Word: goldmans
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...grip of recession. Earnings at energy companies, for example, are expected to plunge 50%. Technology companies could see their incomes drop by a third. Consumer staples - companies like Procter & Gamble that produce toothpaste and toilet paper - could be one of the few sectors to escape the economic downturn. Goldman expects earnings for those companies to be flat in 2009 compared with last year, before rising...
Late last week, Goldman Sachs cut its earnings expectations for the stocks in the Standard & Poor's 500. Collectively, Goldman thinks, those companies will earn $40 a share this year, down from $49 a share in 2008. That's a drop of 18%. Not great. But take out financial stocks, and the picture gets worse. Excluding banks, insurers and the like, Goldman is predicting an earnings plunge of 25% in '09. (See pictures of the stock-market crash...
...what point do these superlow prices become a buyers' market? At Goldman Sachs, chief investment strategist David Kostin opined last week that stocks would finish the year higher than they are today - perhaps as much as 20% higher - but he also noted that the S&P 500 could bottom well below today's levels...
...capitalizing on differentials in interest rates. The loan growth may also not be sustainable, as government concerns about rising nonperforming loans could lead to reduced lending in coming months. "Given the sharpness and severity of the recent slowdown, the recovery path is likely to be volatile as well," wrote Goldman Sachs economists Helen Qiao and Yu Song in a recent report. They're holding to their below-consensus 6% GDP-growth forecast...
...recent Goldman Sachs report estimates that most investment banks believe bonds like Jupiter are worth 40% less than what was paid for them, or 60¢ for every dollar invested. But given how many of Jupiter's bonds have gone bad, you could just as easily guess that it is worth 41¢ on the dollar. And that might be generous. A top bond trader who looked at Jupiter for TIME said that on the basis of where loan defaults are headed and the loans Jupiter holds, even the best part of the bond could be worth as little...