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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
April 20, 2009
From Elliot
Goldberg, Registered Investment Advisor, Goldata
Financial
Last week, market action continued its recent
trend of finding buyers on any market weakness. More interesting was the
action in Goldman Sachs’ (GS) stock early in the week. Consider the
leak of news of a planned secondary equity offering to pay back TARP to last
weekend’s business newspapers, the push of the stock north of 130 by
the close Monday, and then announcing a significant earnings beat ($3.39 vs.
$1.64) early on Monday night (instead of Tuesday morning) so the secondary
could be completed (at $123) with Europe’s help before the market
opened Tuesday. Add that to the fact that the stock never saw the bright side
of 123 for the rest of the week and the term “pump and dump”
comes to mind (You be the judge.) We can expect this same type of action for
the rest of the financials (sans the “p&d”)
as they all would like to pay back the TARP so as not to be hassled by Uncle
Sam anymore. Unfortunately, a time-out has been called until May 4th
when Uncle’s stress-test results will be announced and the
cardiac-healthy among them can start returning funds. Earnings season is upon
us and the news has been better than expected, but not much was expected.
Wednesday’s news from American Express seems to sum up Mr.
Market’s attitude – delinquencies (things) are not getting worse.
This takes the Armageddon scenario off the table for some and allows for adding
exposure to equities. Credit continues to loosen as JP Morgan (JPM) and
Seagate (STX) floated bond issues without government guarantee and, for the
first time, an IPO traded above its offer price (Rosetta Stone [RST]).
Volatility came in 10% this week, but still high by historical standards and
gold continued to sell off. Conclusion: The long-term story continues to
brighten as fundamentals continue to revert to the mean. The market elevator
goes up and down and we’ll have intermittent pullbacks, but, short of a
new shock, the healing should continue.
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