The Golden Sunrise

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Today’s Golden Sunrise 

Tuesday, April 20, 2010

Hours of research consolidated for you

God’s Work-Possibly….Devil’s Methods-Probably

 Goldman Sachs-doing God’s work according to autohagiographer Lloyd Blankfein..worldwide

  • SEC has charged GS with fraud on a 3-2 partisan vote
  • Market was crushed on Friday when the news came out, reversed upward yesterday when the voting total were released
  • Dow was up 91.4 in the last 2 hours yesterday, the S&P 12.3 and the NasDaq jumped 26.3 to finish at -1
  • John Paulson who made billions supporting the toxic waste put into the GS product supposedly selected and proposed including 123 bonds to the “team”. They only selected 55 but out 90 included that is pushing 60%. If Insider Trading does not  apply under current statutes then revision needs to be considered. Insider Trading is a crime and aiding and abetting a crime is a crime.
  • Rajat Gupta, Goldman director, is now being investigated in the Galleon insider trading case with recordings of his personal calls to friend Raj Rajaratnam under close scrutiny.
  • All that said, GS reported this morning and just crushed the forecasts-$12.B in revenue compared to est $11.1. Earnings of 5.59 a share compared to 3.39 year over year and $4.14 estimated. They “earned”$3.46 billion which is 27% on revenue, a truly amazing number.
  • Citibank, yesterday, reported $4.43 billion in profits, to add another big winner in the financials to JPM who kicked it off.
  • There is an ever so slim chance that this story is not finished. 

A daily chart on the holy ones of WallStreet.

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 Asia was up across the board last night with the exception of Japan and Shanghai. Japan supposedly was weak because the big trading houses were affected by the raising of rates by the CB of India to slow inflation there and that will affect their imports and the big trading companies in the land of the rising sun.

 China also has been tightening and the impact on the Shanghai market in an economy the grew 11.9% in Q1 might be enlightening.

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 Last few days have seen the uptrend from Feb 5th broken. Given the charts for the entire world look pretty much like this, except for the downside break, it bears (no pun intended) keeping an eye on.

A series of small items that all have some degree of impact. 

  • Leading economic indicators in the US were up 1.4% in March to the highest level in 10 months.
  • 1st time homebuyers were 48% of home sales in March taking advantage of the $8500 rebate
  • July lumber futures are getting a bid.
  • Corn, wheat and soybeans are getting hit because planting is going very well, ahead of schedule and that means lower prices if there is a bumper crop. That sucks..a cheaper dollar by harvest time might end that “problem”-not for consumers though.
  • The Univ of Michigan consumer sentiment index fell from 73.6 to 69.5 to the lowest level in 5 months.
  • Unemployment rose in 24 states-MI leading at 14.1% (1 in 7)
  • German consumer sentiment released this morning was up sharply to 53, a rise of 8.5 points and the first gain in 7 months. North of 50 is positive.
  • Eurostat construction fell 2.9% in February and is down 10% (year over year)
  • Japanese consumer confidence rose 1.1 in March to 40 (gloomy)
  • The Greeks continue to complain that 7% interest rates are unsustainable and demanding reductions. Interesting thought process..I guess they think they can pick the interest rate they are willing to pay and want 4-5%. I think I will go buy a car today and tell the dealers I am going to $12 for a new one. This will get me as many cars as the Greeks will get loans. It is the entrenchment of entitlement mentality that seems to have gripped the entire world.

 A personal anecdote on healthcare.

  • Purchased my own as I entered a new cycle of life about 6 months ago after decades on company plans.
  • Got notification of a rate increase of 13.9% effective June 1.
  • Will take monthly payments from $498 to $567 on the plan I have which includes a $7000 deductible.
  • Offered an option to reduce my payment to $473 but means my deductible now goes to $10,000.
  • Called Blue Cross of Florida to get some background on the amount the of the increase, the rational for a 5% cut in my premium in exchange for a 43% increase in the deductible.
  • Spoke with 3 people, all a step up the ladder, but none of whom understood my question. Neither did the 4th person but here is what I learned.
  • The increases re across the board and extend to all policy-holders with some age variation in the increase.
  • I expected that an increase that size would be because, under the new law, they cannot exclude anyone, no pre-existing conditions allowed, and no cap on lifetime coverage. NOT SO..isn’t included because the don’t know how these things will be applied in the real world.
  • The policy has a June 1 deadline for selection of a choice but only the original policy falls under the new law as “grandfathered in” so that if I choose the second option I lose my rights under the first but they can’t tell me anything about the new conditions because the Dept of Health and Human Services (sic) have not told the insurers what the law means.
  • So, my rates are going up 14% and I have no idea what my options are. 2000 pages of legislation and no one knows what it means but it will turn out good-trust me-Joe Isuzu. 

Most trusted?  President Obama or President Blankfein? 

I’m expecting the stirring of volatility to become more pronounced as Mr. Market tries to sort all this out.

 JohnR

Goldensurveyor.com 

Golden Sunrise is the Golden Surveyor’s broad-based market and world view. 

 Written daily 4am-7am by markets information specialist GS John!