Really, Really Mind Your Qs

Posted by: Tom Keene on February 8, 2012

WJB Capital, which was based in New York and employed about 100 people, halted its brokerage operations following a year of slower trading, a shortage of capital and interest rates of 25 percent on some debts. MF Global, the New York-based firm previously run by former New Jersey governor and ex-Goldman Sachs Group Inc. co-chairman Jon Corzine, shuttered after revealing a $6.3 billion bet on the bonds of some of Europe’s most-indebted nations.

—Joshua Fineman & Laura Marcinek, Bloomberg, Ticonderoga Securities Said to Close After Effort to Bolster Capital Fails, 24 January 2012.

Volume. Or, a lack thereof.

The vogue is cash flow, the belt-and-suspenders tradition is to look at the bottom of the income statement. Hipsters may migrate up to operating income. Those scandalous can add a bit of balance sheet, knead for five minutes. Voila! EBITDA.

The “need” in this early-2012 is far, far away as described by first-look Q4 2011 nominal GDP of 3.2 percent and further described by “a year of slower trading.”

Travel to the tippy-top of the income statement and consider the P and the Q of revenue. Price (further south) may be a topic for later this year.

Quantity is the issue right now (in spades on Global Wall Street and in selected other industries.)

Mind your Ps; and now…really, really mind your Qs. Discuss.

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EconoChat captures Tom Keene's thoughts on economics, finance and investment. He is editor-at-large for Bloomberg News and hosts Bloomberg Surveillance and Bloomberg on the Economy on NYC1130, Sirius 129 and XM 130 and Surveillance Midday on Bloomberg Television. His complete interviews are at Tom Keene on Demand. Look for Tom on twitter @tomkeene

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