They were at least warned. Following the flagged 'front to back review' of all its businesses under new CEO David Solomon, Goldman Sachs is reportedly planning cuts to its commodities trading business.
At issue is reportedly the heavy use of capital and the light generation of profit in Goldman Sachs' commodities trading operation, plus the high cost of maintaining a network for physical commodity transportation and storage. However, it probably doesn't help that memories are still fresh of 2017's alleged $100m loss on a natural gas bet that went wrong, or that Isabelle Ealet, the former queen of Goldman's commodity business was herself removed last May.
The Wall Street Journal says results of the review are being presented to the board later this month. Further cuts to the firm's under-performing fixed income trading business have the whiff of inevitability.
As of yesterday, we already know that Adam Savarese, Goldman's global head of distressed debt trading is also leaving. Like Goldman's commodities traders, Savarese lost his protector (in this case, fixed income COO Justin Gmelich, who retired in January). Also like Goldman's commodities traders, he was working on a capital intensive trading desk with products that are not the most liquid.
These, then, look like the leading indicators for losing your job in Goldman Sachs' fixed income sales and trading business once the front to back review is finalized.
If you're working in a capital intensive area, beware.
If your boss left recently, beware.
If the products you are working with are not highly liquid and don't lend themselves to being traded electronically, also beware.
As we reported last month, David Solomon has already decided that he's all about "platform electronification" in fixed income trading, and that cutting costs through automation is the only way to maintain margins in a world where the, "available wallet in market intermediation," is shrinking. If you work for a GS fixed income trading business that doesn't lend itself to this, your days are quite likely numbered. Especially if your boss left already.
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