Monday August 13 – No precedent, no rescue, no clue?
For reporters on the call, Goldman CFO Viniar unwittingly supplies the headline: 'This is not a rescue'. Grateful sub-editors simply take out the word 'not'. The market has the same fear after the call that it had before: that somewhere out there lies a very large fund that the market disruption will bring down.
The other big news over the weekend had been the departure of Karl Rove, political fixer for president George W Bush. Fixated on their own worries, Wall Streeters simply ignore this, focusing instead on a rare unscheduled announcement from Goldman Sachs.
Goldman kicks off the week by declaring that it is partnering with a group of outside investors including CV Starr, Perry Capital and Eli Broad, as well as others that do not wish to be named, to inject $3 billion of new equity into the $3.6 billion equity long/short quantitative hedge fund Global Equity Opportunities (GEO), which Goldman manages but had not previously invested in.
If it hasn’t been much of an opportunity before, it certainly is now, Goldman CEO David Viniar tries to argue. "Our collective belief is that the fund is suffering from a market dislocation that does not reflect the fundamental value of the underlying stocks." He goes on: "The events of recent weeks have been unprecedented in their speed and intensity." But, he concludes: "We have seen market dislocations in the past and know they present opportunities."