Financial Dyspepsia

We have never had many nice things to say about Goldman Sachs. And not without cause. Terms like smarmy, shady, disingenuous, greedy come to mind. Even if one overlooks their suspicious long term connections to the Federal Reserve, Goldman is one of the main Wall Street titans of financial and political BS. This is a credibility issue and hardly a new one.

Their connection to Hillary is so thick one would need a chain saw to cut it. Even more suspect is their credibility when it comes to research. Here's why and it's only one of many GS financial burps. This is a firm with a definite case of financial dyspepsia. Trust them at your own peril.

Goldman has done it again. Two days after the central banker-incubator cut its year end price target from $50 to $43, admitting the previously anticipated rebalancing will take longer to achieve, and now expects "a global surplus of 400 kb/d in 4Q16 vs. a 300 kb/d draw previously", and followed the next day by a report in which it said that not even an OPEC deal would stop oil going lower, overnight the very same analyst, just 24 hours after saying the opposite, Goldman's Damien Courvalin said that the OPEC agreement will "likely provide support to prices, at least in the short term" and added that the announced production quota should boost the price of oil by $7/bbl - $10/bbl. Again: this is two days after cutting the 2016 price target by $7, and one day after saying an OPEC deal would have no impact.

Still, trying to avoid looking like a total flip-flopper, Courvalin adds that "at the historical average 4.8% production beat relative to quotas, this target would be 33.7 mb/d, above current production levels. It has historically taken a fall in oil demand to ensure quota compliance, as in that case, production is forced lower by a decline in refinery intake around the world. This is not the case today with resilient demand growth" and said that "we maintain our year-end $43/bbl and 2017 $53/bbl WTI price forecasts given: (1) uncertainty on this proposal until it is ratified, (2) likely quota beats if ratified, (3) potential for production above our cautious forecasts in areas of disruptions (as was the case today in Libya and KRG), and (4) our conservative supply forecasts outside of OPEC for next year."

Then again, the only thing that will be stuck in algos' random access memory is that Goldman now expects oil to rebound by up to $10/bbl, which may explain why oil is now rolling over.

zerohedge.com/news/2016-09-29/goldman-says-opec-deal-may-add-10-price-oil-two-days-after-cutting-oil-price-target