Larry Kudlow says financial stocks are a good buy, but we’re not so sure. Yes, we agree the large financial houses are taking necessary steps to shore up their balance sheets, but have they found bottom?
Not likely, according to Investors Business Daily. The paper reported that Goldman Sachs plans to cut 1,500 jobs, or 5 percent of its workforce. This from a company that was supposedly insulated from the subprime mess (even as it pumped a hefty amount of CMOs into the marketplace, but that’s another story for another day). It seems even a smart company like Goldman’s isn’t immune to the fallout. The company, of course, said it was routine – part of its annual jettisoning of the dead weight. And it’s not necessarily a bad thing to shed expenses to gain a better defensive position. But then Credit Suisse announced it will cut 500 jobs – and so it goes.
Of course, many sector analysts are watching Citigroup, a top dog of the Dow for 2007, which is poised for a comeback in 2008. Now might be the time, and Larry’s been right before. We’ll keep you posted.