This Week's Recap: Goldman's Sucker Punch

Goldman Sachs (GS) pulled the mother of all sucker punches on Thursday, cutting estimates on GPD from 3.0% to 2.7%. Most bears piled in on the short side only to get destroyed when GDP came in at 3.5% and the market blasted 2% higher in one day. The dollar rolled over and precious metals, including gold skyrocketed. Talk about a bear trap…

Speaking of GDP, it’s worth noting that the 3.5% was annualized. REAL GDP growth of the quarter was 0.875%. Let’s consider this for a moment. Thus far, the Stimulus spending/ Bailouts have cost the US more than WWI, WWII, and the New Deal combined… and we get GDP growth of 0.875% for the Third Quarter?

Let’s be blunt here. This is some truly PATHETIC growth given the unbelievable amount of money we’ve thrown around. We were literally subsidizing home and car purchases an unprecedented amount that quarter… and for what? 0.875%? And investors cheer this?

This is like putting a comatose patient in the care of the best doctors on the planet, with the best technology, best facilities, and best drugs… and celebrating because the patient wiggles one finger.

It also proves that MOST of the bailout/stimulus money never went into the real US economy. Unemployment continues to rise, food stamp use continues to rise. Meanwhile Goldman and pals are paying out record bonuses a la 2007… coincidence?

Elsewhere in the world, the Japanese Yen did a massive reversal this week, and has begun forming a head and shoulders pattern. The Yen has been on a tear since August. The fact it failed to make a new high after its early October peak doesn’t bode well.

With the US Dollar making a brief two-day rally this week, the question is: could this be the start of a dollar rally and potential reversal in the Yen (other non-dollar currencies, e.g. Euro)? That Head and Shoulders doesn’t look too bullish.

This brings us to the big question: Was this week’s action the start of something NEW (stock collapse, dollar strength) or was this another fake-out? If stocks break above 1,070 on the S&P 500, we’re likely going to make new highs. If this happens, the Dollar is likely going to 72: its 30 year low. Any move below that and we're in uncharted territory.

Keep alert… something very serious may be afoot in the market. I suggest focusing on the Dollar in particular. The Fed’s Quantitative Easing Program just ended, which means part of the market’s life support has been taken away.

The question now is, does the patient wake up… or sink back into his coma?

Good Investing!

Comments

[doubleguns:]

I agree with you wholeheartedly, it was a sucker punch. If anyone doesn't think GOLDMAN of all people did not know what this number was going to be they are fooling themselves.

They knew and they gamed the average investors out of a heap of money. Hook, line and sinker.

I am sure they justified it by saying desperate times call for desperate measures.

I become more distrustful of the leadership on wall street and in Washington every day this corruption continues. They are not spreading the wealth, they are stealing the wealth.

Now we know what a mugging by GS looks like.

Oct 30 10:06 AM

[Graham and ...:]

"MOST of the bailout/stimulus money never went into the real US economy." because Goldman et al intercepted it.

Oct 30 10:30 AM

[Chip4634:]

Goldman Sks is now becoming the rightful champion of the pack of wolves who are eating the flesh of America for their own personal greed and telling us that we should celebrate their brilliance. The health care industry has done the same....higher costs to all who need healthcare, based on knowledge that slick doctors and their ilk could bilk the federal treasury of money allocated to his need of the people, and turn it into their own personal greed for power and excessive wealth - just read "Departures" magazine ads. Now some idiot is telling us they do not have excessive "reported net income as corporations" - no surprise when you see the cost of their management and ads for overpriced drugs - over pricing guaranteed by congressional
greed in the form of exemptions from anti trust and tax credits.
This wonderful business model, corrupted by the greed, is killing America and we are being told to celebrate their leadership and guile. How sick must we get to change and eliminate these procedures and leaders.

Oct 30 10:54 AM

[The Economi...:]

It's simple. Don't listen to Goldman.

Oct 30 11:50 AM

[SeekingTruth:]

Good, timely and relevant data and info.

Proves once again that any data without analysis can be very misleading and deadly.
While a bear overall , I would genuinely like for someone to provide a list of true "improvements" in order to balance my bearish tendencies.
Where are the plans , the resources , and more importantly, the action to create a new improved environment for American workers and the middle class, and indeed, a better America for all (and not just the big 3)?
I have been looking for myself and can't find any.

Oct 30 12:01 PM

[Stez:]

Looking at the weekly S+P charts the market hit it's head on the top of the yearly downtrend line.

It then has lodged at the bottom of this year's uptrend line.

It makes an asymetrical triangle and now we wait as the lines squeeze together which way it breaks.

This should be decided in the next ten days.

We also have to remember coming to the end of the year people want to book those gains.

My bias is a downdraft to around 900.

Though it can do this slowly rising each time to the top of the yearly resistance lines (sucking in money) and then falling lower with the muti year trend.

Oct 30 02:35 PM

[Carl Spackler:]

For the past three weeks I have been buying S&P puts, and when yesterday happened, it took away about 70% of my profits. This time, I did smell a rat, and I followed a rule I now view as sacred - never decide to buy or sell during trading hours. I just turned off my monitor. Too many times I have seen these guys pull these tricks, but I learned that if you ignore them long enough, they cannot hurt you.

By the way, for long players, the same is true - don't dump your positions just because the market screen show -250. Make your decisions during off hours when your emotions are calm. The stock market is just like hustling in golf - you win when you raise the stakes enough for your opponent that he becomes nervous. A great golf gambler gets you out of your comfort zone and then he has the edge. This is exactly what the GS guys do.

Oct 30 05:14 PM

[untrusting ...:]

Sucker punch indeed. GS specializes in those. Bring on the real heavyweights, such as Joe Frazier, Mike Tyson, and the sparring partners. We need to send them down to GS and show da boys what a real live KO looks and feels like.


On Oct 30 10:06 AM doubleguns wrote:

> I agree with you wholeheartedly, it was a sucker punch. If anyone
> doesn't think GOLDMAN of all people did not know what this number
> was going to be they are fooling themselves.
>
> They knew and they gamed the average investors out of a heap of money.
> Hook, line and sinker.
>
> I am sure they justified it by saying desperate times call for desperate
> measures.
>
> I become more distrustful of the leadership on wall street and in
> Washington every day this corruption continues. They are not spreading
> the wealth, they are stealing the wealth.
>
> Now we know what a mugging by GS looks like.

Oct 30 08:00 PM

[Meltdownman:]

THE RAPE OF BROOKSLEY BORNE:

video.pbs.org/video/13.../

THE MELTDOWNMAN

Oct 31 09:59 AM

[TeresaE:]

How many times do we have to see obvious gaming to stand up and say enough?

The reason GS and the Fed can scam us is because we let them.

The only "solution" to the problem would be to vote with our feet and let them keep it. Sadly talk of such a thing is treasonous and 99.999% of the population has no inclination to save themselves, stick it to the banksters and make a point our officials could never forget.

So, I watch from the sidelines and know in my heart that I am watching the train barrel off the mountain - even if most refuse to see it.

Oct 31 10:44 AM

[doubleguns:]

TE, you are not alone watching the train wreck.

See this for what happened when GS waded into the market.

melis.bbaron.sk/wav2/s...

Oct 31 10:51 AM

[Albertarocks:]

On Oct 30 11:50 AM The EconomicJoker wrote:

> It's simple. Don't listen to Goldman.<

To the contrary, listen to Goldman, and when they say "turn left", turn right.

Oct 31 10:55 AM

[David Van K...:]

If Goldman's sucker punch is so obvious, why was it a sucker punch at all? A sucker punch is a blindside, something totally unexpected. But everybody here has had GS under surveillance for months, suspicious of everything GS does or says. So I'm wondering, if you truly believe that GS deliberately misled with their headlined lowering of their GDP estimate so that they could clean up on the other side of the official announcement, did you fall for it? And if you did, whose fault is that? If you're positive the system is being gamed by GS, why would you trade in reaction to anything they say, unless it was to go in the opposite direction?

Oct 31 02:57 PM

[doubleguns:]

Just because I did not get sucker punched does not mean it was not a sucker punch. There are a lot of mom and pop investors out there that still believe what wall street says is something that can be taken at its word. I am sure they are getting less and less likely to have that trust with each passing moment.

I saw it coming, those that got hit did not. Just an opinion.

Oct 31 03:43 PM

[realold:]

I would say that GS is just smart and taking advantage of the mugging that the U.S. Congress is giving you. If GS is as powerful as you say and routinely mugs you, why don't you do the opposite of what they say? These rants make no sense to me. Congress is the one enabling and funding all this with your money. You are angry with the wrong people.


On Oct 30 10:06 AM doubleguns wrote:

> I agree with you wholeheartedly, it was a sucker punch. If anyone
> doesn't think GOLDMAN of all people did not know what this number
> was going to be they are fooling themselves.
>
> They knew and they gamed the average investors out of a heap of money.
> Hook, line and sinker.
>
> I am sure they justified it by saying desperate times call for desperate
> measures.
>
> I become more distrustful of the leadership on wall street and in
> Washington every day this corruption continues. They are not spreading
> the wealth, they are stealing the wealth.
>
> Now we know what a mugging by GS looks like.

Nov 01 12:55 AM

[Glen60:]

Meltdownman,

Thanks for the link to the Frontline program. Incredible !!! Without fear of prosecution for fraud, these firms will clean our clocks. I bet Ivan Boesky & Michael Milikan wished they had operated in this environment. Senator Phil Graham was one of those politicians that helped repeal the Glass Stegall act, in 1999. Larry Summers was against regulating hedge funds in 2002. What an astute, and honest lady, Brooksley Born is. They chewed her up & fed her to the lions. To my knowledge, no one was ever identified as the naked short sellers responsible for the demise of Bear Sterns. It was so successful that a mere 6 months later, they did the same thing to Lehman Bros.

Nov 01 02:59 AM

[doubleguns:]

Realold, I am angry with both. Washington lacks any leadership and runs simply on reelection campaign funding, read that bribes, and wall street is all to happy to pay said bribes. We must change Washington if we want to solve this problem however if GS manipulates the markets to make money, GS did that, not Washington. Washington just found it convenient to be looking the other way when it happened.

Both entities are corrupt in my book and both need to be taken to task for their corruption. I equally rant on both if you would just go back into my comments you will quickly find that to be the truth. In this article it was GS's (wall street) turn again.


On Nov 01 12:55 AM realold wrote:

> I would say that GS is just smart and taking advantage of the mugging
> that the U.S. Congress is giving you. If GS is as powerful as you
> say and routinely mugs you, why don't you do the opposite of what
> they say? These rants make no sense to me. Congress is the one
> enabling and funding all this with your money. You are angry with
> the wrong people.

Nov 02 09:19 AM

[Swashbuckler:]

realold---I agree that G.S. is smart. They are smart enough to have layered the top levels of government with their former executives so that they can game the system and screw the taxpayer. NEWSFLASH realold---The US Congress is whored out to Goldman Sachs and vice versa. Goldman is profiting from a corrupt, broken system because they are a major reason it is broken.

Nov 02 10:27 AM