Goldman Ire Moving to Mainstream Media & TED Spread

In my “Breaking Up the Banks Post” I mentioned:

Regarding Goldman, there is a lot of chatter and outrage directed at the firm. I wonder if Goldman has been too smart and too cute for their own good. Perhaps laying low and not maximizing profits would have been a better (albeit less profitable) long term strategy. The bloggers (and now even the conventional media) are tenacious in their efforts to uncover any action by Goldman that is or could be construed to be unfair or unjust. I wouldn’t bet against the anti-Goldman sentiment.

The anti-Goldman sentiment is starting to move from the blogosphere to mainstream media.

This morning, two anti-Goldman articles showed up on the News Mashup. Note that the News Mashup is made up of mainstream news sources – not bloggers.

GS a short? And five reasons we hate Goldman Sachs (Cody Willard’s Marketwatch blog)

The rage against Goldman isn’t just populist. The rage against Goldman isn’t just popular. The rage against Goldman is right.

And unfortuntely, the only thing you and I can do about it is to vote out every single incumbent who empowered Goldman and its ilk with all their bailouts, stimulus and other wealth redistribution policies.

Goldman Holders Miffed at Bonuses (Wall Street Journal)

One frustration: Despite record net income and compensation at Goldman as markets rebound and the firm outmuscles weakened rivals for business, analysts expect its 2009 earnings per share to be 22% lower than in 2007 and roughly equal to its 2006 earnings, according to Thomson Financial.

The decline is caused by issuing more than 100 million shares in the past year to bolster Goldman’s financial position and capital. The shareholders have said that reining in the bonus pool would deliver an upward jolt to per-share earnings and the share price, according to people familiar with the discussions.

Moving on, for those that follow LIBOR, treasury rates and the TED spread as a gauge on the health of the credit market, you may have noticed an uptick in the TED spread.

Note that the TED spread is up not because of an uptick in LIBOR. In fact, the opposite has occurred. 1 month and 3 month LIBOR are both actually down a bit ($LIBOR1 and $LIBOR 3 on Stockcharts – you can also access them on Rosocecastia’s list of indexes if you click under Reader Submissions).  However, the yield on 3 month treasuries is now at 0 (also available under Reader Submissions) meaning that you can calculate the TED spread by simply checking the 3 month LIBOR rate.

This is certainly not good news for the stock market. From Barron’s this morning:

IT’S THE CRASH YOU DIDN’T HEAR. Not in the price of any security market, but in short-term U.S. Treasury yields.

Treasury bills once again were trading at negative interest rates Thursday, a mind-boggling state of affairs that hasn’t existed since the panic late last year. That followed the collapse of Lehman Brothers and the assorted knock-on effects, notably the run on money-market funds after the Reserve Fund "broke the buck."

We’re likely looking at a lower opening this morning with no economic data due out this morning. Earnings from DHI will give us another update on housing.

The selloff on the ES started at around 5am EST. EURUSD is trading down meaning that USD is moving up and pushing the stock market lower. We’re seeing a flight to safety in short term treasuries and thus it is not surprising that we’re potentially seeing foreign money being exchanged into USD for these treasury purchases.