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Goldman Closes Long Russell 2000 Recommendation At A Loss

Submitted by Tyler Durden on 04/08/2012 19:19 -0400

And so the latest Goldman recommendation to muppets is now officially a dud.

Closing our Long Russell recommendation with a modest potential loss

We are closing our long Russell 2000 recommendation with a modest potential loss, initiated on March 15 following the better-than-expected data in the first of the regional surveys. The recommendation was predicated on (i) still friendly, if not accelerating, US macro data, (ii) supportive monetary policy, and (iii) better insulation that Russell offers against global concerns, including Europe and China, relative to some other implementations (S&P 500 index and Wavefront GDP Growth Basket).

Since then, the macro data (both US and global) have come in more mixed than we would like, with Friday’s non-farm employment growth report clearly disappointing. Furthermore, last week’s “guts” of the ISM were weaker than the headline reading, and the momentum of our Global Leading Indicator (GLI) stalled. Combined with the fact that the Fed may be further away from a fresh round of easing than we had expected, two out of three pillars supporting the recommendation were compromised. And as the risk/reward of backing the US growth upgrade worsened, Euro area sovereign risks resurfaced yet again. With an upcoming “lull” in the US macro calendar and a significant batch of Chinese data forthcoming, we think it is prudent to step back and re-evaluate our overall tactical trading view.

Unclear if Goldman, which top ticked the market to the penny, with its "once in a lifetime" opportunity to rotate out of bonds and into stocks, has yet given the all clear to buy stocks, i.e., tell muppets to short equities. As a reminder here is what we said then:

Roughly at the same time Francesco Garzarelli fired the first warning shot against Treasurys on January 23, 2012, telling 'clients' that "We are now of the view that a break to the upside, to 2.25-2.50%, is likely and recommend going tactically short. Using Mar-12 futures contracts, which closed on Friday at 130-08, we would aim for a target of 126-00 and stops on a close above 132-00" a trade which has largely worked which means that the Goldman counter-axe is hurting big (although following the trade snap yesterday this may be over for now), the firm's Peter Oppenheimer started drafting a magnum opus, making a 40 page case, chock full of graphs, charts, bullet points, and footnotes, iPad optimized and likely coming to a Kindle near you, desperate to convince clients to sell their bonds to Goldman, and to buy all of Goldman's inventory of stocks from the firm because "After more than a decade of de-rating, equities are implying unrealistically large declines in growth and returns into the future." As a reminder, this is a deja vu repeat of precisely the same trade that Goldman enacted back in 2011... and then back in 2010... and each of those times was accompanied by lots of pretty charts and fancy bullets. Will this time be different, and is the proper call, as usual, to trade alongside Goldman (sell equities, buy bonds), or to do what Goldman tells the muppets to do? You decide.

For those who never had a chance to decide, the end result is the 10 Year is now back to just over 2%, down from nearly 2.40% when Goldman skewered its clients on this the latest occasion.

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Sun, 04/08/2012 - 19:24 |

devo

The FED and Goldman are like reality TV

Sun, 04/08/2012 - 19:36 |

Silver Bug

What a surprise! Once again remember the Goldman rule, never listen to Goldman!

http://jimrickards.blogspot.ca/

Sun, 04/08/2012 - 19:54 |

ihedgemyhedges

Cut 'em a break. They're only trying to help their "clients"......................

Sun, 04/08/2012 - 20:27 |

Stax Edwards

OT:

Ran across this on CR and had to share it. Pretty funny stuff.

Yoram Bauman: Stand Up Economist

http://www.calculatedriskblog.com/2012/04/stand-up-economist-yoram-bauma...

Enjoy!

Sun, 04/08/2012 - 20:32 |

Stax Edwards

He is really funny! Here is some more:

http://www.standupeconomist.com/videos/#aea2012

Mon, 04/09/2012 - 00:35 |

Nobody For President

Better rule - fade Goldman. I took the opposite side with some judious in and outs of TZA and have done reasonably well.

Sun, 04/08/2012 - 19:24 |

HelluvaEngineer

Oooops. Our bad. Sorry Kermit.

Sun, 04/08/2012 - 19:26 |

YesWeKahn

The futures are down, Goldman must know that, they closed their positions last thursday.

Sun, 04/08/2012 - 19:29 |

asteroids

How much you want to bet the IWM will be down at least 2% on the open? I wonder if we might see a mini-crash tomorrow.

Sun, 04/08/2012 - 19:50 |

distopiandreamboy

Ben will sneeze and we'll all wake up to stories about Quantiative sn-easing

Sun, 04/08/2012 - 19:51 |

TradingJoe

If I were you, which I'm not, (thank god), I wouldn't bet ON IT!!!

Mon, 04/09/2012 - 01:52 |

Non Passaran

I placed my bets last week and I'm good to go, short Russell and SPX, long PMs and the miners (ugh).

Sun, 04/08/2012 - 19:33 |

SwingForce

Yeah, The Long Good Buy report can be used for toilet paper. (for about 2 weeks)

Sun, 04/08/2012 - 19:49 |

ExploitTheMarket

Has GOLDMAN SLAGS given any recommendations recently that have not resulted in a loss?

*(disclaimer: It was discovered a few days ago that the NY investment bank, Goldman Slags, owns 16% of a prostitution ring/business called Backpage.com)

Sun, 04/08/2012 - 20:14 |

knukles

Horizontal Diversification

Sun, 04/08/2012 - 21:30 |

WonderDawg

Excellent!

Sun, 04/08/2012 - 19:39 |

dow2000

Muppets lose again....who the hell still does business with these crooks?

Sun, 04/08/2012 - 19:42 |

gatorengineer

Well.... Wait a second, if Goldmansucks says close the long, then it means QE3 is closer than we think and now its time to go LONG. Bullish!!!!!

<Sarc off> not sure of anything anymore however....... Position Long Canned Food and Shotgun shells.............

Sun, 04/08/2012 - 19:44 |

ThisIsBob

A win-win for Goldman. Comish in, comish out.

Sun, 04/08/2012 - 19:56 |

rokka

I can't imagine anybody trading iwm would listen to these clowns.

Sun, 04/08/2012 - 20:06 |

TooBearish

Fuk Goldman and their stoopid clients- IBs that have access to FED discount window and public capital markets to raise both debt and equity NEED TO GO AWAY , TBTFs NEED TO GO AWAY - this system is busted - fuk it

Sun, 04/08/2012 - 20:28 |

banksterhater

I think it was Bullard that whispered "I don't see why we need Primary Dealers" did anyone catch that? End of CNBC interview last time. He even lowered his voice, the COWARD.

Sun, 04/08/2012 - 20:06 |

CryingBear

LOL

Sun, 04/08/2012 - 20:11 |

theTribster

How about sell bonds AND sell equities? Pull the trigger on hard assets, especially those that can "produce" some type of ongoing value like real estate. Unfortuantely, the markets are so completely manipulated its hard to really understand what is going on - what would we do without ZH? Shit, don't even think about it -:)

Sun, 04/08/2012 - 20:22 |

Cheshire

Goldman recommends selling everything and burning the cash to beat the inflation curve.

Sun, 04/08/2012 - 20:23 |

PolishHammer

How about Bubba Watson on the 10th? How about that nerds?

Sun, 04/08/2012 - 20:30 |

banksterhater

Bubba hit some fantastic shots. I think we have a new phrase "The Bubba Sling" (or Bubba Banana?)

Sun, 04/08/2012 - 21:17 |

sabra1

Bubba Shrimp?

Sun, 04/08/2012 - 20:27 |

monopoly

GS has a lot of wealthy clients. I cannot understand why they have not figured this out yet. Why do they leave their accounts with a company that steals, rapes, and consistently takes money away from clients. Why is this bloated piece of shit not on the pink sheets.

Sun, 04/08/2012 - 20:33 |

Hansel

Because they extorted a bailout for their derivative counterparties... but you knew that :)

Sun, 04/08/2012 - 20:31 |

streetcrawler

I don't know what the problem is. The new "long" is three weeks.

Sun, 04/08/2012 - 21:06 |

disabledvet

yeah, no shit. now is the "lifetime play"? we're up 100 percent! how about "50 percent ago" morons? oh, that's right. you were making all your money on the short side! OOPS! Forgot all about "showing some muscle at the bottom." anywho..."the rock bottom price for natural gas must be a sign of a collapsing economy" (in places) since unlike oil which is consumer related nat gas activity actually tracks business activity...and can't be manipulated in yet another insane scheme concocted by Wall Street "to blow another trillion." I mean..."extension of credit to everyone and everything" was the plan? REALLY? and of course "having failed there now we'll stand in the way of superior products and technology at all costs!" unbelievable. Hoover-ville ing the USA still isn't good enough. Anywho "stick with those utilities." They're shutting down coal mines in Kentucky. Honda has a had a wonderful kick of the Fukushima lows...and as the sole producer of a purely natural gas powered vehicle FOR YEARS i sense a "revolution" of the real kind is upon us as the hopelessly expensive gasoline powered ICE (internal combustion engine) is left in the dust for the vastly more economical and soundly designed and engineered sibling. As the saying goes "there's more American in a Japanese car than in an American one."

Sun, 04/08/2012 - 20:35 |

Dollar Bill Hiccup

Do you really want to know what goes on in their board room ?

http://www.funnyordie.com/videos/0431c2b257/muppets-vs-goldman-sachs

Sun, 04/08/2012 - 22:19 |

Marginal Call

I chuckled, but it's far away from the Wu.

http://www.comedycentral.com/video-clips/tw2ltp/chappelle-s-show-wu-tang...

Old dirty bastard sends his regards. Yo.

Sun, 04/08/2012 - 20:40 |

SAME AS IT EVER WAS

Damn! I'm long 50 shares of tza.

This could be just as bad as dennis "I'm full of bs on cnbs" gartman going long gold.

Mon, 04/09/2012 - 00:10 |

luckylogger

hey--- I have been trading for quite a while and have tried to use tza before. My recomendation is to get out as soon as possible. You may come out in the morning. Which will be a blessing--- take it. Tza is a day trading instrument only. If you read the prospectus you will understand. Personnally I have lost 5k in a down market with tza. it sucks and that is for real. I am not full of shiot they will fuk you as fast as tvix will. get out until u understand the product!!!!!!!

Mon, 04/09/2012 - 01:37 |

SAME AS IT EVER WAS

thx- I planned on dumping this a.m.- its a total pos!

Sun, 04/08/2012 - 21:21 |

anynonmous

Unbearable news for doomsayers
http://www.torontosun.com/2012/04/08/unbearable-news-for-doomsayers

Sun, 04/08/2012 - 21:30 |

buzzsaw99

Quick! To the FAZmobile!

Sun, 04/08/2012 - 21:45 |

CvlDobd

How many browbeatings does one need?

I just watched Total Recall BTW.

Sun, 04/08/2012 - 22:21 |

buzzsaw99

I think the term you are searching for is "ass reaming" not "browbeating". I would like to buy some options from the bankers to bet against the, er, bankers please.

Thank you sir, may I have another?

http://www.youtube.com/watch?v=qdFLPn30dvQ

[/seven degrees to kevin bacon]

Sun, 04/08/2012 - 21:51 |

l1b3rty

i guess taxes will be raised.

http://silvervigilante.com

Sun, 04/08/2012 - 22:15 |

El Oregonian