Goldman's prop desk--Ring the register!

Today Goldman removed Garmin from their Conviction Sell list. Now that the stock has doubled in their face, and despite all their stories of worry, they now seem to want to change their viewpoint:

What happened
We are removing Garmin from the Conviction List but maintaining our Sell rating. This change is driven by (1) improving near-term PND unit trends, which we believe will drive strong 3Q results and positive 4Q commentary when Garmin reports earnings on November 4, and (2) our belief that the smartphone cannibalization story is more likely to unfold in 2010 vs. 4Q2009.

Current view
While our CL-Sell call was based on expectations of a disappointing 4Q rather than a 3Q miss, our positive channel checks lead us to believe that 4Q is likely to be stronger than our prior view. As a result, we now believe that 3Q earnings could be a positive catalyst for the stock on the heels of better-than-expected results and positive 4Q commentary.
There is no change to our longer-term Sell rating.

You can check out Goldman's conviction sell here. Or their huddle here. Or what happened with GRMN's last earnings report.

So today Goldman capitulated. Maybe they saw something on the chart!

Now let's get conspiratorial. Today Goldman had this to say about the money on the sidelines:

The money flow story for equities is more complex than most investors appreciate. We identify potential net inflow of roughly $600 billion from individuals, institutional investors, and companies – a large number, but far less than $3 trillion of money market mutual fund assets many investors cite. It offers a bullish backdrop for 2010 if end-demand re-appears.

Individuals: $350 billion of potential money flow into equities

We expect $600 billion of outflows from the $1.9 trillion of taxable money market mutual funds owned by individuals, with 50% going to stocks split between equity mutual funds and direct share purchases. Robust outflows YTD have benefited bond funds but have not yet benefited equity funds. An additional $50 billion could flow from savings to the US equity market.

Institutions: $150 billion from hedge funds and foreign investors

US mutual funds no longer hold large cash positions as a percentage of total assets. If hedge funds modestly re-lever it would total $50 billion of equity inflow. Foreign investors buy $100 billion of US stocks annually.

Corporations: $100 billion net flow from buybacks, M&A, issuance
Non-financial corporations hold $760 billion in cash, reflecting the severe cutback in all forms of capital spending. We expect $250 billion of cash M&A, buybacks, and pension spending offset by $150 billion in issuance.

Why now? Isn't this the chart of the S&P?

Everyone knows that the game on Wall Street is to steal money legally. Goldman knew they had the put of the Federal Reserve behind them, so they just front ran the taxpayer, and decided to pay those bonuses on their profits to themselves.

Of course it wasn't any different over at PIMCO. When Bernanke said the Fed was going to engage in quantitative easing, 86% of their portfolio at th elarget bond fund in the country was in mortgages. Now that the Fed is exhausting it's buying, they are now down to less than 30%. I sit any different with Goldman?

So Goldman touts the money on the sidelines, because they need the sideline money to take them out of their positions when Uncle Ben's rice paper was implicitly backing them out.

After all, Goldman's motto is, "Do what I say, not what I do!"

We see that last week, the SEC said they were interested in SAC Capital and their trading tips. Who tips SAC? Doesn't Goldman? But those are of the dark pool and huddle variety--not inside. Because that's Goldman of course! They keep those tips to themselves!

And today, the tip they are telling the world, is that sideline money is coming into the market.

Which means Goldman's prop desk needs some help with inventory!

And that is so obvious, you don't even need a Garmin PND to tell you that!

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