Golden Goldman and Greenspan "Unplugged"

Chatter on the street is that Goldman Sachs can't help but beat Wall Street's estimates when it reports earnings tomorrow. For that reason, it's one of the few in the brokerage group still holding onto gains at the close.

Goldman stock closed up 2.5%. Bear Stearns, also reporting tomorrow, fell 3%. Morgan Stanley was down 2% after a disappointing report this morning, and Lehman was down a half a percent. Merrill Lynch though was 1% higher.

The firm is expected to report $4.37 per share, but traders say there's a lot of whispering about a bigger number. "I'm sure you recognize we don't comment on rurmor," a Goldman spokesman said. We know that but had to ask anyway.

"Everybody believes if there's a firm that can withstand all this stuff, Goldman would be it, and this is why its stock is holding up," said Keefe Bruyette Woods senior vice president Peter McCorry. (See Bob Pisani's "Trader Talk.")

Morgan Stanley this morning reported profits from continuing operations of $1.47 billion, or $1.38 per share, off 7% from last year. Net earnings were $1.44 per share, while Reuters estimate was $1.54 per share. Its miss was even more painful because Morgan was held out as one of the firms least likely to sustain damage from the credit mess.

Morgan reported $940 million in losses from writing down loans and commitments to finance buyouts. It also had a $480 million loss from in-house equities trading. The report came a day after rival Lehman reported profits a bit better than the street had expected.

"You saw these stocks start to fade on the headlines coming out of the (Morgan) conference call," said Peter McCorry of Keefe Bruyette.

Colm Kelleher, Morgan Stanley's incoming chief financial officer, said the worst of the credit crisis is over but that it will still be some time before its over. "This will take some time to work through the credit markets. I would suspect you're talking about one to two quarters," he said. That comment caused a bit of queasiness about the firms and market in general.

Bear Stearns is expected to earn $1.78 per share for the quarter. It holds a conference call at 10 a.m. New York time. Goldman has a call at 9 a.m. for media and then another for investors at 11 a.m.

Greenspan 101

Okay, it's not just college students who skip their local news broadcasts and flip right to the "Daily Show" every night at 11 -- maybe there are a few parents out there too. But who ever is watching saw a plain spoken Greenspan last night explaining the relationship of the Fed to the markets and how it operates.

Stewart asked Greenspan if it isn't all about gaming the Fed! And in his soothing Fed chairman tone, Greenspan explained how market players watch the same data the Fed looks at and try to guess what it will do.

Stewart: "So the Fed, or whoever's leading it, could in fact, if he wanted to, goof on all of us!"

Greenspan: (shaking his head) "He wouldn't want to."

Greenspan also told Stewart something he told CNBC's Steve Liesman earlier this week: that forecasting hasn't really improved over the years despite all the computer-driven models available today. "I've been in the forecasting business for 50 years... I'm no better than I ever was and nobody else is. Forecasting 50 years ago was as good or as bad as it is today," Greenspan said.

And that, Stewart says, bums the $**t out of him!

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