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It’s all about Goldman

Markets are firmly fixed on what Goldman has to say about its second quarter results at 8:30 am. For those wanting a quick link to conference call info that starts at 11am, they can find it here. Meredith Whitney’s buy recommendation Monday has certainly built in expectations for a bumper quarter.

Blogger Macroman on the whisper number:

A few banks are now suggesting that the whisper number is as high as $5/share, and that anything less than that will disappoint. But given the break back above the old head and shoulders neckline, Macro Man wouldn’t be totally shocked to see the market rally on a $4 print. (Consensus is ostensibly $3.65)

We’ll be live blogging the conference call from here.

A Tale of Two Citi’s

Here’s a summer quiz: Identify the following two US banks:

1. This institution has been profitable throughout the credit crisis. Last year, it reported net income of $6bn on revenues of $60bn, despite taking big hits in its consumer operations in North and South America in the fourth quarter. At the end of the first quarter the bank had total assets of $958 billion, supported by a healthy deposit base of $660 billion.

2. The second institution lost a massive $36 billion last year. Even net revenues were negative to the tune of almost $7 billion. This bank had a $662 billion balance sheet at the end of the first quarter, but deposits of just $88 billion.

Markets knocking the stuffing out of the optimists

Treasurys are up after a stellar auction of $19 billion reopened 10-year notes, stocks are floundering as investors worry about the economy and earnings season. More and more it feels like the pessimists have decisively turned the tide.

David Gaffen over at the Reuters Global Investing blog, sums it up best:

Earnings are expected to fall about 36% once again, and investors in recent weeks have finally cottoned to the idea that vaulting over low bars really isn’t much to get optimistic about. If the market is truly going to turn higher, it will depend on the quality of earnings, and there, some aren’t so optimistic. Mike Lewitt, president of Harch Capital Management, said, “I don’t think there’s a lot of revenue growth, just shrinkage – basically everybody is shrinking across the board and that’s what we’re seeing.”

Beware the Tarp repayments

Shares of Goldman Sachs and Morgan Stanley are trading like the financial crisis never happened. In fact, Goldman’ stock is trading at  price that’s right around where it was the Friday before Lehman Brothers filed for bankruptcy last September.

But it looks the rally may have gotten ahead of itself. Roger Freeman, a Barclays Capital analyst, is scaling back his second-quarter estimates for Goldman and Morgan–largely because of the cost to both firms of repaying money to the Troubled Asset Relief Program.

What about those Goldman bonuses?

Will Goldman Sachs have its best year ever in 2009? Will it payout record bonuses? Maybe. Then again, maybe not.

The financial press went gaga this morning over a report in The Observer that Goldman employees “can can look forward to the biggest bonus payouts in the firm’s 140-year history.” The British paper had no real numbers to back up its claim, just the predictions of “insiders at the firm.”

The cost of paying back TARP

In a fitting twist of irony, Goldman Sachs joined other major banks in paying back the TARP on the very same day the Obama administration was releasing its financial regulatory reform package.

However, freedom for Goldman from the federal government dictating demands on compenstion will take a bite out of second-quarter earnings.  In a regulatory filing, Goldman says: