GOIH Capital Markets: Market Overview

The market opened lower today based on the bad news issued by Bank of America (BAC) a Dow component. BAC missed its earnings estimates indicating a drag on consumer portion of the economy. BAC is the largest of the money center banks whose business model is tied to the retail consumer. BAC's earnings miss suggest as the other indicators suggest that the consumer is facing hard times and if Domino's Pizza reports that consumers are eating less pizza, the outlook is not bright. BAC reported over $717 million in trading losses in their investment banking division. BAC also added to loan loss reserves indicating more losses in the future. The earnings miss was reflected in the stock of BAC opening down sharply currently trading at $48.26. Given BAC trades with low volatility, the downward price is a tremendous blow to a Dow component.

Our GOIH's Quantitative Finance Group (QFG) has developed a proprietary Monte Carlo model based on the stochastic variables of housing starts, interest rates, an index composed of BAC, WMT, TGT, GM, HD, Crude Oil price, Dollar/Euro translation, and Dollar/Yen translation, as a predictor of economic activity in the domestic economy.

Our Quant staff is calibrating the model after the BAC earnings miss and we will have a list of investment opportunities based on the output of the model on Monday of next week, which we will report here.

Etrade (ETFC) is down again today based on horrible earnings. The market is punishing ETFC for their business practices.

GOIH Quantitative Finance Group: Monte Carlo Simulation

GOIH's Quantitative Finance Group (QFG) has programmed a Monte Carlo simulation of the U.S. financial markets with the input variable a stochastic process of the Fed Funds rate. Our QFG has modeled the Feds Funds stochastic process with a range of (0-100) basis points in the Fed Funds rate.

We will announce the results of the Monte Carlo simulation before the Fed meets on Tues.

The model is designed to predict the effects on the market of the Fed's action regarding the interest rate and other policy decisions concerning the economy.


We will publish a list of stocks we feel will be affected by the interest rate decision and the predicted market action: the Dow, Nasdaq, Dollar, Yen, Euro, housing sector, financial sector.