Bank analysts are sharply divided over just how bad Goldman Sachs’ second-quarter earnings will be, offering a much wider range of estimates than is typical for the Wall Street company.
There is a consensus that it will not be one of Goldman’s best quarters, but some are predicting it could be one of the bank’s worst when it reports later today.
Earnings estimates range from Goldman making 33 cents per share and barely eking out a profit, to almost $5 a share and netting more than $1.5bn.
While it is not uncommon for analysts to disagree, the debate over what Goldman, led by chief executive David Solomon, will report is more divided than usual.
Like its peers, Goldman’s earnings are suffering from a sharp drop in investment banking fees and a slowdown in stock and bond trading.
But the bank’s profits will also likely take a hit from the recent acquisition of home improvement lending business GreenSky and losses from its consumer and commercial real estate loan portfolios. Read more on what to expect from Goldman’s earnings.
Read more on banks: Corporate and institutional depositors are demanding higher rates on their deposits and are beginning to shift their funds in search of a higher yield, yesterday’s results show.
Here’s what else I’m keeping tabs on today:
Results: Tesla, Netflix, IBM, United Airlines and Halliburton also report earnings today.
Economic data: New US residential construction starts from the commerce department.
US Congress: Israeli president Isaac Herzog will address a joint meeting of the House of Representatives and Senate.
Five more top stories
1. Donald Trump has said he is the target of a new criminal probe into efforts to overturn the results of the 2020 US presidential election, raising the possibility he could face fresh federal charges in the coming days. The former president yesterday said he had received a letter from the Department of Justice informing him of the investigation. Read the full story.
More on Trump’s legal troubles: The former president has at least six cases against him. Here’s a breakdown of each.
2. Exclusive: Vladimir Putin ordered the seizure of Danone and Carlsberg’s Russian operations after businessmen close to the Kremlin expressed an interest in the assets, according to people close to the decision. Read the full story.
More on the Ukraine war: Saudi Arabia and Turkey are seeking to broker a deal to repatriate thousands of Ukrainian children taken to Russia and held in children’s homes or adopted by Russian families.
3. A US economist chosen for one of the top posts in the European Commission’s competition division has withdrawn after the appointment provoked a backlash, led by France. Read more on the decision by Fiona Scott Morton, a former Obama administration official, not to take a job in Margrethe Vestager’s department.
4. Microsoft is to charge $30 a month for generative artificial intelligence features in its software used by hundreds of millions of office workers. The premium is bigger than expected on a technology that many in the industry hope will bring a powerful boost to revenues. Microsoft chief executive Satya Nadella revealed more details of the charges in an interview with the Financial Times.
5. Big investment banks are turning more bearish on the dollar in the wake of last week’s unexpectedly large drop in US inflation. Morgan Stanley, JPMorgan Chase, Goldman Sachs and HSBC are among the lenders to have either scrapped bullish dollar calls or forecast further declines for the currency as expectations grow of a “soft” economic landing. Read more on the forecasts for the future direction of the dollar.
The Big Read
After Switzerland joined the embargo imposed on Moscow following Russia’s full-scale invasion of Ukraine, much of the Russian oil trade in Geneva shifted to the Middle East. According to a Financial Times analysis, companies registered in Dubai bought at least 39mn tonnes of Russian oil worth more than $17bn between January and April — about a third of the country’s exports declared to customs during that period.
We’re also reading . . .
Fossil fuels: Shell and ExxonMobil cannot lead us out of the climate crisis. Only governments have the power to cut demand for oil and gas, writes Pilita Clark.
Training AI: Tech groups including Microsoft and OpenAI are experimenting with computer-made “synthetic data” to train artificial intelligence models.
The FT View: Hollywood’s strikers are writing the script for other industries as they argue over how to divide the spoils in the new era of digital delivery.
Chart of the day
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Spain is likely to become the latest European country to shift to the right after Sunday’s general election. Polls suggest the hard right Vox party will emerge as the power broker in a coalition led by the conservative People’s party although Alberto Núñez Feijóo, leader of the PP, is fighting to avoid sharing power with the populist party. Read more on Spain’s upcoming election.
Take a break from the news
Greta Gerwig’s Barbie film is a seamless blend of infectious, Day-Glo wit that also peers into the chasm between the have-it-all vision of femininity sold to little girls by the doll’s maker Mattel and the grinding, impossible choices that face many adult women, writes Danny Leigh in his 4-star review.
Additional contributions by Tee Zhuo and Benjamin Wilhelm
Source: Economy - ft.com
