I’m always interested in how Government ties in with the markets. It’s been a bit of a hobby of mine, along with WWII battles, over the past 2-3 years and there’s no bigger tie then Goldman and the Government then recently…and BOY is it bigger then we know! In my recent late night surfing I came across Greg Roy. Greg recently released a special report with the same title of this blog post, Goldman Sachs’ Next Slaughter of the Stock Market Lambs, and being the digger I am, I read the full report and cold called him. I asked if I could repost a part of the report for my Trader’s Blog members. After some convincing he said ok.

This guy knows what he is talking about… Here is an exclusive excerpt from his newly released report Goldman Sachs’ Next Slaughter of the Stock Market Lambs.

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Goldman Sachs

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Goldman Sachs Group Inc. (GS) is contemplating buying tax credits from Fannie Mae (FNM). However, it may be reasonable to assume that the U.S. Treasury may not approve of the deal. Goldman hopes to receive approval this week for $1 billion worth of tax credits. Tax credits are incentives designed to bring more investment to low-income housing developments. This would help the company reduce its tax bill as well as bring some much-needed financial relief to Fannie Mae. While financial details of the proposed transaction are not disclosed, Goldman could arrange other investors for the deal as well. The Obama Administration, however, is opposed to the deal, as it will reduce Goldman's tax bill at a time when Wall Street is already facing intense public scrutiny. Fannie Mae, a government-controlled mortgage financier, could get financial relief if Goldman bought the tax credits. As ...

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Richard Ennis (CFA Institute): The uncorrelated return myth, November/December 2009.

• Peter Clarke (Financial Times): How to avoid a repeat of the Great Crash, October 28, 2009. The chain of events leading from a collapse in stock prices on Wall Street to a Great Depression has leapt from history with an entirely fresh verisimilitude. John Authers (Financial Times): GDP grows, but pain remains, October 29, 2009. US GDP numbers were a good enough reason to halt the return of risk aversion, but the key to whether risk appetite can return depends on US employment data.

• Economist.com: As joyless recovery, October 29, 2009. New figures suggest that America has at last moved out of recession.

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This post is a guest contribution by Dian Chu*, market analyst, trader and author of the Economic Forecasts and Opinions blog.

The dollar’s value against major currencies has fallen in recent months as the US fiscal outlook worsened and amid expectations that interest rates will remain close to zero for some time to fight the economic downturn.

This week, the euro broke above the psychologically important level of $1.50 driving gold prices to record levels, prompting many global central banks intervening on currency markets to slow the dollar’s fall (Fig 1).

How did we get here?

Since the financial crisis last fall, currency markets have taken their cues mostly from stock markets. When stocks plunged in March of this year, investors rushed to the safety of US government bonds, pushing the

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The Goldman Sachs Group Inc. (...

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest.

• Evans-Pritchard (Telegraph): German “wise men” fear credit crunch in 2010, October 15, 2009. Germany’s leading institutes have warned that the pace of economic recovery is “unsustainable” and that the country’s banks may face a fresh crisis over the next year as bad debts surface in earnest.

• Lasse Heje Pedersen (NYU Stern School of Business): When everyone runs for the exit, August 2009. The dangers of shouting “fire” in a crowded theater are well understood, but the dangers of rushing to the exit in the financial markets are more complex. Yet, the two events share several features …

• Anthony Bolton (Financial Times): Are developed or emerging markets the future of investing? October 16,

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Goldman Sachs Group Inc.’s (GS) third quarter 2009 (ended Sept. 25, 2009) earnings of $5.25 per share were significantly ahead of the Zacks Consensus Estimate of $4.13. Results reflected strong performance in the trading operations, which offset the decrease in investment banking division. The company also reported a drop in expenses on a sequential basis. GAAP net income in the third quarter of 2009 was $3.0 billion or $5.25 per share compared to $2.7 billion or $4.93 per share in the prior quarter (ended June 26, 2009) and $0.8 billion or $1.81 per share in the prior-year quarter (ended Aug. 29, 2009). Total revenue decreased 10% sequentially, but was more than double from the prior-year period to $12.4 billion. Operating expenses, however, decreased 13% sequentially but were up 49% year-over-year to $7.6 billion. Expenses were down sequentially as a result of lower compensation and benefits ...

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest.

• Martin Wolf (Financial Times): The rumours of the dollar’s death are much exaggerated, October 13, 2009. Recent figures have proved that the dollar’s fall is a symptom of success, not of failure. All the same, the dollar-based global monetary system is defective. It would be good to start building alternative arrangements.

• E.S. Browning (The Wall Street Journal): Dow at 10000 as crisis ebbs, October 14, 2009. The Dow Jones Industrial Average surged to 10015.86, passing the symbolic 10000 level much faster than expected and racking up a 53% gain in just seven months. Wednesday’s trading marked the first time the Dow touched 10000 since October last year, when markets were unraveling after the collapse of Lehman Brothers

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This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest.

• Mike Shedlock (Mish’s Global Economic Trend Analysis): Is the stock market a leading indicator?, October 12, 2009. The stock market is at best a coincident indicator, known only well after the fact. Furthermore, even as a coincident indicator, the stock market gives many false signals, making it totally useless for all practical purposes. The theory that the stock market is a reliable leading indicator is a myth easily shattered by simple observation of the facts.

• Caroline Baum (Bloomberg): Treasury bond rally fails asset-bubble test, October 13, 2009. Bubble sightings are proliferating by the day, and with interest rates near zero, it’s not hard to understand why. Easy money leads to excess credit creation, which eventually produces

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Goldman Sachs Group Inc. (GS) is contemplating to amend the terms of a $3 billion loan which it had given to struggling lender CIT Group Inc. (CIT) to enable it to continue using the facility.  The investment bank extended a 20-year funding to CIT in Jun 2008. According to the terms of the contract, CIT will pay Goldman 2.85% of the maximum amount lent, which would come to about $85.5 million annually for the first 10 years of the agreement. CIT would be required to pay $1 billion if it files for Chapter 11 bankruptcy.  CIT, one of the nation's largest lenders to small and midsize businesses, received $2.3 billion in federal bailout funds last year. In July, the company secured a $3 billion emergency loan from some of its largest bondholders, evading an immediate bankruptcy filing. But the company still needs to reduce its ...