Business Maverick

Business Maverick

12 May: Goldman Sachs, JPMorgan bank billions in trading gains

12 May: Goldman Sachs, JPMorgan bank billions in trading gains

Also today: Senate unanimous over Fed audit; Hedge funds claw their way back to wealth; Pfizer dismays New York City; Halliburton stands out in Gulf of Mexico oil disaster.

Goldman Sachs, JPMorgan bank billions in trading gains


Goldman Sachs and JPMorgan Chase have made trading gains every day in the last quarter, according to regulatory filings, with JPMorgan saying its average daily revenue was $118 million. That’s not too shabby for Wall Street firms who were putting out blazes left, right and centre some 18 months ago. But given the mood of the American public, their profitability might yet serve as reason for legislators to restrain the trading activities of banks. JPMorgan posted at least $90 million on more than half of the 63 trading days in the quarter, and reported more than $180 million in daily net revenue on about 10 of those days. Goldman reported more than $100 million revenue on 35 trading days. Easy for some.

Photo: JP Morgan Chase Chief Executive Jamie Dimon (L) and Lloyd Blankfein, Chief Executive of Goldman Sachs, depart the White House after a meeting about the economy with U.S. President Barack Obama in the State Dining Room in Washington, March 27, 2009. REUTERS/Kevin Lamarque.

Read more: The New York Times, Bloomberg, Financial Times


Senate unanimous over Fed audit


The US Senate voted 96 to 0 in favour of a one-time audit of emergency measures undertaken by the Federal Reserve during and after the 2008 financial crisis. This comes as the Obama administration sets about framing broad legislation aimed at overhauling the nation’s financial regulatory system. The amendment would require the government accountability office to look at some $2 trillion in emergency lending that the Fed gave the nation’s largest banks – and was paid for by the American taxpayer. The amendment says the Fed can no longer operate under a cloak of secrecy that has always surrounded it. An original amendment could have subjected the Fed to continuing audits of some routine operations, but was scaled back in the face of opposition by the White House, the Fed, the Treasury and some Senators, because money likes hiding places.

Read more: Reuters, National Public Radio


Hedge funds claw their way back to wealth


The HFN hedge fund aggregate index was up 1.55% for April, as US-based hedge funds drew in more capital from investors, but is up 4.35% for the year. The funds seem to equal or underperform the broader market, with the Standard & Poor’s 500-stock index up 1.5% for April and up 6.4% from January through April. However, the gains still seem to be exceeding expectations, after the industry took a nosedive in 2008 when it lost an average 20%. The funds made up most of their losses in 2009, which is likely why investors gave an additional net $7.67 billion to hedge funds in April. Total hedge fund assets now stand at some $2.3 trillion. Emerging market fund returns were above the industry average in April. Funds investing in India and Russia led with gains of 4.4% and 2.1%, respectively. Japan led funds for developed countries, up 3.14% for April.

Read more: The New York Times, Finalternatives


Pfizer dismays New York City


Pharmaceutical giant Pfizer plans to lay off or relocate up to 1,400 employees in New York City, despite receiving millions of dollars in tax breaks to create jobs in the Big Apple. It’s already done away with about 2,000 posts and put its Manhattan headquarters up for sale. The move puts a brake on Pfizer’s once ambitious expansion plans for New York, after the tax breaks were supposed to help it invest in new equipment and jobs in the city. The company says its world headquarters will remain there, but one New York job advocacy group said it just shows how useless the city’s corporate retention deals are.

Read more: The New York Times, The Day


Halliburton stands out in Gulf of Mexico oil disaster


In a day of finger-pointing at US Senate hearings sub-contractor Halliburton is starting to look like the biggest culprit as oily toxins pour into the Gulf of Mexico, according to reports. BP owns the well, and Transocean owns the drilling rig, but Halliburton was responsible for sealing the bottom of the oil well spewing some 800,000 litres of oil a day into southern US waters. The parties have furiously blamed each other for the catastrophe, but Halliburton’s reputation precedes it. During the George W Bush years, the company’s name became allied with crony capitalism as it reaped huge profits from contracts in Iraq that have been linked to its former chairman, Bush’s vice president Dick Cheney. Reports say Halliburton had exclusive rights to provide the US military with food, shelter and communications services that enabled troops to chat with family and friends back home.

Read more: The Huffington Post, AP, Reuters


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