Goldman Sachs the Wall Street Giant Squid is about to release earnings. Ponder this Bear Case Scenario if you can:
Regulators are driving lower leverage. Lower leverage reduces margins, spreads and profits. Low leverage means low return for Goldman Sachs.
Interest rates are to rise soon. Bond portfolios will shrink accordingly. Clients will be suspicious of Goldman advice on Bonds.
Goldman will probably load up on reverse market bets and win big as interest rates rise.
Too big to fail yes. But not too big to bleed badly in a downturn which we know will come someday.
George Gutowski writes from a caveat emptor perspective.