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Two Ways To Play: Goldman Sachs Gets Goldman Sacked?


Strengthen your portfolio in good times and bad.

JPMorgan Cuts Goldman

Bloomberg reports Goldman Sachs (GS) had its 3Q earnings estimate cut by analysts at JPMorgan Chase because of weaker revenue in fixed-income trading and a slowdown in equity and bond sales.

JPMorgan analysts led by Kenneth Worthington wrote in a note to clients that Goldman, the largest securities firm by market value in the U.S., will likely post profits of $2.40 per share, down from a previous estimate of $4 per share. The analysts wrote "July and August have been challenging for the brokers in fixed-income trading. Goldman will be vulnerable to the decline in underwriting and the mark to market losses in its principal investments." Read Professor Macke's Potash and Mosaic Ripping Along.

From the Bull Pen: Professor Macke mentioned that Goldman could be a buy if the stock approaches the $155 level. Sell-stops can be set below.

From the Bear Cave: Those bearish on the financials for the longer term can fade (read: sell) the ETF (XLF) as the stock approaches the $23-24 range. Buy-stops can be set above.

More Gas, Less Cars

Bloomberg reports, for the first time in 26 years, consumers spent more on fuel and gasoline than in vehicles during the months of May and June. According to data provided by the U.S. Bureau of Economic Analysis, gasoline accounted for approximately 4.5% of spending in June compared with 3.9% for vehicles and auto parts. In May both were at 4%. January of 1982 was the last time gasoline spending exceeded autos and motor parts. Earlier this summer retail gasoline hit a record $4.09 a gallon in June which was later broken when it rose to an all-time high of $4.114 per gallon on July 17. Since then, gasoline demand has dropped with prices falling nationwide to $3.778 per gallon yesterday.

From the Bull Pen: Don't expect consumers to go on a spending spree with gasoline prices coming down in the recent days. The economic environment continues to favor plays like AutoZone (AZO). A pullback on this stock to the $130 level could be interesting.

From the Bear Cave: Bears can continue to look to the downside in plays like Toyota (TM). Buy-stops can be set in the $92-93 level.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading was skewed to the downside with the Hang Seng -1.09%, Nikkei +0.48%, Taiwan -1.77% and Shanghai +0.56%.

Glancing towards Europe, we see the CAC +0.15%, DAX -0.60%, FTSE -1.10%.

As of 8:25 AM EST, S&P futures are higher by a point to 1295, and Nasdaq futures are up 3 points to 1969.

A Look At Commodities

Commodities are lower. Crude oil is down -1.70 to 113.31. Gold is down -20.80 to 787.40. Silver is off -1.20 to 13.020, and Copper is down -2.80 to 329.50.

The dollar index is higher +0.359 to 77.028.

On the Radar.


8:30 Empire Manufacturing: -4.4
9:00 Net Long-term TIC Flows: $50 bln.
9:00 Total Net TIC flows: -$2.5 bln.
9:15 Industrial Production: 0.0% cons.
9:15 Capacity Utilization: 79.8% cons.
10:00 U. of Michigan Confidence: 62.0 cons.

Happy Friday! Good luck and have a great weekend!
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No positions in stocks mentioned.

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