Goldman Posts Dismal Earnings; Revenues Lowest Since 2005

Apparently, the vampire squid is really getting hit on all fronts these days, with revenues lower by 40% year over year. If you look at it in the context of how bad Morgan Stanley’s report was, with revenues down 53% yoy, Goldman is doing pretty damn good.

Nevertheless, CEO, Lloyd Blankfein sums of the quarter perfectly.

 “The operating environment … resulted in headwinds across virtually every one of our businesses”

Profits were down 60% for the quarter, yet markets are at all-time highs. Fucking stupid, no?

It’s worth mentioning, last week,  Howard gave us a pretty good heads up at how desperate Goldman is for revenues these days.

Via Briefing.com

• Reports Q1 (Mar) earnings of $2.68 per share, $0.18 better than the Capital IQ Consensus of $2.50; revenues fell 40.3% year/year to $6.34 bln vs the $6.52 bln Capital IQ Consensus.
• Annualized return on average common shareholders’ equity (ROE) was 6.4%.
• Investment Banking
  • Net revenues in Investment Banking were $1.46 billion for the first quarter of 2016, 23% lower than the first quarter of 2015 and 5% lower than the fourth quarter of 2015.
  • Net revenues in Financial Advisory were $771 million, 20% lower compared with a strong first quarter of 2015, reflecting a decrease in completed mergers and acquisitions transactions. Net revenues in Underwriting were $692 million, 27% lower than the first quarter of 2015.
  • Net revenues in debt underwriting were significantly higher compared with the first quarter of 2015, primarily reflecting an increase in investment-grade activity.
  • The firm’s investment banking transaction backlog decreased compared with the end of 2015, but was higher compared with the end of the first quarter of 2015.
• Institutional Client Services
• Net revenues in Institutional Client Services were $3.44 billion for the first quarter of 2016, 37% lower than the first quarter of 2015 and 20% higher than the fourth quarter of 2015.
  • Net revenues in Fixed Income, Currency and Commodities Client Execution were $1.66 billion for the first quarter of 2016, 47% lower compared with a strong first quarter of 2015.
  • Net revenues in Equities were $1.78 billion for the first quarter of 2016, 23% lower than the first quarter of 2015. The decrease in equities client execution reflected significantly lower net revenues in both cash products and derivatives.
• Expenses
• Operating expenses were $4.76 billion for the first quarter of 2016, 29% lower than the first quarter of 2015 and 23% lower than the fourth quarter of 2015.
  • The accrual for compensation and benefits expenses was $2.66 billion for the first quarter of 2016, 40% lower than the first quarter of 2015, reflecting a decrease in net revenues.
  • The ratio of compensation and benefits to net revenues for the first quarter of 2016 was 42.0%, unchanged compared with the first quarter of 2015.
• Non-compensation expenses were $2.10 billion for the first quarter of 2016, 6% lower than the first quarter of 2015 and 49% lower than the fourth quarter of 2015.
  • The decrease compared with the first quarter of 2015 reflected lower other expenses, primarily due to lower net provisions for litigation and regulatory proceedings and lower expenses.
• Book value per common share was $173.00 and tangible book value per common share was $163.54, both 1% higher compared with the end of 2015.

GS is down a mere 1% in the pre-market.

It’s a cocaine party! Everyone, please, bring your own straws.

Credit Agricole downgraded FCX to a sell this morning. No one cares.

SPY

WTI

Nazis

Any questions? Behold the decadence of gratuitous stock market advances.

You cannot make up a better story for me. Imagine you were the President of the United States. As black man, you worry about the troubled youth that seem to be shooting each other in the face all day long, in between Donald Trump riots. So you set out to do something about it. The logical thing to do would be to recruit black scientists, physicians, professors and other professionals to establish an outreach program, in order to give young people inspirational role models and an ideal to strive for.

As leader of the country, the very last thing you’d do would be to recruit a bunch of felons and drug addled rap stars, who actively promote violence, racism, sexism and anarchy.

That’s exactly what Obama did.

President Barack Obama invited Nicki Minaj, J. Cole, DJ Khaled, Alicia Keys, Rick Ross and Pusha T among other Hip Hop notables to the White House to discuss the “My Brother’s Keeper” initiative and criminal justice reform on Friday (April 15).

“I can’t even explain to ya’ll what just happened,” Ludacris says on Khaled’s Snapchat story. “History has been made.”

Oh, by the way, as the President of the United States, leader of the free world, was giving his speech about keeping the youth out of trouble, Rick Ross’s ankle bracelet alarm went off. He had to interrupt the President in order to fix it. He’s had it on since last year, as part of the terms of his release, after being arrested for kidnapping and pistol whipping his gardener.

Here is an old classic Rick Ross song. Truly, this is a man deserving of the White House conference on how to keep America’s black youth out of trouble.

I am certain the House of Saud put in a phone call to BofA/Merrill, after one of their analysts had the gall to speak the truth, with regard to the scorched earth strategy they’re taking to crude oil production.

From the land that gave us the 9/11 attacks, Saudi Arabia now offers us famine and hardened recessions, pink slips galore, until all of the market share falls back into their robed laps. In case you’re hoping to survive the coming oil barrel wars, just know that the House of Saud fully intends to bankrupt your stupid country, whilst smoking cigars with your sell-out leaders. Moreover, if you get in their way, they will dispatch terrorists into your heathen countries to take down your tallest buildings.

All of the crude oil is theirs. If prices don’t get low enough to ensure the insolvency of their competitors, they will ‘grease’ the pockets of your environmental agencies to levy fines against your oil producing polluters to make business untenable.

The NYT is reporting that Theranos sent a letter to outside partners, announcing news that the Justice Department of the United States of America has opened up an investigation into the fuckery that has transpired at Theranos, a company run by college drop-out Elizabeth Holmes.

The note detailed growing list of inquiries from federal and state officials, many of which have looked into the company’s claims about its technology. The United States attorney’s office in San Francisco, which Theranos said was conducting the investigation, declined to comment, as did the S.E.C. Theranos would not elaborate about the exact nature of the investigation.

The company pointed out that the investigations began after articles about the company by The Wall Street Journal.

“The company continues to work closely with regulators and is cooperating fully with all investigations,” Brooke Buchanan, a spokeswoman for Theranos, said in an email.

It’s worth reminding everyone that the real architect of Theranos’ technology is a gentleman by the name of Dr. Gibbons. Sadly, in May of 2013, after the company had duped investors into believing it was worth billions, he committed suicide. It’s also worth noting that former board member, Henry Kissinger, had an alibi for that evening.

In this segment, D. Gartman went full southern ‘hog-wild’ on his predominantly northern audience. He got on the teevee, looked at everyone with a straight face, and ignored his previous calls of crude oil trading down to a wooden nickel, or that (crude) ‘would never trade to $44’ in his lifetime, and suggested, instead, that bankers and frackers alike would be pleased with $42 crude. Moreover, he boldly suggested that crude would be range bound from $32-$42, utterly and entirely abandoning his previous call of it delving into the pits of hell at $15.

Fake books in background: check

Sleepy southern retard look: check

Creepy hand gestures whilst doling out bad advice: double check

Spring chic tie: check

I give you The Gartman.

Shares of NFLX are getting face punched in after-hours trading tonight, post earnings disappointment. The growth was fine; on paper the company is fantastic. However, in light of the headlong assault provided by the money burning Bezos at Amazon, expanding into original content, coupled with the poor reviews of this past season of House of Cards, one could make a strong argument that Netflix is heading into tumultuous waters.

They were expected to produce 2.23 million subs in the U.S. and 4.51 million internationally. Instead, they clown-car’d in with 1.77 and 4.36, respectively. Moreover, look ahead, the company is forecasting 500k domestic subs in Q2 and 2 million overseas. These are outrageous numbers, indicative of a great business. However, expectations were for 586k and 3.5 mill, respectively. That’s a stark drop off in guidance. They attribute the slow-down to maturing markets. Once they enter a market, like Latin America, people go fucking apeshit for the service. But, as human caprices ebb and flow, people become bored with the ancient movies populating the NFLX ecosystem and cancel.

“We were incredibly excited to grow to over 81 million subscribers, it’s an enormous quarter for us that way,” Netflix co-founder and CEO Reed Hastings said during a Monday afternoon webcast. “Some of it was from our expansion around the world: It’s 130 countries so there’s quite a bit of variety.

Some people, like this imbecile from ‘TechnoBuffalo’ think NFLX has something to worry about: “Netflix has had an incredible rise, but they need to be looking over their shoulder because there is an onslaught coming led by Amazon,” Jonathan Rettinger, president of TechnoBuffalo, told CNBC after the earnings announcement. “Netflix has a lot to worry about over the next few months.”

CEO, Reed Hastings, sums up the risks and rewards nicely.

“If you think about your last 30 days, and analyze the evenings you did not watch Netflix, you can understand how broad our competition really is. Whether you played video games, surfed the web, watched a DVD, TVOD, or linear TV, wandered through YouTube, read a book, streamed Hulu or Amazon, or pirated content (hopefully not), you can see the market for relaxation time and disposable income is huge, and we are but a little boat in a vast sea. For example, while we’ve grown from zero to 47 million members in the USA, HBO has also grown, which shows how large the entertainment market is. We earn a tiny fraction of consumers’ time and money, and have lots of opportunity ahead to win more of your evenings away from all those other activities if we can keep improving.”

My guess, people want to be a part of the Netflix ascendancy and this small miscue will not keep growth buyers out of the stock. But, should this miss become a trend, look for valuation to become an issue. The companies PE is out of this world high. The p/s ratio is near all time high levels, above 7x, a 275% premium to the rest of the market. The stock has been trading at this high premium since the stock bottomed in 2013. Before that, the companies p/s ranged from 1.4-5. Clearly, there is downside to the name.

The reward lies in whether or not the company can continue to grow revenues 20-25% year over year. Look at that revenue growth chart.

This is what dreams are made of. Never ending spiraling higher stock markets, spearheaded by calamitous news. If markets can go up on this news flow, imagine what it’ll do when the economy is pistol whipping hot under President H. Clinton.

In what can only be described as miraculous, America inherited an Asian oil rout and flipped it to a rally. Brent crude is essentially unchanged for the day and the Dow broke 18,000 to the upside.

As for me, my positions remain intact: short XLE, long TLT. It was a bad day for Senor Tropicana, as I am feeling the brunt of being fully exposed to the short side of big oil. Nevertheless, I am a patient man and I have time to kill before I cover my shorts. Plus anyway, a bad day used to mean -6% for the day, with my old style. Being down 1% or so is like having to deal with the emotional turmoil of tossing one of my readers into shark infested waters and then presiding over their expeditious and gruesome extermination. It’s not really that big a deal.

This is good because it means that their central bank, the Federal Reserve, will hold off on hiking rates.

Junk debt in China is acting junky as of late, with spreads widening  and yields rising in 9 of the last 10 trading days. Credit agencies are slashing the ratings of these nefarious firms and issuers are canceling bond sales at a frantic pace. More than $9 billion in bond sales have been canceled in April alone.

The numbers suggest more pain ahead: Listed firms’ ability to service their debt has dropped to the lowest since at least 1992, while analysts are cutting profit forecasts for Shanghai Composite Index companies by the most since the global financial crisis.

“The spreading of credit risks is only at its early stage in China,” said Qiu Xinhong, a Shenzhen-based money manager at First State Cinda Fund Management Co. “Many people have turned bearish.”

“To Chinese investors at the moment, default risks are high almost everywhere,” said Shi Lei, the head of fixed-income research at Ping An Securities Co. The yield premium on corporate bonds will probably rise by 30 to 50 basis points over the next several months, Shi said.

Sixty two companies have canceled bond payments this month. To put that into perspective, that’s six times the normal average.

“As more and more issuers default, lenders and investors will reassess their portfolio and lending, and that will cause yields to rise,” said Christopher Lee, chief ratings officer for Greater China at Standard & Poor’s in Hong Kong. “If the onshore market has any dislocation, that will have a spillover effect in the offshore market.”

Corporate debt to GDP in China stands at a record 165% of GDP. Again, this is good news for markets because…

Yeah, my friends and I want to bid for YHOO too. I realize the current market cap is a tad more than what I have saved in my JP Morgan account. Nevertheless,  I’m hoping Goldman Sachs will help finance this dream of mine, to be at the helm of one of the world’s dumbest internet companies alive.

With that in mind, the fucking Yellow Page, or “YP” as they call themselves, wants to acquire YHOO (I bet they do). The only minor stumbling block to financing the deal is YP’s paltry $1 billion valuation. They’d have a better chance if their valuation was zero.

YP is working with Goldman Sachs Group Inc. to investigate a variety of strategic alternatives, which could include acquiring smaller firms or selling itself, said the people, who asked not to be identified because the negotiations are private.

The company, controlled by Cerberus Capital Management, is valued at $1 billion to $1.5 billion, one of the people said. Its size makes it a candidate for a Reverse Morris Trust with Yahoo: a tax-free transaction in which YP would merge with a spun-off subsidiary of Yahoo’s core business, the person said. Time Inc. also considered such a transaction with Yahoo, Bloomberg reported in February.

It’s the fucking phonebook for Christ’s sake. I think it’s fair to say, potential suitors for Yahoo are now the bottom of the barrel varietal. Cerberus should go hire some teenagers to throw 5 pound phonebooks through the windows of Yahoo execs until they agree to the deal.