For Goldman, a swift return to lofty profits

THE LIGHTS ARE ON AGAIN

Most of Wall Street, and America, is still waiting for an economic recovery. Then there is Goldman Sachs. Up and down Wall Street, analysts and traders are buzzing that Goldman, which only recently paid back its government bailout money, will report blowout profits from trading on Tuesday.
    Analysts predict the bank earned a profit of over $2 billion in the March-June period, because of its trading prowess across world markets. If they are right, the bank's rivals will once again be left to wonder exactly how Goldman, long the envy of Wall Street, could have rebounded so drastically only months after the US financial industry was shaken to its foundations.
    The obsessive speculation has already begun, along with banter about how Goldman's rapid return to minting money will be perceived by lawmakers and taxpayers who aided Goldman with a multibillion-dollar cushion last fall.
    "They exist, and others don't, and taxpayers made it possible,'' said one consultant, who, like many people interviewed for this article, declined to be named for fear of jeopardising relationships.
    Startling, too, is how much of its revenue Goldman is expected to share with its employees. Analysts estimate that the bank will set aside enough money to pay a total of $18 billion in compensation and benefits this year to its 28,000 employees, or over $600,000 an employee. Top producers stand to earn millions.
    Goldman was humbled along with the rest of Wall Street when the financial markets froze last year. As a result, it lost money in the final quarter, a rarity for the bank. Along with other big banks, it was compelled to accept billions of dollars in federal aid, which it paid back last month.
    Amid the crisis, it also converted from an investment bank to a more regulated bank holding company. Goldman declined to comment over the weekend, pending its Tuesday earnings report. But if the analysts are right, the results will extend a remarkable run for Goldman that was marred only by the single quarterly loss last fall of $2.12 billion.
    Goldman Sachs is betting on the markets, but the markets are also betting on Goldman: Its share price has soared 68% this year, closing at $141.87 on Friday. The stock is still well off its record high of $250.70, reached in 2007. Goldman has managed to do again what it has always done so well: embrace risks that its rivals feared to take and, for the most part, manage those risks better than its rivals dreamed possible. NYT NEWS SERVICE Whitney, who saw Citi crisis coming, gives GS 'buy' rating
    Meredith Whitney gave Goldman Sachs Group her only ``buy'' recommendation among the eight banks she covers, saying the shares may climb 30%.
    Whitney, the founder of Meredith Whitney Advisory Group, hasn't recommended buying shares of New Yorkbased Goldman Sachs since January 2008, when she was an analyst at Oppenheimer & Co.
    The stock may reach $186 from $141.87 on July 10, the 39-year-old analyst said in a note to clients on Monday.
    Whitney, who left Oppenheimer earlier this year to create her own firm, correctly predicted in 2007 that Citigroup would cut its dividend. Her call triggered the steepest drop in Citigroup shares since September 2002.
    Goldman Sachs, which plans to release second-quarter results on Tuesday, is going to post "enormous" revenue from its fixed-income, currencies and commodities business, Whitney said in an interview on CNBC. "Goldman is going to surprise big on the upside," she said.
    Goldman Sachs shed government-imposed restrictions on compensation by repaying $10 billion of bailout money to the US Treasury in June.
    The firm, which has ratcheted up trading gains and reaped more fees from stock and bond sales, may report the highest pershare profit of any of the 15 biggest US banks, according to analysts surveyed by Bloomberg.
    The shares climbed $4.36, or 3.1%, to $146.23 at 9:39 am in New York Stock Exchange composite trading. They had gained 68% this year before Monday. BLOOMBERG