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What to Look for in Goldman Earnings: Pros


Goldman Sachs is set to report quarterly earnings Tuesday morning, and the better-than-expected results are likely, Sanford C. Bernstein equity research analyst Brad Hintz said on CNBC.

“What you’re going to see is good fixed income, largely rates and credit. That’s not going to be a surprise. That capital market’s going to look good, and the key thing is will we start seeing changes in terms of the capital allocated to fixed income? If we start seeing that, then the belief will be that Goldman is on the way to beating its cost of capital in trading,” he said on “Fast Money.”

Once they’re on that trajectory of beating the cost of capital, he added, “Now you’ve got a stock that can begin to move.”

Hintz forecasted earnings per share of $2.56 on $7.4 billion in revenues. Wall Street consensus was $2.12 EPS on revenues of $7.3 billion.

In response to what Goldman needed to say to boost the stock, Hintz listed a few signals.

“We’re automating our fixed-income operation,” he said. “We’re liquidating some of those merchant banking positions that we have. The equity market has opened up, and IPOs are coming.

“Now when you start saying that, the message is the trading businesses aren’t broken, and the investment banking businesses are going to start posting better numbers going forward.”

Trader disclosure: On Oct. 15, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s “Fast Money” were owned by the “Fast Money” traders: Scott Nations is long SPY; Scott Nations is long BAC; Scott Nations is long C; Scott Nations is long JPM; Scott Nations is long VIX; Steve Grasso is long AET; Steve Grasso is long ASTM; Steve Grasso is long AUO; Steve Grasso is long BA; Steve Grasso is long F; Steve Grasso is long LF; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long P; Steve Grasso is long NVIV; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long WYNN; Tim Seymour is long SBUX; Tim Seymour is long WLT; Tim Seymour is long YUM; Tim Seymour is long BAC; Karen Finerman is long AAPL; Karen Finerman is long AAPL PUT SPREADS; Karen Finerman is long BAC; Karen Finerman is long BAC CALL SPREADS; Karen Finerman is long JPM; Karen Finerman is long JPM CALL SPREADS; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long MSFT; Karen Finerman is long M; Karen Finerman is short MDY; Karen Finerman is short SPY; Karen Finerman is short IWM; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long JPM CALLS; Pete Najarian is long WFC CALLS; Pete Najarian is long INTC CALLS; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long MSFT; Pete Najarian is long LYB; Pete Najarian is long INTC CALLS; Pete Najarian is long LLY;

For Brad Hintz

The following companies are or during the past twelve (12) months were clients of Bernstein, which provided non-investment banking securities related services and received compensation for such services: GS, MS

An affiliate of Bernstein received compensation for non-investment banking-securities related services from the following companies GS, MS.

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