Goldman Sachs - cold shoulder More than double the quarterly net profit and beat analysts" expectations by a third and what happens? A near 2 per cent drop in the share price. So, why the cold shoulder for Goldman Sachs on what looks to be a pleasing second quarter? To start with, the bank's earnings benefited from a lower income tax rate (27 per cent this year against 33 per cent a year ago). Instead of bringing some overseas profits home in the quarter, Goldman invested them locally. And much of the earnings surprise came from the investing and lending business, which includes merchant banking and long-term investments. Net revenue from debt securities and loans, for example, jumped 196 per cent year over year. Most holdings are marked to market daily, so results can be lumpy and sensitive to market performance. Debt underwriting was another bright spot, with net revenue of $695m, a record quarter and up 40 per cent year on year. Revenue from fixed income, currency and commodities trading (FICC) was up 12 per cent, but fell shy of the increases at rivals JPMorgan and Citigroup. While the bottom line looked impressive, the elements that made it so do not look sustainable. Goldman characterised the lower tax rate as a one-time event. Meanwhile, the looming end to the Federal Reserve's asset purchases has introduced volatility to markets and darkened the outlook for bond prices and new issuance, which Wall Street banks only began to feel in the latter part of the second quarter. Large banks and their investors are also faced with uncertainty about how much capital they will be required to hold based on new regulations. Goldman did not give an estimate for its leverage ratio based on a new US proposal. With the bank's shares up more than 60 per cent over the past year, the mood may stay chilly.