Where is Abby Cohen the permanent bull from Goldman – after Treasury secretary Paulson spend the first 350 bil. so unwisely…

Its interesting how Goldman changes its outlook for the market – or they do it even more interesting they have a person and opinion for every direction it seems. Their long time equity strategist called a few months ago all the negative people pathetic since this would be only a financial issue and the SPX with a year-end rally at 1300 – although earlier calls were even higher. The earning call of Goldman is very realistic though with 55$ for the SPX 2009 – in contrast to this pathetic call from UBS who sees a rally up to 130 as the earnings were to negative for 2009. we will get a substantial rally in 2009 but from a lower level even the 50 % may be right but not the target as 1000 will be hard to overcome since assuming 60$ earnings kick in that would be a 17 PE which is far to rich for a deep recession even. we will see a monstrous stimulus package of the western world pouring 1-2 trillion aid programs into the markets by government spending which will have an impact short term but even that makes an average 700 SPX f0r 2009 a positive outlook, since the initial effect will vanish quickly as the job market has to shrink going forward as the zero interest world does not reach the consumers at all and the saving rate is close to = as well so consumers have to take bold steps to repair there household budgets. Once the momentum is triggered especially through bubbles the pendulum has to swing to the other exaggeration point as well. we are not any close to such a point nor for the stock market neither for the real economy.

Goldman Says European Stocks may Fall Another 20% Before Rally

By Alexis Xydias

Dec. 5 (Bloomberg) — European stocks may fall another 20 percent in the “short term” as investors grasp the possibility of deflation, before a rebound in the second half of next year, Goldman, Sachs & Co. strategists said.

The brokerage advised as part of its 2009 European equity strategy holding shares in industries less affected by an economic slowdown, including phone, healthcare and retail companies.

“While it is tempting to believe that a New Year will bring an entirely different set of market prospects the reality is often different,” Goldman wrote in a note to investors distributed today. “The start of 2009 is unlikely to bring a change in the dynamic of growth and the unlocking of credit that is required for risky assets to re-rate.”

The Dow Jones Stoxx 600 Index may drop 20 percent on a “downside risk” possibility, they wrote. A six-to 12-month rally may follow only after the first half, they wrote, lifting the European benchmark between 30 and 50 percent.

Retailers were upgraded to “overweight” from “underweight” in Goldman’s recommended allocation. The industry is dominated by food companies that are relatively less “cyclical,” it said.

The team of London-based strategists, including Jessica Binder, Peter Oppenheimer, Sharon Bell and Gerald Moser, downgraded household-goods shares to “underweight” from “neutral,” citing weaker consumer demand and cut utilities in the same way because of “high leverage and refinancing needs.”

“We expect an inflection point in economic activity and the pricing of markets in 2009, but it is likely to be from lower levels and later in the year,” they wrote. “We stay defensive in our portfolio and would underweight most cyclical sectors.”

Financial-services stocks were upgraded to “neutral” from “underweight.”

Paulson threw 25 bil each to ‘ healthy banks’ like Goldman JP Morgan and Wells Fargo thats at least 75 bil spend absolutely stupid. Did not execute the TARP program as negotiated throws 150 bil at AIG and even GE got huge bailout to save their triple A status but when it comes to save over a million underpaid workers their jobs in the car industry he rather to travels to China to make on of his pathetic Yuan attempts. The Chinese did what they wanted at the end and all this hype about his China connections are just a media myth – internally Chinese are paranoid about becoming a playball of wallstreet banks especially the Jewish ones – one of the bestsellers there is about the influence of the Rothschild’s and the danger they represent. The reason why Chinese make joint ventures and cooperations is to generate the knowledge of the leaders in order to make it independently afterwards themselves. Right now they even will rethink if wallstreet is that smart after all.

Dodd, Frank Warn Paulson May Not Get TARP’s Next $350 Billion

By John Brinsley and Alison Vekshin

Dec. 5 (Bloomberg) — Two top U.S. lawmakers warned Treasury Secretary Henry Paulson that he may not get the second half of the $700 billion financial rescue fund, joining Republicans upset with how the program is being managed.

“I would be a very hard person to convince that this crowd deserves to have their hands on the next $350 billion,” Senate Banking Committee Chairman Christopher Dodd told reporters yesterday in Washington, referring to the Bush administration. “I am through with giving this crowd money to play with.”

Some lawmakers are pushing the Treasury to use its Troubled Asset Relief Program to aid the beleaguered U.S. automakers, and Democratic legislators are also urging money for struggling homeowners. An increasing gulf between the Treasury and Congress makes it more likely that decisions on the remaining TARP funds will be up to the incoming Obama administration.

“It looks like the only way Paulson could get the TARP money is to make a deal on foreclosure relief,” said Tom Gallagher, head of policy research at International Strategy and Investment Group in Washington.

Paulson, who has committed all but $20 billion of the first half of the funds, is also under fire for abandoning the original TARP plan to buy toxic mortgage assets. Under the terms of the law, lawmakers have 15 days to reject a request for the second half of the TARP funds.

House Financial Services Committee Chairman Barney Frank yesterday warned that Paulson may be blocked from accessing the money.

Lawmakers’ ‘Intent’

The Treasury has ignored the “clear congressional intent” of the TARP to reduce home foreclosures, Frank, a Massachusetts Democrat, told reporters yesterday after a speech at a Consumer Federation of America conference in Washington. “At the very least, he’d have to agree that some of that money was going to be used for foreclosure relief.”

~ by behindthematrix on December 5, 2008.

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