Jefferies Group Executive Insights: Balance Sheet, European Growth
Joel Jeffrey – KBW: Can you talk a little bit about how you think about managing the size of the balance sheet for the end of the quarter versus sort of the average size of the balance sheet in the middle of the quarter?
Brian P. Friedman – Chairman, Executive Committee: We basically have told people given the environment that we see in terms of challenging nature of Europe and the challenging domestic economy that we’re going to have a relatively smaller balance sheet for the foreseeable future, which we’ve done now for the last three quarters. Intra quarter, it rises based upon needs of our clients, but by virtue of the fact that we’re at 97% Level 1 and Level 2, we have a lot of flexibility throughout the period of time and it’s not very difficult for us to improve the liquidity and the liquid nature of our balance sheet by basically bringing it relatively tight at the quarter end and that’s what we’ve been doing.
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Joel Jeffrey – KBW: Principle transactions line was down quarter-on-quarter, but it was up year-on-year, can you just talk a little bit about what was in that and what drove the growth year-on-year?
Peregrine C. Broadbent – CFO and EVP: The growth year-on-year was driven by strong fixed income results particularly in the first quarter. Most of our fixed income activities will be on a quasi-agency basis, so that can be captured. The P&L will be captured through the principal transactions line. As you can see from the revenue by source states, Joel, however our fixed income results were a little lower in the second quarter, and therefore the principal transactions line came down a little bit compared to the first quarter.
Joel Jeffrey – KBW: Can you just given us – I don’t you have the numbers in front of you but just an estimate of what maybe the gross net exposures to European sovereign debt currently stand at?
Peregrine C. Broadbent – CFO and EVP: Pretty similar levels. There were published in our first quarter 10-Q, negligible on a net basis. A few 100 million either side on a gross basis, insignificant overall and very similar levels to as I indicated to what you’re seeing out at the end of our first quarter.
Christoph Kotowski – Oppenheimer & Company: You’ve been one of the few firms that really has used the downturn here for the last five years to grow the business by both acquisition and by hiring, and I guess, given the protracted nature of the downturn in Europe, and the fact that there just doesn’t seem any end in sight, are there opportunities, is there a desire to grow the European business, are there businesses and geographies that you’re not in, that you’d like to be in a significant way, and can one – how big would you be willing to be in Europe relative to the size of the Company, I guess, is my question?
Richard B. Handler – Chairman and CEO: I think, the answer there is that across the board, both product-wise and geographically, we think we now have a substantial portion of the long-term architecture of our firm. The near to intermediate term opportunity is to grow it deeper both in terms of more services for existing clients and more clients in existing capabilities and in existing geographies. So I would say that our emphasis is in going deeper, growing our market share, getting the benefit of the maturation of the people that come on to our platform over the last couple of years. Clearly from our point of view, there is no limit to how much growth we would like to generate internally from that capability. If you asked us today, where we see the opportunity, it is probably more heavily short-term in the U.S. in terms of the market that has the most positive dynamic and we’re probably getting the best results. At the same time, in Europe, we’re seeing the capital markets start to take share from the banks in terms of debt financing, and that’s definitely something that is giving us some momentum in investment banking and fixed income in Europe. In Asia, we’re relatively new, and off of a small base, we see long-term opportunity, but I would emphasize that our focus right now is not in geographic expansion, but rather in deepening our results within the products and the capabilities we have we think that the operating leverage and the smart risk reward trade-off here is to leverage within, you would have seen in the last couple weeks some suggestions that we’re expanding in our commodities focus in the metals area. That’s definitely something that we see as an opportunity, and we see that as a global opportunity, U.S., Europe, and Asia for expansion.