August 5, 2011
The Dow Jones Averages are trading between plus 170 and minus 140. Goldman Sachs comes out with an announcement mid-day downgrading U.S. growth to the 2-21/2% range. They also give the economy a one in three chance of falling into another recession.
Neither of these projections is particularly new. We have heard these exact projections before.
The market responded quickly by going down 240 points adding on to a week that has already seen the Dow lose 760 points in the preceding four trading days.
This is a Friday during a very volatile time for the global financial markets. In particular it is a very vulnerable day as news coming out of Europe is causing great concern. The market is already hard pressed to rally on Fridays during volatile times.
For Goldman to come out with this kind of announcement on a day like this, immediately brings up the question "How much were they short"? They know that these comments in this market would have a negative effect. Goldman could make tens of millions of profit in a matter of minutes on a quick move in the market.
Goldman made predictions of no great importance, during a very vulnerable trading session, designed to create a reaction in the markets. Shame on them. With Goldman's expertise it would be very hard for the regulatory agencies to prove the connection, but it is hard to miss it.