Market Recap: Goldman's Surprise Not Big Enough, But Markets Finish Higher
Goldman's earnings weren't big enough. ECB lends out $500 bln. Markets end in green.
Stock futures were up early this morning as traders anticipated a strong performance by Goldman Sach (GS). The premier investment bank reported $7.01 EPS versus $6.61 consensus on revenues of $10.74 bln versus $10.159 bln consensus. Toddo noted on the Buzz, however, that the performance was "not good enough" as the market had expected "eye-popping holy mother-of-gawd" numbers. GS shares were up in the premarket before plunging into the red by the opening bell.
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Professor Depew pointed out on Goldman's conference call of the importance of the velocity of money. Goldman's CFO said, "There was not a lot of activity, and for us… that's really what drives our revenues, really, in all of our business, but in FIC (Fixed Income Credit), as well. It's not the direction of interest rates, the direction of commodity prices… its activity levels." GS finally settled -3.46%. For more read Toddo's Random Thoughts.
Elsewhere, actions by central banks showed increasing uncertainty into the credit markets. The WSJ reported that the ECB lent out over $500 bln through an "unlimited below market" funding program in an effort to bring down borrowing costs. Minyan Peter wrote on the Buzz that the amount represented 5% of total US banking system assets. "Everyone should remember that the $500 bln is funding just through year end. Come January this will need to be refinanced or rolled over." For more, read Professor Mish Shedlock's ECB's $500 Billion Loan Won't Help Solvency Problems.
Tech shares were mixed on the day. Apple (AAPL) plunged over -4% even after Dr. J noted on the Buzz that the company was making preparations to sell its iPhone in Japan. AAPL recovered to settle -0.63%. But Research in Motion (RIMM) gained +0.31%, Google (GOOG) added +0.52%, and Baidu (BIDU) shares jumped almost 5%.
In economic data building permits came in at 1152 k versus 1150 k consensus, and housing starts came in at 1187 k versus 1176 k consensus. The prior figure was revised upward to 1232 k from 12229 k. For more on these numbers, read Professor Depew's Five Things You Need To Know.
In commodities, crude oil fell -0.79 to 90.26. Gold rallied 8.1 to 807.40, and silver added +0.18 to 14.16. Copper fell -0.45 to 288.45. "Note that the XAU/Gold ratio has now fallen slightly below 0.20 to .1985 and is just shy of the panic weekly closing low in the XAU/Gold ratio back in August… buying gold shares any time the XAU/Gold ratio has plunged to or below 0.20 over the past 20 years has resulted in profits for gold bulls shortly thereafter," said Gold specialist Professor Lewis. Check out Professor's Lewis' Minyan Mailbag: Action In Gold Stocks.
For more summaries, click on Minyanville's Buzz Bits.
Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.
Some bullish trade or investment ideas: NDAQ, ICE, NTDOY, ATVI, TTM, FNM, PHM, C, GRMN, TOM2 NA, AKAM, AVX, VSH, CIEN, JBL, ARRS, FFIV, SPY, GLW
Some bearish trade or investment ideas: GS, MSFT, IFN, MS
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