STOCK MARKET WATCH -- Thursday, 19 January 2012

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9. YESTERDAY'S MARKET MIRACLE: U.S. stocks rise on Goldman Sachs results

http://www.marketwatch.com/story/us-stocks-rise-on-goldman-sachs-results-2012-01-18?siteid=YAHOOB

U.S. stocks tilted up Wednesday as investors considered better-than-anticipated results from Goldman Sachs Group Inc. “Goldman Sachs broke a trend” of earnings disappointments from the banking sector, said Fred Dickson, chief investment strategist at Davidson Cos. in Lake Oswego, Ore....

Goldman Sachs Post $1 Billion 4th Quarter Profit

http://www.npr.org/blogs/thetwo-way/2012/01/18/145415193/goldman-sachs-post-1-billion-4th-quarter-profit?ft=1&f=1001

The up and down markets from last year, took its toll even on Goldman Sachs, which is thought of as the rock star of investment banks.

Goldman posted a billion dollar profit during the last quarter of 2011. And while that may seem like a lot, it's 58 percent down. The AP reports that the profit follows a third quarter in which Goldman lost money for only the third time since it went public in 1999.

The AP adds:

"Goldman's typical clients are large hedge funds and multinational corporations that need to hedge their bets on foreign currencies, fluctuating interest rates and commodities.

"The bumpy financial markets hurt revenue in those parts of Goldman's business. Revenue from client services fell 16 percent to $3.06 billion for the quarter. Transactions in commodities, currency and fixed income fell 17 percent.

"Besides trading for those clients, Goldman has made big profits trading for itself — especially when markets are volatile. In 2009, as the country grappled with a financial crisis and a deep recession, Goldman turned a record $13.4 billion profit. But regulations taking effect this year will reduce Goldman's ability to make those trades for the firm."

Bloomberg reports that at $1.84 a share, Goldman still beat investor's expectations. They were predicting a $1.23 profit.

And market took the news in stride. Goldman's stock was up 6.8 percent.

Goldman beats Street on lower expenses

http://news.yahoo.com/goldman-fourth-quarter-profit-falls-beats-estimates-130057965.html

Goldman Sachs Group Inc's fourth-quarter profit fell 56 percent as trading and investment banking revenue plunged, but the bank managed to beat analysts' expectations through cost cutting and lower taxes.
Goldman's results on Wednesday reflected the weakest year for Wall Street since the financial crisis. As politicians and policymakers battled over ways to handle Europe's sovereign debt burden, market volatility surged and Wall Street's clients pulled back on risk-taking, held off on acquisitions and delayed stock and bond offerings.

Wall Street banks cut tens of thousands of jobs and drained bonus pools to respond to the slowdown in business throughout 2011.

Goldman's payroll declined by 2,400 employees during the year, reflecting job cuts across trading, banking and back-office operations. The bank slashed compensation 21 percent to $12.2 billion, or $367,057 per employee, from $15.4 billion, or $430,700 per employee, in 2010. "Goldman is adjusting and continuing to operate reasonably well in a difficult environment," said Gary Townsend, president of Hill-Townsend Capital. "I would prefer to see them investing more in their operations, but clearly right now they have to right-size their staffing to be consistent with the revenues the market is allowing them to generate."



Goldman's profit for the full year was $2.5 billion, its weakest year since 2008, at the height of the financial crisis.
Goldman shares were up more than 2 percent in premarket trading immediately after the earnings report, but lost some of the gains as the morning wore on...Each of Goldman's business lines -- investment banking, trading, investment management and investing and lending -- reported double-digit revenue declines during the fourth quarter. All but investment management reported lower revenue for the full year. Goldman's return-on-equity, a key measure of profitability, was a meager 3.7 percent for 2011. In the years leading up to the financial crisis, it boasted returns of more than 30 percent.