The previous earnings reports from Citigroup and JPMorgan over the past week were not well-received, but today Goldman is up more than 6% as I write this.
But let's be clear on the news. Goldman's $1.84 EPS beat earnings estimates that had been lowered by analysts in the run-up to reporting (all the way down to $1.24). And the numbers versus last year's fourth quarter are anemic: Net revenue dropped 30% and earnings dropped 58%.
Goldman's compensation was also down. Over the whole year, its compensation and benefits pool dropped from $15.4 billion to $12.2 billion. Some of this was due to reducing its workforce by 7%, but there was also a drop in pay per employee. The pool equates to $367,000 per employee this year versus $431,000 last year.
So what we see is an earnings beat with lowered expectations. On Wall Street, where you eat what you kill, there's been less big game to share. We'll see tomorrow whether the expectations for Bank of America and Morgan Stanley were lowered enough to please the market.
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