The King Report: Goldie’s Revenue Contributions



Once again, just like in July, August & September, Benito juiced the system during expiry week.

The previous three weeks, the Fed balance sheet contracted modestly. But for the week ended on Wednesday, Benito poured $54.747B into the system via the monetization of $70.699B of MBS… Term auction credit declined 22.937B.
(See Table 9)

Goldman ($5.25) beat consensus earnings ($4.18); but it did not beat the whisper number. So Goldie declined dragging the market down in concert.

This episode illustrates the folly of consensus estimates. They are usually lower than the real estimates, the ‘whisper numbers’. This allows companies to beat consensus more easily and gives the US’s ‘new economy’, which is financial speculation and euchring the public, another scheme to exploit.

An astute money manager on Goldie’s earnings: Just a little perspective – For this incredibly “broad based” customer platform, here are the rev contributions this quarter:

Financial Advisory/M&A – $325mm
Equity underwriting – $363mm
Debt underwriting – $211mm
Total= $899mm

Trading/Principal investments = $10 Billion!!! [Total rev is $12.4B, so trading is 80.6% of rev] (Used to be $2-4 Billion)

Global economic Armageddon and the near imminent failure of the company was clearly the best thing that ever happed to them!! In fact they became a normal commercial bank as well – even better prop trading profits up 5x and now mistakes are fully guaranteed by US taxpayer. No wonder they swinging for the fences. Wonder how much leverage/VAR they running intra-quarter???

$17 Billion in comp Year-to-date 2009 vs. $11B during the same period of 2008 – Not bad for a govt sponsored entity!! Fannie Mae couldn’t even pull that one off!!

Goldie CFO David Viniar had the temerity to aver that Goldman doesn’t have a government guarantee. “We operate as an independent financial institution that stands on our own two feet. We don’t think we have a guarantee.”

Viniar would have more credibility if he said, “We stand on our own two ears” given the inordinate amount of calls between Goldie CEO Lloyd Blankfein and Hank Paulsen during and after the crisis.

Some analyst should ask Viniar how much of Goldie’s trading profits are ‘unrealized’ gains. As we asserted well before the financial crisis, regulators should compel financial institutions and hedge funds to disclose ‘unrealized profits’, which can be heavily dependent on arbitrary ‘marks’.

Citi’s earnings were torpedoed by increasing write-offs for consumer-related losses…Q4 could be quite ugly for big banks and other entities that must produce yearend results that an auditor will sign.

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