The Earning Game Q1 2009

Posted by Kris | Wednesday, April 15, 2009 | | 0 comments »

So far, the better than expected earning results from the financials are really helping to boost up this extended DJIA rally. Financials are making "large" profits this quarter thanks to the bailout money distributed through AIG. Wells Fargo & Goldman Sachs are beating expectation.

Goldman Sachs Group Inc.'s shockingly strong results had stock analysts on Tuesday questioning whether the performance can be repeated, and intensified the focus on results in coming days fromJPMorgan Chase & Co. and Citigroup Inc.

Goldman (GS) late Monday reported first-quarter profit of $3.39 a share, beating estimates of $1.64 a share, and said it would sell $5 billion of common shares to repay federal rescue funds.

But some analysts say the performance can be chalked up to funds Goldman received from American International Group Inc. (AIG) after the insurance giant was bailed out by the government.

Goldman is "one of the major beneficiaries of our tax payer dollars and the great irony is in an alternate universe, the quarter in which Goldman's reported earnings were twice street expectations would have been the quarter in which it declared bankruptcy," said Dan Greenhaus, an equity analyst at Miller Tabak & Co.

Goldman's surprising after Monday's close, and followed like results last week from Wells Fargo & Co.(WFC), which also released its first-quarter results early, saying it expects first-quarter profits of $3 billion, or55 cents a share, well ahead of estimates of 31 cents a share.

INTEL is going to announced its earning end of today's trading. This is going to test the market's perception of a rosy recovery outlook this quarter. US consumer retail sales dropped in March prompting a sell-off today. DJIA is trading at the resistance level of 8,000. Current price movement is showing a weakness towards the downside. 

With the current high unemployment rate, are the Americans still willing to continue with their shopping spree habits?