'Goldman Ruined My Morning,' Says Ralph Silva

Goldman Sachs Group Inc GS reported mixed second-quarter numbers earlier on Thursday. While revenue at $9.07 billion came in better than analysts' expectations of $8.78 billion, EPS came in at $1.98, way lower than expectations of $3.89. The company reported that litigations costs dragged down the earnings by $2.77 per share.

Ralph Silva, Silva Research Network banking analyst, was on CNBC Thursday to weigh in on Goldman's earnings. Silva also highlighted two important questions that Goldman's second-quarter earnings raise.

Legal Costs

"Goldman ruined my morning because, I think, all of us analysts in the analyst's community, we got that entirely wrong," Silva said. "We had no idea that the litigation costs were going to be that high, which leads to the next sort of issue that we have is – why are they that high? Why are they so much higher than the other banks. Is there another shoe to fall? I don't know, I don't have any insights on that. But I think their legal costs are way too high."

Related Link: Can Goldman Sachs Post A "Reasonable Quarter?"

Fixed Income

He continued, "The underlying business at Goldman is quite good, except for the fixed income. And the other question is – why are they doing so poorly on the fixed income, where the rest of the banks are doing relatively well? I think they might have some relationship issues within the fixed income department at Goldman, and we are going to have to look more deeply into it."