Goldman - Oil. Ethics Q

When Goldman Sachs Analyst came out with a report predicting Oil to touch 200 USD per barrel…We all know that Oil futures hit the roof once that report was out and Mr. Paulson who was the CEO then was forced to defend the Analyst. what if GS’ proprietary trading dept had first hand knowledge of the analysis in the report and went long on Oil. (Assuming they were aware that this report once out would impact prices) Would that tantamount to a violation.? which standard/s?

why not direct this question to appropriate authorities and agencies?

What’s amazing to me is that a world market on a basic commodity can react so strongly to one lone analyst. Does everyone really think that dude knows something profound that all the thousands of economists and analysts weighing in don’t know?

Recall that his first “superspike” report was included in last year’s LII curriculum readings. At $55 he predicted $100. So now at $125 he raises his target to $200 . . . reminds me of the Internet bubble and our readings in behavorial finance . . . And is anyone really naive enough to think that GS’s prop doesn’t wouldn’t already know about the report? I’m sure they had the fingers on the buy button waiting for the second it hit the tape.

But doing so would be insider trading isn’t it? An Analyst friend of mine and I had a debate whether that would amount to one…he was of the opinion it is not… and it happens on wallstreet all the time… So ‘our research team is independent’ should be taken with a pinch of salt…even if it may have come from someone as respected a Henry Paulson…

Henry Paulson is a dump ass - what his contribution to the country as a treasury secretary…he just talking and going to china 12 times year, nothing has been done to dollar, or chine;s yuan/dollar. He is definately good for running a Wall Street firm but not good for as a Treasury Secreatary.

…he is not a wizard…especially when it comes to dealing with chinese government; he is definetly good running Wall Street while being a Treasury Secretary

aldford Wrote: ------------------------------------------------------- > What’s amazing to me is that a world market on a > basic commodity can react so strongly to one lone > analyst. Does everyone really think that dude > knows something profound that all the thousands of > economists and analysts weighing in don’t know? I know Arjun personally, this guy is smart and has great insight. I would trust his opinion over thousands of economists combined

good for you

it’s not a single person’s credibility here, The Firm he represents…If you an Analyst /Economist at Goldman, saying that oil is htting $200.00 this summer, whether you are dumm or not market follows… that what is happening now…oill price double since last year…but did the demand double during that period…noooooooo… any new infomation did come to the markert to believe that gonna happen now…which wasnot avaible last year…nooooo…assumming every Wall Street firm gonna say that …oil is going to come down to $70.00 barral, this year end…its gonna happen ,this is crasy market…without any basis.

$200! Simply put, it is mother of all bubbles.

Here’s the transcription of the Goldman Sachs Global Oil Research Team Conference Call, which has Arjun Murti answering the questions.

$200 is a fair price:) did you guys hear about incremenatal demand?! every day 1 million chinese throw theit bycicles away and switch to Buicks and Hummers :slight_smile: hehe meanwhile, russian oil companies beleive the oil price increase is not sustainable: not enough of chinese and indians on the Earth

I wonder what the Dems would say about offshore drilling if we decided to nationalize oil and use the proceeds to fund universal healthcare?

don’t worry about Chinese. most of them can’t affort a car since their average annual income is only $5,000. Speculators made up stories to jack up the oil price.

I was being sarcastic:)

but main to thing to calm the market is to keep BIG WALL STREET mouth shutttttttt… or remove oil futures from the trading market and it’s only for consumption. I donot think any hedge fund or investment company’s take the delivery of their long positions , the Goldman and wall street companyies need another huge stroages to keek them. WHat jockkkkk…this financial jockers are doing… I feel sorry for them… we digging ourselfs into poverty,

Oracle of Oil :slight_smile: NEW YORK -(Dow Jones)- Oil prices could fall as low as $40 a barrel next spring as an overhang of new, efficient refineries come on line, an analyst at Deutsche Bank said Wednesday. Calling it the “mega-bear” case for oil, analyst Paul Sankey said the combination of weak demand for gasoline and other products, coupled with the start-up of 2 million barrels a day of processing capacity at a new generation of refineries in India and China and expansion projects in the U.S. will combine to depress oil prices. Sankey’s stance, while pessimistic, still anticipates slightly higher oil prices than the bank’s commodities analysts, who on Friday said that oil futures prices could fall further to $30 a barrel under their worst-case scenario. Deutsche Bank’s stance stands in sharp contrast to Wall Street’s oil price expectations just months ago. Analysts were repeatedly forced to upgrade their predictions this year when prices for crude oil futures on the New York Mercantile Exchange surged to record highs north of $145 a barrel. Fundamental analysis became less relevant during the commodities boom, when large speculators, such as hedge funds, became more prominent players in what was traditionally the domain of oil producers, refiners and miners. Analysts who made calls that put them on the extreme end of expectations garnered the most attention. The most notable example was Arjun Murti, an analyst at Goldman Sachs who covers the shares of energy companies, who six months ago said oil prices could “super-spike” to $200 a barrel based on high demand from the Chinese and other emerging-market economies. The New York Times even dubbed him “An Oracle of Oil” on May 21, when oil prices closed at $133.17 a barrel. They peaked at $145.29 on July 3.


Is Njerseyguy an idiot or just enjoys acting like one? There is no direct insider trading law that I know of that says you can’t trade commodities in advance of an analyst’s report on the commodity. You can’t front run clients and you can’t take the info from your company and use it to your own advantage. I think that this would not be much of an issue with CFAI unless someone sued you for it.