Wednesday, 19 January 2011

FTSE 100 Capitulation?

FTSE 100 closed @ 5976.7, -79.73 (-1.32%)

Wow, that was a disappointing close for the FTSE 100, which just petered out from about 3pm, driven by disappointment with the fourth quarter earnings report from Goldman Sachs and speculative reports out of Germany regarding the possible restructuring of Greece's debts subsidised by the EU bailout fund. 

No idea what that entails but it obviously spooked the markets with both the French and German indices down.

Across the pond, the controversial financial giant, Goldman Sachs, reported that fourth quarter earnings fell by 52% bringing the full year decrease to 38%. Difficult to understand how, but the banks bonus scheme will pay out only slightly less than last year. 

Pay and bonuses are by far the banks biggest expense and, at $15.38bn, equate to an eye watering 39.3% of revenues or, an average $430,000 per employee (35,700 employees).

Couldn't suppress a laugh when reading an report on Goldman's earnings which contained a quote from David Viniar, Goldmans Finance Chief. “In the month of December, things were just dead,” Mr Viniar said. The wording could easily be a quote from a couple of likely lads discussing the local pub or nightclub falling out of fashion and probably not the technical explanation and understanding expected from a highly paid Investment banker.

Ultimately, the numbers are disappointing from what has probably been the most lauded, and influential investment bank of recent times, particularly on the back of last weeks positive set of numbers from JP Morgan which raised expectations for the industry.

Anyway, at the close:
DJIA is at 11825.29, -12.64 (-0.11%)
NASDAQ is at 2303.32, -25.47 (-1.09%)

Link to Goldman looks back at ‘dead’ days

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