Some interesting developments in the markets over the last couple of days. The earnings guidance and price reaction (all significantly down) of the likes of Leighton, Macquarie, Intel and Alcoa would suggest to me that maybe earnings downgrades havent been baked into prices like everyone has been assuming. Should be some intersting competing forces over the next month or so with the entrance of Obama/stimulus, versus the inevitable storm of earnings downgrades we will see. With earnings season kicking off on Monday, the current response to downgrades would suggest to me that earnings might win this battle in the short term
Macquarie warns of profit hitJanuary 8, 2009 - 10:38AM Macquarie Group has warned it faced extremely tough market conditions in the December quarter that would hit its profits, sending its share down over 7%.
The group, headed to its first profit fall in 17 years, said in a statement that conditions had been challenging for almost all of its businesses. It said it would give a further update at a regular briefing in February.
Macquarie shares were down 6.5% at $31.54 in early trade after to falling to as low as $31.19.
Investment banks worldwide have suffered in the global credit crisis, leading them to raise capital and sell assets. So far Macquarie has said it would not need to raise equity to shore up its capital, as Australia's commercial banks have done.
Instead Macquarie is trying to sell about $15 billion of its assets under management, with $12 billion sold so far, to focus on more profitable parts of its business.
That included the sale of its $1.5 billion margin lending portfolio to Australia's Bendigo and Adelaide Bank for $52 million worth of convertible preference shares in Bendigo and Adelaide, announced today.
The group, formerly known as the "millionaire's factory'', was earlier this month said to be looking to put one of its top-end properties in China for sale with a price tag of around 300 million yuan ($61.5 million).
Meanwhile, Babcock & Brown, struggling after a debt-funded expansion binge, is set to announce a partial response from its lenders to a debt restructuring plan that involved a debt-for-equity swap.
(20min delay)