The New York Times 'DealBook' column reports that Goldman CEO Lloyd Blankfein was asked at the Merrill Lynch Banking and Financial Services Conference Tuesday whether his firm was likely to take any significant asset write-downs in the fourth-quarter. His single word response - 'No' - added $7.2bn to Goldman's market cap later that day, and helped US stocks rally the most in 2 months.
Blankfein confirmed that Goldman had 'a pretty good grip' on the valuation of its Level 3 assets, and his comments went a long way to reassuring the markets. Bloomberg quotes Doug Peta, market strategist at J&W Seligman & Co in New York, who said that 'the most important thing was Goldman's Blankfein coming out and saying point blank that they weren't going to have any significant write-downs. I felt if we got through this week without hearing anything bad from Goldman and Lehman, it meant that they had come out of the fire'.