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What's going on?
Goldman Sachs reported second-quarter results on Tuesday that knocked the socks off investors expectations and announced that its getting a new CEO. But the party atmosphere was killed somewhat by its stock falling by 1%.
What does this mean?
Goldman crushed expectations, growing its profit by 40% from this time last year. This was thanks in part to its investment banking division which advises companies on mergers and acquisitions and helps them sell their stocks and bonds to investors outdoing itself and bringing in 18% more moolah. This helped offset Goldmans weaker-than-expected sales growth in its trading businesses an area where competitor JPMorgan was making hay as investors bought and sold stocks there.
Why should I care?
For markets: You gotta trade to win.
The fall in Goldmans shares was perhaps because the bank didnt take as much advantage of the booming trading environment as some of its peers did. Goldmans weakness was JPMorgans strength, which means there was business to be done it just wasnt being done at Goldman. Goldmans stock is down some 9% so far this year, trailing behind both of the Morgans (JP and Stanley) and Bank of America all of which have reaped more from trading.
The bigger picture: Theres a new sheriff / DJ in town.
After 12 years at the top (and 36 at the bank in total), Goldmans faithful CEO is going to be replaced with a newer model: a banker by day and DJ by night (tweet this). As the previous CEOs been there so long, a change-up could well spark a new direction for the bank like a turn to consumer-facing business (e.g. personal bank accounts and credit cards). This isnt in Goldmans current box of tricks, so it could be an expensive endeavor with a long wait for it to bring home the bacon.
Originally posted as part of the Finimize daily email.
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