Trading activity has been low lately, given the uncertainty surrounding the budget cuts since the debt ceiling crisis. This is particularly bad for a company like Goldman Sachs which earns the bulk of its revenues from trading in mortgage based securities. With the Federal Reserve also expected to taper off its $85 billion-a-month bond-buying program sometime next year, investors are holding off from major trades in the equities and fixed income currencies and commodities markets.
The lull in trading activity is eroding Goldman Sachs’ (GS) revenues. Investors are advised to hold the stock, at least till the Fed announces a date for when it will quit its Quantitative Easing program.
Goldman Sachs is one of the largest investment banks and investment management companies in the world and has the fifth-largest asset base after the Big Four US banks. Its clientele includes mostly rich individuals and governments. Its operations are based mainly in North and South America, from where it generates 59% of its revenues.
