Learning from Lloyd

Treść źródłowa

Last time I met Lloyd Blankfein was ten years ago, in February 2016. He’d been chairman and chief executive officer of Goldman Sachs for a decade by then, having navigated the firm through the financial crisis. Market conditions weren’t as bad as they had been during the crisis, but they weren’t exactly good either. Outside our meeting room, on the edges of a conference in Miami, the stock market was selling off, the oil price was collapsing and credit spreads were widening. “It isn’t the easiest environment,” he conceded.In particular, Blankfein was worried about a doom-loop of forced selling. With oil trading 70% below its average price of the prior few years and Iranian supply coming on-stream to push it even lower, energy companies faced acute pressure. Fears of defaults led to a widening of credit spreads which spilled into other sectors. Compared with where they sat 18 months earlier, US high yield spreads had more than doubled, reaching levels not seen since the European debt crisis of 2011. All this after a period of ultra-low interest rates and ample liquidity.“Higher risk, less liquidity, hard to get out of certain positions,” Blankfein said. “And that feeds upon itself. Sometimes positions are easier to put on than to take off.”Goldman came out of it fine. After printing its lowest quarterly revenue since 2011, profits swiftly rebounded. So fleeting was it that the period doesn’t even merit a mention in Blankfein’s new memoir (much less his meeting with me).But the episode highlights Blankfein’s grasp of market dynamics and how to manage a business through them. …