Daily Archives: October 28, 2008

Is Goldman Sachs As Smart As Everyone Thinks? (GS, C, MS, NTRS, STI, USB)

Goldman_sachs_logoSometimes there is just lunacy written about financial companies, and sometimes there is lunacy inside of financial companies.  Forget about the argument that there are usually both for a minute.  Yesterday we covered an issue from Financial Times after they wrote an article over the weekend and this issue may not go away about Goldman Sachs Group (NYSE: GS) CEO Lloyd Blankfein placing a call to Vikram Padit at Citigroup (NYSE: C).  The topic: merger.

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Posted on: October 28, 2008 – 6:04 am in Banking, Brokerage Firms, Financial Stocks, , , , , ,

Financial Crisis Cost Moves Toward $25 Trillion

Cammonopoly_wideweb__430x3250No one with an abacus, a calculator, or a mainframe will ever know what the global credit crisis has cost in real money. Lost jobs means lost tax revenue. Lost bank capital means a drop in share values. Government aid must be near $1.5 trillion when the US’s $700 billion is added to what all other nations have put in to shore up banks.

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Posted on: October 28, 2008 – 5:21 am in Economy, ,

Google (GOOG) Burns More Money To Save The World

GoogLeaving aside its huge and immensely profitable search business, Google (GOOG) has managed to lose money in almost every other business it has started or bought. YouTube is probably at the top of that list.

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Posted on: October 28, 2008 – 4:56 am in Internet, , ,

Government Puts More Capital Into Banks: More Failure Of Tickle Down Theory

FedThe large money center banks never planned to take the money they are getting from the government to make loans. The equity investments will be used to shore up capital, which is now old news. Bank executives talked big about improving credit liquidity, but that was a feint all along.

Since Treasury has not attached strings to the capital going to banks, the system for getting money to businesses and consumers may be a year or more from improving.

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Posted on: October 28, 2008 – 4:37 am in Banking, ,

Boeing (BA) Settles With Unions: All That Wasted Time

R218533_855025Moving into the pit of a recession, Boeing (BA) executives managed to prolong a strike with the company’s machinists for seven weeks before reaching an four-year accord. Management almost certainly knew their tipping point for settling, so what was the wait for?

In the meantime, the big aerospace firm allowed its long-delayed Dreamliner to get even later which will almost certainly cause airline customers to seek penalties. That would be another few hundred million dollars out the door. Airbus certainly took whatever advantage it could of the significant failure of the people who run Boeing.

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Posted on: October 28, 2008 – 4:21 am in Aerospace,

Bolshevicks Seize Detroit (GM)(F)(TM)

Ford1As far as anyone can prove, Henry Ford and Alfred Sloan were not members of the Communist Party. Neither one of them was asked to testify before the House Committee on Un-American Activities. No one has ever even hinted that either of them ever met Senator Joseph McCarthy.

Left alone, Detroit did fairly well. With the exception of being converted into the world’s largest arms manufacturing apparatus during WWII, and a loan given to Chrysler in 1978 and paid back by Lee Iacocca, the federal government has not given a financial aid package to the auto industry. This relationship has been a one way street for decades. Congress mandates safety features and emissions standards. Detroit spends hundreds of millions of dollars complying. The $5 billion (or $10 billion) loan that GM (GM) is asking from the Fed to help it finance a buyout of Chrysler might be seen as a payback for all those years of regulation.   However, the overarching stupidity of the management of The Big Three must be acknowledged as well.

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Posted on: October 28, 2008 – 3:24 am in Autos

Magazine Business Starts To Follow Newspapers Down The Tank (NYT)(WPO)(GCI)(MHP)(TWX)

There are no Wall Street analystsNewspaper_2 who believe that newspapers will recover from the ongoing financial crisis. Publishers have argued that housing, employment, and car markets were the cause of their declining revenue. When those industries recovered, they reasoned, so would the newspaper industry. Based on the third quarter results from large newspaper chains including The New York Times Company (NYT) and Gannett (GCI), it is almost certain that the internet has mortally wounded this business and that the websites set up by local papers are not pulling in enough revenue to offset what print versions are losing.

The Audit Bureau of Circulations released its numbers for newspapers today. For the six months ending in September most large dailies lost a significant portion of their subscribers compared to the same period a year ago. The biggest papers in Boston, Houston, Philadelphia, and Atlanta all dropped over 10%.

As the year wears on there is growing evidence that the magazine industry will not escape the fate of newspapers. Several of the largest weekly magazines, business publications, and the flagship properties at some of the big print companies are experiencing tremendous advertising page attrition which is, in many cases, accelerating.

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Posted on: October 28, 2008 – 3:17 am in Old Media, , , , ,

Media Digest 10/28/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

NewspaperAccording to Reuters, GM (GM) and Chrysler have asked the government for $10 billion to close their merger.

Reuters reports that  Boeing (BA) and its machinists have entered into a tentative labor agreement.

Reuters reports that Honda (HMC) cuts its sales forecasts due to the financial crisis.

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Posted on: October 28, 2008 – 2:46 am in Press Digest, , , , , , , , , , , , ,

Asia Markets 10/28/2008 Big Move Up (HMC)(HBC)

JapMarkets in Asia rose sharply.

The Nikkei was up 6.4% to 7,622. Honda (HMC) was up on a falling yen. Mitsubishi UFJ Financial due to concerns it will raise over $10 billion diluting current shareholders.

The Hang Seng rallied 11.5% to 12,280. HSBC (HBC) rose sharply.

The Shanghai Composite was up 2.8% to 1,772.

Data from Reuters.

Douglas A. McIntyre

Posted on: October 28, 2008 – 2:19 am in International Markets, ,