Morning Coffee: Goldman Sachs exec plays Trump card in crypto denial. Deutsche Bank’s favorite clients
Goldman Sachs Chief Financial Officer Martin Chavez dropped one of President Trump’s favorite phrases on Thursday, calling a report that the bank is ditching plans to open a crypto trading desk “fake news.” However, in his denial of the reporting, Chavez then appeared to confirm that the bank in fact does not have any near-term plans of setting up a trading desk to make markets in digital currencies. It’s all very confusing.
"I never thought I would hear myself use this term but I really have to describe that news as fake news," Chavez said in response to Wednesday’s Business Insider report, according to CNBC. He noted that Goldman’s initial conversations over potential cryptocurrency offerings, first reported back in December, were exploratory and would evolve over time. "Maybe someone who was thinking about our activities here got very excited that we would be making markets as principal and physical bitcoin, and as they got into it they realized part of the evolution but it’s not here yet,” he said.
Chavez is therefore confirming the crux of Wednesday’s report – that Goldman has no immediate plans to trade cryptocurrencies – and is rather taking issue with the idea that bank ever set ink to any physical trading plans in the first place. “The CFO of Goldman Sachs just called a story 'fake news' while also confirming the contents of said story. Weird,” Matt Turner, Business Insider’s executive editor, tweeted on Thursday night.
The issue, it seems, goes all the way back to late last year, when Bloomberg reported that Goldman is “setting up a trading desk to make markets in digital currencies,” and was assembling a team in New York. With that narrative set, anything other than the launch of a trading desk would appear like a deviation in strategy, though in fairness the bank didn’t confirm Bloomberg’s initial report, noting at the time that it was “exploring how best to serve” client interests in digital currencies.
At the end of the day, Goldman Sachs isn’t playing market maker in crypto – at least not in the near-term. Instead, the bank is exploring over-the-counter bitcoin derivatives Chavez referred to as “non-deliverable forwards,” according to CNBC, which said Goldman has been clearing bitcoin-linked futures contracts since May. Chavez may have been inclined to clear the air on Goldman’s cryptocurrency strategy as the price of bitcoin and other cryptocurrencies fell off a cliff on Thursday following the Business Insider report. Historically, Goldman remains rather mum on media reports.
Elsewhere, Deutsche Bank is letting it be known which clients it loves best. The German lender, which has taken a knife to its U.S. prime brokerage unit, invited a select group of hedge fund managers and other institutional investors to a Thursday meeting aimed at reassuring big clients that it’s pared down unit can still deliver all the required brokerage services, according to Bloomberg. Deutsche Bank is reportedly severing ties with less valuable clients to concentrate its efforts more on high-revenue generating funds. The bank trotted out all its big-name U.S. executives for the meeting. No attendees were named, though Renaissance Technologies, Och-Ziff Capital Management and AQR Capital Management are among Deutsche’s biggest clients.
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