"Astounded" by Goldman's Upgrade: Banks "Heading Into the Storm," Whalen Says

[Joanne98]

Goldman Sachs making headlines again. Today, it’s on two accounts.

First, Bloomberg is reporting Goldman could earn about $1 billion should the troubled lender CIT Group, enter bankruptcy or otherwise end a $3 billion financing agreement. I'm sure it's adding fuel to the fire for the "Government Sachs" conspiracy theorists, who probably see it as a repeat of what happened with the AIG bailout.

For those that don't remember, Goldman received $12.9 billion from AIG after the government rescued the world's largest insurer. That raised suspicions of conflicts of interest and unfair treatment, since then Treasury Secretary Hank Paulson also happened to be a former CEO at Goldman.

Chris Whalen of Institutional Risk Analytics is a Goldman conspiracy sympathizer and someone who "doesn't like their politics." But, in this case, he doesn't necessarily think anything is askew. "Like any distressed lender they have a right to their payment. They took the risk," he admits.

What strikes Whalen as more curious is Goldman's call on the big banks. Citing a positive outlook on earnings, Goldman analysts raised the outlook on banks from neutral to "attractive" this morning. They also upgraded Wells Fargo to "buy" from "neutral", Comerica to "neutral" from "sell", and added Capital One to their "conviction buy" list.

Whalen is "astounded" Goldman would make such a move "when the banking industry is heading into the storm." Contrary to the Goldman call, Whalen says the earnings outlook will get worse over the next two quarters, culminating in a bloodbath in the fourth quarter. Part of the problem for Wells Fargo, according to Whalen, is the bank still has plenty of write-downs to come associated with the Wachovia merger, as detailed here.

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http://finance.yahoo.com/tech-ticker/article/349054/%22Astounded%22-by-Goldmans-Upgrade%3A-Banks-%22Heading-Into-the-Storm%2C%22-Whalen-Says

[dixiegrrrrl]

1. So, if Goldman rated a "sell" on those banks,

you do realize what would have happened a nano-second later, do you not?

Smoke and mirrors, it is all smoke and mirrors.
Till the budget for smoke gets cut, at any rate.

[sendero]

2. Anything GS says..

... is part of the Wall Street pump and dump axis. This means, do the opposite of what they say, it is a setup.

[wuvuj]

3. Everyone knows that if you see a storm approaching...

...you raise all sails... :patriot:

The stock market is manipulated by the big investment houses....up or down.