Tag Archives: GS

The world’s most transparently cynical website.

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www.gs.com

Did you double check to make sure you landed on a bank’s website?

Do they really think this will help improve their image? Making their charity efforts the focus of their front page with a slick presentation might give some people the message that it is all for show.

It’s as if they don’t realize that the public considers them a tad disingenuous. Their website must have cost a fortune in design, development and consulting fees, but results completely missed the mark.

Scroll over the nav bar at the top. Under “Our Firm,” where in a typical website you might a find a rundown of products and services or a company history, you see instead “What we do for economy,” “Stimulating economic growth,” and “Strengthening the financial system.” Another tab is “Citzenship,” and another is “Ideas,” such as “Education and health” and “environment and energy.” Ugh.

This whole effort reflects enormous contempt for the public — throw some money around, put ethnic looking women on your front page, and people will forget about the mortgage bubble, the backdoor bailout via AIG, and suspicians that the sources of their $100M in daily trading profits might not be entirely ethical.

Goldman is not invincible

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I have talked a lot about the conspiratorial tone of frustrated bears lately, and how I take it as a sign that traders are resigned to the market marching ever higher despite the depression grinding on. Much of that anger and awe is directed at Goldman Sachs, which rightly or wrongly is perceived as the all-seeing, all-profiting eye at the top of America’s Ponzi economy. With their men in high places and their high frequency trading bots, they are invincible, or so says their stock price:

Source: Yahoo! Finance

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I am prone to fading consensus wherever I find it, and here I see the chart of a financial behemoth trading at the same level as at the very height of the credit expansion, 2006, back when it was churning out toxic bundles of AAA debt on houses and malls that are today being abandoned. In 2006, the company earned over $9 billion a year with 20% fewer shares and 20% less debt, and the mood in the stock market was of total euphoria: smooth sailing as far as the eye could see, Goldilocks time.

As far as I’m concerned, the rally from $47 to $165 has been one of the greatest short squeezes and dead cat bounces in history. For this stock to have a market cap over 20% greater than at the height of the bubble is absurd. Yes, they earned a record $3.4 billion last quarter, but trading profits come and go, and it’s not as though any of that is doled out to common shareholders: the company pays no dividend.

Expect their political racket to come back to bite them, and hard, as regulations tighten on all kinds of trading and the skeletons start to fall out of the closet. The heyday of finance is over for America, and political power follows economic power.

I suspect that the lows are not in for this pig, and that in fact it may face a crisis of existence at some point in the coming years. Besides, did you ever see a better chart from a short perspective? Its got a ready-made stop, too, in case there is more steam here than I think.

With every new low in the VIX, I buy more puts

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Still in favor are Dec 2011 SPY LEAPS of various strikes, and today I’m eying market darlings Apple and Goldman. The chatter on these two being recession-proof is reaching a fever pitch, and while there is a kernel of truth to that story, their stock prices leave no room for error at these levels. Actually, even if these companies continue to prosper, their stocks will deflate as the market assigns lower multiples to the earnings of its strongest as well as weakest components.

REITS (proxy IYR) can’t hold up much longer either, their short-squeeze having run out of steam while rents start to plummet in earnest.

The question of the summer is how high this market will go while the global reprieve in mood lasts. That the NASDAQ is leading the pack reminds me of late 2007, when the market had started to roll over but the “tech horsemen” (AAPL, RIMM, AMZN, GOOG) kept on rising, against all reason. The fact that it has already reached such heights is a big warning sign. It has almost filled its October gap, a very nice target for a corrective bounce.

Above chart from google finance. BTW, check out wikinvest if you get a chance. It’s got a lot over google and yahoo’s stock pages.

Elliott Wave theory holds that corrections move in three waves (impulse moves in five), so this current push could be viewed as the C-wave in an A-B-C move. When it exhausts, a sea change may ensue, not just a minor reversal. With no fundamental support above SPX 400 (and weak support there), just such a paradigm shift is very much on the table.