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Before presenting Goldman Sachs' earnings release below, I want to touch on something we'll be witnessing in the coming weeks. Yesterday on twitter, I was joking that Goldman Sachs does everything with an implicitly silent "biiiatch!" at the end of every statement/action/filing/etc. (Definition/use of of "biiiatch" here).

The headlines yesterday were "Blowout Earnings" and "Goldman Secondary Offering" and yadda yadda. Those headlines obviously didn't contain Goldman's sweet new tagline. So, just imagine a bunch of old bankers coming out and saying "Goldman Sachs biiiatch!" ... "Blowout Earnings biiiatch!" ... "Secondary offering at insane prices biiiatch!" It's cool though, we let it slide because after all, they're Goldman Sachs (NYSE:GS) and they do what they want. This implicitly silent tagline let's them puff out their chest and show just how much better they are than everyone else.

But all joking aside, this earnings season will be littered with absolute dominance and absolute disaster.
And, by dominance, we of course mean beating estimates by way of government help/intervention, accounting tricks, and other fun loopholes. *Cough* Wells Fargo *Cough*.

If you missed their tomfoolery, Wells Fargo basically came out and announced earnings that seem outright impossible given that they were getting their ass handed to them just a few quarters ago. This anomaly was made possible by various accounting sidesteps referenced in the article linked above. Yet, there seems to be no mention of the fact that they might need billions of dollars. Curiously enough, KBW comes out yesterday and claims that Wells Fargo (NYSE:WFC) might need up to $50 billion in order to cover loan losses and pay back the government.

Wow, but they just came out and killed their numbers... why would they ever need that much money?!? /End sarcasm.

We bring this point up because in a normal world, earnings season is a field of land mines. Yet, given the circumstances specific to this past quarter, the minefield has now quadrupled in size. So, you are now more likely than ever to step on a mine.

There are two categories of companies reporting this earnings go-round: Firstly, there are those with accounting sidesteps and government ties due to help/intervention. Secondly, there are those without any of that... i.e. the rest of the companies reporting. The harsh reality is that both categories are equally as scary for different reasons.

Companies who "beat" estimates and "profit" all of a sudden will do so because of abnormalities unique to their reporting situation. Many of the financials will appear to "dominate" their numbers, when in reality they have only masked them by putting pretty flowers around them. So, this datapoint becomes essentially useless in gauging just how far along (or far behind) we are in this mess. Should we buy them now because they're doing "just great" with an asterisk next to their name? Should we sell them because they've rallied so much already? The reactions will be interesting to gauge. But, thus far, most companies in this category have been bid up. The problem with earnings season is you have just as much of a shot at hitting a land mine that instead of showering you with dollar bills, rips your face off.

There will also be companies out there who have not had as much government intervention and are lacking in the ability to mask their true faces. Those companies will miss earnings, will lower guidance, and will warn about impending doom. They will paint pictures of reality as they drop 30% in a single day.

So, as you can see, we have some polar outcomes here. The companies who have been at the center of a lot of the crisis (financials, etc) are benefiting from their ability to sweep things under the carpet by way of the government or accounting changes. The companies that are not so fortunate, however, will not have such luck when it comes to reporting their earnings. So, while the tide (read: herd) rolls in directions that make absolute zero sense, you have to respect them. Because, if you don't, you'll be mauled. (Case in point: Financials spiking 20-30% off crazy earnings announcements). The problem with all this is that we're still left wondering, "What's changed?"

We're simply here to kick off what we have already deemed the Q1 '09 Earnings Season Clusterf**k. You will most likely be deceived, tricked, and possibly even lied to. But, it's cool, because everyone is all of a sudden profitable out of NOWHERE. We just want to tell our readers not to place too much weight or emphasis on this earnings season simply because if the earnings already reported are any indication, this past quarter took place in Candyland, not recessionary America.

So, keep on your toes and don't put on any big positions before these releases... You'll have better luck at blackjack or baccarat. As a matter of fact, Vegas & Atlantic City desperately need your money right now. So, go there and kill two birds with one stone: Get better odds and help save the American past-time known as gambling.

The point of all this is merely a precautionary tale. Earnings of Q1 will be polar... to say the least. Just keep that all in mind as you are hit with a progressive barrage of earnings. In the end, it will be pretty clear who is being realistic and who is toying around in Candyland, accomplishing not much of anything. We're trying to take steps of progress forward. Unfortunately, we're most likely stepping sidways or even backwards.

To those destitute yet admirable companies that will tell it like it is (only to see your stock plummet instantaneously): we salute you. No, seriously. We are being 100% honest when we say thank you for providing some transparency to the macro environment and thank you for keeping it real. It has to get worse before it can get better.

And, on that final note: Let the games begin... Hiyo!


*Disclaimer I: Due to the recent Goldman Sachs legal tirade against a blogger, we are inserting this disclaimer to say that we have no affiliation with Goldman Sachs whatsoever. All 'taglines' in this article are fictional, are created solely by us, and are by no means a representation of Goldman's official slogan, mission, values, etc, etc, etc, etc. Everything in this post (well, mostly everything) is a satire and witty in nature. Please take this into account as you digest this delectably delicious derision.

*Disclaimer II (herein referred to as 'Disclaimer of the Disclaimer'): Please also note that while the aforementioned Disclaimer I is serious in nature, this aptly named Disclaimer of the Disclaimer is in and of itself a mockery of the Goldman Sachs proceedings referenced above as the 'legal tirade.' Those responsible for the sackings have been... well, sacked.

Market Folly biiiatch!

And now to the afore-promised and obligatory relevant content: Goldman Sachs' Q1 2009 Earnings Release

Source: Goldman Sachs and Why Earnings Season Will be (Bi-) Polar