Goldman Sachs’ traders lost money  on a whole ten days last quarter, after posting no losing days the quarter before:

Not exactly mean reversion

Something tells me their summerhouses are safe for now, though.

(Source: Business Insider)

Hard to believe today, but if the economic recovery continues then I believe it won’t be too long before we start to hear calls for Lloyds to be broken up due to the obscene profits it’s raking in.

It’s already started, ahead of schedule, with today’s half-yearly results:

Taxpayer-backed Lloyds Banking Group (LSE: LLOY.L – news) has kept up the momentum of the British banking recovery, unveiling first-half profits of £1.6bn.

The sum was twice the £800m figure predicted by analysts and represents a sharp bounce-back from the £4bn losses seen a year earlier.

The improvement was partly down to vastly reduced writedowns, with loan impairments coming in at under £6.6bn – less than half the £13.4bn it suffered in the same period last year.

Lloyds said it had seen strong trading against the backdrop of a stabilising economy – and it expects to deliver a strong medium-term performance as the recovery continues.

It said it has passed a “significant milestone”, with the toxic-loan legacy of its HBOS takeover beginning to fade and the bank “on track” to achieve its target of £2bn in synergies from the deal by 2011.

Disclosure: As detailed on Monevator (follow the links) I hold both Lloyds shares and Lloyds preference shares. Both have performed strongly recently, but the latter in particular have leapt ahead as credit concerns have faded.

(Source: Yahoo Finance)

Better or worse than expected? Almost impossible to judge when the sums are so large, which might be why the shares are currently unmoved today, despite BP’s huge charge and the sending of its CEO Tony Hayward to Siberia. Analysts are surely dazed and confused.

The reason for the loss is of course a huge charge for the Gulf spill:

BP announced today that it has taken a pre-tax charge of $32.2 billion for the Gulf of Mexico oil spill, including the $20 billion escrow compensation fund previously announced.

The company will also tell analysts later today that it plans to sell assets for up to $30 billion over the next 18 months, primarily in the upstream business, and selected on the basis that they are worth more to other companies than to BP. This portfolio high grading will leave the company with a smaller but higher quality Exploration & Production business.

Meanwhile BP continues to access new business opportunities, with new agreements in Azerbaijan, Egypt, China and Indonesia announced since the end of the first quarter.

The company said it was taking a prudent approach to managing the balance sheet and its financial liquidity, in order to ensure that BP has the flexibility to meet all of its future financial obligations. As a result it plans to reduce its net debt level down to a range of $10-$15 billion within the next 18 months, compared to net debt of $23 billion at the end of June. Group capital spending for 2010 and 2011 will be about $18 billion a year, in line with previous forecasts.

(Read more: BBC)

If you’re going to fall on your sword, it’s best if it’s gilt-edged.

Just ask departing BP boss Tony Hayward, who is in line for the sort of payout that would have most of us running into the nearest fencing shop to get the job done ASAP.

According to Robert Peston:

Tony Hayward will be able to draw a pension of around £600,000 a year from the moment he leaves the company on October 1, I have learned.

This is his contractual entitlement under the company’s pension scheme. The rules of the scheme say that those who joined it before April 6 2006 can take the pension at any point from age 50: Mr Hayward is 53.

However the pension entitlement is bound to be hugely controversial.

Mr Hayward’s pension pot had a transfer value on 31 December 2009 of £10.8m, and he had accrued a pension of £584,000 a year. The pension pot will be worth more than that by the time of his departure.

I happen to think that BP has done a reasonable job in the wake of the disaster, as I wrote when I prematurely considered BP shares good value at 435p. With the leak sealed, they’re finally inching back towards that. (Thanks Tony, for sparing my blushes!)

What’s more, I think Hayward’s main crime was to be British. They think he has a posh lar-dee-dah voice in the US, whereas to a British ear he just sounds like a geology lecturer from Warwick University.

True, he’s committed a few PR gaffs, but on a stage this big, who wouldn’t? And what do we care about – the problem being fixed or a clumsy word along the way?

Nevertheless I find it hard to stomach that any retiring employee should find themselves with a £600,000 a year pension. I have a convoluted theory for why it might not be quite as poor an outcome as it appears, but there still seems something morally suspect about it.

If it’s an entrepreneur who built his or her own business, that feels different.

Am I suffering from muddled thinking?

(Source: Peston/BBC)

A pretty picture to add to my article on BP shares and their impact on the FTSE:

Click to see that impact in full

(Source: Telegraph)

Some sterling and creative entries over on LogoMyWay’s BP logo redesign competition:

Very creative stuff, but this kind of thing just makes BP shares even more a buy in my book.

(Source: LogoMyWay via The Big Picture)

According to this article in The Guardian, the US outcry over the BP leak in the Gulf is as usual rather myopic coming from the world’s largest per capita consumer of oil.

Look at the situation in Nigeria:

According to Nigerian academics, writers and environment groups, oil companies have acted with such impunity and recklessness that much of the region has been devastated by leaks.

In fact, more oil is spilled from the delta’s network of terminals, pipes, pumping stations and oil platforms every year than has been lost in the Gulf of Mexico, the site of a major ecological catastrophe caused by oil that has poured from a leak triggered by the explosion that wrecked BP’s Deepwater Horizon rig last month.

I think the US public is right to be up-in-arms about the BP leak – but I think it’s anger should go further.

(Source: The Guardian)

Okay, so this actually happened on Wednesday 26th May, and the web has already gone crazy over it. (I was half waiting to see if Microsoft bounced back to be bigger than Apple so I could write a comedy post to that effect, but with the iPad launching in Europe today, Apple stock is still on the up).

Apple overtakes Microsoft. Only took 30 years.

As an Apple – and Steve Jobs – fanboy for over three decades, I find this a remarkable turn of events. But while a close techie friend and I love to torment ourselves by looking at Apple’s stock price graph (we both nearly invested several times a couple of years ago, but I still don’t hold any US stocks directly) I wouldn’t bet on Apple outperforming from here.

It’s now the second biggest company in the US, and one of the world’s largest, too. Just doubling its market cap is subject to ‘the law of large numbers’.

Also, sooner or later it will do something evil. Big companies always do.

(Source: Business Insider)

The most pessimistic estimates of the cost of BP’s (horrific) rig explosion and the subsequent (potentially ecologically disastrous) oil spill in the Gulf have been pegged at £8.5 billion. Yet since the rig exploded on April 20th the company has lost as much as £17 billion off its market cap.

In contrast, Shell is mildly ahead over the same period. BP shares have rallied a little, but this valuation gap still looks too big to me:

Is BP really worth 10% less than Shell, forever on?

Six years ago, the shoe was on the other food after Shell’s reserves scandal hit its valuation. These things tend to balance themselves out over the decades.

(Source: Google Finance)

This is not the latest missive from Lloyd Blankfein, you may be surprised to hear, but the closing sentence from the Chairman of Personal Assets Trust plc, in their latest Quarterly Report.  PAT is an enigmatic Investment Trust whose board reports are always worth a read.

The aforementioned Chairman, Robin Angus, addresses the concerns of a shareholder who was not overly impressed with the trust’s performance as follows:

I was, however, a little concerned that [the shareholder] would even contemplate the idea that our performance might ever be ‘spectacular’. So I plead with you now ― if Personal Assets’ performance is ever ‘spectacular’ in a rising market because we seem to be taking the kind of risks that could result in the loss of irreplaceable capital, write to me, complain to me, come and camp outside 10 St Colme Street and make my life a misery, until the Board returns to its senses. We are not in the business of trying to be ‘spectacular’.

Uniquely amongst Investment Trusts, PAT successfully eliminated the “discount” by continually redeeming and issuing new shares as necessary to ensure the share price stays very close to the underlying Net Asset Value.  Under the management of late Ian Rushbrook the trust avoided the worst of the equity market losses during the credit crisis, having correctly predicted the severity of the subprime mortgage problem and its wider impact due to credit “securitisation”.

(Source: Personal Assets Trust plc.  Disclosure: no position in PAT plc)