I still find the fact that the SPX turned around at 666 highly disturbing to say the least as it was a highly manipulative turn - I have never seen before at a market low an extreme high call buying activity that contradicts any logic and experience. Capitulations happen with panic mode but we had the pure opposite - what a coincidence. We had a similar coincidence the day before the FED made hours before market opening on a Friday a surprise announcement of their first rate cut. Someone bought tons of calls the prior day and the rumours I heard were mentioning Goldman - in any case someone had again illegal insider information. I did recommend to buy Goldman below 60 after I was short and now I would rather look to sell Goldman around the 150 level as I can not see earning of 20's for Goldman neither this or next year.
I am surprised to see Ms Whitney to do the classic mistake of most analysts to join the buy rankings at the highs - if GS can perform above 20 in 2010 she would be right but still late.
Banks Stronger But Outlook Clouded by Job Loss: Whitney
Unemployment is likely to rise to 13 percent or higher and will weigh on the economy for several years, countering government efforts to stabilize the banking industry, analyst Meredith Whitney told CNBC.
While Whitney raised her short-term outlook for banks, causing stocks to open in positive territory after pointing lower earlier, she said the long-term outlook for the economy remains murky.
Consumers will not be able to spend as they continue to lose jobs and credit conditions stay tight, she said in a live interview. The result will provide a vivid display of how critical housing and lending are to economic growth. Unemployment is currently at 9.5 percent but is expected to keep rising.
"We underestimate how much the whole economy is dependent on the mortgage industry, and that has to change," Whitney said. "This is what happens when you delay the inevitable. We're buying time here, but we're not restructuring the economy."
Prior to the interview, Whitney raised hopes for banks when she said Goldman Sachs [GS 146.8399 4.9699 (+3.5%) ] is in for a hugely profitable quarter.
She expanded her remarks during her CNBC appearance, saying the Wall Street titan probably will earn $4.65 per share for the second quarter, $20 for the year and more than $22 for 2010.
Banking stocks will be good buys at least in the short term as the industry takes advantage of "the mother of all mortgage quarters," Whitney said.
Little-noticed new Safe Harbor Mortgage Modification rules that went into effect May 20 prohibit mortgage investors from suing loan servicers. The legislation is significant in that it offers added protection for large servicers from investor litigation as the institutions modify mortgages for distressed homeowners.