Are Steel Prospects Rustier Than Goldman Would Like You To Believe?
Always searching for a positive inflection point to upgrade the living daylights out of, Goldman now sees major upside in steel stocks, with X making the Conviction Buy (aka GS Prop Desk Conviction Sell) list. Below is a chart of US steel imports in value and tonnage over the past 3 years.
Goldman present the following favorable points:
- #1 – Steel stocks have sharply underperformed other cyclicals.
- #2 – US steel prices have bottomed.
- #3 – Scrap prices (key leading indicator) are moving up.
- #4 – Rising lodestar China prices are pulling up global prices.
- #5 – Rising iron ore and coking coal prices provide cost push.
- #6 – The BDI (another leading indicator) is sharply up.
- #7 – Continued dollar weakness deters imports/boosts exports.
- #8 – Domestic industrial activity is expected to improve in 2010.
- #9 – Steel makers should maintain discipline when raising supply.
- #10 – Inventories are close to a “pinch point.”
- #11 – Demand from other emerging markets, even ex-China, is improving.
- #12 – Multiples have contracted/could expand as prices rise.
- #13 – Margins should recover and expand as we exit the bottom.
- #14 – Steel has already decoupled from other commodities.
Whether all these are sufficient to offset a 70% drop year over year in US imports, even as service centers had been feverishly restocking inventory into H2, is unclear. Frankly, all of the points above by Goldman are irrelevant: the only open question is how much more Krugman-adored stimuli will the US economy see in the next year. Extrapolate from that all the information you need.
| Attachment | Size |
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| Goldman Steel.pdf | 409.23 KB |
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on Mon, 11/30/2009 - 09:37
#146154
priceless....the same guy who rants against gold and argues for negative rates and no cash.
NEW YORK, Nov 30 (Reuters) -Citigroup Inc on Monday named Willem Buiter as the bank's new chief economist replacing Lewis Alexander, the bank said. Buiter will take up his post in January, 2010 and will also lead the economics research unit after joining the Citi Research and Analysis Group management team. As chief economist, Buiter will act as a senior adviser on global economic issues and within the investment research team, will help analyse economic themes with practical investment applications. Buiter is currently Professor of Political Economy at the London School of Economics and a widely published author on economic affairs in books, professional journals and the press, the bank said in a press release. Since 2005, he has been a consultant with Goldman Sachs advising clients on a global basis, according to Citi. Prior to that, he was chief economist for the European Bank for Reconstruction & Development between 2000 and 2005
on Mon, 11/30/2009 - 09:47
#146162
Thank you for sharing GS, God's work is never done.
on Mon, 11/30/2009 - 09:50
#146165
If you're going to reproduce this garbage (my opinion) then you should at least highlight a few of the GoldSach disclosures for readers who aren't able to read 6 pt font size.
"Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to opinions expressed in this research."
on Mon, 11/30/2009 - 09:52
#146168
What bout steel industry capacity - surely that is a point to mention!
on Mon, 11/30/2009 - 09:55
#146170
Look at these losers trying their hardest to get it the green. Aren't you fuckers talented. You can print money and buy stocks with it. What a great strategy for an economic recovery. Morons.
on Mon, 11/30/2009 - 09:56
#146172
You forgot:
#15 - AMZN now offering ton of steel with free shipping
on Mon, 11/30/2009 - 10:15
#146192
(drop shipped from Chungdu)
on Mon, 11/30/2009 - 10:00
#146174
And how much steel was going into Dubai??
on Mon, 11/30/2009 - 10:02
#146176
Arcelor-Mittal (my favorite hate fund) has an 11,5% weighting in the AEX-index (Netherlands). They are also part of the French and Spanish indexes. In my opinion this fund has Enronesque red flaggs, not least a father CEO and son CFO setup, no proper oversight (they are headquartered in Luxemburg, London and Amsterdam), some serious off-balance shit, etc etc.
GS is market maker on daily and weekly derivatives in the Netherlands.
Get it? One plus one? I do.
Given the choice between buying this fund and sucking dick in hell, I will take the last option.
on Mon, 11/30/2009 - 10:17
#146194
got little bit too graphical there eh?
on Mon, 11/30/2009 - 10:14
#146191
The chart of US steel is a joke....when measured on fibonacci the last wave down gives a negative number for this stock i.e. backruptcy or at least something else not good for shareholders. When you measure from to to bottom this stock has not even retraced to the 38% line. It still needs to rise 100% to reach that. So after the biggest bear market rally this stock has not recovered.....watch out!.....and that is even before I discussed the fundamentals!
on Mon, 11/30/2009 - 10:40
#146217
During the last correction the overall market lost ~5%, meanwhile U.S Steel dropped from 50 to 35, killing longs, then, it subsequently bounced back 20%, effectively crushing shorts.
This is obviously a manipulated stock. How anyone can take these reseach reports seriously is beyond me.
on Mon, 11/30/2009 - 10:39
#146214
Look what happened to X share price the last time (last year i believe) Goldman Sachs put it on it's conviction buy list.
on Mon, 11/30/2009 - 10:40
#146218
Look at what happened to US Steel's share price the last time Goldman Sach's put X on it's conviction buy list (last year I believe).
on Mon, 11/30/2009 - 10:47
#146224
Last time they did that was on June 23, 2008. One really must love those archives... Just as someone once said "The archive is the best revenge of a journalist .... LMAO.
http://www.streetinsider.com/Analyst+Comments/Goldman+Sachs+Added+U.S.+Steel+(X)+to+their+Conviction+Buy+List/3763253.html
on Mon, 11/30/2009 - 10:49
#146227
Last time they did that was on June 23, 2008. One really must love those archives... Just as someone once said "The archive is the best revenge of a journalist .... LMAO.
http://www.streetinsider.com/Analyst+Comments/Goldman+Sachs+Added+U.S.+Steel+(X)+to+their+Conviction+Buy+List/3763253.html
on Mon, 11/30/2009 - 11:47
#146278
That's unbelievable. They gave the stock out at the exact tippy top. One week later, it started to tank.
Seeking Alpha archives Jim Cramer's stock picks. On a hunch I went back to see if he was pimping X at that time. Sho' enough:
http://seekingalpha.com/article/82087-hershey-s-house-of-pain-cramer-s-lightning-round-6-19-08
Stocks discussed in the lightning round session of Jim Cramer’s Mad Money TV program, Thursday June 19.
Bullish calls:
Wal-Mart (WMT): "I only like Costco…I like Wal-Mart … I like TJX and I like Urban Outfitters."
Costco (COST), TJX Companies (TJX), Urban Outfitters (URBN)
Qualcomm (QCOM): "…buy, buy, buy. It's going higher... congratulations, you go it, and I missed it."
General Steel (GSI): "I like the steel business in general."
United States Steel (X), Reliance Steel (RS)
Gran Tierra Energy (GTE): "I don't want you to run for the exits... Buy some more if it goes under $7."
on Mon, 11/30/2009 - 11:12
#146247
Quite. There are so many caveats at the end of the document to render it almost meaningless.
DavidC
on Mon, 11/30/2009 - 12:37
#146320
Steel stocks imploded not long after GS projected X to go to 240.
on Mon, 11/30/2009 - 14:42
#146528
Is Goldman trying to unwind a position?
My friends think I'm being too cynical...