Thursday, November 06, 2008

Goldman Beige Book Recommendations

"1. Mixed messages on global growth outlook
Earnings calls this quarter lacked the consensus of prior periods when

upbeat commentary on global growth prospects was nearly unanimous.

While some management teams cited slowing economic growth and the

possibility of a global recession, others reported no deceleration in foreign

market end-demand for their products or suggested that the US slowdown

was just now spilling into developed and emerging markets. Commentary

on the economic outlook for Europe was notably bearish

2. Consumers spending less and trading down

Comments from management teams across all ten sectors focused on the

impact of weakening consumer sentiment and spending both in the US

and around the world. While food and energy prices are becoming less of

a weight on consumers, rising unemployment and falling home prices are

dampening spending in discretionary and seemingly non-discretionary

categories. Consumers are looking for value and "trading down."

3. Gov't intervention helping weak banks most

Many management teams shared their perspectives on the recent US

government intervention in the Financial system.

Some banks applauded
recent policy action while others questioned the impact on stronger

banks versus weaker banks and lamented the lack of focus on the key

issue of declining home prices.

4. Credit crisis increasing balance sheet focus

The recent credit market crisis played a starring role in 3Q earnings calls,

with management teams in all sectors focusing on balance sheet and

liquidity issues. Even companies with rock-solid balance sheets and no

short-term financing issues felt the need to reassure investors that they

had access to capital. The impact of the credit crisis was also apparent in

commentary on reduced plans for near-term M&A, capex, and buybacks.

5. Forecasting ability hampered by uncertainty

Management earnings guidance for future quarters was not only weak, but

also was severely lacking in specifics and confidence. Countless

management teams declined to offer forward-looking earnings guidance

because of the difficulty of forecasting in the current environment. Others

candidly commented that any guidance provided was given with a low

level of conviction."


Anonymous said...


Anonymous said...

I should notify my pal about it.