Somehow this earnings season is something special. Not sure what it is. Sitting here and waiting for the reports feels a little like sitting and waiting until “the game” starts. Maybe it is because I am sitting and hoping the numbers are all good and we all can now look ahead at better times to come. Well, turns out, not so. Some of the important players have reported not as strong as expected, or only reported numbers that would have been called ridiculous a few years back, or both.
I find it especially interesting what Goldman and Morgan Stanley had to report and as a guideline, at least so I thought, JP Morgan. Well, while JP Morgan reported some nice numbers and created some hope, the following reporting “big guns” in finance display a struggle. It seems the golden years are really over. Yes, the mortgage bubble blew up, not in their face it appeared, but now it seems they have a few issues to carry. One of the questions I ask myself, what are they doing now? And I remember, 10 years back, when the “internet bubble” busted, I asked myself the same question. Then they lost the business of IPO’s. Remember, every website was brought public and nice fees bolstered revenue and profit. Today, the mortgages are gone and with them all the attached opportunities to make a lot of money. Sounds a little like then, doesn’t it?
So, I am wondering, are they out of ideas? No business model other than trading around for a few bucks? I am afraid so, at least for Goldman. Morgan Stanley didn’t look much better, however, it is said that they are in better shape for the future due to a few adjustments they made (Dean Witter/Smith Barney businesses) and others. This is interesting, there is a bet on the retail investor. Also, JP Morgan has a retail bank attached and that surely helped to create some revenue and profits. I don’t read retail in any of the Goldman news. I am in deed under the impression Goldman is falling behind.
So, I am already looking forward to the next earnings season like I start waiting for the super bowl in September. How will they do in the next three months? Will the recent plannings and executions at Morgan Stanley help them report better numbers? What will Goldman do? I was thinking for myself, last time they created the mortgage bubble when things were sour, what will it be this time? Watch out, regulations or not, I am afraid something is brewing.