And the Beat Goes On…

The market barely batted an eyelid at the news that a CIT bailout was unlikely. I wonder what the reaction would have been if we’d heard that last week? We did have a slightly muted open however as we prepped for some big earnings announcements. Now Nokia numbers may not be such a market moving event as it used to be but it is still heavily watched, and I would wager this time especially so, given the tech leadership we’ve seen (ignore Dell, we don’t like to look at poor figures). Anyway, on the off chance you haven’t received 487 Bloombergs on detailing every aspect of the numbers, here’s the skinny: they weren’t enough; light on sales, margins and outlook and the stock is taking a bath on the back of it.

The Kiwi, as noted yesterday, survived dual tsunami (that is the correct plural). Well one of them didn’t materialise but it did have to deal with another one today in the form of a Fitch long term credit rating downgrade. NZD took it in its stride however, falling 1.5% before the risk on trade bore out again courtesy of a much bigger beat from JPM. Interesting to note just last month, consensus estimates from JPM were c28c.

A couple of things caught my eye today. Firstly, Pragmatic Capitalist is running a piece asking whether this move we’ve seen, and what a move, is a short covering rally. The basic conclusion is yes it was/is as the most shorted names have outperformed while the Nasdaq is up less than SPX and Russell 2000 ie beta hasn’t been the driver here…this is the link if you care.

Secondly, and this relates to the mighty house of GS. Now it’s easy to get into GS bashing/begrudging especially with so much of it in the media at the moment. Indeed some of it sounds compelling, ie when you have a former Assistant Secretary of the Treasury say that Geithner “works for Goldman Sachs” (see the last 15 seconds or so, pretty unbelievable), or when you look at the speed the FBI moved on the Aleynikov saga. The code he took could be used to manipulate markets, so erm, take it off him and leave it with GS?? Anyway, some of it is less compelling, such as the Matt Taibbi stuff in Rolling Stone which is sensationalist to say the least. With the GS figures the other day came a new high in their VaR @ $245m. ZeroHedge asks how can they have so many $100m+ profit days on a VaR of $245m? Perhaps the answer lies in the fact they have an exemption from traditional VaR models. Which begs the question, why do they have such an exemption? Now I’m not a risk manager, so there could be a very reasonable explanation which I wouldn’t be aware of. It just stood out as odd to the cynic in me. Anyway, enough of that, onwards and upwards as the beat goes on…