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MV Weather Report: Earnings Tornando at Goldman?

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Rain or shine, we review the day's biggest stock stories.

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Just as it was last night, Goldman Sachs (GS) was the story of the day. The big news was its $5 billion equity offering, priced at $123 a share. Today, Goldman closed below that price, at $115 a share. What gives?

Some analysts are starting to question how Goldman came up with its earnings numbers. Minyan Peter wrote a great article today, and then a follow-up on the Buzz& Banter:

"When Goldman Sachs became a bank holding company, it was required by the bank regulators to convert its fiscal year end to December 31 like every other bank. (Up until that time, Goldman, Morgan Stanley (MS) and others chose November as it gave these firms a competitive advantage vis a vis the rest of the industry.)

"The issue I and others are having vis-a-vis the change in Goldman's reporting is that, at least as far as I know, there has been no public disclosure by the firm regarding its financial performance for the "stub month" of December. The speculation - and let me reinforce that it is speculation - is that Goldman took big losses in December "when it didn't count" in order to book better results in the first quarter. (And in that regard it would not be dissimilar to the "de-risking" we saw from Wells Fargo (WFC) relative to its acquisition of Wachovia.)

"Hopefully when Goldman files its 10-Q, they will include some data on the fourth quarter of 2008, although, even then, I suspect that it will be hard to really know for sure."


The S&P 500 opened down today but quickly rebounded before selling off with Goldman. The index briefly tagged the 856 level before closing at 841. The market's inability to get above the 850/860 square out (per Professor Cooper) shows that the level may be a top for the current rally.

Tomorrow will be a big day for economic data. First, traders will be watching the CPI, Empire Manufacturing, Net Long-Term Tic Flows, Capacity Utilization, and Business Inventories. These reports will be due out after the bell. Some market pundits blamed today's sell off on weak retail sales, if there are any numbers that are worse then expected, watch for the market to sell off tomorrow. Right here I think all the positive data is priced in, it feels as if we are setting up for a sell off.

Minyanville's newest professor, Jack Lavery - former chief economist at Merrill Lynch, stated that he's expecting CPI to come in flat vs +0.2% consensus and core CPI to be +0.1%, in-line with consensus. For other economic forecasts, read Stabilization? What Stabilization?

Earnings Review:

Intel (INTC) just reported EPS of $0.11 on revenues of $7.1 billion. The company beat analyst's expectations on the top and bottom line, and said that second-quarter revenues will be around $7.05 billion. It also sees gross margins in the mid 40s. Management believes the PC market bottomed in the first quarter, and that seasonal patterns are returning.

The stock is selling off a bit in afterhours, to $15.40, down from a closing price of $16.01 in today's trading. Does that mean we sell in May and go away?

All right, Minyans, I'm off. Have a great night!
No positions in stocks mentioned.

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