| NEW YORK
NEW YORK Dec 17 Expectations are high for
Goldman Sachs Group Inc (GS.N) to report another strong quarter
on Tuesday, even as its peers face write-downs and other
problems from the subprime mortgage crisis.
That's worrying investors from all sides -- stocks, bonds
and currencies -- who say that if the investment bank shows any
holes in its results, it could mean the financial sector's
problems may be even worse than thought.
"Everyone has been so used to them beating expectations.
The risk is that they don't. If that's the case, it won't be
good for stocks and will be friendly for bonds," said Lou
Brien, market strategist at DRW Trading in Chicago.
The news can only be disappointing, with expectations so
high for Goldman, said Jim Awad, chairman of W.P. Stewart Asset
Management, in New York.
"If they meet expectations, people will focus on problems
other companies have. If they disappoint, they will say, 'Uh
oh, we've got even Goldman.'"
The release of Goldman's fourth-quarter results, expected
before Tuesday's opening bell, follows growing expectations of
further deterioration in the financial sector's profits.
Last week, Lehman Brothers Holdings Inc. LEH.N reported a
decline in fourth-quarter earnings. It also recorded an $830
million net write-down during the quarter. For details, see
Morgan Stanley (MS.N) and Bear Stearns Co. Inc. BSC.N are
also expected to report results this week.
But Goldman, which is expected to have made billions of
dollars in gains from bets against the subprime mortgage
market, is seen as somewhat immune to the troubles hitting the
rest of its sector.
Analysts on average expected Goldman to report profit of
$6.76 a share on $10.1 billion of revenue, according to Reuters
Research. A year earlier, it reported a profit of $6.59 a share
and revenue of $9.41 billion.
"They've weathered the storm better than most, and
everybody expects them to do well," said Tim Smalls, head of
U.S. stock trading at brokerage firm Execution LLC in
"If they don't do well, if they surprise to the downside,
that'll put a shock through the system."
(Additional reporting by Richard Leong; Editing by Jan