Thursday, September 11, 2008


Headline in the WSJ this morning is "US Senate probe accuses Wall St cos in tax scheme" includes all the big investment brokers -Morgan Stanley (MS), Lehman Brothers (LEH), Citigroup (C), and Merrill Lynch (MER) - marketed allegedly abusive transactions that helped foreign hedge-fund investors avoid billions of dollars in U.S. taxes over the past decade. Needless to say these stocks and banks are ripping lower on the scanner. LEH currently testing $4.00 as the WSJ, in a separate tag, talks about the lack of disclosure with respect to the size of its commercial real estate holdings. Citi and GS have downgraded LEH. Asian markets sold off overnight, as are Europeon markets. Adding to the negative sentiment were the weaker than expected econ. data re: inital claims and import prices.

Futures trading sharply lower and only one stock on the gap up scan - CSX on earnings.

Gapping down: LEH, MER, C, GS, MS, BAC, WB, AIG, WM, AXA, RF, RIO ... Analyst downgrades NVDA, PDLI, AEG, AZN Earnings KNXA


Aimable Mugara said...

Hi Jamie,

I have watched as the GS stock got clobbered due to what most analysts see as the worst report in years this coming Tuesday. Do you think that report will be as bad as some are saying?

TJ said...


Here is an excerpt from the WSJ

Goldman Sachs might not be so golden this quarter - WSJ (163.24 ) -Update : WSJ reports Goldman Sachs Group might not be so golden this quarter. The Wall Street investment bank has hardly emerged unscathed from the credit crunch. But compared with Lehman Brothers Holdings and Merrill Lynch, Goldman has made it look easy. There is no obvious sign of big trading losses. But the third quarter wasn't kind to most of Goldman's businesses, as trading activity and investment-banking business swooned. In recent weeks analysts have cut earnings estimates to $2.13 a share, or $953 million, from $3.29 a share Aug. 15, according to Thomson Reuters. That probably remains too high. The few analysts at $1.50 a share may look smartest. Goldman earned $6.13 a share, or $2.85 billion, in the year-earlier period. The main culprit: Trading volumes across certain products dropped drastically in August. For example, monthly U.S. equity volumes fell 30% year-on-year, according to NYSE Euronext. This drop will ripple through a host of Goldman's operations. Less client trading will cut into profitable businesses such as prime brokerage. This is all likely to hit the co's principal and trading-business line, which accounted for 59% of revenue in the second quarter. Investment banking, another profitable business, also has been weak. In August, for example, Goldman's completed mergers-and-acquisitions volume fell almost 60% globally from 2007, according to Thomson Reuters. And there are likely to be write-downs from the co's $17 billion commercial real-estate portfolio.

All of the broker dealers are extremely volatile, but GS is one of the few that has yet to take out the March low. $150.00 is a key pivot as it held on this morning's weakness. If $150.00 fails, it will retest $140.00.

Aimable Mugara said...

Thanks Jamie!