Opening Bell: 10.18.11
Goldman Sachs Posts Third Quarter Loss (Bloomberg)
he third-quarter loss of $393 million, or 84 cents per share, compared with a profit of $1.9 billion, or $2.98, a year earlier, the New York-based company said today in a statement. The average estimate of 26 analysts surveyed by Bloomberg was for an 11-cent loss per share, with estimates ranging from a $1.02 loss to a $1.22 profit. The company, which said in July that it planned to cut about 1,000 jobs to reduce annual costs by $1.2 billion, said it employed 34,200 people at the end of September, down 1,300 from the end of June. Investing and Lending, the segment that includes Goldman Sachs’s stakes in Industrial & Commercial Bank of China Ltd. and other companies, as well as holdings by the Special Situations Group run by Jason M. Brown, reported negative revenue of $2.48 billion for the quarter. That compared with revenue of $1.04 billion in the second quarter and $1.8 billion in the third quarter of 2010. Goldman Sachs’s third-quarter revenue fell 60 percent to $3.59 billion from $8.9 billion a year earlier and declined 51 percent from $7.28 billion in the second quarter. The company’s book value per common share decreased to $131.09 from $131.44 at the end of the second quarter.
BofA Swings To Profit In Muddled Quarter (WSJ)
Overall, the Charlotte, N.C., bank reported a profit of $6.23 billion, compared with a year-earlier loss of $7.3 billion. On a per-share basis, which includes the payment of preferred dividends, the bank reported earnings of 56 cents compared with a loss of 77 cents a year earlier. In total, the quarter included about $10.5 billion in one-time pretax gains and an additional $5.5 billion in pretax losses. That makes the profit closer to $2.7 billion before taxes. That figure still includes a boost of $1.7 billion compared to the prior year from the bank putting aside less to handle souring loans. Last year's results included a goodwill impairment charge of $10.4 billion, without which the bank would have earned $3.1 billion, or 27 cents a share. Meanwhile, the bank's surprising looking revenue growth of 6% to $28.7 billion was also inflated by the various accounting moves.
Wells Fargo Earnings Up But Revenue Slips (Charlotte Observer)
The San Francisco-based bank reported net income of $4.1 billion in the third quarter, more than 20 percent higher than the same time period last year. Aided by a decrease in loan losses and operating expenses, the bank earned 72 cents per share, falling just short of analysts' estimates. Last quarter, Wells posted earnings of 70 cents per share with a net income of $3.9 billion.
Oliver Stone Faces Down Wall Street (Dealbook)
“Jamie Dimon should be spending three weeks on a park bench, homeless, and get a taste of what it’s like on the other side,” Mr. Stone said of JPMorgan Chase’s chief executive. “Might knock out some of the arrogance out of those guys.”
Citigroup Closing Proprietary Trading Unit (Bloomberg)
The company is almost “two-thirds done” winding down the Equity Principal Strategies unit, Chief Financial Officer John Gerspach said yesterday in a conference call with analysts. Market turmoil caused a revenue decline for the unit, which suffered losses as it exited trading positions, Gerspach said. “Equity Principal Strategies is a de minimis part of Citi’s overall trading operation,” Danielle Romero-Apsilos, a spokeswoman, said in an e-mailed statement. “As it does not fit with Citi’s business model under the impending Volcker rule, it is in the process of being wound down.”
He Made It On Wall Street And Used It To Help Start Protests (NYT)
Robert S. Halper, a retired Wall Street trader, spends time each day in Zuccotti Park talking to protesters about politics and their thoughts on reforming the banking system. But Mr. Halper, a 52-year-old Brooklyn native, never reveals two facts about himself: he is a former vice chairman of the New York Mercantile Exchange and the largest single donor to the nonprofit magazine that ignited the Occupy Wall Street movement.
Hedges Haunt Morgan Stanley (WSJ)
The exposures that have dogged Morgan Stanley raise similar issues. They are tied mostly to MBIA Inc., a bond insurer based in Armonk, N.Y. Around 2006, before the U.S. real-estate market cratered, MBIA sold Morgan Stanley credit protection on bundles of commercial real-estate assets. The protection covered roughly $4 billion in mortgage-debt pools, to offset risks Morgan Stanley took on in trades with hedge funds and other clients, people familiar with the matter said.
Traders Warn Of Market Cracks (WSJ)
"Liquidity will continue to be a big problem," says Patrick McMahon, co-founder of hedge fund MKP Capital. Mr. McMahon says he has noted the sharp decline in liquidity, or market depth, in recent months. And, with global banks reducing their risk exposure, they are less likely to step in and take either side of trades, Mr. McMahon says. He says fewer investors are willing to buy or sell stocks, creating an effective vacuum. "That's why you get 5% moves in a matter of minutes," he says. "When there are sellers, there are few buyers, creating an air pocket down."
Paul Seek $1 Trillion In Cuts (WSJ)
Mr. Paul said he would close the departments of Education, Energy, Commerce, Interior and Housing and Urban Development, as part of a broader plan to cut federal spending. The federal work force would be cut by 10%. Mr. Paul also called for stopping foreign aid and "ending foreign wars.'' His "Plan to Restore America'' would end the estate tax and taxes on personal savings, "allowing families to build a nest egg.'' He would extend tax cuts on personal income, capital gains and dividends that were enacted under former President George W. Bush. Mr. Paul has said he would support amending the Constitution to abolish the income tax, though that does not come up in his economic plan.
Bernie Madoff's Daughter-in-Law: I'd Spit In His Face (ABC)
Stephanie Madoff Mack, the daughter-in-law of Bernie Madoff, says she blames the disgraced financier for her husband’s death. Madoff Mack is the widow of Mark Madoff, who commited suicide two years after his father’s arrest for the largest Ponzi scheme in history, and the first Madoff family member to break her silence. In an interview with “20/20″ anchor Chris Cuomo, she [says] that if she saw her father-in-law today, she’d tell him “that I hold him fully responsible for killing my husband, and I’d spit in his face.”
