As 2016 draws to a close, it is a good time for reflection on the main happenings of the year. Below are Goldman’s 2016 published- Macro themes and rationale. This is an open thread to discuss the main themes of 2016 and the outlook into 2017.
Top Trade No. 1:
Long USD vs. short EUR and JPY: This is about the Federal Reserve, which is tightening monetary policy, as the European Central Bank and Bank of Japan continue to loosen monetary policy. It's the theme of divergence in global monetary policy.
Top Trade No. 2:
Long US 10-year ‘Breakeven’ Inflation: Expectations for inflation remain low. Goldman sees this reversing as economic growth pushes wages and prices higher.
Top Trade No. 3:
Long MXN and RUB (equally weighted) vs. short ZAR and CLP (equally weighted): This is about trading the unfolding global emerging-market story, which includes further adjustment in current-account balances in South Africa; stabilization in oil prices, which should help Mexico and Russia; downside in metals prices, which is bad for Chile and South Africa; and depreciation in the Chinese currency.
Top Trade No. 4:
Long EM ‘External Demand’ vs. Banks stocks: Goldman's house view is that growth in the emerging markets will continue to be pressured. As such, they think that emerging-market stocks that are more exposed to the developed markets will do better than those that focus on growth at home. Specifically, they favor noncommodity exporters over banks.
Top Trade No. 5:
Tighter Spread between Italy and Germany Long Rates: Easy monetary policy from the ECB will bring down the yield in higher risk European countries like Italy.
Top Trade No. 6:
Long large-cap US Banks relative to the S&P500: US banks are reasonably cheap, pro-cyclical, and will benefit from higher rates.
They abandoned all these calls in February...
5/6 were 'abandoned' in February.......
Whatever GS says is going to happen in their outlook, take the opposite position.
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