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Investor anxiety is mounting as the conflict in the Middle East enters its fifth week, sending…

NVIDIA Corporation (NASDAQ:NVDA – Get Free Report) Director Aarti Shah sold 19,000 shares of the stock in a transaction that occurred on Thursday, March 19th. The shares were sold at an average price of $176.71, for a total transaction of $3,357,490.00. Following the transaction, the director directly owned 36,007 shares of the company’s stock, valued […]

Lloyd Blankfein splits his time between his Miami ‘beach bunker’ and New York - Saul Martinez Lloyd Blankfein may be retired, but the 71-year-old former boss of Goldman Sachs continues to divide opinion. To some, he remains the Gordon Gekko of his time: a poster child of greed and excess who symbolises everything that’s wrong with Wall Street. Others remember him as the charming man with a biting wit who steered his bank through the 2008 financial crisis relatively unscathed. But while the billionaire’s 12-year tenure as Goldman’s top dog makes him a target for both praise and censure, Blankfein portrays himself as the boy who went from social housing to the pinnacle of Wall Street via law school. It’s this Blankfein who features in his 400-page memoir, aptly titled Streetwise: Getting To and Through Goldman Sachs. He was accepted to Harvard University before becoming a tax lawyer. He later ditched that to pursue a role in banking – becoming a commodities trader at a firm which he would later go on to run. A simple tale of a boy done good. Whatever your opinion of him, one thing’s for sure: he’s a stickler for punctuality. After all, tardiness is not a common trait at Goldman Sachs. Blankfein writes of the “tremendous anxiety” he feels about being late, a fear he inherited from his postal worker father that filled him with so much dread that he turned up two hours early for his grilling at his Harvard entrance interview. So it’s to my surprise when, at 10.30am New York time, Blankfein still hasn’t appeared, and his publisher frantically tries to locate him. Suddenly, my speakers are filled with an unmistakable Brooklyn accent. “Well, that’s progress!” a voice booms. Blankfein greets me warmly from his Miami “beach bunker”. He generally splits his time these days between the Sunshine State and New York. Next week, he’s on a book tour in London, which he claims was once in the running to host Goldman’s global headquarters over New York. He’d be “hard pressed” to say the same thing now, he adds. Today, he’s traded his signature sharp suit and tie for a navy shirt and jeans. He may be a stickler for punctuality, but even he can’t escape the frustrations of technology. “Don’t worry, we’ll all lose our jobs soon to AI,” he quips. “So it won’t matter as much.” Blankfein remains a keen trader and on the day we speak has already spent a few hours watching the markets and buying and selling shares. These past two weeks have been a wild ride for even the most seasoned investor, with oil prices firmly above $100 a barrel and shares lurching from despair to relief and back again. Blankfein knows more than most about the world of commodities, having cut his teeth in the financial world as a precious metals trader at J. Aron, which was snapped up by Goldman a year before he joined. He warns that high oil prices are the “worst of all worlds”, with the risk that a prolonged war in the Middle East could even push the world into recession. Goldman recently warned there was a one in four chance the world’s biggest economy would slip into economic decline. For now, Blankfein remains calm. After all, it was only a couple of weeks ago that Blankfein said he expected the conflict to end quickly. That’s still his base case, he insists, because the world simply can’t afford for the situation to continue. Oil for delivery a year from now is currently priced at $75 a barrel, which Blankfein says is much lower than the three-figure spot price for immediate delivery. “If something happened where everybody expected to continue for a long time, then the price of oil that people would buy for forward delivery would also go up, and that would be inflationary, and it would also be a burden on growth. So a higher price of oil is the worst of all worlds. Will it push the world into recession? It depends how bad and how long. But it’s not good.” That grim reality may already be hitting the UK, where the country’s gas storage capacity covers just 1pc of annual demand. Compare that to roughly 30pc in both France and Germany, and it’s clear how vulnerable Britain is to an inflation shock. Andrew Bailey, the Governor of the Bank of England, warned this week that policymakers stood “ready” to raise interest rates if necessary to keep a lid on inflation, adding that higher prices on supermarket shelves were all but inevitable. Investors are now betting on up to three UK rate increases this year to cool the economy. Just a few weeks ago, they were pricing in rate cuts. “The only thing that’s relevant to the market is the Strait of Hormuz,” says Blankfein. “And the impact on the price of oil and how that feeds through the supply chain and rattles the economies of the world. So that’s where the focus is. “It’s so serious and so dangerous that it just can’t last long, because everybody in the world wants it resolved.” Blankfein, who helped to distinguish Goldman from the rest of the Wall Street pack with a focus on risk management, says he feels the world has become complacent about the risk of a big crisis. “The thing about a crisis is it causes a reckoning,” he says. “People have to sell things they didn’t want to because they have no choice. It makes you deal with problems that you’ve put off. We haven’t had that for a long time. Lloyd Blankfein remains a keen trader and keeps a close watch on the markets despite his retirement - Saul Martinez Blankfein warns that the accumulation of risks means any one factor could be the catalyst for a crisis. “Think of it as kindling on the floor of a forest, and it gets dry. What caused the forest fire? Is it the spark, or is it the kindling? It’s really the accumulation of the kindling, because that spark, at another time, wouldn’t have caused a fire, because there’d be nothing to burn.” He says one of those sparks could come from a sustained surge in oil prices. It could also come from the shadowy world of private credit, which boomed after the 2008 financial crisis when regulators cracked down on traditional banks and forced them to hold a bigger cash cushion against riskier loans. “I think private equity is a good place to look, because we’ve had a very strong equity and lending market for a long time, and yet private credit firms – and certainly private equity – which is in the business of making investments and then selling their investments, haven’t sold very much in a long time. “They can’t, and the obvious reason, to me, must be that they’re carried at too high a value, which is why it’s not being sold. So I think something like a reckoning needs to occur.” Blankfein is a self-made billionaire. While Forbes estimates his net worth at $1.7bn, he grew up in a cramped apartment on the fourth floor of a 14-storey tower block in Brooklyn, where he shared a bedroom with his sister, Jacky, nine years his senior. His grandmother, Lilly, slept on the couch in the living room. Blankfein’s father worked at the sorting office of the US postal service while his mother was a receptionist at a burglar alarm company, which he describes as “one of the few growth industries” in his neighbourhood. Growing up with little taught Blankfein how to hustle. As a child, he quickly learnt to make a profit selling comics and baseball cards. Lloyd Blankfein aged two at his family dinner table - Lloyd Blankfein It taught him how to juggle and prioritise. At Harvard, where he went on to attend law school, he worked as a lifeguard by day and a waiter at night. It also taught him to be generous. When Blankfein – surrounded by unbridled wealth – ran out of money to sustain himself, administrators at the Ivy League college wrote him a cheque, no questions asked. Blankfein reflects on what he would tell his 25-year-old self to do differently. “I might have skipped law school and almost five years of practising law to go right into what I ended up doing for a long time.” However, he insists he has no regrets. After all, if he hadn’t gone, he wouldn’t have met his future wife, Laura. Laura Jacobs, as she was then known, was introduced to Blankfein through Emily, his tax law colleague, who played matchmaker by methodically going through her Rolodex. The couple have been married for more than four decades and have three adult children: Alex, 40, and Jonathan and Rachel, who are both in their 30s. Lloyd and Laura Blankfein at an event in New York City in November 2019 - Dia Dipasupil/Getty Images for Lincoln Center Their marriage took them to London in the late 1990s, where he helped to run the company’s currency operations ahead of the launch of the euro. He also blames Brexit for Britain’s decline as a financial centre – although he’d still pick it over Paris or Frankfurt. Blankfein doesn’t deny his status today as a card-carrying member of the global elite. Among the guests at his eldest son’s wedding was Joshua Kushner, brother of Jared, who has his own famous father-in-law. Joshua was Blankfein Jr’s roommate when they were undergraduates at Harvard. He found success by being bold, with some of his biggest bets helping to turn Goldman into a force to be reckoned with on Wall Street. One of Goldman Sachs most daring punts was masterminded by Blankfein’s former lieutenant, Gary Cohn, a dyslexic trader who was poached by J Aron. Cohn later went on to work for Donald Trump as his chief economic adviser. The collapse of the Soviet Union in the 1990s meant huge amounts of aluminium were being dumped on the global market. It was more than the world had use for at the time, although everyone knew that at some point demand for the metal would pick up again. That led to Goldman’s “cash and carry” trade. In simple terms, the bank would buy the metal, hold it and then sell it at a profit. The only catch was that buying it meant you actually had to take delivery of it. Luckily, Cohn found a warehouse in Rotterdam that fit the bill, and the bank spent two years buying and stockpiling the stuff, even storing it outside once deliveries became too large for the facility to handle. Former Goldman Sachs MD Jimmy Riley and Gary Cohn with the aluminium they bought in the 1990s - Lloyd Blankfein They amassed so much aluminium that Dutch air traffic control actually rang them up to demand they cover the shiny metal so it would not blind pilots flying into Amsterdam’s Schiphol airport. And just as Goldman Sachs predicted, aluminium prices went up, and profits started rolling in, earning the firm hundreds of millions of dollars. Blankfein insists it’s this willingness to do things differently that makes Goldman stand out. But his journey to the top didn’t always come with glowing reviews. Streetwise features appraisals from his former colleagues that highlight his acerbic wit as a weakness. The book also lays bare the top 20 criticisms of him. He is encouraged to be “less dominant in meetings,” more willing “to occasionally lose a debate or argument,” and “be viewed as more empathetic”. His work also meant he often rubbed shoulders with the great and the good – as well as the not-so-good. As a currency trader for J Aron, Blankfein became the point man for Robert Maxwell, the media tycoon who was found dead in the Atlantic Ocean after disappearing from his yacht. It later transpired that Maxwell had stolen £450m from his companies’ pension funds to support his collapsing empire, and he was using Goldman – and Blankfein personally – to shift money from where it was meant to be to where it was not. Blankfein, like many others, was duped by Maxwell, though the episode left him riddled with guilt. The finance veteran reflects in his memoir that while there was “nothing inherently illegal or unethical about a client providing funds for a trade from one entity and having proceeds paid into another”, he acknowledges “it should have raised a red flag”. The bank was fined £160,000 by regulators in 1993 for “deficiencies in internal organisation” related to the scandal, though it was made clear there was no illicit conduct. But for Blankfein, one date is seared in his memory. It was in July 2007 that he suddenly realised a financial crisis was on the way. That balmy summer evening wasn’t spent in the boardroom or auditing Goldman’s accounts. It was date night, and Blankfein had taken his wife, Laura, to the cinema to watch the latest Die Hard film. While Bruce Willis was bashing the bad guys, Blankfein was also engaged in his usual habit of poring over profit and loss accounts on his BlackBerry in the darkness of the cinema. These reports, which he demanded every day at 6pm, became Blankfein’s best management tool during his tenure at Goldman. Lloyd Blankfein, enjoying his retirement in Florida, insists he has no regrets - Saul Martinez Through them, he knew which areas were making money, and more importantly, those that weren’t. And that’s when he noticed an anomaly. In what had been a fairly pedestrian day in the market, one particular fund plummeted 6pc in value. A normal day’s trading would see that fund move by a matter of a few basis points. He knew something was wrong. “This is the scene in the movie – not necessarily the one I was watching – where the sky darkens, the birds fly away, and the horses start whinnying. It was, for me and for Goldman, the overture to the global financial crisis,” he writes. Blankfein then lists in painstaking detail the steps that Goldman took to protect itself. Its secret weapon was the bank’s ability to mark investments to market. In other words, valuing assets based on their current price rather than historical cost. In the panic came the pressure to merge. After all, there’s usually safety in numbers. A slightly facetious Blankfein claims he would probably “have merged with Starbucks” if it would have secured the company’s future. Under pressure, he reveals he even called Stephen Green, then the boss of HSBC, at his home to discuss a merger. Green gave him short shrift, leaving the Goldman boss “embarrassed” for even floating the idea. In the end, Goldman, like all the other Wall Street banks, was forced to take money from the US treasury secretary in a bid to stabilise markets. “It was existential for everybody,” reflects Blankfein. “The world could have gone off the rails but for what I think is some very courageous and smart activity by the official sector. And I give them credit.” Streetwise is Blankfein’s second attempt at writing his memoir. His first draft began life as a series of vignettes, but after losing confidence in it, and wondering if anyone would even care, he paused it for four years. But with the rise of Trump, he decided to revisit it. He says that he’s enjoyed the experience, even though he takes umbrage at his British publisher’s choice of cover art. An obligatory copy of his book is visible throughout the interview, although the black front cover with his face brandished on it is very different to the British version, which is white and only features text. “I thought we had perfectly good cover art,” he smiles, “but then I was told that we had to use something different and that I don’t understand the UK market.” It seems he’s found his magnanimous streak after all. “I suppose I can understand that anything with even half of my face on the cover was going to be a burden on their marketing efforts.” Lloyd Blankfein’s UK publishers opted not to use his face on the cover art of his memoir Our hour is almost up. So, has the septuagenarian learned to relax in retirement? “I don’t know what my relaxed state is actually,” he replies. “This may be me being relaxed.” And what about that boy from Brooklyn who was taught the value of money? Is he still financially prudent? Definitely, he insists. “I still walk around turning off lights, my wife’s always buying me some new sweater or something that’s too good to wear. And then I finally wear it when it’s old and out of style, because only then am I comfortable using it. “So I find myself much more empathetic than some of my friends to the travails of normal people. But I also want to be careful here, because I’ve been well-to-do for a long time now.” Humility may not be his strong point, but he wears his success with flair.

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