The shrewdest U.S. investors understand that future profits will come from overseas.
But Goldman Sachs Group Inc. (NYSE: ) is apparently getting those profits now.
Wall Street analysts are predicting that Goldman – which only recently repaid billions in government bailout money – will report a "blowout" quarter today (Tuesday), thanks to its own shrewd ability to trade its way through the overseas markets. Indeed, analysts are looking for profits in excess of $2 billion for the March-June quarter.
In an odd financial irony, Goldman’s good fortune could well underscore that many problems remain in the U.S. financial sector, meaning the U.S. economic recovery remains in the distance.
Goldman Sachs is "taking opportune risks that others aren’t taking," Charles Geisst, a Wall Street historian and author of the forthcoming "Collateral Damaged: The Marketing of Consumer Debt to America," told The New York Times. "They are scooping up all the risks that are available."
Goldman’s shares surged $7.57 each, or 5.34% in trading yesterday (Monday) to close at $149.44.
As Money Morning has reported, less than a week into corporate earnings season – where U.S. firms are posting their second-quarter results – investors are anticipating a lackluster showing, but are hoping that big banks and high-tech leaders will report strong enough results to at least stop the stock-market’s current decline, or perhaps even to ignite another stock-market rally.
The Standard & Poor’s 500 Index and Dow Jones Industrial Average delayed declined for the fourth straight week last week – the longest string of losses since stocks hit their low point in March. The Nasdaq Composite Index lost 2.47% in the week ended Friday.
Earnings reports this week from computer-chip giant Intel Corp. (Nasdaq: ) and several big banks – including JPMorgan Chase & Co. (NYSE: )– could provide investors and economists some insights on where the U.S. economy appears to be headed.
Earnings are expected to improve over the last quarter, even though they’ll still be down substantially on a year-over-year basis, Binky Chadha, chief U.S. equity strategist at Deutsche Bank AG (NYSE: ), told MarketWatch.com.
JPMorgan Chase & Co. (NYSE: ) reports Wednesday.
