Meredith Whitney Sides With Da Boyz And Says: Buy Goldman

Meredith Whitney, one of Wall Street’s new rock stars, has seen the light and in a “if you can’t beat ‘em, join ‘em” moment put a buy rating on Goldman Sachs (GS) saying, it’s a buy in a bear market. Who can blame her? The company runs the US economy and so many confirming and negative articles are now appearing. The latest came from Rolling Stone and it’s hard to argue with the objective analysis and conclusion unless you’re just a shill for Da Boyz. Does anyone care or notice? It’s not popular to be a Cassandra on Wall Street.

As I wrote subscribers over the weekend, the bullish bias is ever present. Investment managers and trading desks are looking for reasons to buy at all times. You get light volume in the summer and it doesn’t take much to stampede the herd.

That said, markets exploded higher after her buy recommendation causing a short squeeze relieving recent short-term oversold conditions. Volume was July-light while breadth was overwhelmingly positive.

The McClellan Summation Index didn’t bat an eye today and continues its descent.

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You have to expect these kinds of days. I can hear many market veterans mumbling, “Never short a quiet market” and that was true today. Bull’s are looking for any shred of news to rally on and Meredith provided it today. She probably didn’t expect this big a reaction but you never know. Once you earn a reputation, even if it’s only once, you’re put on a pedestal until you’re knocked off.

Goldman Sachs remains unabashedly a major force on the Street, in DC and with the Fed. The Rolling Stone article coupled with others recently should make your blood boil. It’s obviously been on our minds for several years given all our postings on the subject. GS will post earnings this week that should exceed their record profits in 2007, and they’ll do so by trading your tax money on the very junk of their own creation. You really can’t make this stuff up. Nothing is changing nor will it until people gain an understanding of just how the power forces in this country work. In the meantime, respect their power and accept the results. Hopefully some day there will be a reckoning.

Today was an oversold bounce. Perhaps Larry Kudlow, Jim Cramer and now Meredith Whitney are right. The bank’s crap assets are no longer marked to market, banks have been bailed out of all their responsibilities, the Fed and Treasury stand ready to keep them pumped up and politicians of either party just enjoy the donations flowing. There is no change period.

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Comment by Tim@elementary finance

2009-07-14 06:53:55

I’m more of a fan of Morgan Stanley. I liked what Fast Money said last night about how Morgan stands to gain more off the GS upgrade.

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