- SEC reaches a $550 million settlement with Goldman Sachs. “The regulators get to claim victory while the Eloi get to continue their frolic atop the fluffy clouds of privilege and untouchability,” Josh Brown writes at The Reformed Broker. “Nobody admits wrongdoing, rightdoing or frankly, admits anything at all for that matter.”
- “This is surely a massive win for Goldman, whose entire business was at stake if it was found guilty of serious wrongdoing,” Reuters blogger Felix Salmon says. “The risk, of course, is that Goldman’s victory here will only serve to exacerbate its arrogance. Could the Squids of West Street become even more insufferable, now?”
- Business Insider has a list of winners and losers in the Goldman fraud settlement case.
- Lots of data to digest this morning, and most of it isn’t promising. Producer prices fall for third straight month and manufacturing data was weak. Headline jobless claims number looks good, but seasonal adjustments played a large role in the better-than-expected figure. “Due to the seasonal issues around the adjustments with GM doing the opposite of what they’ve historically done has made initial claims more difficult to analyze for a few weeks,” says Miller Tabak’s Peter Boockvar. “One thing though is for sure, up to 3 million workers will be falling off the extended claims rolls as benefits run out.”
- Naked Capitalism blogger Yves Smith relays an interesting nugget from HousingWire: for every one home currently on the market, two are waiting to be sold. “The scary part here is this estimate of market overhang refers only to foreclosed and distressed property,” she says. “There is another category of hidden inventory, people who would like to sell but aren’t even listing their houses.”
- Oil has finally stopped gushing into the Gulf. For now, as BP tests a new containment cap.
- Apple’s (AAPL) acquisition of mapping company Poly9 marks the second maps-focused company AAPL has bought in the last year. “In the short term, and with Poly9 specifically, Apple is buying its Google Earth,” Business Insider’s Dan Frommer says. “But more broadly, Apple is preparing for life after Google.”
- H-P’s (HPQ) Android tablet, which was supposed to hit the market in 4Q, has been delayed and won’t ship before the end of the year, Digital Daily blogger John Paczkowski reports, citing anonymous sources. Reason for the delay aren’t clear. “Perhaps, H-P has decided to focus its resources on the future webOS slate PC that its new Palm unit is developing,” he says. “Or perhaps the company is reconsidering its multi-OS tablet strategy in light of the Palm acquisition. After all, H-P has said repeatedly it is ‘doubling down’ on webOS.”
- “Even as lenders struggle to pull themselves out of the credit crisis, signs of a new and potentially dangerous infatuation with risky borrowers are emerging,” WSJ reports.
- Pretty pumped to see Carlos Beltran patrolling center field once again for the Mets.
Traders had a field day with Goldman Sachs’ (GS) call options, including those that expire tomorrow, late in the session after SEC says a “significant announcement” is coming.
Traders rightly predicted it’s the long-awaited settlement.
Nearly two-thirds of the day’s 153,000 Goldman call contracts conveying the right to buy shares changed hands in the final half hour, notes OptionMonster’s Jon Najarian, who says activity “exploded” on the news.
July options expire tomorrow, meaning traders who picked up near-term contracts are anticipating an immediate burst for the shares. $150 calls expiring tomorrow make money if GS can rise 4% or higher Friday to breach $151.10.
Trading after the close is nearly there: GS is up 5.2% to $152.71 after hours.
So now it appears the nation will get a new set of laws for the banking industry. Actually, “set” is putting it lightly; at 2,000-plus pages, the financial reform bill passed this afternoon by the Senate is as monstrous a leviathan as the healthcare bill that proceeded it.
Glass-Steagall and the other Depression-era laws that were a response to another financial crisis, created a stable environment for the banking industry for half a century. If this bill manages that feat, it will be rousing success, and investors will reap the benefits, even if they don’t realize it.
Here’s the rub, though: Glass-Steagall was 37 pages. Thirty-seven pages. It laid out concrete, simple rules. This bill we have today, this 2,000-page behemoth, doesn’t lay out simple, concrete rules. It creates councils. Agencies. “Authorities” to break up banks that “pose a threat” to the system.
“Citbank, JP Morgan, Bank of America, Wells, Goldman, and Morgan Stanley NOW constitute ‘a grave risk to financial stability.’ ” Yves Smith writes at naked capitalism. “You could extend the list further into the stress test banks (19 in the US), but let’s stick with these. If we believed this bill was meaningful, action be taken against these banks immediately upon signing. Odds of that happening? Zero.”
Sit back and take a deep breath, there’s a ton of news to digest today.
US stocks stage a furious late-day rally and close mixed as Senate passes financial overhaul bill, but more importantly, speculation swirled late in the day that a settlement had been reached between the SEC and Goldman Sachs (GS) over the fraud lawsuit.
Headlines crossed after the closing bell confirming the rumor, saying Goldman agreed to pay $550 million to settle the charges. SEC’s planning to hold a news conference any minute.
Dow snaps its seven-day winning streak, closes down 7 at 10359, but was down as much as 126 earlier in the session before recovering. S&P 500 rises 1 to 1096 and Nasdaq Comp slightly drops 0.8 to 2249.
JPMorgan kicked off the day by generating strong 2Q profits, although revenue fell in four of its six lines of business. Additionally, there was a plethora of economic data this morning which can be described as suspect, at best. Producer prices fall for third straight month and manufacturing data was weak. Jobless claims dip to two-year low, but seasonal factors skewed the data.
But all the fireworks came after hours. In addition to Goldman, Google shares are sliding 4% in late trading after the Internet giant reported 2Q earnings that missed analysts expectations.
WSJ also reports latest developments surrounding the scandalous iPhone 4, saying Apple (AAPL) overruled internal concerns about antenna reception and denied carriers the proper time to test the device before selling it.
Hectic week ends with a busy day tomorrow as GE, BofA and Citi all report quarterly results. As Art Cashin always says, stay nimble, folks.
Banks are leading the market down, after JPMorgan’s earnings report looked great on the bottom line, but not quite so hot above there. Also, today’s data offer more dismal markers on the recovery.
Before you get to the video, ponder this from Capital Economics’ Paul Ashworth: “Today’s data releases suggest that the industrial recovery is rapidly losing momentum, making deflation an even bigger threat.”
Remember how I said the Fed tries to make everything it says sound dull and monotone? (I said it yesterday morning in case you missed it.) Right on cue, the Fed gave me the best example I could hope for in its June FOMC minutes. Read this:
Participants generally anticipated that, in light of the severity of the economic downturn, it would take some time for the economy to converge fully to its longer-run path as characterized by sustainable rates of output growth, unemployment, and inflation consistent with participants’ interpretation of the Federal Reserve’s dual objectives; most expected the convergence process to take no more than five to six years.
Catch that? The Fed thinks it’s going to take another five to six years before the economy’s back to a state that could be described as “normal.” Our colleague Kathleen Madigan found that line, buried in the summary of the minutes. “The U.S. might have to go through another World Cup before the economy gets back to normal,” she wrote (for the wires version of Market Talk.)
Forget all that pablum about 3%-3.5% GDP growth this year, about 3.5%-4.2% next year. This is the Fed’s real assessment of the economy, buried where almost nobody will actually read it. Five to six years. That’s the payback for the debt hole the nation dug itself. That’s the ramifications of the worst recession in 80 years. There are no quick fixes, there’s no amount of public largesse that can wipe out the long, painful unwinding we’re experiencing, much as our elected and appointed officials would have you believe there is.
Time heals all wounds, in this case a lot of time, for a lot of wounds.
The picture’s a bit mixed ahead of the US stock market open, with stocks in Asia down sharply overnight, moderately higher currently in Europe amid a stronger euro and premarket US equity futures pointing slightly higher. JPMorgan posts substantial 2Q EPS upside, but it’s largely driven by big cut in loan-loss provisions.
Full slate of economic data due this morning, including weekly jobless claims, Empire State July manufacturing survey and June PPI, all at 8:30 a.m.; June industrial production & capacity utilization set for 9:15 a.m.; and Philly Fed’s July business index at 10:00 a.m.
Google reports 2Q results after the close. S&P futures up 3.90, DJ futures up 29. Ten-year note flat, yield at 3.05%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
The bridge that collapsed on Interstate 5 bridge over the Skagit River in Washington was listed as “functionally obsolete” and “fracture critical,” which means the whole sha-bang could come tumbling down if one major part fails. Click here to read the details from USAToday. This sort of thing shouldn’t be happening in a modern, developed nation. Barry LePatn […]
