Friday, January 22, 2010

Goldman cuts metals

Just a few weeks ago, X was touted as one of Goldman's top Conviction Buys, and X was touted yesterday by Goldman as a buy before earnings.

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Today X is removed from Conviction Buy, and the Metals and Steel sector is downgraded due to concerns from China, and FCX was cut to neutral.

Anyone think the action in X and FCX yesterday, was Goldman trading off that call before they released this news to clients?

Another trading "huddle!"


Anonymous said...

Palmoni, do you think APWR is a steal at this price today or is there more down side?

Did you hold your shares?


db said...

P how about this senario .BO is pissed at the banke he put a bulls eye on GS ...what is GS gives up it's bank charter and takes itself private again ?

db said...

OOPS...after reading my post I have learned you NEVER eat toast with jelly while trying to type !

Palmoni said...

I sold some on Christmas Eve at 20 but still holding 3/4 of my shares.

I'm suffering a bit from hindsight on it --Had well over a good double, and I should of lightened up half, but I was "waiting" for 24

That being said--if I would of sold more, I would be buying back here--instead I'm just holding the rest

The stock always seems to break their secondary price by about 10% then stabilizes, before it runs up--but darn it, they are so promotional that they get a bighaircut whenever they want to raise money.

Anonymous said...

any more "color" on Goldman's steel downgrade?

Palmoni said...

here's Goldman this morning---seems like a trading huddle call that they would probably take in their shorts in X that they laid out yesterday....

Taking down Metals and Steel sector coverage views to Neutral
We see near-term risks to our bullish stance on the Metals and Steel sectors as China has now embarked on
a tightening process. Accordingly, we are raising our risk premia and lowering our coverage views on both
sectors to Neutral from Attractive. Our Goldman Sachs global steel team in Russia, Latin America and China
have also made downgrades on these concerns. Historically, investors have shunned these high beta sectors
when concerns about Chinese demand have surfaced. Although stocks have already corrected somewhat,
there is a likelihood of more tightening measures that could further weigh on stocks.
Metal and steel intensive markets could be at risk
We believe that metal-intensive, rate-sensitive sectors like property construction and autos could face the
brunt of tightening measures. China accounts for about 40% of global metals and steel consumption, and
Chinese property and auto sectors account for more than 30% of these products. In steel, while not broadbased,
we are beginning to see price discounting by some domestic mill, undermining recent price increases
and could present a headwind for the stocks.
Downgrading Freeport to Neutral; lowering PTs for FCX and AA
We are downgrading FCX to Neutral from Buy. FCX is regarded as the closest thing to a pure-play on copper
- a metal whose price is heavily dependent on Chinese growth and the metal that China is chronically short
of. Copper has recently traded above our 1Q price of $3.30 per pound, and we see elevated near-term risks
of a pullback. Any concern of a slowdown in China from credit tightening measures will be perceived
negatively for FCX, in our view. We lower our 6-m target price for Freeport, partially due to our lower
estimates as a result of higher cost assumptions and partially due to lower valuation multiples we believe
market will assign to FCX shares in light of these concerns. We are also reducing price target for AA due to
the lower valuation multiples.
Removing X from Conviction Buy List; maintain Buy
Although steel is a more regional market and US Steel is not directly dependent on Chinese demand, our
concern that steel prices in the US could be rolling over in the near-term, and investors would shed steel
stocks on China fear, we are removing X from the Conviction Buy List, but we retain our Buy rating as it is the
best positioned steel company due to the recovering OCTG market and vertical integration into iron ore.

Palmoni said...

goldman could give up its bank charter--but they have $30 billion of cheap financing from the taxpayer thatthey would have to disband with first

Palmoni said...

goldman could not take itself private now

what's the $46-47 billion of Level 3 assets really worth?