Guest Post: A Goldman Rebuttal

Dear Lucas,

Since I haven't been able to get you or anyone from Goldman Sachs to appear on my show in months, perhaps we can just try corresponding in writing. Thank you for your press release. I have submitted my follow-up questions in bold...

By Dylan Ratigan

Prime ABX: A Reminder

With the topic of shorting real estate once again all the rage, we take this opportunity to remind readers that the next substantial event in real estate (in addition to the multi-trillion CRE maturity roll) will be in the continuously worsening Prime RMBS data. To capitalize on this inflection point MarkIt recently introduced the Prime ABX index (which we initially discussed in July 2009) which will "allow investors to synthetically gain exposure to Prime RMBS collateral." A brief summary of the key index features according to MarkIt: "In addition to creating sub-indices by vintage and collateral, Markit will create and administer an aggregate ABX.PRIME index combining all 6 sub-indices; ABX.PRIME.AGG will trade via CDS contract and will serve as a macro indicator for the entire asset class; Each relative sub-index will be equally weighted in the aggregate, sub-weighting will be applied in the same manner." As we reported recently, the lack of any cash offers in corporate loans is forcing the investment community to seek derivative exposure for yield chasing. We expect Prime securitization to explode soon as the Fed still continues to rule over capital markets with an iron fist and guarantee all sub-5% returns, cutting marginal loss risk by about 50%. The question is now that banks are doing reverse inquiry into Prime ABX participation, which hedge funds, allegedly like Magnetar and Paulson, are creating Prime portfolio structures that will be hedged by this new index? Inquisitive investigative reporters - take it away

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...

Bull/Bear Weekly Recap

Summary of the week's key bullish and bearish economic events

Some Afternoon Confusion

Can someone please explain to us what the nature of this post is: “Zero Edge” — Rebutting Faulty Tax Analysis" which appeared today on Barry Rithholtz' blog. We are confused by the whole premise of some guy called called Matt Trivisonno taking offense at our unadjusted and unredacted tax withholdings data, and saying we are misrepresenting something or another. What is more confusing to us is that we have never read anything by Mr. Trivisonno before. Matt, not sure what the problem is - we are merely showing that the Treasury is collecting less money in taxes than it did in 2009. And as for contrarians, we were focusing on the puppets of the government such as Steve Liesman who were making these false claims (at least on an actual cash flow basis - I am sure your adjustments will lead you to whatever conclusion you desire). Period. I am happy to share the primary data with you or anybody else: it is all public and anybody can grab the data directly from the Treasury. If Matt wishes to challenge what the raw data is showing, we are happy to open a forum to him on Zero Hedge. We will post an update on the ongoing deterioration in gross tax withholdings (actual, unrecasted, unmodified or seasonally adjusted) shortly.

That said, we are very amused by Barry's distinction between his blog and ZH. To wit:

ZH is a blogger who covers Wall Street.
I am a Wall Streeter who blogs.

Barry is too kind, although since we cover Wall Street, and Barry considers himself a "Wall Streeter", does that mean we should be covering him as well? Thanks for the heads up!We are lucky that Barry points out what Wall Streeters do: "While he was typing, I was speaking to our clients, doing a Tech Ticker interview for Yahoo, a radio interview, and then making arrangements with NBC World News Tonite." So that's what Wall Streeting is? We will make a note.

Daily Oil Market Summary: April 16

Oil prices were under selling pressure from the opening bell on Friday, having sold off in trading overnight. In the trading overnight in Asia and in Europe, oil prices were being sold in reaction to a lower equities and a stronger US dollar. This was in sharp contrast to the previous six out of seven days, or the period ended on Wednesday, during which fundamentals had played a leading role. For the first five days of that period, ending on Tuesday, oil prices had declined based on heavy inventory levels. On Wednesday, they rallied after this week’s DOE report showed a drawdown in crude oil stocks and a slightly larger-than-expected draw in gasoline inventories. Demand had also shown Oil prices were under selling pressure from the opening bell on Friday, having sold off in trading overnight. In the trading overnight in Asia and in Europe, oil prices were being sold in reaction to a lower equities and a stronger US dollar. This was in sharp contrast to the previous six out of seven days, or the period ended on Wednesday, during which fundamentals had played a leading role. For the first five days of that period, ending on Tuesday, oil prices had declined based on heavy inventory levels. On Wednesday, they rallied after this week’s DOE report showed a drawdown in crude oil stocks and a slightly larger-than-expected draw in gasoline inventories. Demand had also shown