Archive for November, 2008

Goldman Sachs wins NY state banking charter (Reuters)

Friday, November 28th, 2008 | Finance News

NEW YORK (Reuters) –
Goldman Sachs Group Inc on Friday won a charter from New York State's banking department, a key step in the Wall Street bank's effort to change its investment banking model and gather deposits.

The new bank will be called Goldman Sachs Bank USA, and include Goldman Sachs Capital Markets LP, Goldman Sachs Credit Partners LP and Goldman Sachs Mortgage Co, the banking department said. Goldman will merge its Utah-based industrial loan company into its New York-chartered trust company. Goldman Sachs Bank will be based in New York City.

A Goldman spokeswoman declined to comment.

The approval came two months after the Federal Reserve designated Goldman and rival Morgan Stanley as bank holding companies. That change gives them access to more low-cost funding and the $700 billion federal bank bailout, but requires greater regulatory scrutiny and reduced risk.

In seeking a state charter, Goldman diverged from Morgan Stanley and other lenders that have sought national charters, which would make it easier to expand into many states. JPMorgan Chase & Co Citigroup Inc and Bank of America Corp also have national charters.

Goldman's pursuit of a state charter suggests the company will continue to focus on investment banking, trading and wealthier clients, and not soon build a nationwide retail banking business. Morgan Stanley, in contrast, has said it will pursue "opportunistic" bank acquisitions.

A state charter nevertheless permits Goldman to open branches in states with "reciprocal" agreements, an arrangement now spanning roughly 25 states. New York-chartered banks may also operate branches in neighboring Connecticut, New Jersey and Pennsylvania, while remaining subject to New York laws.

Other lenders with New York charters include Bank of New York Mellon Corp and M&T Bank Corp.

Goldman's decision to seek a state banking charter "reflects confidence in New York as a financial center and in its banking department as an effective regulator," State Banking Superintendent Richard Neiman said in a statement.

Goldman and Morgan Stanley changed their banking model following the collapses of Bear Stearns Cos and Lehman Brothers Holdings Inc and Merrill Lynch & Co's agreement to be acquired by Bank of America.

Many investors worried about the sustainability of the Wall Street banking model, especially if customers or trading partners were to flee to lenders with more stable funding.

Goldman in September won a $5 billion infusion from Warren Buffett's Berkshire Hathaway Inc, four days after Goldman obtained bank holding company status.

Shares of Goldman closed Friday up $2.49 at $78.99. They have fallen 63 percent this year.

(Reporting by Jonathan Stempel; editing by Carol Bishopric)


Wall St gains in thin trade (Reuters)

Friday, November 28th, 2008 | Finance News

NEW YORK (Reuters) –
U.S. stocks rose on Friday on light volume in an abbreviated session, capping the best week for the S&P 500 since at least 1980, as investors hoped government and central bank moves unveiled this week would boost the economy.

For the Dow industrials, Friday's close marked five straight days of gains for the first time since November 2007.

Economic bellwethers such as General Electric (GE.N) and financial stocks rallied and helped overshadow weakness in retailers' shares, which slumped on concerns the weak economy may hurt sales during the holiday shopping season.

Traders said financials were gaining strength after the U.S. Federal Reserve outlined an $800 billion lending facility to support the market for consumer debt securities. An S&P index of financial stocks (.GSPF) rose 2.9 percent.

"A combination of thin holiday trading and today being the last day of the month contributed to some buying in the last 30 minutes," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

Financial shares "rose on the bet that the rally this week will be sustained. The important part for me was the government plan to buy the mortgage-backed securities, which dramatically drove down interest rates this week."

The Dow Jones industrial average (.DJI) shot up 102.43 points, or 1.17 percent, to end at 8,829.04. The Standard & Poor's 500 Index (.SPX) advanced 8.56 points, or 0.96 percent, to finish at 896.24. The Nasdaq Composite Index (.IXIC) added 3.47 points, or 0.23 percent, to close at 1,535.57.

The U.S. stock market's session ended at 1 p.m. (1800 GMT) on Friday after the Thanksgiving holiday.

For the week, the Dow gained 9.7 percent, while the S&P 500 jumped 12 percent and the Nasdaq surged 10.9 percent.

November, though, was a bleak month for the U.S. stock market, with the Dow losing 5.3 percent for November, the S&P 500 falling 7.5 percent, and the Nasdaq tumbling 10.8 percent.

In Friday's session, GE climbed 6.1 percent to $17.17 and helped lift both the Dow and the S&P 500.

The Dow's top advancers included Caterpillar (CAT.N), up 4.2 percent at $40.99, and Coca-Cola Co (KO.N), up 3.3 percent at $46.87.

In the financial sector, shares of Citigroup (C.N) jumped 17.6 percent to $8.29 on the New York Stock Exchange, while American Express (AXP.N) gained 4.5 percent to $23.31, Bank of America (BAC.N) climbed 5.3 percent to $16.25, and JPMorgan Chase & Co (JPM.N) advanced 3.4 percent to $31.66.

Yahoo Inc (YHOO.O) shares gained 8.8 percent to $11.51 and gave the Nasdaq one of its biggest lifts after billionaire activist investor Carl Icahn disclosed that he has raised his stake in the Internet company.

But investors shunned retailers' shares on "Black Friday,"

the annual kick-off to the holiday shopping season, as consumers indicated they plan to spend less this year. Wall Street and Main Street alike are worried about how stores will fare this holiday season in an economy troubled by increasing job losses and shaky credit.

The long Thanksgiving holiday weekend will be a test of how willing consumers are to spend as the country faces its worst financial crisis since the Great Depression.

Shares of Wal-Mart Stores Inc (WMT.N), the world's largest retailer and a Dow component, fell 1.4 percent to $55.88 on the NYSE. The S&P's retail index (.RLX) slumped 1.6 percent.

Another weak spot was the energy sector, with Chevron (CVX.N) down 1.2 percent at $79.01 as OPEC ministers convened to deliberate further supply cuts to curb flagging global demand. U.S. crude oil for January delivery dipped 1 cent to settle at $54.43 a barrel on the New York Mercantile Exchange.

Volume was light, as expected, on the Friday after Thanksgiving, when the U.S. stock market was closed for the holiday.

On the New York Stock Exchange, only about 786.97 million shares changed hands, well below last year's estimated daily average of 1.90 billion.

Advancers outnumbered decliners on the NYSE by about 2 to 1 on both the NYSE and the Nasdaq.

(Editing by Jan Paschal)


Oil rises on short-covering; down 20 pct in November (Reuters)

Friday, November 28th, 2008 | Finance News

NEW YORK (Reuters) –
Oil rose in late Friday trade on short-covering ahead of OPEC's meeting this weekend after slowing demand sent prices down nearly 20 percent in November.

U.S. crude traded up CLc1> 76 cents to $55.20 a barrel at 2:32 p.m. EST in late post-settlement trade. Earlier, U.S. crude settled at $54.43 a barrel, down 1 cent from Wednesday's close, in a shortened NYMEX trading session.

U.S. markets, including the New York Mercantile Exchange, were shut on Thursday for the Thanksgiving holiday, though U.S. crude did trade on the Globex electronic platform.

London Brent crude LCOc1> settled at $53.49, up 36 cents from Thursday.

"It looked like there was some short-covering ahead of the OPEC meeting," said Jim Ritterbusch, president, Ritterbusch & Associates, in Galena, Illinois. "There was some support from the recovery in the stock market."

U.S. stocks rebounded from early losses as financials gained on signs that liquidity measures were beginning to work.

Oil prices have tumbled from record highs over $147 a barrel struck in July as demand in the United States and other large consumer nations slumped amid an economic crisis.

Global oil demand is expected to decline slightly this year and next, the first fall in a generation because of the world economic downturn, according to a Reuters poll.

Crude's steep November drop followed a 32 percent fall in October, the biggest monthly drop ever. The losses came despite agreements by the Organization of the Petroleum Exporting Countries since September to cut output by a total of 2 million barrels per day (bpd).


OPEC ministers gathering in Cairo for an informal meeting this weekend said they were likely to defer a decision on more output cuts until the December 17 meeting in Algeria.

Still, two delegates said there was a chance the producer group could cut output on Saturday.

Venezuelan Oil Minister Rafael Ramirez said he may propose a one million bpd cut.

A Reuters poll this week of 15 analysts forecast by a narrow margin that OPEC would make no announcement of a further reduction in oil output this weekend but would probably do so at its meeting in Algeria.

(Reporting by Matthew Robinson and Gene Ramos in New York; Jane Merriman and Christopher Johnson in London and Maryelle Demongeot in Singapore; Editing by Marguerita Choy)