Thursday, April 14, 2011


The bad feature in the GOOG report was the eleveated operating expenses.

Run, don't walk, to read Goldman Sach's Dave Kostin's "Portfolio Strategy Research" comprehensive report this morning.

In terms of sectors, Dave would be long cyclicals, short defensives and companies that have large sales exposure into BRICs.

The greatest risks to economic growth and to his market projections are interest rates and the cause, duration and macroeconmic backdrop of a potential oil price shock.

Things to worry about:

1. higher oil and input prices;

2. a debased U.S. currency, lingering budget concerns and political partisanship, which could jeopardize a budgetary compromise (and resolution);

3. screwflation of the middle class and its inevitable impact on economic growth and corporate profits;

4. the specter of structural unemployment;

5. the absence of a recovery in home prices;

6. the fiscal and monetary "stabilizers" are soon to be taken off;

7. vulnerability to consensus 2011 growth projections, corporate margins and profitability;

8. the euro sovereign debt crisis, thought to be contained, has continued to spread;

9. a relatively anemic recovery exposes the economic cycle to the vulnerability of more black swans (and tail risk), which are occurring with greater regularity; and

10. investor sentiment has moved to a lopsidedly bullish extreme.

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