Alcoa Inc. kicked off earnings season Monday by reporting a larger first-quarter profit than analysts expected, helped by strong demand for aluminum used to make airplanes and automobiles.
The company still sees demand for aluminum growing 7 percent in 2013, with gains cutting across many industries.
Alcoa is the first company in the Dow Jones industrial average to report first-quarter results. Because its products wind up in so many things, from cars and buildings to soda cans, investors study Alcoa’s results for hints about earnings at companies in other industries. Read More
UBS said first-quarter profit more than halved amid a 1.16 billion Swiss franc ($1.28 billion) hit to profits due to charges on its debt.
The Swiss bank struck a cautious second-quarter outlook, saying economic worries rattling wealthy clients such as the eurozone debt crisis, concern over Europe’s banks, and the U.S. deficit are likely to take a toll.
“Failure to make progress on these key issues would make further improvements in prevailing market conditions unlikely and would have the potential to continue the headwinds for revenue growth, net interest margins and net new money,” UBS said in a statement.
Nevertheless, the bank voiced confidence its flagship private banking arm would still attract fresh assets, a key bellwether for future revenue.
UBS announced in November it would scale back its investment bank business to focus on its flagship private bank.
Net profit fell to 827 million Swiss francs from 1.807 billion a year earlier. Analysts called for net profit of 1.11 billion Swiss francs in a Reuters poll.
“Inflation will pick up further as China’s economy warms up again,” Liu Li-Gang, Hong Kong-based head of Greater China Economics at Australia & New Zealand Banking Group Ltd., said before the release. Rising wage costs and the government’s policies to boost consumption will add upward pressure on prices, he said.
Wen said last month the government aims to keep consumer- price gains within about 4 percent for 2012, taking into account risks from imported inflation and rising costs of land, labor and capital. He also pledged to change the way the price of resources including electricity and fuel are set to better reflect their costs.
China, the world’s largest oil consumer after the U.S., increased gasoline and diesel prices for the second time in less than six weeks on March 20 after crude had its biggest monthly gain in a year, adding to pressure for consumer prices to rise. Read More
UBS profits have plunged by 76 per cent the bank revealed in its latest quarterly results.
Net income for the last three months of 2011 were 393m Swiss francs (£270m), down from 1.7bn francs during the same period the previous year.
Business levels fell both at its key wealth management unit, as well as at its struggling investment bank.
The banks also forecast a poor first quarter as uncertainty surrounds the Eurozone, its banks and US deficit issues, as it posted a sharp drop in fourth-quarter profit that missed analyst expectations.
“Traditional improvements in first quarter activity levels and trading volumes may fail to materialize fully, which would weigh on overall results for the coming quarter, most notably in the investment bank,” UBS said in its earnings report.
“Nevertheless, we believe our asset-gathering businesses as a whole will continue to attract net new money as our clients recognize our efforts and continue to entrust us with their assets.”
Mr. Buffett argues that such highly complex financial instruments [derivatives] are time bombs and “financial weapons of mass destruction” that could harm not only their buyers and sellers, but the whole economic system. Some derivatives contracts, Mr. Buffett says, appear to have been devised by “madmen”. In his letter Mr. Buffett compares the derivatives business to “hell…easy to enter and almost impossible to exit”…
He might be rich, but let’s face it: he is one manipulative character.
And the parade of dollar negative news continues this morning. First the USDCNY an 18 year low, now the USDCHF hit an all time low, trading as low as 0.8675. This is astounding considering the pair had traded north of parity for pretty much all time until last summer when the USD succumbed to Bernanke’s strong dollar policy. The reason for the record surge is attributed to comments by SNB president Philipp Hildebrand who, in observing the economy, says that the “inflation outlook still in range of price stability and Swiss economy grows more vigorously than anticipated.” Translation: record CHF has killed off all our exports, and Nutella is about to picket our offices. And in other related, and very entertaining news the SNB said that posted a first-quarter profit of 1.9 billion Swiss francs ($2.18 billion), thanks to gains from currency transactions and a fund in which it parked toxic assets from banking giant UBS. In other words, SNB has now become AIG, booking MTM profits on its literally toxic subprime assets (thank you Brian Sack and Chicago permabid IWR algos), all the while ignoring the 220 billion in USD backing the “asset” side of its balance sheet, which if fairly marked would likely bankrupt the central bank overnight. And people say we can’t teach the euros a thing or two about banking…
The positive result could take some pressure off SNB Chairman Philipp Hildebrand, who has come under fire for huge losses the central bank incurred previously due to forex interventions intended to cap the rampant Swiss franc.
“In the first quarter of 2011, the Swiss franc depreciated against the European currencies, leading to exchange rate gains, especially on euro holdings,” the central bank said in a statement on Friday.
Hildebrand will face shareholders at the SNB’s annual general meeting in Berne later on Friday for the first time since the central bank racked up a 2010 loss of 19.2 billion francs, its largest ever.
In the first quarter of this year the SNB also recorded a profit on the fund with toxic assets bought from UBS during the financial crisis and said its loan to the Stabilisation Fund was further reduced to 9.9 billion francs from 11.8 billion francs.
The SNB set up the fund at the height of the crisis, buying assets from UBS for some $39 billion. The fund posted a quarterly profit of $678 million and contributed 338 million francs to the consolidated result, the SNB said.
And for those lamenting the sad passage of the rag known as the dollar first in Chinese and now in Swiss terms (we hope readers did all their Bahnhoffstrasse Patek Phillipe shopping last year) we present its obituary, translated into Swissish.
Infosys Technologies Ltd. (INFO), India’s second-largest software exporter, posted fourth-quarter profit that missed analyst estimates after clients shortened the length of orders and the rupee appreciated. The shares dropped.
Net income rose to 18.2 billion rupees ($408 million) in the three months ended March 31 from 16 billion rupees a year earlier, Bangalore-based Infosys said today. Sales grew less than estimated after clients reduced the tenure of contracts and the rupee gained against foreign currencies, cutting the repatriated value of Infosys earnings overseas. Growth in U.S. information technology-services contracts could hit a roadblock if legislators pass rules that would make it more expensive for companies to bring skilled workers to the country for temporary work.
The company reported sales of 72.5 billion rupees for the quarter, compared with 59.4 billion rupees a year earlier.
“OMAHA, Neb. (AP) — Warren Buffett’s company reported a 40 percent drop in second-quarter profit Friday because the improvement at Berkshire Hathaway Inc.’s operating companies couldn’t overcome $1.4 billion in paper losses on derivative contracts. Berkshire’s strong performances from its railroad, insurance and manufacturing businesses was overshadowed by the plummeting value of the Omaha company’s derivatives — many of which are tied to the value of four major stock markets.”
From Buffett himself in 2002:
“The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”
From Bloomberg recently:
“Buffett’s well known for his criticism of derivatives. Yet Berkshire in recent years has become a big player, with some $60 billion in derivatives contracts. Under any new derivatives regulation, Berkshire would be likely to have to produce collateral for new derivatives contracts it writes. This would limit the attractiveness of new derivatives deals for Buffett, who has boasted that Berkshire rarely does a deal that calls for it to produce collateral. But that’s not why Buffett has been pushing back against the financial reform bill in the Senate. Instead, Buffett says he’s concerned that the legislation would impose collateral requirements on existing contracts — which he says would be illegal. Sen. Ben Nelson, D-Neb., made the same case this week as he defected from the Democrats backing the financial reform bill. Whatever his logic, pushing back on derivatives reform has the interesting side effect of aligning Buffett, with his sterling reputation, with the widely derided Wall Street banks.”
Buy and hold? Buying strong businesses? Derivatives are weapons of mass destruction? Bailouts of many of the components of BRKA? Does anyone have the cajones to criticize Buffett? There has to be at least one emasculated weenie out there who will come on here and tell me that I can’t criticize America’s wealthiest just because he is rich. Right?
The Buffett myth is just that — a myth. If not for the fall 2008 bailouts, he would be on the senior circuit revising history along with Greenspan. Why my stark view on this lovely sunny morning in beautiful Southern California? Cause no matter how many books populate Amazon, all preaching about how you can become the next Buffett, they are all disingenuous fairy tales.
Huge ass bonuses for all! Conference call at 11, press release from 85 Broad (PDF here): Hat Tip DealBreaker
NEW YORK, Jul 14, 2009 (BUSINESS WIRE)– The Goldman Sachs Group, Inc. today reported net revenues of $13.76 billion and net earnings of $3.44 billion for its second quarter ended June 26, 2009. Diluted earnings per common share were $4.93 compared with $4.58 for the second quarter ended May 30, 2008 and $3.39 for the first quarter ended March 27, 2009. Annualized return on average common shareholders’ equity (ROE) (1) was 23.0% for the second quarter of 2009 and 18.3% for the first half of 2009.Excluding a one-time preferred dividend of $426 million related to the repurchase of the firm’s TARP preferred stock, diluted earnings per common share were $5.71 (2) for the second quarter of 2009 and annualized ROE was 23.8% (2) for the second quarter of 2009 and 19.2% (2) for the first half of 2009.