Goldman Sachs: Top Trades for 2013

Goldman Sachs is out with a number of reports in recent weeks highlighting their positioning for 2013.  Now, it’s important to keep in mind that these kinds of reports are no holy grail.  In fact, if you review the same report from last year (see here) you’ll notice that the picks didn’t actually perform as Goldman might have expected.  But it’s always good for brain storming.  And after all, it’s not like Goldman Sachs is a bunch of dummies.  Anyhow….

Goldman’s favorite position for 2013?  They say buy US large cap banks (via Business Insider):

“This recommendation is based on several features of our 2013 outlook: (1) a fairly supportive view of the economic and equity market landscape for 2013, particularly in the US; (2) US monetary policy that remains extremely accommodative, focused on MBS purchases and the transmission of its policy through the housing channel; (3) continued improvement in the housing sector in terms of activity and prices, building on advancesalready seen in 2012; (4) transmission of the housing sector strength into large cap US banks; and (5) the fact that financials have, thus far, lagged improvements seen in other housing-related equities over the last several months.”

Some other picks Goldman recently released (via Zero Hedge):

Longer-term structural views are expressed in our Top Trade recommendations. These are typically managed with a wide stop, and assessed on the basis of whether the fundamentals continue to support the medium-term investment theme.

  1. Stay short AUD/NOK, opened at 5.90 on 03 Dec 2012, with a target of 5.00 and a stop on a close above 6.35, currently at 5.88.
  2. Stay long risk (sell protection) on the CDX High Yield on-the-run index, opened at 506bp on 04 Dec 2012, with a spread target of 450 and a stop on a close above 550, currently at 516.
  3. Go long the Commodity Carry Basket (Crude, Corn and Base), opened at 100 on 05 Dec 2012, with a target of 112 and a stop on a close below 94, currently at 100.

Some detail on the Commodity Carry Basket:

The Commodity Carry Basket: Crude, Corn and Base (CCB)

To take advantage of this increasing carry in key commodity markets, we recommend opening an equally weighted position in GSCI-style rolling front month indices in petroleum, corn and, for base, copper less aluminum.

Crude: long the S&P GSCI® Petroleum Index

Corn: long the S&P GSCI® Corn Index

Base: long the S&P GSCI® Copper Index against short the S&P GSCI® Aluminium Index*’

See also: Goldman Sachs – 5 strategies for a 2013 market rally.  

Goldman Sachs on the growing downside risk in gold.  

Goldman’s top 10 market themes for 2013.

Jan Hatzius’s outlook for 2013.

 

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • SS

    Who in the firm is actually making these predictions? It’s one thing to get this info from guys on their trading desk with actual trading backgrounds. It’s another thing to get this from some research guy who just publishes notes for their retail clients.

  • LVG

    Aren’t they a little late on the “housing recovery” theme?

  • http://www.conventionalwisdumb.com Conventional Wisdumb

    Is this the same group that said we would be at 1250 on the S&P by end of year?

    I guess there is still time for this prediction to come to fruition so we’ll see.

  • Onlooker

    As you alluded to, their picks for last year were a loser. They got 1 out of 4 right. But hardly anybody goes back and critiques these calls from the gurus. Good on ya for pointing out their track record for last years calls.

  • http://www.greenworldbvi.com/alternative-investments-options/ alternative investments

    I do like some of their commodity picks, especially in the ag sector. They mention corn, but I also think wheat could also perform quite well also. I came across an article on this couple days ago: http://www.businessweek.com/news/2012-12-06/wheat-may-take-over-from-corn-as-grain-market-driver-fao-says.

    One other thing I read was that it was looking to look like the futures market was moving out of contango over to backwardization. This could be huge for these various commodity ETFs, at least for those that actually do tip over to backwardization. Not an expert in this area, but it seems like backwardization means the roll yield is positive, whilst contango means it is negative. Curious if Cullen or anyone else read the same about this possible new trend?