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The core PPI number (excluding food and energy) saw a rise in 0.2%. This is an okay number. Equity markets will behave fine with this news. Only when there is a major surprise to the upside should we become concerned.
BTW, CPI comes out tomorrow.
Well Goldman did it again. The firm reported net revenues of $10.18 billion and net earnings of $2.33 billion for its second quarter ended May 25, 2007. Diluted earnings per common share were $4.93 compared with $4.78 for the second quarter of 2006 and $6.67 for the first quarter of 2007. Annualized return on average tangible common shareholders' equity was 31.2% for the second quarter of 2007 and 37.8% for the first half of 2007. Annualized return on average common shareholders' equity was 26.7% for the second quarter of 2007 and 32.3% for the first half of 2007.
Other highlights included:
-- The firm continued its leadership in investment banking, ranking first in worldwide announced mergers and acquisitions and public common stock offerings for the calendar year-to-date.
-- Equities generated its second highest quarterly net revenues of $2.50 billion, reflecting strength across all major businesses.
-- Asset Management generated record management and other fees of $1.04 billion. Assets under management increased 28% from a year ago to a record $758 billion, with net asset inflows of $18 billion during the quarter.
-- Securities Services achieved record net revenues of $757 million, 15% higher than its previous record.
My take: not a bad quarter but there appears to be a deceleration in revenue from a year-to-year basis. This should be expected and I as have mentioned in the past: GS's increases in earnings every quarter were not sustainable. But its still a good stock and very good firm!
Two Interesting "Buried" Points to take away from the initial Press Release:
(1) "Net revenues in Fixed Income, Currency and Commodities (FICC) were $3.37 billion, 24% lower than the second quarter of 2006, primarily reflecting lower net revenues in commodities and weak results in mortgages, principally attributable to continued weakness in the subprime sector."
My take: Maybe we havent seen the end of the subprime woes! In fact, this may be a clear indicator as to why you need to stay away from interest rate sensitive Bear Stearns!
(2) "Operating expenses were $6.75 billion, essentially unchanged from the second quarter of 2006 and 14% lower than the first quarter of 2007."
My take: GS will do just about anything to hit theirs numbers and "right" the ship! If earnings see declines then I would expect operating and compensation expenses (layoffs and/or tempered hiring policies) aggressively slashed over the next 3 to 4 quarters (regardless of what they might say).
More after the conference call!
This week will see much action on both the macroeconomic side and coporate earnings front.
Tuesday June 12
Wednesday June 13
Thursday June 14
Friday June 15
