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How a ‘buy’ on Goldman Sachs sparked global rally

This article was posted on Jul 15, 2009 and is filed under Press Releases

Even as the recent few days have been negative for global and Indian stock markets, Monday saw a sudden respite as Wall Street rallied about 2.5% led by stocks of the financial sectors, which rose by more than 6%.

The reason: famous analyst Meredith Whitney who turned bullish on Goldman Sachs and initiated a buy rating on the financial institution. Whitney’s buy call sparked off a relief rally in financial stocks that then spread across Wall Street, and in turn provided some upside to Asian and Indian markets on Tuesday.

Whitney said Goldman Sachs would benefit from ‘a tsunami of debt issuance’ and on the back of re-emergence of lending. “It is clear that when the denominator shrinks and consumers have less averrable liquidity — and mind you there is a lot of refinancing, but not a lot of net new lending — the consumer suffers and will suffer for a long period of time. This is all, if you look at the first quarter, all of the government buying agency paper, it was all a way to put money in the back door of these financials,” she said.

Whitney, however, continued to remain bearish on the US economy and other US financials.

source: Moneycontrol

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