Market Talk

Just because Goldman Sachs’ (GS) reputation has been hit hard in recent months doesn’t mean its shares have taken the same sort of abuse.

Quite the opposite, in fact, as Goldman’s stock has enjoyed an 18% run-up throughout the last six weeks even as the firm’s rep has been under attack.

Goldman, famously dubbed the “Vampire Squid” by Rolling Stone writer Matt Taibbi, has often been criticized for its controversial role throughout the financial crisis. Recently it seems like Goldman has been bending over backward trying to preserve its reputation. The latest defense came last month from Lucas van Praag, Goldman’s head of corporate communications, who went into granular detail in a blog post rebutting a NY Times story that described the firm’s controversial relationship with AIG.

But putting the negative publicity aside for a second, Chad Brad, founder and president of Peridot Capital, makes the case that Goldman shares are undervalued and at current levels present a good buying opportunity for investors.

Goldman is still the “best investment bank in the world…has seen many of its competitors go out of business or dramatically scale back operations, and yet at around $170 per share the stock still trades for less than 10 times estimated 2010 earnings,” he says.

Brand, which discloses his firm is long Goldman shares, notes the firm trades at a lower valuation than both Bear Stearns and Lehman did pre-crisis.

And buying Goldman at less than 10x earnings is a “tremendously attractive risk-reward opportunity,” he adds.

Goldman shares were recently off 1.4% at $172.44.

- Deflationary winds kicking up? Core CPI slips into negative territory for first time since 1982. “It’s hard to overlook the fat that negative monthly readings for this data series are extraordinary rare,” James Picerno says. “For the sake of economic stability, let’s hope it stays that way.”

- With Goldman Sachs’ (GS) image under attack, spokesman Lucas van Praag’s tough talk has only served to “alienate potential allies and enablers in the press and project a supercilious institutional arrogance which only serves to confirm the unflattering portrayals offered up by the firm’s detractors,” the Epicurean Dealmaker blog says.

- “High volatility in sentiment is a clear sign of utter confusion on the part of market participants and creates a landscape that is ripe for dramatic moves in either direction,” the Pragmatic Capitalist writes.

- Fed’s discount rate hike has more to do with technical reasons than a policy shift, former Dallas Fed president Bob McTeer says.

- Barclays scooped up a lot of talent throughout the financial crisis, according to LinkedIn data.

- Matt Taibbi’s latest account of the financial crisis misses one key point that no one wants to talk about: we could be in a depression without government intervention, Andrew Leonard writes. Still, reflecting on current bank profits, banks’ resistance to regulation and inability of government to do anything about it, “I’m beginning to come around to the view that maybe it would have been more effective to just blow everything up and start all over.”

- Deal activity has gotten off to a sluggish start in 2010, but investment bankers remain busy keeping up with secondary offerings, DealBook reports.

- Bottom line to this economy recovery is job growth. “The good news is Washington is working on it,” S&P’s Howard Silverblatt says. “The bad news is Washington is working on it.”

- Record bank profits may be tough to come by as the Fed starts raising rates.

- Tiger made the world stop from 11:00 to 11:15 this morning. How’d he do? Bill Simmons says the press conference was “a borderline train wreck.”

Please, Lucas, tell us another one.

It seems like ever since Rolling Stone’s Matt Taibbi tagged Goldman Sachs (GS) the “vampire squid,” the firm has bent over backward trying to defend itself.

Latest defense comes from Lucas van Praag, Goldman’s head of corporate communications. He pens a blog post in The Huffington Post that goes into granular detail to rebut Sunday’s NY Times story detailing the firm’s controversial relationship with AIG.

He breaks the story into nine different sections, labeling “NYT assertions” and then correcting these errors with “the facts,” claiming several aspects of the story are false, misleading and mischaracterize the situation.

Bottom line, van Praag disagrees with notion that Goldman was biggest beneficiary of mortgage market’s decline. “Through prudent , we limited our losses, rather than generating ‘enormous profits,’” he says. “AIG was only one of many counterparties with whom we had hedging arrangements.”

This isn’t the first time Goldman’s gone out of its way to take part in damage control. In December, van Praag responded to several questions the Zero Hedge blog posted related to Goldman’s prop trading operations as well as how it defines market risk and if it even has a risk policy.

Continue reading…

We’ve been negligent about keeping you up to date on our outside activities, mainly because those activities have been eating up most of our free time. But with the most intense two weeks of earnings season winding down — there will be stragglers for another few weeks, and the retailers haven’t reported yet, either — our earnings-focused column in the WSJ, The Upshot, is also winding down.

Today’s column looks at food growers and retailers, and the “pricing environment” facing them, what people outside of corporate communications call deflation:

“In my 30-plus years in retail, I’ve never witnessed the intense level of price reductions and promotional activity now occurring,” Supervalu Inc. Chief Executive Craig Herkert said last month. “My belief is that the recent industry trend toward lower pricing is here to stay.”

The NY Times last week had a story on this theme, but the focus was price deflation in Japan. It just shows how much of the currents swirling around these days are swirling around the world.

(And I was pleased to see yesterday’s Upshot column, which ran in the Marketplace section, get “repurposed” today on the website’s careers section. It’s nice to write a story that’s got legs.)

Lastly, we’ve been so busy that we’ve missed some things that happened this week, like the withering rebuttal from Goldman’s chief flak Lucas Van Praag to the report from our colleagues across the pond that the company’s going to pay CEO Lloyd Blankfein a $100 million bonus.

Mr. Van Praag said this: “There’s speculation, and there is stupidity. This speculation transcends the simply stupid and takes it to an entirely new level.”

In other words, of course we’re going to pay him $100 million, you dolt.