Goldman Sachs Group Inc has brought back a little faith in Wall Street after it eased concerns about future write-downs, causing traders to snap up options.
Morgan Stanley, Merrill Lynch and Citigroup have all written off billions of dollars due to the subprime fiasco, but at Merrill’s financial services conference yesterday, chairman and chief executive Lloyd Blankfein was adamant that Goldman wouldn’t be next in line.
Succinct
Asked if the bank was looking to ‘take a significant writedown’, Mr. Blankfein's quick and definite answer was a simple ‘no’.
"OK, that's about as crisp as it gets," came his interrogator’s response.
He also dismissed claims that that the investment bank would still suffer from the subprime fallout: "We manage our business for growth in the long term," he said.
“No single operating business or trading operation dictated our relative performance."
In spite of saying the bank remained short in the mortgage market, he emphasized that there would eventually be value there.
Hope
"The world will not come to an end. The business and the markets will recover. There will be a mortgage business after this," he said. "This is not the first cycle I have seen."
Goldman is expected to earn $6.60 a share for the current quarter, a penny more than during the same period last year, according to Thomson Financial, and Blankfein’s assured comments yesterday prompted an almost nine percent rise in Goldman’s stock.
Shares jumped $18.33, or 8.5 percent, to $233.04, as traders were active with almost 80,500 call options on the stock changing hands.
November 14, 2007