This was reported on Bloomberg. Here is a copy of a story on this change in forecast by la belle dame sans merci, who is renowned for having called out the fakery in Wall Street prior to the financial collapse.
Although this news piece cited below does not provide details, analyst comments suggest the slump in earnings is likely to come from a drop in gains from fixed income trading, as the great wealth subsidy from Timmy and the Fed to a few crony banks runs dry. As one analyst commented:
"All you are really doing is rewinding the camera -- we are going to replay the fixed income cycle," said Brad Hintz, an analyst with Sanford C. Bernstein. "During that replay, fixed income gives up a lot of that profitability, especially on the credit side."With the slumping volumes in equity trading and IPO's, it is an open question if Goldman can skim enough from the other markets to make up for their loss of Fed sponsored welfare payments.
StreetInsider
Ahead of Q2 Results, Meredith Whitney Slashes Estimates on Goldman (GS), Morgan Stanley (MS)
Shares of Goldman Sachs have begun a move lower on very heavy volume as we are hearing that controversial banking analyst Meredith Whitney has lowered her earnings estimates on the stock ahead of the company's quarterly results, expected out on Tuesday, July 20th.
Meredith now sees Goldman reporting Q2 EPS of $1.70, down from her previous estimate of $4.75 and compared to the current Street consensus estimate of $2.34. Q3 EPS estimate moves from $4.24 to $3.77, which compares to the Street estimate of $4.10. For FY10, Meredith is now expecting Goldman to report $15.70, down from $20 previously. The Street is looking for FY10 EPS of $16.76.
Whitney maintains a Hold rating on shares of Goldman.
Elsewhere among the big banks, the analyst also lowered estimates on Morgan Stanley (NYSE: MS). Whitney lowered her Q2 EPS estimate on MS from $0.68 to $0.40. The analyst consensus is currently calling for quarterly EPS of $0.50.
