Thursday, December 2, 2010

UPDATED: Goldman Sachs: Here Are our First ‘Top Trades’ of 2011 (GS)

Update below.
Original post:
From MarketBeat:
Goldman Sachs rolled out its spiffy new economic outlook Wednesday, sporting a more positive view on the U.S. economy. Analyst at Goldman also came out with the first five “Top Trades” for 2011 based on those forecasts. Wanna play Master of the Universe? Here are their recommendations, with patented MarketBeat color commentary in italics:
1) Short the dollar vs the Chinese Yuan.
Not exactly a bold call. Given the macro-economic forces in favor of a stronger yuan and the political forces pushing that direction, the surprise will be if the yuan doesn’t rise. They recommend using longer-dated forward contracts to profit from expectations that the yuan will continue to appreciate beyond 2011.
2) Long large-cap U.S. banks
Goldman’s base case calls for a moderate acceleration of economic growth in the U.S. but monetary policy remaining on hold. With consumers slowly healing, Goldman argues that should be a positive environment for big U.S. banks. Their favored way to play this is via the KBW Bank Index tracked by the SPDR KBW Bank ETF (KBE).
"More on Goldman's Top Trades 2011: "We Like Finance Stocks for First Time Since ‘08" (GS; BKX; XLF)"