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Weekly Chartology
Goldman could just as easily recap their entire market outlook in 8 simple words, "volume low, market up, volume high, market down" but since they are expected to provide extended sell-side service in exchange for everyone routing their trades through Redi, Sonar, Sonar Dark, OmtimIS, 4CAST, PortX, Piccolo, Navigator, Apollo, Sigma, FX trader, not to mention the hundreds of fixed income and commodity flow and prop traders (the two are interchangeable at GS), this is how Goldman quantifies the current, indisputably "cheap" market:
- Performance
S&P 500 rose 1.5% this week. The Utilities sector was the worst performing sector, falling 0.1%. Materials was the best performing sector, rising 3.7%. We expect S&P 500 to rise to 1300 by midyear (+20.5%), before ending 2010 at 1250 (+15.9%) - S&P 500 Earnings
Our top-down EPS forecasts of $76 and $90 for 2010 and 2011 reflect +33% and +20% growth, respectively. Our pre-provision and write-down EPS forecasts are $81 for 2010 and $91 for 2011. Bottom-up consensus forecasts a 39% increase in 2010 to $79, and a 20% increase in 2011 to $95. - Valuation
Top-down, the S&P 500 trades at an NTM P/E of 14.3X (13.3X on pre-provision EPS). Bottom-up, it trades at NTM P/E of 13.7X and LTM P/B of 2.3X
And here are the charts that validate the popular delusion.
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As an ex-GS investment manager, I can attest that Kostin et al data mine very effectively to arrive at just the conclusions which they have preordained. There is no heed given to macro considerations such as the credit contraction, deflationary environment which is our new reality. Their presumption is that markets are wholly independent entities, siloed off from the broader economy, and governed by predictable reversion to mean dynamics. The end result is clients who remain wedded to a stay-the-course, fully invested discipline which ensures a smooth annuity stream of IM fees for the firm. There is no fiduciary orientation within this firm; it is completely self serving. Of course, if GS has the ability to manipulate markets to the degree often postulated by ZH, maybe Kostin should be given some latitude for simply talking his own book!
Sigh......I suppose this means Mr. Efficient Market is about as real as the Tooth Fairy.
Mr. Market is decidedly inefficient, but Goldman is rapaciously efficient (at bending Mr. Market to its will).
The Tooth Fairy paid. I just ran out of baby teeth.
Do dentists work for GS?
I've been a "buy side" customer of GS for 14 years (retired now) and I can't agree with you more about their approach and book talk etc.....It's like a chess game with them except they have the moves more than planned out, they've already been locked in and we become hooked as a key pawn that triggers the GS ticket to partner wealth. It's too bad because there are actually a few good people there except they become caught up in the fame as if they were rock stars!
As for predictions and forecasts, it would seeem we "practical thinkers" may get the short end of the stick for a while longer until the inevitable strikes. It just depends how well prepared we are to endure the credit extension to the big boys and if ever the PPT is infultrated.
Rubearish10 -
After managing a book for GS for 5 years, I could no longer countenance the arrogance and myopia of their Investment Strategy Group. I took my business to a place where objective, critical analysis and executing around a fiduciary orientation are encouraged, and I am 100% confident that my clients are better served in the process. Yes, GS has some very smart people, but they are compromised by the need to perpetuate their business model and preserve their illusion of superiority. I would encourage you to look outside the firm or suffer mediocre returns (at best) as sell-side GS is going to be very slow to adapt to a changed secular environment.
Agreed and thanks! Good luck to ya!
How was Kostin able to stay awake long enough to compile this?
ALL brokerages operate this way. This is not unique to GS
There's a lot of crap to read in there but if you dig in you can find that I believe they have reduced their earnings estimates from S&P's estimates. They Have Dropped.
They don't focus on it, but it does appear to be so. This raises P/E further. It looks like quietly the earnings are not coming in for entire 2010 as hoped. "Beats" are not the same thing as being behind the 2010 total year estimate.
Beats. Ex-Items.
Smoke. Mirrors. All good things come to an end.
WRONG. Ex-items looks stronger for Q4 that "op earnings".
Thus, there are more "write-ups" than "write-downs".
Also, operating eps are just better. Do you really care about "goodwill write downs?" Goodwill also gets written-up and this is never counted.
Insider trading and front running clients while being back- stopped by Geithner and friends. They could be right you know.
http://www.youtube.com/watch?v=IGxmdsQ3NGA
Choppy sideways action and chronic mixed signals continued this week, but the buying support I have previously mentioned returned on Friday 12 Feb.
It seems the DOW / SP500 / EURO / COPPER counter trend rally may start this coming week.
Daily charts remain bearish of course.
http://www.zerohedge.com/forum/market-outlook-0
ascending triangle upside breakout? http://abortspace.blogspot.com/2010/02/ascending-triangle-in-es.html
likewise, it could fail and we see new lows
they might be right on their EUR call. Perhaps we'll see $1.348-1.35 before reversing
They aren't guessing what will happen, they are telling you what WILL happen. Fight them at your own risk..
Doelarr goes sideways (the EZ couldn't get any more juice into it?!) and not without high volatility...so are the StarBucks running out of energy? Currencies are a dying breed, propped up with imagination and IMF "paper gold", and the sooner they implement the global "credit" system, the closer we are to full domination of the NWO. While they kill the currencies they create the opportunity to increase the prices of their coveted precious commodities they need to get them through these hard stages of global depression. Slight dip next week due to the "shock therapy" that the markets have been given for the last 6 weeks. This is the last installment of "the brakes" though, as they have to get the show on the road soon. Gold to test 1066 next week. DJ to test 96-97 hundo. The Doe to touch 81 DXY.
GS put STI (one of the worst regionals in my view) on their CONviction buy list after its brief run from 20/21 to 25. It's now back to low 22s.
They have no credibility whatsoever. ZH has already detailed other examples of the CONviction buy list game and there have been many examples over the years. I would not believe one word that comes out of them.
As it has been a while since I asked, has the chief hypocrite, Lloyd Blankfein, fulfilled his wish about not wanting to have originally participated in the FDIC TLGP to the tune of some $20B and retired those bonds? Yeah, right Lloyd. You.are.a.hypocrite.
And to think Viniar really thinks that the squid doesn't rely on government help......
You quote 1 stock, down 10%, as evidence of failure?
Do you read ZH? (Gold, Silver, short Stocks, short Treasuries... every trade pitched constantly here has failed FAR WORSE than the 1 you cite ???)
I think GS have a perfect record for a contraian indicator since 2000, right?
This is the same conflict of interest all permabullish hedge funds have: "The market is always in one direction: UP"
Any thougths?
The whole of Wall St. maintains a permanent bullish bias which is a direct result of the implicit conflict of interest of wanting to keep customers in the game. This is also the origen of the buy & hold, stay fully invested, don't try to market time ethos which is conventional sales patter from the street. The resultant stereotype is that brokers drive Mercedes while their clients drive VWs.
The majority of investment advisors (in my experience) are long on text book strategy and short on street sense and true money management skills. If you can find an independent advisor who is macro driven, close to the ground for implementation and tactical trading, and truly understands you and prioritizes your interests, stick with him/her.
yeh, don't fight the trend... buy, buy, buy
This sounds just like the handiwork of Mr. Abby Joseph Cohen.
They may have a different front-person now, but the message never changes.
Just like most of Wall Street and all the mutual fund companies: "No matter where we are in time, what's going on the world, what interest rates are, what we had for breakfast, or what color our socks are...stocks are 10-20% undervalued, and you Mr. and Mrs. Customer, need to buy stocks!"
Point of order - it is Ms. Abby Joseph Cohen. But I agree that she is a sad joke of a Sr. Strategist. GS did shunt her to the side into a largely vacuous role, but the only reason she is still there is because she is a partner. And, why Barron's keeps her on their Roundtable (which itself is lacking in critical objectivitiy) is a mystery.
As long as there are computers and Technicians who know how to drive the market, and there are alot of them, The market will defy all logic and charts. Why The Fuck is it such a shock to see the market defying the technical Patton war charts? This is not your Grand pappys Stock market. Its rigged with computers and people who know how to use them. This market is going higher because thats the way it is programmed. Done.
what i dont get: i dont know if you read this report in details... look at page 7 (upper left corner) and page 14 (same corner) .. compare..they say underweight telecom, healthcare, utilities?!!?
what i learned: russel beats by far s&p.. short interest surgerd last week => meaning taking contrarian positions (long) => reversal or what?!
what i dont agree: page 14
in 3mo they say gold will be 1235..it means +140$ from now (2$/day..imho too low) .. let's take average gain 5$ p/day => 60days => 300$ => 1395 $/troy oz..(+27%)
ok now look at WTI ok in 3mo: 90$ (+20%) take a look at their gold forecast again (+13%)...then in next 3mo from 90$ to 96$ (+6,6%) ..their gold (1295$ ..+4.38%) ...ovrall 6 months gold: +18%, WTI (+28%) BUT a 6% increase after a 20% represents 30% and a 4% increase after 13% represents 30% ...so see a divergence here?
then as you know stocks do move WTI (nowadays not inverse...) and EURUSD
again they say 1.45 in 3mo meaning 900 pips from now...(15p/day)= +6.6%
Hypothesis if in 3mo WTI adds +20% where should be EURUSD? right not 1.45...
If gold in 3mo (as they say) +13% where should be EURUSD? not 1.45 :) even if you take average: 16.5% [ok i dont know maybe you could take a weighed average..here is to make simpler...] => 1.36 +16.5% = 1.5844 (wow!) ok you smooth this to 1.55 if you want... but we are far from 1.45 !!!!! even if you take a rise by 10% =>1.496 (not 1.45!!!)
then if WTI continues to rise then why EURUSD is flat?!?! (3mo is too short for a such flat move)...
so the mistake is in WTI forecast?!?! in 3mo it will be spring/summer how they explain such a rise!!?! only by stock market move.. if yes, then maybe we need to adjust EURUSD and gold??
My forecast(in 3mo, if and ONLY if we go bullish in stocks)
WTI +13% =>84.75$
GOLD: at least 3$/day => 1275 $(+16.4%)
EURUSD: at least 25p/day => 1.51 (+9.9%)
Ok,hope it was clear and easy to digest
If someone cld clarify me on that...
and to conclude an African proverb:
The one who swallows a coconut, trusts his anus
Have a good day
mfbwu
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