Now raising intellectual capital

from Rolfe Winkler:

Meredith Whitney asks the tough questions

----Not to beat a dead-horse here, but I thought I'd blog one last interesting thing on Goldman. This from today's conference call. (Transcript via Thomson Street Events, no link)----

Guarantees for certain liabilities aren't the only way Goldman has benefited from government largesse. They've also made money handling trading volume that is driven by the Fed...

Meredith Whitney, Analyst: I have a few questions. The government purchase program was supposed to end this quarter. They've extended it to next quarter. How much of that us a driver of velocity of flows? And how are you positioned when they exit, if they exit, for any type of principal risk? And what do you think that impact is going to be in the larger market? That is my first question. Start off with an easy one.

Is MW on to something here? Perhaps: Note the non-answer answer.

David Viniar - Goldman Sachs Group, Inc. - EVP, CFO: Not a problem. Look, I think, as you know and I think the Fed knows this, exiting their support of various markets is a very tricky thing. I think that they are going to do it carefully. They are going to do it slowly and over time. I think they are signaling the market. I think they are doing a very good job of letting people know they are going to continue for a while, but they aren't not going to continue forever. As far as our positioning, I don't think it really matters at all. As you know, as I said, most of what has happened has been the velocity, not the positioning. And I think that they are going to slowly extricate themselves for that as the markets get healthier and can pick up slack.

JP Morgan sure to point out it’s giving back to the community


JP Morgan’s PR machine was sure to give a shout out to loan modifications as a counter to the embarrassing amount of riches reported in their third quarter report. The press release of course leads with its eye popping net income of $3.6 billion in the quarter. But before the bank details all the glorious gains in investment banking fees and fixed income, Jamie Dimon takes a moment to say how much the bank is doing for the community.

We recently announced the decision to revamp our overdraft policies to make it easier for customers to have more control over the fees they pay. In addition, our Card Services business has developed new innovative products that enhance the way customers manage their spending and borrowing. We are also aiding communities by working with struggling mortgage customers to modify their loans. We have approved more than 262,000 new trial modifications under the U.S. Making Home Affordable Program and our own modification program, nearly 90% of which include a reduction in payments for the homeowner. Since 2007, we have helped families by initiating 782,000 actions to prevent foreclosure, and we are committed to doing our part to support economic recovery going forward.”

Barclays’ yo-yo balance sheet


Talk about deleveraging. By far the most striking number in Barclays’ first-half profits concerns its balance sheet:

Our total assets decreased by £508bn to £1,545bn over the first half of 2009.

Given the stated desire by regulators – and investors – for banks to shrink their balance sheets, a 25 per cent reduction in total assets in the space of just six months has to be applauded, right?

Tech results give few clues to economy: Eric Auchard


Windows 7 touchscreen demonstrationBy Eric Auchard

LONDON, July 24 (Reuters) – Investors have proved all too ready to interpret positive earnings trends from Intel, IBM and Apple as signs of economic recovery and to justify a continued rally in technology stocks.

Now they are taking the wrong lessons in reverse by reading disappointing results from Microsoft Corp as evidence that a nascent rebound in the economy has stalled.

That little thing called cash burn


Ford Motor Co, which could be referred to as the Big One after GM and Chrysler’s fall from grace, has investors cheering after it posted a $2.26 billion profit in the second quarter and a smaller than expected operating loss. But it’s still burning through lots of cash. Sure it’s less than before, but $1 billion in a quarter still isn’t anything to sneeze at, especially since it’s been trying to turn itself around since 2005.

From the release:

Automotive operating-related cash flow was $4.7 billion negative during the first half; on track with Ford’s plan.

The hollow ring of tech earnings reports: Eric Auchard


By Eric Auchard

Morgan Stanley Hi-Tech Index year-to-dateLONDON, July 17 (Reuters) – For technology investors looking for clues to how the sector is faring, Intel Corp sent a false positive signal with its upbeat quarterly report this week. Subsequent reports from IBM, Nokia and Google show how hollow any recovery for growth stocks is proving to be. Even though the growth sector has defied the broader market sell-off in recent weeks, all the signs point to weak trading in months ahead.

Nokia, the world’s largest mobile phone maker, offered a harrowing reminder of what life is like for companies exposed to the wider vicissitudes of consumer demand. It is struggling in a handset market set to decline around 10 percent this year, even though Nokia signalled the industry may be stabilising.   

Don’t read too much into Intel’s success: Eric Auchard


By Eric Auchard

Intel CEO Paul OtelliniLONDON (Reuters) – Intel Corp has cheered up investors by once again making forecasts about its financial performance. The trouble with reading too much into its rebound, however, is that this is largely due to productivity gains of its own making, rather than a broader awakening of demand.

To be sure, Intel’s revenue, profit and margins surged past all published analyst expectations for the second quarter. Partly, this was merely the “snapback” that occurred after Intel throttled back production to as low as 25 percent of factory capacity in the first quarter, amid a glut of unsold chips and shriveling demand.

Moving Goldman


So the big news to come out Goldman Sachs’ conference call is that it will start to move into its new building in the fourth quarter. And that means higher short-term occupancy costs as it will temporarily be located in two buildings.

Any suggestions on a moving firm?

I think they should go with Two Men and Truck.

Goldman Sachs earnings call


Goldman Sachs had a blowout second quarter, exceeding high expectations on its strong trading gains.

At a time when much of the financial industry is still struggling with the legacies of debt and leverage, the success of Goldman is riveting.  Yet as Matthew Goldstein has written, exactly how Goldman makes its huge gains remains largely a mystery.   Maybe, just maybe, some light will be shed when the firm holds a conference call on the results at 11 a.m. today.  Reuters columnists will be live blogging the call here.

Bank of Goldman


Lloyd Blankfein, chief executive officer of Goldman Sachs and banker-in-chief of the US/world, didn’t disappoint as his investment firm once again proved that it’s second to none on Wall Street when it comes to printing money and profits.

By now you know the headline news that Goldman generated blowout second-quarter earnings on record net revenues of $13.8 billion. Net revenues from trading and principal investments were $10.78 billion, up 93% from the year ago period.