By Tyler Durden
When it comes to the market’s February freakout, when the Feb 5 volatility explosion resulted in a brief correction for the S&P, we now know that it could not have come at a better time (or faster) for US banks – not only the money centers, but pure-play trading desks like Goldman benefited from a substantial burst in equity-trading revenue. As Goldman explained this morning, this was due to “higher results in both derivatives and cash products” as well as higher “commissions and fees reflecting higher market volumes, and net revenues in securities services were higher, reflecting higher average customer balances.”
In short, the sellside – which mostly made its money on commissions and a surge in volume instead of directional trades – loved the February volocaust.
Not so much the buyside, however, which was whipsawed in either direction and slammed by the abrupt end in momentum. For a quick confirmation of the pain in hedge fund desks this year, look no further than the HFRX global hedge fund index according to which the average hedge fund is still down for the year.
So why did the buyside hurt so much?
For the answer, we refer readers to an overnight report from Goldman’s …read more