Goldman Sachs might come back down to earth with a bump this quarter. Largely unaffected so far by the recent turmoil in the markets, the smart money says that even Goldman can't buck the trend forever. And many feel that the chickens may have come home to roost during the current trading period, which, for Goldman, finishes at the end of this month.

The smart money thinks that sluggish M&A activity and weaker underwriting business in the past few weeks, (and deteriorating market conditions in February will have impacted Goldman's revenues in the first quarter. And then there's the small matter of asset writedowns. Some feel that Goldman is likely to have to writedown up to $3.5bn in the period, which would probably wipe out any profit. Having said this, the great unknown is the firm's prop trading business, which may have been able to pull another rabbit out of the hat. Even if Goldman puts in a weaker performance in Q1, however, most expect this to be fairly transitory in nature.

The Financial Times (FT) reports that Bear Stearns and China's Citic Securities are to renegotiate the share swap agreement they provisionally signed off on towards the end of last year. Bear's shares have fallen around a third since the deal was reached, whilst Citic's have fallen by some 40%. The upshot of the re-negotiation is likely to be that the firms take a somewhat larger stake in each other.

Separately, the newspaper says that some hedge funds clients are now busy casting their eyes over the credit-worthiness of the prime brokers they use to execute a lot of their business. The FT quotes Angelos Metaxa, director of Geneva-based CM Advisors, who said that 'it is quite paradoxical. In August, everyone was worried about a hedge fund blowing up, but now they are worried about a bank blowing up and taking a few hedge funds with it'.

Finally, Bloomberg reports that Fimat broker Moussa Bakir, the man interviewed by French police for 2 days earlier this month over Socgen's $7.1bn rogue trading scandal, says that he had no knowledge of any wrongdoing committed by trader Jerome Kerviel, although he admits to giving him 'two or three pieces of advice'. The Financial Times has now also reported that, according to Kerviel's spokesperson, the trader was actually taking large positions as long ago as July 2007, at that stage running a loss of some $3.2bn, which he turned into a profit before losses kicked in once again. Quite how this revelation will help Kerviel we can't imagine.

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