Goldman reported a $2.12 billion loss and the market was thrilled it wasn't much worse. The stock immediately jumped four points and lifted the broad indices also. Good news only seems to last a short time as Moody's lowered Goldman's corporate ratings and cut the stock's gain to 2.25 points. Best Buy also reported much better than expected third quarter earnings which lifted its stock 10%. They seem to be gaining market share but the key quarter is the fourth quarter. Management is still being cautious as it is offering buyout packages to most of the corporate staff and aggressively cutting costs and capital expenditures.
On the economic front, housing starts were only 625,000 which was less than expected. It wasn't long ago when housing starts were 2.2 million. The deflation scenario continues to pick up steam as consumer prices declined 1.7% in November when compared to October prices. We have said for months that it is all about the economy and weak data keeps pouring in.
The markets are rallying but the day won't be complete until the Fed cuts rates and lets investors know how much they will grow its balance sheet. It certainly seems like we are in a bottoming process as the market is rallying on good news and shrugging off bad news.
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