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GS Holdings
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18 сентября 2013, 21:03

Blankfein shows little desire to pare back commodity business

"This is a core, strategic business for us," says Lloyd Blankfein of Goldman Sachs' (GS -0.7%) commodity operations, making a forceful public commitment to the unit as regulators scheme force the bank out, and some competitors willfully exit.The Fed is expected to decide shortly whether Goldman and Morgan Stanley (MS) should continue to be allowed to broadly trade physical commodities and invest in infrastructure assets. Being in physical commodities was "grandfathered in" when Goldman became a bank holding company in 2008, says Blankfein, by dint of the bank being involved in the business for more than 100 years. Blankfein got his start in Goldman's J Aron commodity unit.Earlier from Blankfein. Post your comment!

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18 сентября 2013, 11:50

P-E firms battle as Energy Future heads towards bankruptcy

An almighty fight has been brewing between private-equity firms over who will get paid what in the expected bankruptcy filing of Texas power company Energy Future Holdings, which owes over $40B to creditors. One group of debtees includes Apollo Global (APO) and Oaktree Capital, and another involves Blackstone Group's (BX) GSO Capital Partners. Meanwhile, Energy Future's owners, KKR (KKR), TPG and Goldman Sachs (GS), which bought the utility in 2007 for $32B plus about $13B in assumed debt, are hoping to keep some equity in any Chapter 11. They've already written their investment down to almost zero. Complicating matters is that if Energy Futures were to break up, a massive tax bill would need to be paid. The sides are due to meet on Friday to try to resolve the dispute. Post your comment!

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11 июня 2013, 17:56

Petrobras ([[PBR]] -3.5%) signs an agreement with South Korea's GS Holdings that could lead to a partnership to build a Brazilian refinery capable of processing ~300K bbl/day of crude starting in late 2017. PBR needs new refineries to keep up with soaring domestic demand for vehicle fuels and petrochemicals, and higher costs have led it to seek partners such as Venezuela's PDVSA and now GS to help build them.

Petrobras (PBR -3.5%) signs an agreement with South Korea's GS Holdings that could lead to a partnership to build a Brazilian refinery capable of processing ~300K bbl/day of crude starting in late 2017. PBR needs new refineries to keep up with soaring domestic demand for vehicle fuels and petrochemicals, and higher costs have led it to seek partners such as Venezuela's PDVSA and now GS to help build them. Post your comment!

28 марта 2013, 14:53

FOX BUSINESS: Goldman Sachs Massages '08 Warrant Deal With Warren Buffett

By Matt Egan Published March 26, 2013 FOXBusines Warren Buffett said he plans to hold a “significant investment” in Goldman Sachs (GS) after the Wall Street investment bank amended terms of crisis-era warrants awarded to the billionaire’s Berkshire Hathaway (BRK.A).  Goldman shareholders cheered the news, bidding the financial giant’s shares more than 1% higher in premarket trading. “We are pleased that Berkshire Hathaway intends to remain a long-term investor in Goldman Sachs,” Lloyd Blankfein, Goldman’s CEO, said in a statement. Goldman, which received a crucial $5 billion investment from Buffett during the financial crisis, said it has amended its warrant agreement with Berkshire from cash settlement to net share settlement. Under terms of the original agreement, Berkshire had the right to acquire 43,478,260 shares of Goldman’s common stock at an exercise price of $115 at any time until October 1. Goldman’s shares closed at $146.11 on Monday, meaning Berkshire conceivably could have sold its approximately $5 billion of new shares for about $6.35 billion on the open market. However, Goldman said it will now deliver to Berkshire the number of shares of common stock equal in value to the difference between the average closing price over the 10 trading days preceding October 1, 2013, and an exercise price of $115 multiplied by the number of shares of common stock covered by the warrant (43,478,260). “We intend to hold a significant investment in Goldman Sachs, a firm that I did my first transaction with more than 50 years ago," said Buffett, the CEO of Berkshire. "I have been privileged to have known and admired Goldman's executive leadership team since my first meeting with Sidney Weinberg in 1940." Shares of New York-based Goldman gained 1.3% to $147.97 in premarket trading on Tuesday, putting them on track to extend their 2013 rally of 14.5%. Discuss this topic @ Share Investor Forum - Register free Read the full transcript of the October 24 2012 Squawk Box Interview with Warren BuffettDownload the 2010 Berkshire Hathaway Annual ReportDownload the 1977 - 2011 Warren Buffett Letter's to Berkshire Hathaway ShareholdersWarren Buffett @ Amazon Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012: A Fortune Magazine Book by Carol J. Loomis Buy new: $16.66 / Used from: $11.95Usually ships in 24 hoursWarren Buffett's 3 Favorite Books: A guide to The Intelligent Investor, Security Analysis, and The Wealth of Nations by Preston George Pysh Buy new: $12.99 / Used from: $16.04

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26 марта 2013, 16:59

Warren Buffett (BRK.B) becomes a long-term investor in Goldman Sachs, agreeing to amend his warrant agreement to accept shares for any difference between the $115 exercise price and the value of the stock on Oct. 1, 2013. Buffett: "We intend to hold a significant investment in Goldman Sachs." [[GS]] +1.4% premarket. (PR)

Warren Buffett (BRK.B) becomes a long-term investor in Goldman Sachs, agreeing to amend his warrant agreement to accept shares for any difference between the $115 exercise price and the value of the stock on Oct. 1, 2013. Buffett: "We intend to hold a significant investment in Goldman Sachs." GS +1.4% premarket. (PR)  Post your comment!

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14 марта 2013, 00:03

Goldman Sachs (GS) will hold its annual meeting in Salt Lake City, the first time it's ever been outside of the NYC area. Lured by low taxes, and a cheaper, but well-educated workforce, Goldman is fast building out operations in Utah as it cuts back elsewhere.

Goldman Sachs (GS) will hold its annual meeting in Salt Lake City,  the first time it's ever been outside of the NYC area. Lured by low taxes, and a cheaper, but well-educated workforce, Goldman is fast building out operations in Utah as it cuts back elsewhere. Post your comment!

08 марта 2013, 14:46

Chinese investors are in talks to acquire a 40% holding in the General Motors Building in Manhattan in a deal that would value the 50-story skyscraper at $3.4B, including debt, making it the most valuable tower in the U.S. The investors, who are led by the family of Soho China CEO Zhang Xin, would acquire the holding from a Goldman Sachs (GS) fund that represents Persian Gulf interests. The owner of the other 60% is Boston Properties (BXP).

Chinese investors are in talks to acquire a 40% holding in the General Motors Building in Manhattan in a deal that would value the 50-story skyscraper at $3.4B, including debt, making it the most valuable tower in the U.S. The investors, who are led by the family of Soho China CEO Zhang Xin, would acquire the holding from a Goldman Sachs (GS) fund that represents Persian Gulf interests. The owner of the other 60% is Boston Properties (BXP). Post your comment!

04 марта 2013, 14:10

Previewing The Key Macro Events In The Coming Week

In the upcoming week the key focus on the data side will be on US payrolls, which are expected to be broadly unchanged and the services PMIs globally, including the non-manufacturing ISM in the US. Broadly speaking, global services PMIs are expected to remain relatively close to last month's readings. And the same is true for US payrolls and the unemployment rate. On the policy side there is long lost with policy meetings but we and consensus expect no change in any of these: RBA, BoJ, Malaysia, Indonesia, ECB, Poland, BoE, BoC, Brazil, Mexico.  Notable macro issues will be the ongoing bailout of Cyprus, the reiteration of the OMT's conditionality in the aftermath of Grillo's and Berlusconi's surge from behind in Italy. China's sudden hawkishness, the BOE announcement and transition to a Goldman vassal state, and finally the now traditional daily jawboning out of the BOJ. Sunday 3rd China Services PMI (Feb): The non-manufacturing Purchasing Managers’ Index fell to 54.5 in February from 56.2 in January. Monday 4th Confirmation Hearing for BOJ Leadership Nominees: Given how much FX markets focus on potential policy changes at the BOJ after the nomination of the new leadership, the confirmation hearing could become an important driver of the JPY. Also interesting: Fed Yellen Speech, Spanish unemployment (Feb), UK Hometrack house prices (Feb), UK Construction PMI, Turkey consumer prices (Feb). Tuesday 5th Global Services PMIs (Feb): Broadly speaking, global services PMIs are expected to remain relatively close to last month's readings. US Non-Manufacturing ISM (Feb): Consensus expects 55.0 after 55.2 in Jan. RBA Meeting: The strong consensus view is that the RBA will retain a 3.00% cash rate at its March meeting, albeit with an explicit easing bias intact. Financial markets also perceive the RBA to be in ‘wait and see’ mode – ascribing just an 18% chance of a rate reduction this Tuesday. Also interesting: Taiwan and Philippines CPI, Fed Lacker Speech, Australia Balance of Payments (Q4) and Retail sales (Jan). Wednesday 6th US Factory Orders (Jan): Consensus expects -2.2% mom after +1.8% in Jan. Australia GDP (Q4): We currently expect GDP growth of +0.5% qoq - as rising consumption, housing construction & net exports, offsets weakness in company profits & business investment. In contrast, current RBA forecasts imply stronger growth of +1.2% qoq in the quarter. Consensus expects a +0.6% qoq growth. Brazil central bank policy meeting: GS and consensus expect unchanged SELIC at 7.25%. Poland monetary policy meeting: We continue to think that the Polish MPC will keep the base rate on hold, at 3.75%. This is more hawkish than market pricing, which suggests around 60% probability of a cut next week and around 50bps more in cuts until end-2013. Consensus is skewed to another 25bps cut in March. BoC monetary policy meeting: GS and consensus expect unchanged rates at 1.00%Also interesting: Fed's Beige Book, Fed Fisher and Plosser Speeches, ADP Employment Change (Feb), Eurozone GDP (Q4) Thursday 7th BOJ Meeting: Ahead of the leadership change and after the increases in the APP announced at the previous meeting, we do not expect any mayor change at this meeting. ECB Meeting: Consensus expect no change in policy, some expect a 25 bps rate cut. BoE Meeting: Consensus expects no change in BoE policy at this meeting. Goldman expects the Bank of England to engage in further easing in the coming months, in line with the arrival of its very own Mark Carney's "but this is likely to come through credit easing initiatives, which would likely be announced in conjunction with “other UK authorities”. US Trade Balance (Jan): Consensus expects a $43bn deficit after $38.5bn in December. Also interesting: Australia, Chile and Taiwan Trade data, US Weekly Claims, Fed supervisory stress test, Hungary IP, Brazil IP, Mexico inflation, Japan GDP (revised). Friday 8th Japan Balance of Payments (Jan): Customs-cleared trade data for January showed exports up 6.4% yoy, the first rise in eight months. Meanwhile, imports rose 7.3%, resulting in a ¥1.6 tn trade deficit. the income account balance remained around a ¥1 tn surplus while the service account showed a somewhat larger deficit yoy. As a result, the current account in January would be -¥768.5 bn, the largest deficit within a statistically comparable timeframe (i.e. since 1985). China Trade Balance (Feb): Exports and imports growth will likely fall substantially as the Chinese New Year distortions get reversed. US Non-farm Payrolls (Feb): Consensus expects +160k after +157k in Feb. GS expects +150k. GS and consensus expect the unemployment rate to remain unchanged at 7.9%. Mexico central bank policy meeting: In our view the MPC will likely wait for more data in order to ascertain whether the current disinflation trend continues and consolidates, and also whether domestic demand will require monetary stimulus. As such, we expect the central bank to hold this week, but assess very close to a 50% probability of a 50bp-75bp once-off rate cut between late April and early July. Also interesting: China Money Supply and Loan Data (Feb). The same data as the Goldman summary above, from the visual perspective of SocGen: And again from SG, here are the Top Issues for the week ahead: EUROGROUP TO REITERATE GERMAN DIET Monday’s Eurogroup meeting (ahead of the 14-15 March EU Council) is set to discuss a bailout for Cyprus, but with still apparent divides over the shape of a bailout (and notably whether bank depositors should take losses), the risk is that no final agreement will be reached this week. When we log in to watch the press conference (with the indicative starting time of 19h00 CET) we’ll be looking for any hints of additional softening in what we long ago termed the “German Diet” of austerity and structural reform. Our expectation is there will be none, which will be a clear message to Italy’s future government. MARKET ISSUES: The euro debt crisis has no easy overnight fix. Last year, the spring brought a reality check on just what the LTRO could and could not achieve. It seems that the time has now come for one on the OMT. OMT HAS CONDITIONALITY, BUT THE ECB CAN DO MORE Market consensus (and our own view) is that there will be no tangible action at this week’s ECB meeting. The press conference, however, will be given close scrutiny. We expect President Draghi to deliver the simple message that OMT comes with the strict conditionality of an ESM programme, but when it comes to the economy and banks the ECB could do more with a potential future rate cut and additional LTROs. MARKET ISSUES: This message should come as no surprise, but the reminder that the OMT comes with full-blown ESM conditionality is never agreeable. We expect the March Sentix investor sentiment reading to post a greater-than-consensus decline (to ?8.0), indicating that already sentiment has suffered in the fallout from the Italian election. CHINA TO BE LESS DOVISH ON SHORT-TERM STIMULUS The slogan “making progress while maintaining stability” set at the Central Economic Work Conference in late 2012 is set to dominate the National People’s Congress (NPC) from 5 March to 17 March. We expect the 7.5% GDP growth and 4% CPI targets to be maintained, but broad money growth may be lowered to 13-13.5% from 14%. If confirmed, this would lend further support to Wei Yao’s view of more pre-emptive monetary policies and thus less upside to economic recovery. On structural reform, the NPC is a venue more for setting frameworks, rather than concrete measures. Nonetheless, two measures should be voted on: (1) an amendment to the land management law to give a greater slice of land sale revenues to farmers and (2) a proposal to merge the troublesome Ministry of Railways into the Ministry of Transport. MARKET ISSUES: Hopes of more short-term policy stimulus are set to be disappointed, but a more aggressive stance on structural reform should be reassuring for long-term stability. US SILVER LINING Midnight Friday the sequester kicked in and, with that, $85bn of cuts. Our forecast already discounts about half the cuts and we still see some chance for some of the cuts to be legislated away. The silver lining, as highlighted in this week’s US Focus, is that this will ease market fears of an early QE exit and all the more so coupled with Ben Bernanke’s dovish testimony last week. On the data front, the February employment report is centre-stage and we look for +225K non-farm payrolls – the highest reading in three months. MARKET ISSUES: Signs of housing recovery coupled with increased clarity on the policy frontshould pave the way for a sustainable recovery. The sweet spot will be the combination of continued QE and better economic news. TEMPTING, BUT NO BOE ACTION THIS WEEK Cracks in the MPC voting, as we have seen of late are typically a sign that a policy change is imminent. We expect that the more worrying inflation profile, further exacerbated by sterling weakness since the UK downgrade will keep the BoE on hold this week. Moreover, the February Inflation Report would have been a more opportune timing for a move. MARKET ISSUES: Expectations are set to remain in place for further BoE easing action – all the more so as Mark Carney’s arrival date approaches. BOJ AWAITS ITS NEW LEADER We see no action from the BoJ this week ahead of the upcoming leadership change. Focus now is on the nomination process as Prime Minister Abe seeks parliamentary support for his candidate, Mr Kuroda. MARKET ISSUES: As we discussed in BoJ's challenge for a regime change, we expect the new BoJ leadership to be one fully supportive of Abeconomics and expect to see a substantial expansion of monetary. RBA ON HOLD RBA Governor Stevens noted in his recent testimony that there is already considerable stimulus in the pipeline. Moreover, AUD depreciation is an additional argument against easing this week. We do, however, expect the RBA to maintain a dovish tone. MARKET ISSUES: No change from the RBA is the market consensus. The global mood on risk is set to be the more important driver this week. CBR ON HOLD Although recent economic news has been unimpressive, the Central Bank of Russia appears concerned by accelerating inflation and, although Chairman Ignatiev expects to see a decline in inflation over the coming months, we see no change in the policy stance this week. MARKET ISSUES: We continue to see room for a future rate cut. Source: Goldman, SocGen

15 февраля 2013, 14:47

CNN MONEY: Does Warren Buffett still hate private equity?

By Dan Primack February 14, 2013: 3:30 PM ET Warren Buffett has teamed up with 3G Capital to buy Heinz. Yes, that's a private equity firm. FORTUNE -- Warren Buffett is no fan of private equity, having said that buyout firms are short-term financial engineers who "don't love" the companies in which they invest. He also has bragged about how he never has bought a company from private equity firms. So what are we to make of the fact that Buffett today teamed up with a private equity firm called 3G Capital Partners to buy H.J. Heinz Co. (HNZ) in a $28 billion transaction? From my perspective, it's a bit hypocritical. 3G has been referred to in the press as both a private equity firm and a hedge fund manager, and both are factually accurate. 3G manages several private equity funds, the most recent of which had gross asset value of $1.12 billion as of last October. Here is how 3G describes this fund family in its brochure: The 3G Special Situations Funds' objectives are to achieve superior long-term capital appreciation by making either controlling or non-controlling (but, in such cases, typically influential) investments in a small number of companies operating fundamentally good businesses with easy to understand business models that are being undermanaged or to which the Adviser believes it can add meaningful value. The 3G Special Situations Funds focus on leveraged acquisitions, recapitalizations, and acquisitions of controlling or influential stakes of businesses in industries where the Adviser has either operating experience or a strong network of contacts within the industry. It also appears to charge a 20% carried interest on these funds, with a management fee of between 1% and 2%. Around one-quarter of the capital comes from firm principals, while the remainder comes from a small group of high-net-worth Brazilian individuals (plus an even smaller group of institutional investors). Read more: One more reason for Buffett to hate private equity 3G also manages a number of small hedge funds with differing strategies, including some that hold stakes in such companies as Goldman Sachs (GS), Google (GOOG) and SandRidge Energy (SD). So perhaps it's best to describe 3G as an alternative investment platform, which features multiple strategies. Similar to how one might characterize The Blackstone Group (BX) or Kohlberg Kravis Roberts & Co. (KKR). Those familiar with 3G seem uncomfortable with the comparisons, however, saying that the firm has a much longer investment horizon than does garden-variety private equity. In that sense, they say, 3G more resembles Buffett's Berkshire Hathaway (BRKA) than Blackstone or KKR. I've been unable to learn the investment lifecycle of a 3G private equity fund, in order to compare it to the industry-standard of 10 years. In fact, one source suggested that there may not even be one. If true, then it's a major distinction. If not, the only real difference would be that 3G raises its money from rich friends in Brazil rather than from public pension funds and university endowments in the U.S. And it certainly doesn't have publicly-traded securities like Berkshire Hathaway (which means there must be some viable path to investor liquidity). A look at the firm's private equity track record doesn't help dispel the private equity label either. For example, 3G acquired Burger King (BKW) in 2010 largely by leveraging bank debt, and then returned it to the public markets just two years later via a reverse merger (as opposed to an IPO). 3G still holds a majority stake, but there's nothing novel about a private equity firm retaining control of a portfolio company three or four years after the initial acquisition. Speaking of bank debt, even the Heinz deal is a leveraged buyout. It does include more equity than does a typical mega-LBO with Berkshire putting in between $12 billion and $13 billion (plus a smaller equity slug from 3G), but that still leaves billions of dollars of new debt on Heinz's books. Perhaps Buffett was being hyperbolic when expressing his disdain for private equity, painting the entire industry with a brush of its worst excesses. After all, if he really believed 100% of what he said, then you'd think he would have found someone else to buy Heinz with. Below is a CNBC interview with Buffett from earlier this morning, discussing the Heinz deal: Discuss this topic @ Share Investor Forum - Register free Read the full transcript of the October 24 2012 Squawk Box Interview with Warren BuffettDownload the 2010 Berkshire Hathaway Annual ReportDownload the 1977 - 2011 Warren Buffett Letter's to Berkshire Hathaway Shareholders Warren Buffett @ Amazon Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012: A Fortune Magazine Book by Carol J. Loomis Buy new: $16.66 / Used from: $11.95Usually ships in 24 hours Warren Buffett's 3 Favorite Books: A guide to The Intelligent Investor, Security Analysis, and The Wealth of Nations by Preston George Pysh Buy new: $12.99 / Used from: $16.04Usually ships in 24 hours

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04 февраля 2013, 16:50

Key Macro Events And Developments In The Coming Week

One-stop summary of the key events and issues in the week ahead. From Goldman Monday 4 February European Services PMIs (Jan) US Factory Orders (Dec): GS: 2.7%, Consensus: 2.3%, Previous: 0.0% Also interesting: UK Construction PMI Tuesday 5 February RBA Meeting: We expect no change to the Cash Rate at 3.00%, in line with consensus. The market is pricing a cut of  approximately 10bp. US ISM Non-manufacturing Index (Jan): GS: 55.0, Consensus: 55.0, Previous: 55.7 China HSBC Services PMI (Jan): Previous: 51.7 Wednesday 6 February Germany Factory Orders (Dec): Consensus: 0.9% mom, Previous: -1.8% mom Czech Central Bank Meeting: GS: 0.05%, Consensus: 0.05%, Previous: 0.05%. Poland Central Bank Meeting: In line with consensus we expect a 25bp cut to 3.75%. Also interesting: Czech Industrial Output, Czech Trade Balance Thursday 7 February ECB Meeting: We expect no change to either the re-fi or deposit rate. BoE Meeting: We expect no change to either the Bank Rate or the £375bn asset purchase program, in line with consensus. Peru Central Bank Meeting: We expect the MPC to keep the policy rate unchanged at 4.25% but the post meeting policy  statement could turn slightly more dovish. Germany Industrial Production (Dec): Consensus: 0.2% mom, Previous: 0.2% mom UK Industrial Production (Dec): Consensus: 0.9% mom, Previous: 0.3% mom UK Trade Balance (Dec): Consensus: -£8.9bn, Previous: -£9.2bn Brazil IPCA Inflation (Jan): GS: 0.80% mom, Previous: 0.79% mom Also interesting: US Initial Claims, US Nonfarm Productivity, US Unit Labour Costs, Australia Labour Market data, Swiss Foreign Exchange Reserves, Mexico Inflation, Chile Trade Balance (Jan). Friday 8 February China CPI (Jan): Consensus: 2.0% yoy, Previous: 2.5%. China Exports (Jan): Consensus: 14.9%, Previous: 14.1%. US Trade Balance (Dec): GS: -$45bn, Consensus: -45.8bn, Previous: -48.7bn Also interesting: Sweden Industrial Production Key issues in the coming days, via SocGen EUROPE’S GROWTH CHALLENGE As the ECB Governing Council convenes in Frankfurt, European leaders will be gathering in Brussels for a two-day European Council. Both will be concerned about the continued economic weakness and recent euro strength will no doubt be a topic of discussion at both venues. In our opinion, the ECB will remain on hold this week, but any hints of a more dovish tone will raise hopes that the March meeting – when the ECB presents it new staff forecasts – could see a rate cut. While not unwelcome, a rate cut alone is unlikely to bring about any significant change to the euro area’s growth outlook. Fast-tracking fiscal and banking union would have a much more significant impact on the euro area economy; unfortunately progress remains slow to date. This week European leaders will seek to tackle the EU’s 2014-20 budget and while we do not see a material immediate growth impact from an agreement, this would lift confidence on the ability of the EU to resolve issues. Trade is also likely to figure on the agenda, with the idea that strengthening trade relationships will promote investment, jobs and growth medium term. Note, Chancellor Merkel is due to meet Prime Minister Rajoy early this week and President Hollande on 6 February. MARKET ISSUES: With no action seen at this week’s ECB meeting, focus will be on the press conference and any hints of a more dovish tone, which would raise hopes for a March rate cut (albeit not our baseline scenario). UK TRIPLE DIP RECESSION CALLS PREMATURE Overall, weak economic data add to the risk of easing, but we believe that the MPC will opt to stay on hold this week. A bounce back up in December manufacturing output – we look for +1.2% mom – would confirm our view that cries of a triple-dip recession are premature. The upcoming Inflation Report (13 February) will shed further light on the Bank’s analysis of the economic situation.  MARKET ISSUES: The bank remaining on hold and slightly better data could bring some near-term respite for sterling. Market attention remains centred on the arrival of Mark Carney on 1 July, who is widely seen as being willing to take aggressive action to boost the UK economy. He will appear before the Treasury Select Committee on 7 February. SEASONAL BOUNCE IN CHINESE DATA The timing of Chinese New Year often brings some distortion to the data early in the year. 2013 is no exception as the Lunar New Years falls on 10 February, 3 weeks later than last year and adding 4 working days to January 2013 compared to January 2012. This seasonal effect should bring an extra boost to January trade data, lifting both exports (21% after 14.1% yoy) and imports (14% after 6.0% yoy). January loan data should also see a boost. MARKET ISSUES: Overall, we continue to see a cyclical bounce in the Asia data, but we do urge caution when interpreting the January data from China.

25 января 2013, 22:06

Goldman Sachs (GS) is cut to Hold at Deutsche Bank which says the stock's big run has put it at a premium to other large investment banks, but the firm doesn't have the same opportunity for cost savings as some of its brethren. (Previous: Deutsche ups JPMorgan)

Goldman Sachs (GS) is cut to Hold at Deutsche Bank which says the stock's big run has put it at a premium to other large investment banks, but the firm doesn't have the same opportunity for cost savings as some of its brethren. (Previous: Deutsche ups JPMorgan) Post your comment!

22 января 2013, 21:41

Earnings Roundup: Housing Recovery Drives Profit Gains at Financials, Homebuilders

The rally in housing has been good news for earnings at banks (where mortgage volumes kept climbing in the fourth quarter) and home builders, and is pushing blended earnings growth estimates higher for the S&P 500. Last week it was the turn of banks and other financial services companies to dominate the earnings news, with their reports accounting for nearly two-thirds of all S&P 500 index announcements. That proved to be good news for the blended earnings growth estimates for the S&P 500 index, which edged slightly higher in the wake of those reports. Although only 55% of the companies in the sector announced results that beat earnings estimates (below the sector’s long-term average of 62%), several among them posted positive surprises that were large enough to drive growth higher for the sector as a whole. Goldman Sachs Group Inc (GS.N) was one of those outperformers, beating its $3.78 earnings estimate when it announced a fourth-quarter profit of $5.60. The company’s 204% surge in net income was due to the strong performance of Goldman’s investment banking and investment management divisions; in the latter case, the bank benefitted from higher performance fees. One of the most significant reasons for the impressive earnings surprise was a lower rate of compensation. As other companies across the economy have done, Goldman has emphasized cost reduction, and by reducing headcount and compensation as a percentage of its profits, the company was able to improve margins. Another much-anticipated earnings announcement last week came from JPMorgan Chase & Co (JPM.N). Compared to the $1.16 a share that the bank earned in the fourth quarter of 2011, the profit of $1.39 a share it announced for the just-ended quarter looks healthy. The bank’s underlying businesses also look healthy, however, with mortgage volumes rising 33%, while the bank has witnessed a lower level of foreclosures and the associated legal expenses. Equity and fixed income trading also performed well, with revenues from these businesses 19% higher year-over-year in the fourth quarter. JPMorgan Chase, like most other large banks, continues to struggle to cope with net income margin compression in the current low interest rate environment, as the spread between the bank’s funding costs and the rates it earns loaning out its funds decreases. The large banks weren’t the only ones announcing their fourth quarter results, or contributing to growth in the Financials sector. Of the five regional banks that reported earnings this week, four beat their estimates and all five of them had growth rates higher than 25%. Once again, the single largest contributor to profits at these regionals is home mortgage market growth, but they are also benefitting from improved credit on the part of their corporate customers. Analysts expect the Consumer Discretionary sector to be another major contributor to overall earnings growth in the fourth quarter. Retailers companies can usually be counted on to drive earnings in the fourth quarter, but in this period, it is the homebuilders that analyst expect to post the highest rate of earnings growth, at 259%. As the first homebuilder to report, Lennar Corporation (LEN.N) set the pace. Reporting earnings of 56 cents a share – well above the 44 cents a share that analysts had forecast it would earn – Lennar’s CEO, Stuart Miller, said he believes this is still only “the early stages” of a recovery in housing. If so, that recovery has delivered a big gain to Lennar already; that profit marks a 250% surge over year-earlier earnings of 16 cents a share. “The recovery began in micro markets across the country and it’s continued to spread to larger pockets,” Miller explained. “In the second half of this year, recovery had taken hold across the country and has readily been seen in spite of generally negative economic data.” It is demographic fundamentals that are kicking in, Miller added, suggesting that the pent-up demand for homes will continue driving business and profits “into 2013 and beyond.”

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22 января 2013, 16:16

Goldman's GS Direct Pharma Cuts Stake In Chinese Billionaire Couple's Firm

Shares in Chinese pharmaceuticals supplier Shenzhen Hepalink Pharmaceutical closed down by 2.6% at the Shenzhen Stock Exchange today after it was disclosed that GS Direct Pharma, part of Goldman Sachs, cut its holdings in the company.

16 января 2013, 21:13

2 Bottoming Stocks in Top Sector

These two health-care stocks not only have room to run if the sector continues to rise, but the youth of their rallies means that they may be better able to withstand a near-term correction, writes MoneyShow's Tom Aspray. Though the tech-heavy Nasdaq-100 remains under pressure, so far the selling in the broader S&P 500 has been well absorbed. Once again, the stock index futures are lower in early trading, but are holding above initial support. The markets are nervously waiting for earnings from financial giants JPMorgan Chase (JPM) and Goldman Sachs (GS), which will be released before the opening. The new all-time highs for the Dow Jones Transports and the S&P Health Care Sector are a positive for the overall market. Health care surpassed 12-year resistance in 2012. The positive intermediate signals for the stock market do not rule out a 2% to 3% pullback at any point, which could take the Spyder Trust (SPY) back toward its quarterly pivot at $142.64. Such a decline would also partially fill the gaps that were formed on the first trading day of 2013. Despite the gains in many health-care stocks, there are still some that are just turning higher from support and are likely to hold up better if the market does correct. These two health-care stocks fit this criteria and are quite close to their buy levels.

16 января 2013, 15:35

Alibaba Said to Hire Credit Suisse, Goldman for $4 Billion IPO

Alibaba Group Holdings Ltd., China's biggest e-commerce company, hired Credit Suisse Group AG and Goldman Sachs Group Inc. (GS) to arrange an initial public offering.

15 января 2013, 19:43

Goldman Sachs And The Big Hedge Funds Are Pushing Leverage To Ridiculous Extremes

Michael Snyder, ContributorActivist Post As stocks have risen in recent years, the big hedge funds and the "too big to fail" banks have used borrowed money to make absolutely enormous profits.  But when you use debt to potentially multiply your profits, you also create the possibility that your losses will be multiplied if the markets turn against you. When the next stock market crash happens, and the gigantic pyramid of risk, debt and leverage on Wall Street comes tumbling down, will highly leveraged banks such as Goldman Sachs ask the federal government to bail them out? The use of leverage is one of the greatest threats to our financial system, and yet most Americans do not even really understand what it is. The following is a basic definition of leverage from Investopedia:The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.  Leverage allows firms to make much larger bets in the financial markets than they otherwise would be able to, and at this point Goldman Sachs and the big hedge funds are pushing leverage to ridiculous extremes. When the financial markets go up and they win on those bets, they can win very big.  For example, revenues at Goldman Sachs increased by about 30 percent in 2012 and Goldman stock has soared by more than 40 percent over the past 12 months.  Those are eye-popping numbers.  But leverage is a double-edged sword. When the markets turn, Goldman Sachs and many of these large hedge funds could be facing astronomical losses.Sadly, it appears that Wall Street did not learn any lessons from the financial crisis of 2008.  Hedge funds have ramped up leverage to levels not seen since before the last stock market crash. google_ad_client = "pub-1897954795849722"; /* 468x60, created 6/30/10 */ google_ad_slot = "8230781418"; google_ad_width = 468; google_ad_height = 60; The following comes from a recent Bloomberg article entitled "Hedge-Fund Leverage Rises to Most Since 2004 in New Year"...Hedge funds are borrowing more to buy equities just as loans by New York Stock Exchange brokers reach the highest in four years, signs of increasing confidence after professional investors trailed the market since 2008. Leverage among managers who speculate on rising and falling shares climbed to the highest level to start any year since at least 2004, according to data compiled by Morgan Stanley. Margin debt at NYSE firms rose in November to the most since February 2008, data from NYSE Euronext show.So why is this so important? Well, as a recent Zero Hedge article explained, even a relatively small drop in stock prices could potentially absolutely devastate many hedge funds...What near record leverage means is that hedge funds have absolutely zero tolerance for even the smallest drop in prices, which are priced to absolute and endless central bank-intervention perfection - sorry, fundamentals in a time when global GDP growth is declining, when Europe and Japan are in a double dip recession, when the US is expected to report its first sub 1% GDP quarter in years, when corporate revenues and EPS are declining just don't lead to soaring stock prices. It also means that with virtually all hedge funds in such hedge fund hotel names as AAPL (the stock held by more hedge funds - over 230 - than any other), any major drop in the price would likely lead to a wipe out of the equity tranche at the bulk of AAPL 'investors', sending them scrambling to beg for either more LP generosity, or to have their prime broker repo desk offer them even more debt. And while the former is a non-starter, the latter has so far worked, which means that most hedge funds have been masking losses with more debt, which then suffers even more losses, and so on.By the way, Apple (AAPL) just fell to an 11-month low. Apple stock has now declined by 26 percent since it hit a record high back in September.  That is a very bad sign for hedge funds. But hedge funds are not the only ones flirting with disaster. In a previous article about the derivatives bubble, I pointed out the ridiculous amount of derivatives exposure that some of these "too big to fail" banks have relative to their total assets...According to the Comptroller of the Currency, four of the largest U.S. banks are walking a tightrope of risk, leverage and debt when it comes to derivatives.  Just check out how exposed they are... JPMorgan Chase Total Assets: $1,812,837,000,000 (just over 1.8 trillion dollars) Total Exposure To Derivatives: $69,238,349,000,000 (more than 69 trillion dollars) Citibank Total Assets: $1,347,841,000,000 (a bit more than 1.3 trillion dollars) Total Exposure To Derivatives: $52,150,970,000,000 (more than 52 trillion dollars) Bank Of America Total Assets: $1,445,093,000,000 (a bit more than 1.4 trillion dollars) Total Exposure To Derivatives: $44,405,372,000,000 (more than 44 trillion dollars) Goldman Sachs Total Assets: $114,693,000,000 (a bit more than 114 billion dollars - yes, you read that correctly) Total Exposure To Derivatives: $41,580,395,000,000 (more than 41 trillion dollars)Take another look at those figures for Goldman Sachs.  If you do the math, Goldman Sachs has total exposure to derivatives contracts that is more than 362 times greater than their total assets. That is utter insanity, but we haven't had a derivatives crash yet so everyone just keeps pretending that the emperor actually has clothes on. When the derivatives crisis happens, things in the financial markets are going to fall apart at lightning speed.  A recent article posted on goldsilverworlds.com explained what a derivatives crash may look like...Limited Edition - 1 Ounce Silver MedallionWhen one big bank faces some kind of trouble and fails, the banks with the largest exposure to derivatives (think JP Morgan, Citigroup, Goldman Sachs) will realize that the bank on the other side of the derivatives trade (the counterparty) is no longer good for their obligation. All of a sudden the hedged position becomes a naked position. The net position becomes a gross position. The risk explodes instantaneously. Markets realize that their hedged positions are in reality not hedged anymore, and all market participants start bailing almost simultaneously. The whole banking and financial system freezes up. It might start in Asia or Europe, in which case Americans will wake up in the morning to find out that their markets are  not functioning anymore; stock markets remain closed, money at the banks become inaccessible, etc.But for now, the party continues. Goldman Sachs and many of the big hedge funds are making enormous piles of money. In fact, according to the Wall Street Journal, Goldman Sachs recently gave some of their top executives 65 million dollars worth of restricted stock...Goldman Sachs Group Inc. GS -0.76% handed insiders including Chief Executive Lloyd Blankfein and his top lieutenants a total of $65 million in restricted stock just hours before this year's higher tax rates took effect. The New York securities firm gave 10 of its directors and executives early vesting on 508,104 shares previously awarded as part of prior years' compensation, according to a series of filings with the Securities and Exchange Commission late Monday.And the bonuses that employees at Goldman receive are absolutely obscene.  A recent Daily Mail article explained that Goldman employees in the UK are expected to receive record-setting bonuses this year...Britain’s army of bankers will re-ignite public fury over lavish pay rewards as staff at Goldman Sachs are expected to reward themselves £8.3 billion in bonuses on Wednesday. The American investment bank, which employs 5,500 staff in the UK, will be the first to unveil its telephone number-sized rewards – an average of £250,000 a person – as part of the latest round of bonus updates. The increase, up from £230,000 last year, comes as British families are still struggling to make ends meet five years after banks brought the economy to the brink of meltdown. google_ad_client = "ca-pub-1897954795849722"; /* 468x60, created 7/28/12 */ google_ad_slot = "9833874419"; google_ad_width = 468; google_ad_height = 60; Wouldn't you like to get a "bonus" like that? Life is good at these firms while the markets are going up. But what happens when the party ends? What happens if the markets crash in 2013? When you bet big, you either win big or you lose big. For now, the gigantic bets that Wall Street firms are making with borrowed money are paying off very nicely. But a day of reckoning is coming.  The next stock market crash is going to rip through Wall Street like a chainsaw and the carnage is going to be unprecedented. Are you sure that the people holding your money will be able to make it through what is ahead?  You might want to look into it while you still can.This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here. var linkwithin_site_id = 557381; linkwithin_text='Related Articles:' Enter Your Email To Receive Our Daily Newsletter Close var fnames = new Array();var ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';fnames[1]='FNAME';ftypes[1]='text';fnames[2]='LNAME';ftypes[2]='text';var err_style = ''; try{ err_style = mc_custom_error_style; } catch(e){ err_style = 'margin: 1em 0 0 0; padding: 1em 0.5em 0.5em 0.5em; background: FFEEEE none repeat scroll 0% 0%; font- weight: bold; float: left; z-index: 1; width: 80%; -moz-background-clip: -moz-initial; -moz-background-origin: -moz- initial; -moz-background-inline-policy: -moz-initial; color: FF0000;'; } var mce_jQuery = jQuery.noConflict(); mce_jQuery(document).ready( function($) { var options = { errorClass: 'mce_inline_error', errorElement: 'div', errorStyle: err_style, onkeyup: function(){}, onfocusout:function(){}, onblur:function(){} }; var mce_validator = mce_jQuery("#mc-embedded-subscribe-form").validate(options); options = { url: 'http://activistpost.us1.list-manage.com/subscribe/post-json? u=3ac8bebe085f73ea3503bbda3&id=b0c7fb76bd&c=?', type: 'GET', dataType: 'json', contentType: "application/json; charset=utf-8", beforeSubmit: function(){ mce_jQuery('#mce_tmp_error_msg').remove(); mce_jQuery('.datefield','#mc_embed_signup').each( function(){ var txt = 'filled'; var fields = new Array(); var i = 0; mce_jQuery(':text', this).each( function(){ fields[i] = this; i++; }); mce_jQuery(':hidden', this).each( function(){ if ( fields[0].value=='MM' && fields[1].value=='DD' && fields[2].value=='YYYY' ){ this.value = ''; } else if ( fields[0].value=='' && fields [1].value=='' && fields[2].value=='' ){ this.value = ''; } else { this.value = fields[0].value+'/'+fields[1].value+'/'+fields[2].value; } }); }); return mce_validator.form(); }, success: mce_success_cb }; mce_jQuery('#mc-embedded-subscribe-form').ajaxForm(options); }); function mce_success_cb(resp){ mce_jQuery('#mce-success-response').hide(); mce_jQuery('#mce-error-response').hide(); if (resp.result=="success"){ mce_jQuery('#mce-'+resp.result+'-response').show(); mce_jQuery('#mce-'+resp.result+'-response').html(resp.msg); mce_jQuery('#mc-embedded-subscribe-form').each(function(){ this.reset(); }); } else { var index = -1; var msg; try { var parts = resp.msg.split(' - ',2); if (parts[1]==undefined){ msg = resp.msg; } else { i = parseInt(parts[0]); if (i.toString() == parts[0]){ index = parts[0]; msg = parts[1]; } else { index = -1; msg = resp.msg; } } } catch(e){ index = -1; msg = resp.msg; } try{ if (index== -1){ mce_jQuery('#mce-'+resp.result+'-response').show(); mce_jQuery('#mce-'+resp.result+'-response').html(msg); } else { err_id = 'mce_tmp_error_msg'; html = ' '+msg+''; var input_id = '#mc_embed_signup'; var f = mce_jQuery(input_id); if (ftypes[index]=='address'){ input_id = '#mce-'+fnames[index]+'-addr1'; f = mce_jQuery(input_id).parent().parent().get(0); } else if (ftypes[index]=='date'){ input_id = '#mce-'+fnames[index]+'-month'; f = mce_jQuery(input_id).parent().parent().get(0); } else { input_id = '#mce-'+fnames[index]; f = mce_jQuery().parent(input_id).get(0); } if (f){ mce_jQuery(f).append(html); mce_jQuery(input_id).focus(); } else { mce_jQuery('#mce-'+resp.result+'-response').show(); mce_jQuery('#mce-'+resp.result+'-response').html(msg); } } } catch(e){ mce_jQuery('#mce-'+resp.result+'-response').show(); mce_jQuery('#mce-'+resp.result+'-response').html(msg); } } } BE THE CHANGE! 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07 января 2013, 18:02

Summary Of Key Events In The Coming Week

It's a quiet week in macro, but that doesn't mean there is nothing going on. Here is a summary of the key events happening in the coming week via GS and SocGen. The main events of this week, monetary policy meetings at the BoE and the ECB on Thursday, are not expected to bring any meaningful changes. In both cases, banks are expected to keep rates on hold and to hold off on further unconventional policy measures. While significant economic slack still exists in the Euro area, and although the inflation picture has remained relatively benign, targeted non-standard policy measures are more likely than an interest rate cut. As financial conditions are already quite easy in the core countries, where the monetary transmission mechanism remains effective, the ECB’s first objective is to reverse the segmentation of the Euro area’s financial markets to ensure the pass-through of lower rates to the countries with the most need for further stimulus. The data calendar is similarly light, with German factory orders and industrial production, US Trade data and MPC meetings in Korea, Peru and Poland the main releases to watch. In addition, the week will also bring a number of China data releases, including GDP, Retail Sales, IP and FAI, as well as price and trade indicators. The Week Ahead: Monday, January 7 Interesting: Brazil IGP-DI Inflation, Swiss Foreign Exchange Reserves Tuesday, January 8 Chile CPI: We forecast 1.5%yoy, after 2.1% last month, while consensus expects 1.6%. Germany Factory Orders (November): Consensus expects a 1.4% decline, after last month’s reading came in at +3.4%. US Consumer Credit: Consensus forecasts +$12.7bn, down from the last report at +$14.2bn Also Interesting: Euro area Consumer Confidence & Unemployment rate, Hungary IP, Mexico Consumer Confidence, Korea Unemployment rate Wednesday, January 9 Poland MPC Mexico Inflation: We forecast 3.0%yoy for core, and 3.7%yoy for headline inflation. Germany IP (November): Consensus expects an increase of 1.0% after a surprising drop of -2.6% in October. Also Interesting: Hungary and UK Trade Balance, Canada Housing Starts, Czech Unemployment and Consumer Prices Thursday, January 10 ECB Meeting Bank of England MPC Bank of Korea MPC: We expect rates to be on hold at 2.75%, in line with consensus expectations. US Initial Claims: Consensus expects 365,000, down from last month’s 372,000. Brazil IPCA Inflation: We forecast a read of 5.8%yoy, in line with consensus, and up from last month’s read at 5.5%. China CPI: Consensus expects and uptick to 2.3% from 2.0% last time. Also Interesting: China PPI, Japan Leading Indicators, France IP, Mexico Economic Activity Index Friday, January 11 US Trade Balance: Our forecast at -$41.3bn is in line with consensus at -$41.2bn, after -$42.2bn last month. US Federal Budget Balance Also Interesting: Mexico, Spain, and UK IP, Swiss HCPI, Czech Retail Sales FRENCH LABOUR MARKET REFORM The French social partners (trade unions and employers) are due to meet for a final round of negotiations on 10-11 January in a bid to reach compromise on labour market reform. An Ifop opinion poll published over the weekend found 62% of those surveyed do not expect agreement to be reached. Employers want more flexibility on dismissal, wage setting and working-hours. Trade unions want better protection, with measures such as higher costs on temporary employment contracts and better health care protection. Failure to reach agreement between the social partners would force the government to take the lead and set out a labour market reform (by the end of Q1). With already low popularity readings, it is clear that the Hollande administration would prefer to avoid such an outcome and is encouraging the social partners to seek compromise. Pressure on France to reform is coming from three sources; (1) European peers, and notably Germany, (2) rating agencies and markets, and (3) the need to secure the future growth potential of the French economy. Historically, efforts to reform the French labour markets (and pensions - on the reform agenda in 2H13) have been met with strong resistance. MARKET ISSUES: France's ability to agree structural reform marks a key test for both France and the euro area. BOE ON HOLD Mixed data since the last MPC meeting offer no obvious trigger for a policy move this week and we look for no change. The MPC will have been encouraged by the significant increase in credit supply indicated by the Q4 Credit Condition surveys. Banks cited the Funding for Lending Scheme (FLS) as a key reason for the improvement. This week we expect to see some rebound in manufacturing output after the October slump. MARKET ISSUES: Gilt yields are caught between international economic optimism of the back of the US Fiscal Cliff compromise and fears domestically that the economy may be heading for a triple-dip recession and a rating downgrade. COUNTDOWN TO LOWER SAXONY ELECTION Voters head to the polling booths in the state election in Lower Saxony on 20 January. Whether or not the current CDU/FDP coalition can hold on to power will mark a first test for Chancellor Merkel ahead of the general elections due in the autumn. State elections are also due in this year in Hessen and Bavaria, but not until the autumn. MARKET ISSUES: On the domestic front, the opposition Social Democrats favour more income redistribution (with higher taxes on the rich). On tackling the European debt crisis, however, it is difficult to identify strong alternatives to the strategy adopted by Merkel. No doubt some of Germany's euro partners are hoping that should the opposition come to power, there would be greater appetite for risk sharing with less aggressive conditionality. Given public opinion in Germany, however, we would not expect marked differences in the management of the euro debt crisis. Most likely, the future Chancellor would still seek broad political consensus in the management hereof. NO MOVE, BUT STILL EASING BIAS IN KOREA Improving activity data suggest that the BoK will remain on hold this week. The BoK, however, expects the output gap to “persist for a considerable time”, and this combined with low inflation will keep the central bank leaning to an easing bias. Our central scenario currently does not discount further rate cuts, but won strength could tip the balance. MARKET ISSUES: With the new Japanese government pressuring the BoJ to ease more aggressively, the won has already seen appreciation against the yen. While Japanese exporters cheer, Korean exporters could become increasingly vocal on eroding competitiveness. RATE CUT EXPECTED IN POLAND Weak economic activity and low inflation should pave the way for a rate cut from the NBP this week to 4.0%, with one or two additional 25bp rate cuts in Q1. MARKET ISSUES: Our rate cut call for this week is in line with market expectations. Source: GS and SocGen

03 января 2013, 12:11

Tick By Tick Research Comment - 13 Economic Tales To Take You Into 2013

Dear All,    As Bollinger question why their sales have dropped off a 'cliff' (excuse the pun), since London's LIBOR traders find themselves looking for a career change, the rest of the investment community continue to act with the confusion and irrationality that fuel the modern markets.  S&P 2000, 3000 or even 10 000 - seemingly anything has become possible as the powers that be finally commit to full debt monetisation to preserve the worlds over-leveraged, under-funded and wounded economy.        "When dealing with people, remember you are not dealing with creatures of logic, but creatures of emotion"   Dale Carnegie     Despite all the doom and gloom, here at Tick By Tick, we are here to provide an air of rationality and guidance to help keep your feet on the ground . As a result, we feel obliged to provide you, the loyal reader, with a seasonal present of our own.  (Drumroll please).  I would like to present Tick By Tick's 13 Economic Tales to Take You Into 2013    1.       Being long the US markets (SPX, NDAQ, DJIA and Russ 2K) vs. the PIIGS (PSI 20, MIB, ASE, ISEQ and IBEX) YTD would have only resulted in 14bps of outperformance (1206 bps vs. 1192 bps)   2.        When comparing Jan-Jun of 2011 vs. 2012 in terms of Futures trading volume, total volume has fallen 10.2%.  More interestingly, PM volume was up 32.8% vs. Equity Indices at -14.4% despite both essentially delivering no gains over the period   3.       Between 2007 and 2010, the US birth rate fell 8% to 63.2 births per  1000 women – this includes a 23% drop in the Mexican birth rate over the same period.  These new figures have seen the US fertility rate drop below population stagnation rate of 2.1 to 1.9 children   4.       Despite 10s of thousands of individuals reading the Gartman Letter on a daily basis, should you have invested in his Horizons ETF since its inception, you would be lagging the SPX by 50%   5.       The largest two Global brokerages (MS and GS) were 253 and 170 SPX points away from the current level of 1420 in their 2012 predictions.  Following their advice would have cost you 17.8% and 11.9% respectively   6.       If being married was a requirement of voting in the US Presidential election, Mitt Romney would have won 56-42.  Instead, due to the American demographic, Obama retained power due to the proportionately high unmarried population voting 62-35 in his favour.   7.       If the economies of the US and Chile were compiled into audited accounts, every fundamental investor would pick Chilean debt as comparatively better purchase.  Despite this, the 10yr yield spread is 372bps and US Treasury allocations are near historic highs   8.       Whilst John Paulson, founder of Paulson & Co, basked in the fame of making +600% during the last financial crisis. A relatively unknown individual named Andrew Lahde, founder of Lahde Capital Management, generated returns in excess of 1000% before closing his fund and using his 5 minutes of fame to remind the world of the idiocy that surrounds the global Hemp market   9.       Despite running a trade surplus, having a full funded pension liability and complete energy independence, investors prefer to hold the US dollar, which offers none of the above, over the Norwegian Krone that offers all of these characteristics   10.   On December 6th Apple lost $35bn in market capitalisation, that is 5.5x the total market capitalisation of Research in Motion who previously controlled 44.5% of the Smartphone market in 2008   11.   On May 4th 2012, Michael Pachter from Wedbush was the first bullish analyst on FB providing a $44 price target following the IPO.  Six months later on 6th November, FB traded at $22, exactly half of his target   12.   Those who believe that a cashless society is inevitable have been labelled conspiracy theorists, yet Mastercard, Visa and AMEX are up 120%, 150% and 33% over the last 2 years.   ..     ...and finally               13.  In the UK, houses with the number 13 are, on average, 2% cheaper than the identical houses either side of them    Before we leave you to question the logic in the facts set out before you, as the founder of Tick By Tick, I would like issue a small apology to my loyal reader-base who have found Tick By Tick market comments absent from their inboxes for the last 6 months.  Big changes - that will be explained in my future insights -  are coming that will ensure this is a Black Swan event rather than the norm.   Thank you for the continued support and a Happy New Year to you all.   Best Regards George Adcock    Founder www.tickbytick.co.uk  #0000ff;">  Twitter: @TickByTick_Team   *All figures correct at time of writing   If you would like to receive weekly comment emails like this in the future, please send an email to [email protected] with the words "add me" in the subject line.   All email addresses will be held with complete confidentiality and there is no profit motive in any piece of writing disseminated.

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06 ноября 2012, 17:38

Goldman's Guide To The Election In 3 Simple Charts

Ahead of today's presidential and congressional elections, Goldman provides some brief thoughts on various election-night (and beyond) events. From a viewer's guide to the poll-closing times to a discussion of the apparent 'closeness' of the race and post-election market performance, they note that equity performance post 'tight' races has been better than in elections where the winner is more clear-cut. This election has a twist though in that it will be immediately followed by debate on the fiscal cliff, and thus resolution of the election will reduce, but not eliminate policy uncertainty.   Via Goldman Sachs: Q&A On Election Night Given that pre-election polling indicates that, at least at a national level, this election is closer than most others over the last 50 years, there is a clear risk that the results may not be known by the end of November 6. Equity markets in presidential election years do not follow a consistent pattern like markets in midterm election years. However, median equity performance in the weeks following very competitive elections slightly outpaces performance following less competitive contests. That said, this election is unusual in that it will be immediately followed by debate on the fiscal cliff, and thus resolution of the election will reduce, but not eliminate policy uncertainty. Q: How does this election compare to other close elections?   A: At the presidential level, it is closer than most contests over the last 60 years. Exhibit 1 lists several previous elections in which public opinion polling on the eve of the election suggested a very close race. Even compared to those, polling at the national level suggests a closer race than most in recent history.   Exhibit 1: Pre-Election Polling in Competitive Presidential Elections Source: Gallup. Realclearpolitics.com. GS Global ECS Research.   Q: Is there a risk that the election result will be delayed past November 6?   A: There are two foreseeable risks: a recount in a key state, or a delayed result due to absentee ballots or other voting issues. Colorado, Florida, and Pennsylvania conduct automatic recounts if the results are within 0.5 percentage points; Ohio's threshold is 0.25%. The average of recent polls in Colorado shows the President with a 0.6pp lead, just outside this threshold. In Virginia, President Obama has traded leads with Gov. Romney over the last couple of weeks; the President currently leads the average of recent polls in the state by 0.3pp (in Virginia, like other states that do not have automatic recount rules, candidates can still request a recount in a close election). While it is not inconceivable that at least one state's results could be subject to recount, it should be noted that even in the event that this occurs, it would take an incredibly close election to trigger a recount process similar to what happened in Florida in the 2000 election; President Bush's final margin was only 0.009% of the combined vote of the top two candidates.   Some states may also have difficulty dealing quickly with absentee and provisional ballots. Election laws in Ohio require that provisional ballots--votes cast by those whose eligibility to vote is in question, or who requested but did not return an absentee ballot--should not be counted until 10 days after election day, when absentee ballots must have been received, to avoid potential duplicate votes. As of November 2, there were around 200,000 outstanding absentee ballots, or roughly 3.5% of the number of votes cast for the two major party candidates in 2008.   Q: Do markets behave differently following close elections?   A: Equities react slightly more positively after competitive elections. Market trends are much less clear-cut around presidential elections than they are around midterm elections, when equities have fairly consistently gained following the election and into the early part of the third year in the presidential cycle.   By the end of the week following the election (i.e., November 16 this year) the median gain in the S&P 500 has been 1.9%, compared with 0.3% following less competitive races. The reaction in Treasuries is inconsistent; the yield on the 10-year Treasury has risen following competitive elections and declined slightly following less competitive contests, but is characterized by large moves in either direction in a few election years, and very small moves in most others.   While there are undoubtedly parallels with some of these prior periods, as we have pointed out recently, there are also major differences: the fiscal cliff looming just after the election at year end, the greater fiscal imbalance that lawmakers are likely to address next year, and the increased political focus on monetary policy ahead of the end of Chairman Bernanke's current term in January 2014.   Exhibit 2: Equity and Interest Rate Reaction Following Competitive Presidential Elections Source: Federal Reserve. Standard and Poors.   Q: What will the early indicators be on election night?   A: Indiana for the Senate, Ohio for the White House, and Virginia for both. Exhibit 3 lists each state by poll closing time, along with the number of electoral votes at stake and the party leading (and margin of lead) in the average of recent polling in the presidential and Senate races. Taking the poll averages at face value, current poll results imply that the President would win 303 electoral votes and Gov. Romney would win 235. In the Senate, taking the current polls at face value implies that some seats will change hands but that the net result will be 23 Democrats elected and 10 Republicans, leaving the partisan composition of the Senate unchanged (there are 23 Democrats and Democratic-caucusing Independent seats and 10 Republican seats up for election this year).   In the race for the White House, Virginia will be the first closely contested state to close its polls, at 7:00 pm ET. The state is essentially tied in recent polling, implying that if the President wins here, Gov. Romney would need to win in either Ohio or in a combination of other states (e.g., Colorado, Iowa, Nevada, New Hampshire and/or Wisconsin) where the President's polling advantage has recently been stronger than in Virginia. Ohio closes its polls half an hour later, at 7:30 pm, and while other electoral combinations are possible, there is a good chance that the winner in Ohio will also win the election.   Regarding the Senate, the earliest indicators will be in Indiana and Virginia. Democrats, and independents who caucus with them, currently hold 53 seats, while Republicans hold 47. If the Indiana seat, currently held by a Republican, is won by the Democratic candidate Rep. Joe Donnelly over Republican candidate Richard Mourdock, it will be an early indication that Republicans will have a difficult time gaining the majority in the Senate. Likewise, if Republican former Senator and Governor George Allen is able to win against Democratic former Governor Tim Kaine, it would indicate that Republican gains might be larger than generally expected.