STREAMING NOW: Watch Now

Goldman Sachs is Wall Street's big loser

Goldman Sachs can't catch a break.The vaunted Wall Street firm reported a nearly $2 billion quarterly loss Wed...

Posted: Jan 17, 2018 6:12 PM
Updated: Jan 17, 2018 6:12 PM

Goldman Sachs can't catch a break.

The vaunted Wall Street firm reported a nearly $2 billion quarterly loss Wednesday -- its first loss in six years -- due to a short-term hit from the new tax law.

The lack of market volatility also led to a steep drop in trading revenue during the last three months of 2017.

This weakness is even hitting Goldman Sachs employees. The firm's compensation and benefits expenses -- its so-called bonus pool -- rose just 2% last year. But the company's headcount rose 6%.

When you do the math, workers actually got 4% less than they did in 2016. Granted, Goldman Sachs employees still received $323,852 on average last year. So no need for tears.

Still, Goldman Sachs workers took home $338,576 in 2016. And the average compensation for a Goldman Sachs employee in 2015 was $344,511.

Shares of Goldman Sachs fell 3% Wednesday -- even though earnings beat forecasts after backing out the tax charges. Overall revenues topped forecasts too.

The stock has gained less than 10% in the past year too, underperforming the S&P 500 even as the broader market keeps powering on to new record highs.

Goldman Sachs has lagged all of its top rivals too -- JPMorgan Chase, Citigroup, Morgan Stanley, Bank of America and even troubled Wells Fargo.

CEO Lloyd Blankfein alluded to the headwinds facing the firm, saying in the company's earnings release that last year was "a challenging environment " for its trading business.

Goldman Sachs and other investment banks make more money when the markets are more volatile. It leads clients to trade more actively.

But the company said Wednesday revenue from stock trading fell 14% from a year ago in the fourth quarter while revenuesfor bond, currency and commodity trading plunged 40% from the fourth quarter of 2016.

Blankfein was more upbeat about the future though, saying that he expects a better year "with the global economy poised to accelerate" and that the new tax laws in the United States will give the company a longer-term boost too.

Goldman Sachs said that it took a $4.4 billion charge in the fourth quarter because of the tax law changes.

Most ($3.3 billion) was due to the cost tied to bringing cash in foreign subsidiaries back to the United States. The remaining $1.1 billion was a result of revaluing so-called deferred tax assets -- previous tax deductions that are worth less following the corporate tax cut.

Other big banks have been hurt by the tax changes too. JPMorgan Chase took a $2.4 billion hit when it reported its latest results last week while Citigroup said Tuesday that it took a whopping $22 billion one-time charge.

Related: Why Goldman Sachs gave early stock awards to 300 employees

Most banks should benefit from the lower corporate tax rate going forward though -- and Goldman Sachs is no exception. Investors are hopeful that companies will buy back more stock and increase dividends as a way to reward shareholders.

But Chief Financial Officer Martin Chavez said during the company's conference call with analysts that the firm expected to buy back just $5 billion to $6 billion in stock for the next few years. That's lower than what Wall Street was expecting.

The fact that Goldman Sachs has largely missed out on the big market rally is also something that has vexed investors. President Trump has largely been pro-business, championing for fewer regulations as well as lower taxes.

And Trump has stacked his administration with Goldman alums, most notably Treasury Secretary Steven Mnuchin and National Economic Council director Gary Cohn.

Related: Blankfein says U.K should vote again on Brexit

But Blankfein does not appear to be a big fan of the president. While never mentioning Trump by name, Blankfein has made pointed critiques of Trump policies on Twitter since Trump was elected.

His two most recent ones are no exception. Without mentioning Trump by name, Blankfein tweeted on January 11 that he was optimistic that there could be a compromise on immigration reform.

"Hearing bipartisan support forming on #DACA. The country and the kids need it, deserve it. Hope it's not just a dream..." he tweeted.

One day later, Blankfein tweeted a photo of the Statue of Liberty from Goldman Sachs headquarters, writing that the foggy "view from our building today reminds me that despite all the sh*t, American values will shine through."

West Lafayette
Clear
76° wxIcon
Hi: 85° Lo: 66°
Feels Like: 76°
Kokomo
Clear
70° wxIcon
Hi: 83° Lo: 63°
Feels Like: 70°
Rensselaer
Clear
70° wxIcon
Hi: 82° Lo: 64°
Feels Like: 70°
Fowler
Clear
70° wxIcon
Hi: 82° Lo: 65°
Feels Like: 70°
Williamsport
Clear
73° wxIcon
Hi: 83° Lo: 65°
Feels Like: 73°
Crawfordsville
Clear
66° wxIcon
Hi: 82° Lo: 65°
Feels Like: 66°
Frankfort
Clear
65° wxIcon
Hi: 83° Lo: 64°
Feels Like: 65°
Delphi
Clear
73° wxIcon
Hi: 85° Lo: 65°
Feels Like: 73°
Monticello
Clear
73° wxIcon
Hi: 86° Lo: 64°
Feels Like: 73°
Logansport
Clear
66° wxIcon
Hi: 82° Lo: 63°
Feels Like: 66°
Warm Weekend Continues Sunday
WLFI Radar
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 72254

Reported Deaths: 3023
CountyConfirmedDeaths
Marion15503725
Lake7447274
Elkhart476082
Allen3789161
St. Joseph337381
Hamilton2668105
Vanderburgh188813
Hendricks1833106
Cass17749
Johnson1719118
Porter126639
Clark117846
Tippecanoe117711
Madison91565
LaPorte88330
Howard87265
Kosciusko84012
Marshall77122
Bartholomew76647
Floyd76045
Monroe72230
Delaware70152
Dubois67612
Boone66246
Noble65929
Hancock64138
Vigo58610
Jackson5725
Warrick57030
LaGrange55610
Shelby54227
Grant52130
Dearborn49328
Morgan45934
Clinton4093
Henry37320
Wayne35410
White35410
Montgomery34821
Lawrence33627
Decatur33232
Harrison32123
Putnam2868
Miami2672
Daviess26320
Scott26310
Greene24634
Franklin23813
Jasper2272
DeKalb2264
Jennings22012
Gibson2144
Steuben2063
Ripley1977
Fayette1837
Perry18112
Carroll1772
Starke1767
Posey1670
Orange16624
Wabash1633
Wells1622
Fulton1612
Jefferson1552
Whitley1506
Knox1490
Tipton1336
Spencer1313
Washington1311
Huntington1213
Newton11510
Randolph1154
Clay1095
Sullivan1031
Adams952
Jay860
Owen841
Pulaski761
Rush744
Brown731
Fountain682
Blackford622
Ohio624
Benton600
Pike520
Parke511
Vermillion500
Switzerland450
Crawford440
Martin430
Union370
Warren221
Unassigned0202

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events