So how’d Harvey do? I found Goldman’s co-CFOed earnings call this morning a bit awkward but the awkwardness was a bit overwhelmed by IS LLOYD GETTING FIRED TOMORROW?? No, I’d guess?
You can look at Goldman’s results from a variety of distances. Up close, EPS estimates were $2.28 and actuals were $2.85 ($3.33 ex-DVA); $2.85 is more than $2.28 and there’s a dividend increase to boot so, yay there you go.
In the middle distance, you could have some concerns. Core, recurring revenue growth was so-so relative to peers, and costs were high, partly due to pleasing comp accruals, which I guess could concern you if you were a mean ungrateful shareholder and/or a former Goldman employee who for whatever reason is no longer accruing said accruals. Most of the outperformance came from appreciation on investing and lending positions.1
In the far distance, what do you make of it? The most awkward moment of the call for me was when the UBS analyst asked the CFO tag team to try to give him a sense of future Investing & Lending profits. You can’t do that! Investing & Lending is like the stochastic slush fund; revenues were $1.8bn this quarter versus $200 last quarter and ($2.5bn) this time last year. If you could predict those revenues you shouldn’t be a banking analyst. The tag team went like this, paraphrasing wildly: Read more »
Call it Anglocreep. Call it annoying. Snippets of British vernacular that were until recently as rare as steak and kidney pie on these shores are cropping up in the daily speech of Americans (particularly, New Yorkers) of the taste-making set who often have no more direct tie to Britain than an affinity for “Downton Abbey.” This star-spangled burst of Anglophonia has “established itself as this linguistic phenomenon that shows no sign of abating,” said Ben Yagoda, a professor of English at the University of Delaware. “The 21st-century ‘chattering classes’ — which is itself a Britishism — are the most significant perpetrators of this trend,” he added…“I’m getting sick of my investment banking clients saying ‘cheers’ to me,” said Euan Rellie, a socially prominent British-born finance executive in New York. [NYT]
Point: “This was decided yesterday afternoon. I made the decision. I talked to [Citigroup Chairman] Mr. O’Neill. I don’t believe in having lame-duck sessions, in having the outgoing CEO looking over the shoulder of the incoming CEO.” Counterpoint: “Citigroup directors ousted Chief Executive Officer Vikram Pandit after concluding that he had mismanaged operations, leading to setbacks with regulators and a loss of credibility with investors, a person with knowledge of the discussions said.”
As you may have heard, earlier today, Citigroup announced that CEO Vikram Pandit would be resigning from his post at the bank, effective immediately, along with several longtime lieutenants. While the news came as a shock to Wall Street, it was assumed that on the inside, employees had been given some advanced warning and time to get used to the idea of life without Uncle Vik. That they weren’t just realizing now those hugs on the elevator Monday had been their last. That he’d stashed something away for them to remember him by. (A one dollar bill with this face on it. A glossy 8X10 photo to keep on their desks. SOMETHING.) That he hadn’t just left in the middle of the night. Unfortunately for those who’ve grown quite attached to Vickles since he took the reigns in 2007, however, that’s exactly what happened.
The news of Mr. Pandit’s departure after five years atop the company came as a shock to Citigroup employees, including senior executives. In the firm’s London office, some executives emerged from a meeting and read the news on their computers and Bloomberg terminals, well before the bank’s internal memo was released. Soon a dozen employees were crowded in front of television monitors, following the story on financial business shows. Others were seen around a water cooler on the trading floor, discussing the news. Still others retreated to their desks to parse Citigroup’s recent earnings release, looking for hints of internal conflict. “There’s shock,” said a Citigroup executive based in New York. “Even senior people were surprised.”
And although early reports suggested that Count Vikula had simply decided that Citigroup had come so far since he’d taken the gig five years ago that his work was done, and that while it was time to move onto the next stage of his life, he’d cherish the memories and the people he met at Citi, it now sounds like the split was a bit more acrimonious than that. Read more »
Citigroup CEO Vikram Pandit Resigns (WSJ)
Citigroup Chief Executive Vikram Pandit is stepping down, effective immediately, and will be succeeded by Michael Corbat. “Given the progress we have made in the last few years, I have concluded that now is the right time for someone else to take the helm at Citigroup,” Mr. Pandit said in a statement. “We respect Vikram’s decision,” Chairman Michael E. O’Neill said. “Since his appointment at the start of the financial crisis until the present time, Vikram has restructured and recapitalized the company, strengthened our global franchise and refocused the business.” President and Chief Operating Officer John P. Havens also resigned. Mr. Corbat, who has spent nearly three decades at Citi, previously served as its CEO for Europe, the Middle East and Africa. “Mike is a proven, hands-on leader who is known for his focus on enhancing productivity, holding people accountable and practicing sound risk management,” Mr. O’Neill said. “He has consistently delivered impressive bottom-line results at many of our major global business units and has forged a strong track record of improving efficiency and mitigating risk while also optimizing the allocation of the company’s capital.” Mr. Pandit is resigning as a board member as well.
Vikram Pandit Steps Down, Jim Cramer Loses His Mind (CNBC)
“This is a complete shock. No one expected this whatsoever,” said Cramer. “The divisions were all in very good shape, I don’t even want for a second to tell people that there was anything in the works to make this happen. There was nothing…this was the quarter where you give him a big raise, he was under a lot of pressure but he got this right.” Cramer lauded Citi’s earnings results and questioned why he would leave so abruptly. “Vikram Pandit, 24 hours ago, was the belle of the ball. This guy finally got it right. Something’s wrong here,” he said. “I don’t know what the heck is going on here.”
Goldman Swings To Profit (WSJ)
Overall, Goldman’s investment-banking arm recorded revenue of $1.16 billion, up 49% from a year ago, although 3.2% lower than in the second quarter. Goldman said debt underwriting revenue surged to $466 million from $168 million a year ago. Stock underwriting revenue more than doubled to $189 million, though financial advisory revenue fell 2.7% to $509 million. Fixed income, currency and commodities client execution revenue rose 28% to $2.22 billion. Goldman posted a profit of $1.51 billion, compared with a year-earlier loss of $393 million. Earnings per share—reflecting the payment of preferred dividends—were $2.85 from a loss of 84 cents a year earlier. Net revenue, including net interest income, more than doubled to $8.35 billion. Analysts polled by Thomson Reuters expected per-share earnings of $2.12 on revenue of $7.3 billion.
Soros Demands Germany Stop Euro From Destroying Europe (Reuters)
The crisis “is pushing the EU into a lasting depression, and it is entirely self-created,” said Soros, chairman of Soros Fund Management. “There is a real danger of the euro destroying the European Union.” He added: “The way to escape it is for Germany to accept … greater commitment to helping not only its interests but the interests of the debtor countries, and playing the role of the benevolent hegemon.”
Wells Fargo Creates Markets Unit, Takes On Wall Street (Bloomberg)
The division will be one of five main units under the Wells Fargo Securities brand and include equity and fixed-income sales and trading, commodities, prime services and futures clearing, the San Francisco-based firm said today in a statement. Walter Dolhare and Tim Mullins will oversee the division and report to John Shrewsberry, 47.
Damien Hirst condemned for killing 9,000 butterflies in Tate show (Telegraph)
Visitors to the exhibit at the Tate Modern in London observed the insects close-up as they flew, rested, and fed on bowls of fruit…Figures obtained from the Tate reveal that more than 9,000 butterflies died during the 23 weeks that the exhibition was open. Each week it was replenished with approximately 400 live butterflies to replace those that died – some of them trodden underfoot, others injured when they landed on visitors’ clothing and were brushed off. A spokesman for the RSPCA said: “In this so-called ‘art exhibition’, butterflies are forced to exist in the artificial environment of a closed room for their entire lives. “There would be national outcry if the exhibition involved any other animal, such as a dog. Just because it is butterflies, that does not mean they do not deserve to be treated with kindness.” Read more »
$$$ “The study’s results identified three factors that groups with high team intelligence possess: The ability of group members to read and respond to social cues; The proportion of women in the group (women tend to do better on social perception tests); Evenly distributed conversational turn-taking, rather than dominance by a few members.” [HBR]