010
http://www.nytimes.com/2010/05/12/business/12bank.html

Category: Earnings, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

47 Responses to “Perfect Qs: GS, BofA, C & JPM”

  1. destor23 says:

    So does Bernanke get a bonus?

  2. call me ahab says:

    it’s obviously a sign of a healthy market-

    should we expect anyhting less than 100% profitable trading days from our best and brightest?

    doesn’t mean it’s rigged or a scam or anything does it?

    like if I was playing black jack- and won every hand for 3 months- no-one would think that was unusual would they? But if it was four of us and we won every day for three months- just a coincidence right?

    of course

  3. DeDude says:

    ZIRP should never be made available to companies that gamble on Wall Street. That money handed over by government for free is being used to drive up commodity prices and consumer prices. So we the people are being robbed twice.

  4. economicdisconnect says:

    I wonder if they (The perfect banks) will go all cash soon?

    Maybe they are sticking with the 0% money and buying the 10 year from the government. While some will applaud this weird data set, one has to ask if things are so freaking unreall the world over why all the help is still around. Have a rate of change graph for that one anyone?

  5. constantnormal says:

    So Barry, given that trading might be looked at as an exercise in predicting the future (or at least a set of likely futures) and preparing appropriately, what are the odds that 4 banksters would make predictions for 61 consecutive days without error?

    What is the record at your firm for traders having N perfect days in sequence (where “perfect” is defined as a non-losing day with a nonzero number of trades)? Is trading really that easy as a competitive enterprise?

    When the mob bosses visit Vegas and walk away without losing a dime 61 days in a row, I kinda think that the gaming commission would get interested. But then I’m probably naive.

  6. constantnormal says:

    BTW, if it’s not apparent, I think the markets ARE rigged, and that the banksters own the casino.

    Sheeple enter through the doors of the Bananamerican “free markets” at their peril.

    I’m looking for a deal on one of those mattresses that are zippered to facilitate the storage of cash.

  7. alfred e says:

    I have a really, really hard time choosing my favorite comment.

    They are totally dead-on. Which BR was baiting for.

    If I have to make a choice it would be Ahab.

    What a strange banana republic world we live in.

    But why? The elites already have more money than they spend. And they own their individual Caribbean islands. And all their money’s off-shore.

    So what’s left?

    Well, if they can’t juice the market and re-inflate assets the ones’ hit hardest are at the bottom. When their pension funds go boom.

    Isn’t that the subject matter for classical novels? Tension? Counter-forces.

    And that’s the singular message from the EU bailout. And perhaps the American one too. Except transparency is a well understood term and poorly practiced.

    But the price we all have to pay to the elites, who already have more than they can spend, is still too excessive.

  8. icm63 says:

    The perfect 2010 trading plan

    1) Server on the exchange
    2) Front run orders
    3) $10 BN at 0.25% from the FED
    4) Bank Bailout options
    5) Congress in my back pocket
    6) Commercial banking license in 7 days
    7) Hire a russian or asian or indian maths wizz

    I would get the same results

  9. icm63 says:

    And every one wonders how the market fell 1000 points when they all turned the HFT programs off.

    The market is very a lonely place with out HTF, there a few other players. Hence the no BIDS when machines are off.

  10. Myr says:

    The funny part is that they’ll still get bailed out when the inevitable happens again. The Fed will loan them all the money they need against the crappiest of assets and keep it all a secret. In the meantime, they’ll pay out all their “earnings” via massive bonuses while maintaining absurdly low capital levels. One day, the Fed will get burned and we’ll all be “shocked” when it hits the news.

  11. SOP says:

    I like this part:

    ““This is not about hitting home runs,” said Jaidev Iyer, who runs his own risk management consulting firm, J-Risk Advisors. “This is just, as we call it, milking the market and your captive client base.” ”

    I don’t know what the odds are for a “perfect day” or how often they happen. The following makes it sound as though this may not be as “impossible without cheating” as it may seem at first glance.

    “”Given the recent turmoil, last quarter’s strong showing will be hard to replicate. In 2009, the banks posted losses on less than 20 percent of the trading days; during the turmoil of 2008, losses occurred as much as 40 percent of the time. “”

    And this seems to be a “special year” for the robots, more trades, more perfect days of “milking.”

  12. oldcodger says:

    Are there no regulators? Is there no Department of Justice? Are there no prosecutors? IS THERE NO JUSTICE?!?!? PERFECT MY A**! I’ve never seen such “in your face”, blatant fraud in my entire 65 years. And with our tax money to boot! I have never been so mad in my life. We’ll see how those lying, cheating bastards like it when the torches and pitchforks get to their Hampton hideaways.

  13. R. Cain says:

    GS, JPM, C

    ‘money for nothing’
    m knopfler, e clapton

    http://www.youtube.com/watch?v=dlPjxz4LGak

  14. KidDynamite says:

    i was just looking through BAC’s 10q… this crap is complicated, but it looks like their holding in AGENCY paper (in excess of $150 BILLION) dwarf their holding in treasuries…

    so, someone please correct me if i have this wrong: but BAC originates mortgages, generates fees, and sells the mortgages to Fannie and Freddie. Then, BAC borrows from the Fed for free, uses the money to buy FNM/FRE paper, print money on the funding difference, and the government pumps money into FNM/FRE to make sure that they won’t have any issues… rinse, repeat, divide by zero error? Talk about twisted…

    Just like what got us into this mess, it seems no one has incentive to make sure these loans are good loans… BAC just sells them off, and FNM/FRE have an unlimited pocketbook to access..

    there is a monster story here, but people are diverting attention AWAY from it by screaming about front running and other garbage. BAC attributed roughly 15% of these trading earnings to equity risk!

  15. ACS says:

    In announcing their results of 100% daily profitability for the first quarter of 2010, Wall Street powerhouse Goldman Sachs has captured the Robert L. “Red” Bone Cup for Astonishing Results in Trading. The previous holder was former First Lady Hillary R. Clinton who had held the trophy since 1994 when her exploits in trading cattle futures became public. A spokesperson for the now Secretary of State had no comment from Mrs. Clinton. An anonymous Goldman Sachs source said it was merely the result of “God’s will” although he admitted the policies of the Federal Reserve and some “darn good computer programming” may have contributed to the company’s good fortunes. Although nominated on numerous occasions, Bernard L. Madoff was ruled ineligible because his results were obtained without using real money.

  16. VennData says:

    Conspirators listen up, they were buying up tin…

    http://www.google.com/finance?q=NYSE:JJT

    …so pick up another couple of hats for yourself.

  17. call me ahab says:

    KD-

    good stuff

    VD-

    dude- as long as our man BO is in the house- you will never see things any other way. Your party = correct policy even if deep down you know Bushie would have done the same exact things-

    so in reality- you have given up on any independent thought- but hey- it makes it easy I guess

  18. Mannwich says:

    Yay, home team, yayyyyy. USA, USA, USA! What a country. Makes me proud to be an American.

  19. wally says:

    I had a perfect Q too: nothing ventured, nothing gained.

  20. TakBak04 says:

    @call me ahab Says:
    May 12th, 2010 at 5:50 pm

    it’s obviously a sign of a healthy market-

    should we expect anyhting less than 100% profitable trading days from our best and brightest?

    doesn’t mean it’s rigged or a scam or anything does it?

    like if I was playing black jack- and won every hand for 3 months- no-one would think that was unusual would they? But if it was four of us and we won every day for three months- just a coincidence right?

    of course

    ———–

    Are you implying ..”Deck Stacked Against Us?”

    ????? Only those who have the hand…know the cards and the rest aren’t playing “Poker” …but something else?

  21. TakBak04 says:

    BR….are you “Drinking the “Kool Aid?”

    Can understand…because in our business we have to cough down a lot of what we REALLY think…….while still giving the best guidance our consciences can deal with before we go “over the edge” for our clients so that we retain some credibility..

    But, still…on your BLOG? Well…I guess it’s read by so many…one has to do what one has to do.

    That’s what it is these days.

  22. TakBak04 says:

    call me ahab Says:
    May 12th, 2010 at 7:16 pm

    @KD-

    good stuff

    VD-

    dude- as long as our man BO is in the house- you will never see things any other way. Your party = correct policy even if deep down you know Bushie would have done the same exact things-

    so in reality- you have given up on any independent thought- but hey- it makes it easy I guess

    ————

    Would McCain/Palin have offered any different policy after the Implosion than Obama/Biden?

    Given the “Structure in Place”….could you question whether both wouldn’t have been the SAME in Policy?

    What do you think?

  23. gman says:

    “could you question whether both wouldn’t have been the SAME in Policy”…same if you discount even soft-core reform that is being attempted! The maveric would not even attempted the mild window dressing that causing FILLIBUSTERS from his republican collegues!

    With the yieldcurve this steep these banks should make money every day.

  24. TakBak04 says:

    @gman Says:

    With the yieldcurve this steep these banks should make money every day.

    ——–

    With what we have in Congress these days…those banks will be making money far off into the sunset…and I think BR and Fusion IQ and the rest all know this…because they see “CAPITULATION.”

    So…let’s be good little doggies and follow that juicy bone out into oblivion. BUT…we can make some BIG PROFITS …along the way if we understand the way “THE GAME IS PLAYED.”

    We got a “Head Up.” Let’s USE IT!

  25. Robespierre says:

    Barry Barry Barry you know better than that…
    “best go back to Roswell and come up with a new conspiracy theory ”

    It is just silly to still called a conspiracy when the plundering and pillaging is done in broad daylight. Then it is simple called government sponsored fraud (GSF)

  26. cewing says:

    When I think about about it, it makes sense that all these banks did so well. If you’re a big bank, you have all the inside information. You have all the capital to move markets in any direction. You have the technology to outrun or overwhelm any other traders on any given day. And you have Uncle Sam standing behind you with a blank checkbook in case you screw up.

    If you’re in the position those banks are in and you’re NOT raking in money every day, you should probably be fired.

  27. johnborchers says:

    Is the answer this easy? I wonder….

    They didn’t sell any of the trades which lost. These are probably mostly shorts. They carry these into the next Q in which these trades will then become profitable.

    If this is true, the banks want the market down in 2Q.

  28. Robespierre says:

    Also “and a rip roaring market”

    It stops being a market when all bets are wins. We also have a different name for that

  29. TakBak04 says:

    @constantnormal Says:
    May 12th, 2010 at 6:17 pm

    BTW, if it’s not apparent, I think the markets ARE rigged, and that the banksters own the casino.

    Sheeple enter through the doors of the Bananamerican “free markets” at their peril.

    I’m looking for a deal on one of those mattresses that are zippered to facilitate the storage of cash.

    ———-

    Friend of mine and I had running jokes for years about putting the cash in “Zip Lock Bags” in the mattress because it didn’t take up that much space. The JUMBO ZIP LOCKs…stash in there without creating lumps.

    Of course…it does depend on how MUCH cash you NEED TO STASH! :D…. For some it could make for a very uncomfortable nights sleep. For many of us…we might not even notice the difference!

  30. KidDynamite says:

    jeezus guys… you are doing EXACTLY what The Powers That Be want you to do – ranting about how the big banks manipulate “the market”… the “rigged market” and trading on “inside information” ” – and ignoring the reason they are actually making money – the MASSIVE subsidy in the form of free money which they reinvest into MORE government guaranteed entities which themselves are being subsidized!

    these 4 banks didn’t make $100mm a day EACH by” pushing the stock market around”… Equities are a minority of those profits… it’s largely fixed income, and it’s just as big a story, and the American people should be JUST as outraged when they find out what’s going on… but I’m not sure I have the bank balance sheet deconstruction expertise to write it.

    for those interested, JPM’s 10q:

    http://www.sec.gov/Archives/edgar/data/19617/000095012310047138/y84097e10vq.htm

    BAC’s 10q:

    http://www.sec.gov/Archives/edgar/data/70858/000119312510111878/d10q.htm#toc

  31. lalaland says:

    For what it’s worth I also had a perfect quarter.

  32. TakBak04 says:

    Good Point! I deal with BAC…and my Broker is a many times bought out Smith-Barney employee. Started out with Solomon/Smith-Barney and then the rest.

    My broker just bought the rock band he’s been singing with all these years..and I’m thinking this 50 something year old guy is looking at his JPMorgan/Chase and thinking…”damned…it’s not worth it, anymore!” So he’s thinking about his “early retirement” from the GAME. This was after he sent me the “Company Investment Outlook” for the month of May. :D

    GET OUT IF YOU CAN…and do something ELSE…was the message I’m getting.

    Maybe he’s not too “Far Out.” My niece and nephew who are in their early 40′s are just cashing out and going to live the “High Life” of Travel and finding something to do where they can be “Of Service.” They are Xerox and Delco employees. Engineer and Customer Service…with no kids and high incomes they socked away living frugally. They are Off on their Rainbow Journey.

    Maybe some can do their “Rainbow Journey” and if so…why not rather than give it to Wall St. to take it away?

    The rest are left to deal with the mess struggling with unemployment and the fake dream they were sold.

    How do the “rest” deal with it all? :shrug:

  33. cewing says:

    I think that’s the point, KidDynamite. These banks have ALL the bases covered. They’re spouting cash out of every orifice and using it to buy politicians who make sure they’re allowed to keep ass-raping the world. It’s a perpetual motion machine and it won’t stop until Capitalism is radically re-thought.

  34. Lariat1 says:

    The “fake dream” they were sold by thinking that they too could have it all, including that McMansion
    which is now underwater. They don’t understand that there are “class ” distinctions in this country, they thought they could step up and be almost equal to the powers that be. How naive. If it sounds to good to be true, then there it is.

  35. KidDynamite says:

    yes Cewing – but the key pieces are Fannie, Freddie and the totally f’ed up circle of money that is being funneled directly from the Fed, through the Agencies, to the Banks… equities markets are a diversion…

  36. jpeak says:

    Sorry Barry, but your comment is lame. Because four TBTF incompetent, overleveraged, had-to-be-bailed-out but yet amazingly agile-at-trading companies all had a perfect quarter this is evidence that GS tactics (as well as the others) are legit/legal? You should consider a writeup with the same detailed research that people like ZeroHedge (my other must-read blog) on how this is feasible, where the profits come from and what the breakdown is. To those less-experienced, such as myself, this highly suspect. The “everyone else did it too” argument doesn’t hold water. My impression of GS so far (as well as the historical precedent they’ve set all the way back to the Great Depression) tells me they’re crooks.

  37. gloppie says:

    We’ll see how good those mother-effers do when the Dow is at 3600.
    Right now, as several good people here said, if Banks wouldn’t make tons of money, they would be quite lame, or honest, whatever.

  38. jjay says:

    If the only time they trade is to front run every order that hits the exchange, they can’t lose.
    While the Federal government is just talking about a transaction fee on all equity trades, it looks like GS/JPM et al are already doing it. They can get a percentage of every trade on the exchange in effect, if they have the capital and the platform on line. I am engaging in speculation now, but perhaps they have split up the stocks they cover among themselves so everyone gets their share and there are no hard feelings. Might go on a rotation basis so it is not too obvious. Just speculation on my part, I’m sure it is all legal and above board! Maybe Leo Bloom wrote the program while Max Bialystock handles the PR.

  39. reedsch says:

    Then there’s somebody out there who lost money every day for 61 days in a row. In substantial sums. Anybody got the data (not conjecture or anecdote) to show who those now-poor slobs were, who showed either profound and consistent bad judgment or had incredibly bad luck?

  40. Andrew says:

    To understand HOW this mechanism works, that causes so much financial havoc and keeps going READ: “The largest heist in history.

    It is not for faint-hearted but very informative if you go through the details.

  41. MTPockets says:

    Aha that’s the question! Well if the bulk of money has been made on FI curve carry, exploitation of government guarantees and scaring (threatening) governments into revolving bailouts guess who’s on the other side of that? You are.

  42. fugazzi says:

    Correct me if i’m wrong, but to have a positive trading day on the curve, you have to be positioned propertly relative to the curve’s move THAT day…as far as i know the curve isn’t flat or widening every day, is it? same for equities, “rip roaring market” do go down once in a while, either the odd “bear tap”, or the more legitimate correction we saw for 3 weeks from late january to early february…so, yes, steep yield curve, ZIRP and strong up-trending markets explain why these businesses should be wildly profitable overall, not how they do it EVERY DAY…to me, it’s even more surprising that they ALL can do it…i mean, they all have the correct direction/relative move/more than perfect hedge every day??? Why, they really are our best and brightest…???

  43. wally says:

    “Then there’s somebody out there who lost money every day for 61 days in a row.”

    Doesn’t have to be; you could trade back-and-forth up a penny a day all quarter. The fundamental here is: if you are going to call a subsidy a ‘profit’, then this is what you get. It is just another example of the fact that all the indicators and dials and gauges are rigged; There is no way today to know where things actually stand. Utterly contradictory information comes out every day.

  44. rktbrkr says:

    I’m reminded of the WSJ article about the apparent backdating of options where the WSJ had an actuary compute the odds of the CEOs in question exercised their options at the best price quarter after quarter after quarter. The actuary computed it in the billions, he said it was like winning the lottery every time you bought a ticket. The article eventually shamed the SEC into doing their job.

    Here the entire starting rotation has pitched back to back to back to back perfect games . There haven’t been 2 perfect games pitched in the same year in history – so we know these guys are gods among us.

    So HUGE bonuses this quarter and then a quick sunday night meeting with Geithner somewhere down the road when high frequency trading turns against them like it did briefly a week ago.

  45. rktbrkr says:

    Hugh Hendry has been screaming about a RE crash in China for awhile now. Looks like Chicken Little got it right. Beijing RE prices down 31% in one month…the bubble pop heard round the world?

    May 11 — The average transaction price of commercial residential properties in Beijing for the week ended May 9 fell 1,790 yuan per square meter or 9.6 percent week-on-week to 16,898 yuan per square meter, reports The Beijing News, citing statistics released by Beijing Real Estate Information Network.

    Compared with the week ended April 11, the average transaction price of commercial residential properties in Beijing plunged 31.43 percent or 7,744 yuan per square meter.

    In the last weeks of April, the transation volume of commercial residential properties in Beijing decreased by 10.34 percent, 11.39 percent and 30.82 percent respectively. Average transaction price was flat at between 22,000 yuan to 23,000 yuan per square meter.

  46. [...] Perfect Qs: GS, BofA, C & JPM   By Barry Ritholtz – May 12th, 2010, 5:32PM [...]