Snarky Comment On Goldman Sachs -- July 21, 2017

Unless you've been under the Geico Rock for the past week, you are aware of Goldman Sachs earnings this past quarter. Not good. It's been fun to watch the news on Goldman Sachs since they reported.

I see that some readers are going back to an earlier post on Goldman Sachs, dated May 11, 2017, in which I wrote:

Goldman Sachs now bullish on oil -- at least for the next 6 to 12 months -- oilprice.com.

He pointed to the futures market, where the curve could be headed into backwardation – a situation in which near-term oil futures trade at a premium to contracts further out. That structure points to concerns about a deficit in the short run, which is why front month contracts would trade at a higher price than deliveries six or twelve months away.

A deficit in the short term? What universe is he living in?

Putting some of the jargon aside, Goldman is simply arguing that the oil market will be much tighter this year than most people seem to think. The investment bank forecasts returns on commodity prices on the order of 13.3 percent over the next three months and 12.2 percent over the next 12 months.

It's been my impression that trying to decipher a Goldman Sachs announcement is akin to sorting out a vision from the Delphi oracle.

And so it goes.