Barclays Slaughters Goldman, Cuts Q2 2010 EPS By 65% To $1.95 From $5.35 Previously, $4.29 Street Consensus

From Barclays: "Financial market conditions have deteriorated notably since 1Q10, evidenced by sharply wider credit spreads, cash-derivative basis, declines in structured finance indices, sharply higher volatility and a "flight-to-safety" trade in less risky assets. We believe this market dislocation, while certainly smaller than the dislocations seen in 2008 and early 2009, has impacted broker-dealer revenue generation in terms of client activity levels, trading revenue and investment banking results. Additionally, we believe that 2Q results will be more divergent across the Street, driven more by relative positioning for the moves this quarter." The key reasons for the Barclays cut: "The largest downward revisions are in lower core FICC (-40% seq to $4.49bn, -$1.18 EPS), lower core equities (-40% seq to $1.4bn, -$0.75 EPS), weaker investment banking (-37% seq to $743mm, -$0.39 EPS) and the inclusion of$650mm of UK bonus tax (-$0.90 EPS)." The Q2 financial earning season just got interesting.

Comments

[hedgeless_horseman]

Grenade!!!!!!!!!!

[jkruffin]

I posted on Yazoo yesterday to those morons on GS board, that GS was getting ready to get popped.  No way they earn what they have been claiming in the past.  I was even thinking they may report losses.  If Congress gets the Prop Trading ban in, its all over for GS and JPM.

[Joe Shmoe]

I took a look at the GS 09 annual report, and even in that PR piece, on the consolidated financial statements, the story is astounding.  Some 85% of their pre-tax operating income comes from trading and proprietary transactions.  So, basically, as we all know, and they've publicized, they are a hedge fund.  And their CEO cut his teeth as a gold trader.  No conspiracy here, just public information.

[TWORIVER]

For SPY the daily chart is showing a good probability of a retest of support just below 105 in the near term. If we did just put the top in the Shoulder part of the pattern (104-65:113.2=8.85pts), a break of support should lead to 95 using the height of the Shoulder as a guide.

[Cleanclog]

But but but . . . quivering lip . . . doesn't the GS prop desk make profits EVERYday?

[stickyfingers]

Has Uncle Warren seen this?

[Rogerwilco]

"Cry 'Havoc!', and let slip the dogs of war"

[Joe Shmoe]

Also, maybe it's just because I live in an economically depressed state (one of many), but it seemed kind of clear to me this morning: 

Income, as in regular people earning it, is all that matters.

The financial sector is broken with more pain to come, same goes for housing, consumer discretionary, consumer durables, public sector, etc.  Health care (and maybe industrial) seem better.  Doesn't seem like an economic development official's dream mix.

Personal income will recover slowly, and as always, the growth will come from somewhere the government has no clue about. 

[Chemba]

Give me a break.  Sell side analysts are not able to forecast Goldman's earnings.  It's not like counting vehicle production multiplied by revenue per vehicle multiplied by an operating margin.  Goldman's busines is too complex and opaque to analyze from the outside.

And the bulk of "trading and principal investments" is flow trading, not proprietary.

Ever wonder how Goldman Sachs didn't have a losing Q throughout the financial collapse, while other firms were bleeding and going bankrupt?  It is because Goldman has a real-time read on their portfolio, and they avoid large directional bets.  Lehman and Merrill went under because they made large directional bets on mortgage credit; Goldman Sachs did not.

[TWORIVER]

For SPY the daily chart is showing a good probability of a retest of support just below 105 in the near term. If we did just put the top in the Shoulder part of the pattern (104-65:113.2=8.85pts), a break of support should lead to 95 using the height of the Shoulder as a guide.

[papaswamp]

HUGE miss on new home sales....huge

[Buy High Sell Low]

and these guys should know it as they are among the world top 3 in FICC and equities themselves...

[chinaguy]

"The Q2 financial earning season just got interesting."

Go long.

How can the Obama Admin (now) possibly not begin QE2 "to protect the fragile recovery"...meaning the TBTFs

It ain't about value anymore.. Now, it's all about timing govt bailouts - LOL

[G-R-U-N-T]

Another brilliant decision.

http://www.wdsu.com/news/23997498/detail.html

[MrTrader]

Barclays cuts Goldman EPS ? Strong buy.

[mephisto]

Expected news -

BARC cuts MS, JPM

GS cuts BARC

MS cuts BARC

JPM cuts GS, MS

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