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Good quarter but pullback expected

Goldman showed an impressive ROE of over 20% in the second quarter attributed to an improving macro environment. The stock has rallied since its low of $47.41 by tripling over the past six months. Now it’s time to move on to the next quarter. Following this V shape market recovery it is hard to maintain this growth heading into the third quarter. GS 2Q results are not sustainable, there will be a capital markets pullback with second half of 09 resembling 1Q results. This financial shakeout has a bit more to go before we can confidently say the deterioration of the global economy has subsided. Analysts estimate GS book value at $100, today Goldman is trading at a 60% premium. Expect the shares to pullback after earnings season is over.

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