Concerned about European bank deleveraging impacting Emerging Market growth prospects? Worried over Global Trade Volumes dropping and a multi-decade low in the Baltic Dry? Fearsome of record inventories for commodities in China and the potential for a harder landing from credit contraction in the shadow banking system? Concerned that Europe's sovereign and financial insolvency problems are not all gone? Worry no more. It appears, and who are we to argue with the data, that the USA is in fact leading the world out of this global growth slowdown with its Composite PMIs the highest of all the major growth drivers. From Markit Economics, we see that perhaps Goldman's Jim O'Neill will have to change his famous acronym to UBRIC as the decoupling myth (not a lag or inventory cycle) remains firmly in place (and the record-breaking jumps in some of the US Services PMI sub-indices should be treated with all the respect in the world).
Cutting down to the chase on Goldman's numbers, the top line was weak, with the company reporting $6.05 billion in total Q4 revenue on expectations of $6.39 billion. The primary reason was a decline in all segments Year over Year with Investment Banking tumbling 43% to $863 Million, Institutional Client Sales down 16% to $3.1 billion, Investment Management down 16% (great work Jim O'Neill) to $1.3 billion, and finally Goldman Prop, or as it is politically correctly now known, Investing and Lending, down 56% to just $872 million, although much better than the massive Q3 loss of $2.5 billion. All this was offset by compensation benefits of $2.2 billion, which resulted in a Q4 Compensation Margin of 36.5%, down from the 44.5% average previously in 2011. As a reminder, back in Q4 2009, Goldman had negative compensation expense of $519 million to make its EPS. The result was total comp of $12.2 billion in 2011, or 42.4% compensation payoff, compared to $15.4 billion in 2010. Yet since the company let the axe fly, cutting total staff from 35,700 at December 31, 2010 to 33,300 at year end 2011, or the lowest since Q1 2010, average trailing 12 month compensation per employee rose to $367,057.06, also known as "not much" for Mitt Romney.
Is idiosyncracy the substitute for a fledgling Sovereign Bond Market? Including our recommendations for 2012
How Jim O'Neill still has a job is beyond us. Not only is he the head of the worst performing vertical at Goldman Sachs, not only is he the creator of the Bloody Ridiculous Investment Concept (BRIC), but now this? Come on...