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Weekly Chartology
Here is the latest lay of the land according to Goldman as we head into a week that sees 128 firms report. "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 $78, and a 20% increase in 2011 to $95." We admire the fortitude of Goldman for having a Buy rating on companies such as Amazon (50.6x NTM PE), Textron (45.1x), which will both report on April 22. Oh, and just because the lustre of the whole BRIC concept has disappeared and been taken over by fancier acronyms such as PIIGS and STUPIDs, Goldman is holidng an "Inaugural Goldman Sachs BRICs Conference. Goldman Sachs will host its first BRICs conference in London on May 11-12, 2010. Companies across
industry sectors from Brazil, Russia, India, and China will join leading developed market multi-nationals that Goldman Sachs believes are best positioned to profit from the increasing importance of the BRIC economies." Goldman's response to any weakness anywhere in the world: "BRIC." Nothing has changed for the past decade. However, just like the only Goldman investment thesis from 2005 to 2008 was to short any housing or derivative thereof (in the trading realm this meant using counterparties that have heavy housing exposure, short firms like Merrill and Lehman that have small rolodexes and can't offload their housing exposure), we wonder just how heavily Goldman is shorting anything having to do with Brazil, China, India and Russia...
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Can they short the IMF?
Isn't BRIC really an anaconym for Buy Residential Insurance CDOs?
I meant Credit Default Swaps (CDSs)
Derivatives can be so confusing, ya think.
duplicate
I love reading this site. I read it mainly for its intellectual humor and anti-establishment rants. As far as trading the BRICs v. any where else, I would recommend finding an executive in any Fortune 500 company and ask where the growth actually is. I speak to 3 fairly regularly (once a month). These companies are international, large, and sell durable, important products. Each will tell you roughly this: growth is "budgeted" at 5-7% next year; 15% in BRIC countries; 0-2% (at best) in the US, Europe, and Japan. Whether GS has convinced them of this or not I can tell you this is where they put the manufacturing, distribution, and sales resources, and I've heard this consistently for about 5 years and the song remains the same. Intel (who is not one of the three) is probably a good example of this. Will this change if the dollar gets a lot stronger and commodities weaker? No idea. So my conclusion is this: the growth isn't here (in the US/Europe) it is there.
As was noted by TD and others yesterday, Goldie is too busy shorting itself to have much time for shorting the BRIC's... yet.
Why would you short BRICs? There is actual growth due to constant increase in demand for everything. People there practice sound money management becasue credit is pretty expensive. Most real estate is bought with 70-100% cash. People actually have money as opposed to having cheap credit and only having 10 credit lines. To restate that better, most people in BRIC countries have positive net worth and are not debt €encoumbered.
This is not only a monetary issue, but this is a difference in culture. This difference in culture also leads to more healhy consumption and less excesses. You do not see people buying endless shit that they don't need. You also don't see excessive fat people. Same reason, difference in culture.
You also have a situation where credit cost is starting to gradually decrease, and will be decreasing over next 5 years, while credit costs in western countries are only going to be increasing.
I think it's a stunner to see such a rise in the Yen/Gold/Silver on a 12/m forecast, and how this is either a direct contradiction of the entire package they have or a glaring mistake. Why would safe havens have 10-20% increases and developing markets have similarly euphoric forecasts? Something seems strange about this.
Overtextended SP500 / DOW daily charts show bearish warnings and the next few days will tell us more.
DOW chart :
http://www.zerohedge.com/forum/latest-market-outlook-0