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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (9838)	8/15/2008 7:00:36 PM
From: John Pitera	Respond to of 33421

Goldman, JPMorgan May Prove `Mortal' as Earnings Drop, UBS Says By Lynn Thomasson Aug. 15 (Bloomberg) -- Goldman Sachs Group Inc. and JPMorgan Chase & Co., which weathered the credit crisis better than most of their peers, may prove ``mortal'' in the third quarter as loan losses increase and banking revenue drops, UBS AG said. *Goldman Sachs is ``not immune'' to declining profits* even after the biggest U.S. securities firm ``escaped many of the pitfalls that have snagged rivals,'' said UBS analyst Glenn Schorr in a research note today. JPMorgan, the second-biggest U.S. bank by market value, faces more asset writedowns and deteriorating consumer credit, he said. Both companies have outperformed the Standard & Poor's 500 Financials Index as their results for the past two quarters topped analysts' estimates and writedowns and credit losses totaled less than those at peers Morgan Stanley, Bank of America Corp. and Citigroup Inc. Goldman dropped 27 percent since the financial index hit a peak in October, while JPMorgan lost 21 percent. The broader measure has plunged 41 percent. Since both ``have been viewed as safer places to hide during the credit crisis, we think investors may reduce exposure to these names in the near term,'' Schorr wrote. He expects Goldman to earn $2.25 a share in the third quarter ending this month, down from a prior projection of $3.20. The New York-based analyst reduced his profit estimate for JPMorgan to 25 cents from 62 cents. He rates both companies ``neutral.'' Schorr also reduced his estimate of Citigroup and Morgan Stanley, citing weakness ``across the board'' in the industry. Since the start of August, Goldman and JPMorgan have fallen 13 percent and 9 percent, respectively, more than three times the 3 percent decline of the S&P financials index. Weekly Drops Goldman Sachs shares are down 7.6 percent this week, the most in a month. Oppenheimer & Co. analyst Meredith Whitney and *Deutsche Bank AG's Mike Mayo cut third-quarter profit* estimates for the company on Aug. 12. JPMorgan also reduced earnings estimates for Goldman today. JPMorgan is headed for its biggest weekly drop since May. The second-biggest U.S. bank slumped 8.1 percent this week after reporting a $1.5 billion loss on mortgage-backed assets in less than two months, based on a regulatory filing released Aug. 11. The company also agreed to pay fines and buy back auction-rate securities that state and federal regulators said were fraudulently sold to investors. To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net. Last Updated: August 15, 2008 15:58 EDT

To: John Pitera who wrote (9838)	8/15/2008 7:43:46 PM
From: John Pitera	Respond to of 33421

Missile shield accord draws Russian fire By Isabel Gorst in Moscow and Jan Cienski in Warsaw Published: August 15 2008 03:00 \| Last updated: August 15 2008 18:09 Moscow lashed out at Washington and Warsaw on Friday, saying the plan to site a US anti-missile defence shield in Poland would undermine the global balance of power and put Poland at risk of nuclear attack. Washington and Warsaw reached a preliminary agreement on Thursday to build part of the missile defence shield in Poland, station US Patriot missiles there and bolster the two countries’ military co-operation. The US claims the shield in Poland, as well as a radar tracking base to be located in the Czech Republic, is designed to defend against “rogue states” such as Iran. The timing of this week’s agreement, as relations between Russia and the US deteriorated over the Georgia crisis, has strengthened Moscow’s conviction that the move is anti-Russian. “The deployment of new anti-missile forces in Europe has the Russian federation as its aim,” said Dmitry Medvedev, the Russian president, at a press conference with Angela Merkel, the German chancellor, on Friday. Dmitri Rogozin, Russia’s Nato envoy, said the fact the agreement “was signed at a time of a very difficult crisis in relations between Russia and the US over the situation in Georgia shows that, of course, the missile defence system will be deployed not against Iran, but against the strategic potential of Russia.” Anatoly Nogovitsin, the deputy head of the Russian armed forces, warned Poland that by hosting the shield it could become the target of a nuclear attack in war time. “The US is concerned with its own anti-missile defence, not Poland’s. But Poland, by deploying [the shield], will be exposed to attack.” Copyright The Financial Times Limited 2008

To: John Pitera who wrote (9838)	8/17/2008 2:03:28 PM
From: ajtj99	Read Replies (1) \| Respond to of 33421

John, the situation in the former Soviet republics was bound to provoke a response from Russia. The US is attempting to marginalize Russia in that area while establishing bases in many of the former Soviet republics. Add in the NATO memberships of so many former Russian satellite states and the pending membership of some of the republics, the stage was set for push back from Russia, who has been excluded from NATO consideration. Russia's not going anywhere, and you saw what happens when people fail to respect a regional power. What's interesting is the US press is hardly portraying this correctly. The Georgian government invaded the autonomous Ossetia area without provocation and with the implied consent and aid of the US as well as help from Israeli advisors. Over-reaching has its consequences, whether it is in international relations, financial speculation, or just plain greed. What is really going to cause some pain in 2010 is the fact the Fed will be out of bullets, the last being a drop to 1% Fed Funds rate. With a contraction in all credit, including consumer credit, no home equity draws, and no stimulus checks, the pain will be much more acute than we've seen recently. The recent drop in fuel costs only means the pain will likely be much more harsh later on as lower energy costs will already have been attained, so the consumer will not see relief there when they need it most.