Morgan Stanley CFO Colm Kelleher somehow kept a straight face when he told a Dow Jones Newswire reporter, "We always said 2009 was a year of transition, and what you're getting is a validation of that."
Translation from Streetspeak: "Year of transition" means "business as usual" and "validation" means "profits so big I think I'm going to shit myself."
The WSJ story on this matter notes that Morgan Stanley's risk-taking is paying off, just as it already been at Goldman Sachs. Morgan's just now trying to catch up, being slow on the profit uptake during this year's market rally. Nevertheless, as DJN's Gabriella Stern points out:
Hedge funds recovering, mergers and acquisitions are starting up again, the big banks are frantically trying to figure out how to spin their impending resumption of big bonuses. Meanwhile, "the job market is bleaker than ever in the current recession."
A pox on the G-20, at which "the lack of questioning of the status quo was spectacular." Halligan notes: "Obama's oratory was typically impressive. The trouble is, it wasn't true. ... Nothing 'bold' was done to lessen systemic dangers or overhaul the global regulatory regime."
Russian oligarch's pending purchase of New Jersey Nyets continues an odd, tragicomic history of ownership of the franchise that once boasted Dr. J. Funny little story by Brad Parks notes that Bruce Ratner, who bought the team in 2004 for $300 million, wound up spending about $1.5 million per win.
Even bears are optimistic about impact on market. "One big reason for the market's continued strength is that expectations were so low for the economy and corporate earnings that the market was able to rise even on modestly good news."
The L.A. Times, in its very first paragraph of a hometown big-news story, calls Disney's conquest of Marvel's superheroes a "reinvention" — no wonder that readers are flocking away from dull daily newspapers. Much better, as usual, is the Wall Street Journal's take: "By bringing in macho types such as Iron Man, Thor and Captain America, the Marvel deal would expand Disney's audience, adding properties that appeal to boys from their preteen years into young adulthood. That demographic group hasn't been swept up by Disney's recent hot properties, such as High School Musical and the Jonas Brothers." Marvel becomes a Mickey Mouse operation as Disney tries to jump-start flagging DVD sales. The film industry is in deep trouble from all sorts of Web-based diversions, and the WSJ sees more consolidation in Hollywood. Meanwhile, Disney's Bob Iger sounds like a pedophile: "We view this as an opportunity to attract more boys and older kids." The Big Money's Chadwick Matlin spoofs "Exclusive Disney-Marvel Synergy Memo." Click on video above (or here) for Disney's subliminal messages.
Riffing on David Cho's scary story last weekend in the Washington Post, "Banks 'Too Big to Fail' Have Grown Even Bigger," Salmon urges that someone has to force Wells Fargo, JP Morgan Chase, and BofA "to start shrinking today."
"In a perfect world, we would simply ban leveraged buyouts. The vast majority of these debt-laden corporate takeovers are no less predatory and value-destroying to a company than a loan shark who charges usurious rates of interest." However, it's an imperfect world, so why not force private equity buyers "to pony up at least 50 percent of the purchase price"?
Puts the lie to current spin. With links. Behind all this is that sharks are using corporate welfare to churn shitty banks, and that's not going to accomplish anything but profits for individual sharks. His conclusion: "Recognize bad debt instead of continuing to pretend it will work itself out eventually. Stop funding insolvent institutions and use those funds to seed new, healthy banks instead."
Reaction from one investment strategist: ""Whether it's the facts catching up with the expectations or the expectations catching up with the facts, I'm not sure which." You can those words to the bank. WSJ speculation, Telegraph (U.K.) on fears that rally's over; Seeking Alpha's The Mole on the bear.
"The country's growing unemployment is overtaking subprime mortgages as the main driver of foreclosures, threatening to send even higher the number of borrowers who will lose their homes and making the foreclosure crisis far more complicated to unwind." In the first quarter, prime foreclosures outnumbered subprime ones.
Droll profile of one Laura Steins in ritzy NYC suburb Harrison: "[S]he's months overdue for a visit to her colorist, a telltale sign of economic distress for a woman such as Steins."
Sailing on its swift boat with its three Gilligans — little buddies Bill O'Reilly, Glenn Beck, and Sean Hannity — Fox has seen its viewership rise 11 percent from last year. CNN and MSNBC are down.
Regular investors don't think much of Citigroup stock right now (it fell 3.9 percent this morning in early NY trading), and energy trader Andy Hall got $100 million last year, so why should he do this? Traders like Hall don't have to disclose their compensation and don't fall under the aegis of pay czar Ken Feinberg, so the feds may have to send some leg-breakers to Hall's mansion.
Advertisers not only suddenly frugal but also increasingly turning to the Web. Uh-oh. The Internet virus is spreading from the newspaper industry (which started to waste away before the recession) to the slicks.
The S&P 500 "has soared 48 percent since it reached a 13-year low on March 9." That says something about the manic-depressive economy. Read the rest of this overview by Michael J. Moore. Goldman's equities revenue was up 59 percent over the first quarter, Wall Street firms have raked in $4.2 billion in underwriting fees because of all the action. The rally bolsters confidence in companies "that cater to wealthy and corporate clients." But, speaking of manic-depression, see this WSJ story: "After Dow's 42% Run, Roadblocks Looming." Lithium may be indicated.
"It's easier to call the economy than stocks, and the economy has been experiencing a dead-cat bounce. I have some charts that I looked at recently, and I think that the likelihood of a normal post-recession bounce is very low."
The high-class watchdog Corporate Library has released its "sneak peek" of the highest-paid CEOS of 2008.
Jesus, what a disastrous year that was, what with the meltdown and all. But check out (and download for free) "The Top 10 Highest Paid CEOs of 2008: Pay hits the gas pedal as the economy hits the brakes." Blackstone's Stephen A. Schwarzman, one of Wall Street's highest-flying vultures, raked in "total realized compensation" of $702.4 million, fairly closely followed by Oracle's Larry Ellison, who garnered $557 million, followed by seven guys from the oil business. And, finally, followed by Abercrombie & Fitch's Mike Jeffries, in 10th place with 2008 gravy totaling $71.8 million.
Special mention to A&F's Jeffries. The teen-apparel outfit's share price was in the high 70s in January 2008 and ended the year in the low 20s. Didn't seem to hurt him any.
And something not in the Corporate Library report: In early June 2008, before A&F's share price started its rapid descent, Jeffries raked in millions of dollars in just a few days by selling a shit pile of stock, not all the sales of the "automatic" variety. (See for yourself.)
Jeffries's timing was impeccable, although maybe it hasn't been so good this year. Only today, Abercrombie & Fitch reported that it swung to a second-quarter loss that seems to be directly tied to some poor management decisions.
John Paulson, who made billions last year by hiring Alan Greenspan as a consultant and betting that the U.S. housing market would collapse, snapped up huge chunks of Bank of America and Goldman Sachs in the second quarter, Bloomberg reports. The WSJ notes that Paulson also bought other banks, but Bloomberg has more detail on other purchases by Paulson: He bought lots of drugs, gold, and computer stuff. If you had earned $2.5 billion last year, you would too.
Warren Buffett not only was in essence bailed out by the bailout but he also traded the bailout to seek "morally hazardous" profits. That's a somewhat disillusioned take from Rolfe Winkler of Reuters. (He also gets credit for the above graphic.)
Buffett, one of the most human-seeming of our oligarchs, got credit for bailing out Goldman Sachs with $5 billion last fall. The Omaha guru has wailed about government guarantees. But looky here, says Winkler in "Buffett's Betrayal": "Were it not for government bailouts, for which Buffett lobbied hard, many of his company's stock holdings would have been wiped out." He adds:
Berkshire Hathaway, in which Buffett owns 27 percent, according to a recent proxy filing, has more than $26 billion invested in eight financial companies that have received bailout money.
Winkler's piece is nice, and Joe Wiesenthal masticates it here, and Robert Wenzelhere. See Buffett's February 2009 letter here.
Goldman Sachs is setting records, but it's a broken record: The Street's big daddy has "reached all-time highs" in revenue "less than a year after the firm took $10 billion in U.S. rescue funds," as Bloomberg puts it.
Goldman Sachs Group Inc. set aside $11.4 billion for compensation and benefits in the first half of 2009, up 33 percent from a year earlier and enough to pay each employee $386,429 for the period. ...
After setting a Wall Street profit and pay record in 2007, Goldman Sachs cut compensation 46 percent last year as the financial crisis slashed revenue and the firm accepted government support. The firm repaid $10 billion to the U.S. Treasury last month, freeing itself from restrictions on year- end bonuses. Even so, a compensation bonanza at a company that received taxpayer support could stoke political anger with the U.S. economy in recession.
Time to go back and read Matt Taibbi's screed on Goldman-as-vampire-squid.
As usual, Eliot Spitzer makes sense about the economy. If he hadn't fucked his own career, he'd be a valuable resource right now. Albany would never have blown up the way it has, if Spitzer were still governor. And unlike David Paterson, Spitzer understands Wall Street and knows how to point out schnooks.
If only Spitzer had kept his finger out of prostitutes and left it on the public pulse. Here he is talking earlier this morning on Bloomberg about public perception of Goldman's expected record haul:
"The question becomes how does this all play politically? This could be a political explosion. 'Suddenly they're back making their bonuses and we're unemployed.' And you know what? The public is right."
1 comment(s)
