Meredith Whitney Slashes Earnings Estimates on Goldman Sachs From $4.75 to $1.70

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.

Obama: More Adult Americans Disapprove of His Presidency Than Approve

As so many forget George W. Bush was in a similar position in his lackadaisical early presidency, prior to 911 and the invasions of Afghanistan and Iraq.

One thing that W never forgot, in fact it was almost a central tenet of his political life, is to never lose your base, always keep their interests in mind.

Who is Obama's base? He has lost the independents, the new voters who came out for his promises of change and reform. He has lost his party from the left to the middle, when he dropped the pretenses after the election and packed his administration with big business shills and Chicago cronies. The core of the Republican party will never accept him no matter what he does, because they cannot trust him, and do not easily compromise as they are ideologues, as inflexible as the far left whom they despise. He does maintain the hard core of the Democratic faithful, but their support is stronger in the public faces than in their private conversations.

I admit I cannot figure the man out even now. He is obviously well spoken and intelligent, but is lacking in principle, weak willed, seemingly light in what used to be called character, and even worse, softly corrupt in the 'go along to get along' and low class grubbiness of the Chicago machine. An Americanized version of Tony Blair some might say, with a Liverpudlian twist. The choice and continuance of Tim Geithner as Treasury Secretary epitomizes his presidency. The American people voted for change, for a Roosevelt, and were delivered something closer to a Warren G. Harding.

Why bring this up at all? Anyone who has followed this blog knows that I identified Obama as a pivotal figure well before he was a credible presidental contender. He was going to be the change agent, immensely important. And he has failed to deliver anything that could conceivably change the lumbering decline of his nation and our worst case forecast.

And it indicates how rough things will be for his party in the November elections, if not for all incumbents. This means that changes in policies, in approaches, will be de rigueur. That is, if American politicians will care about the electorate anymore, or are merely content serve the money masters in the corporations. Those changes will affect the economy and foreign policy of the last remaining superpower, even as it might be faltering, and that has implications for the world.

Gold Chart Daily

Gold has not broken the short term downtrend yet. It almost looks like it is rangebound in its attempt to break that nasty overhead resistance that the bullion banks are defending. The next credible attempt will be the fourth, and it would likely be successful in most markets.

SP 500 September Futures Daily Chart

Strong technical bounce off the bottom of the downtrend channel.

Rumours abound that BP is close to plugging the Gulf oil leak, with the word quietly out so that the same insiders who sold shares, and even went short the sector and region ahead of the public disclosure of the problem and its severity, can cover up and go long.

But that's a rumour, so let's see if they really do finally solve the problem, and if stocks can break up threw that resistance where they stopped near the close, and take on the next level of resistance a little higher up.