Yesterday JP Morgan announced earnings that blew away the official analyst estimates. Today Goldman Sachs did the same thing.
But the reaction to both earnings announcements is similar: is that it?
It was hoped that JP Morgan would reveal that its loan loss provisions had declined. Instead they kept climbing. And we wanted Goldman to totally blow away the ‘estimates.’ Instead it plugged in a solid “beat.” A lot of Goldman’s gains were made on bets that ordinary mortals might have made, such as trading in further declines in subprime.
What was missing in both reports was the idea of market genius or financial expertise. Where was the “fire?”
Everyone knows you can make money if your borrowing costs are held artificially low by government backstops. So just being profitable isn’t enough these days. We need heroic profitability. And neither Goldman nor JP Morgan delivered on the prospect of heroism.