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Goldman's Top Ten Market Themes For 2013

Tyler Durden's picture




 

Whether you trust the squid and their thought process or believe in 'better the devil you know', Goldman's top thinkers - from Garzarelli to Himmelberg and from Stolper to Hatzius and Wilson - lay out the top ten global macro themes from their economic outlook that will dominate markets in 2013. Agree or disagree, one thing is for sure - these ten 'themes' will impact us all one way or another and for each theme, Goldman discusses the wider implications for markets, and the potential issues and options for investing around them. Aside from the ten key themes, they provide succinct macro outlooks for rates (steeper curves and seniorty shifts), FX (moderate USD weakness amid broad stability), equities (accelerating growth and risk reduction underpin a solid 2013), and credit ('search for yield' has less to find).

Strawman - or investing bible - there is a little here every bull, bear, and arbitrageur...

 

Goldman's Top Ten Key Themes (and our annotated summary):

1. Global growth: A ‘hump’ to get over, then a clear road ahead - The biggest challenge from a markets perspective is that we see risks to growth concentrated early in the year, with Q1 likely to show a step-down in growth globally. Fiscal restraint plays a major role in that story: we expect a big increase early in 2013, but a significant fading on both sides of the Atlantic thereafter.

2. More unconventional easing in the G4 - The danger of positioning for a weaker JPY is that a convincing shift may require the BoJ to ‘out-ease’ a committed Fed, which we do not expect.

3. Termites eat away at the foundations of the ‘search for yield’ - Even though we expect the search for yield to continue, the risk-reward is falling.

4. Housing stabilisation and private-sector healing in the US - While we see continued healing in the household sector and ongoing gains in both housing starts (20% growth in 2013) and home prices (2%-3% growth in 2013), this may now already be priced in by markets.

5. Euro area a smaller driver of global risk, but still a source of tails - The best opportunities to take directional exposure to Europe have come either when the market believes that the system is close to collapse (as it did again in May) or when there is confidence that the key risks have been resolved. Neither is true right now.

6. Continued divergence between core and periphery in the Euro area - The divergence in growth between the Euro area core (Germany in particular) and the periphery (Spain in particular) is set to continue. Periphery weakness is already well-known, but the potential for German overheating is a more distinctive theme.

7. EM growth pick-up revisits capacity constraints - if EM equities outperform DM in an absolute sense, the outperformance is unlikely to be enough given the higher risk or variance in outcomes.

8. EM differentiation continues - The ‘orthodoxy’ of the central bank reaction function to inflation is also likely to vary, and so the risk in some places is that even with building inflationary pressure, policy does not necessarily tighten.

9. Commodity constraint to loosen in the medium term - we expect oil markets to return to a more structurally stable position, where the ability to bring on new supply in the $80-90/bbl range is rapidly increasing.

10. Stable China growth, but not like the old days - iron ore demand is likely to remain soft as core building demand falls, and that copper will receive a boost from the completion of new buildings in the next 6-9 months, but is likely to peak thereafter.

 

 

GS_Top 10 Themes

 

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Sun, 12/02/2012 - 18:03 | 3028479 JeremyWS
JeremyWS's picture

So we can be sure S&P won't be at 1575 in a year or EURUSD at 1.40 next year.

Sun, 12/02/2012 - 21:59 | 3028714 philipat
philipat's picture

Goldman gives nothing for free to the muppets. So, as always, doing the exact opposite of what they put out in such publications is the guaranteed way to make money, along with Goldman itself.

Sun, 12/02/2012 - 22:05 | 3028722 strannick
strannick's picture

11. Gold will kick all assets asses, like it has from 2000-2012

Sun, 12/02/2012 - 22:28 | 3028749 CheapBastard
CheapBastard's picture

I don't see house prices stabilizing until unemployment drops and wages increase. Maybe California is special in that The Aliens are buying there with Hot Money from abroad, but as my realtor says, "all RE is local" and in most areas he says RE is slowly dropping still due to job loss, foreclosures and seniors getting zapped by ZIRP on their savings.

Sun, 12/02/2012 - 23:05 | 3028809 CPL
CPL's picture

...plus COLA adjustments that are 2% in a 8-15% inflation adjusted universe.

Mon, 12/03/2012 - 03:11 | 3029029 rocker
rocker's picture

Goldman needs fresh money in the market. Long or Short. They just need it to manipulate your trade and take the opposite side.

Sun, 12/02/2012 - 18:05 | 3028480 fonzannoon
fonzannoon's picture

Barf.

Sun, 12/02/2012 - 18:14 | 3028490 JustPrintMoreDuh
JustPrintMoreDuh's picture

#11) Find ever more perverse means of raping as many muppets as possible.

Sun, 12/02/2012 - 19:09 | 3028494 ptoemmes
ptoemmes's picture

This was the Asia market open headline on CNBC.com at 6:05PM ET...wishful thinking?!  The formatting looks ok in preview but not after posting so I dunno what anyone else might see.  I'll leave as is posted rich text.

 

 

HEADLINES FROM CNBC Asian Shares Open 5 percent Higher on Wall Street Surge http://fm.cnbc.com/applications/cnbc.com/staticcontent/img/sprite.png); background-color: transparent; line-height: 0 !important; zoom: 1; display: inline-block !important; height: 0px !important; vertical-align: bottom; padding: 11px 11px 0px 0px; position: relative; top: -8px; margin-left: 3px; background-position: -30px 0px; background-repeat: no-repeat no-repeat;"> Text Sizehttp://fm.cnbc.com/applications/cnbc.com/staticcontent/img/sprite.png); background-color: transparent; line-height: 0 !important; zoom: 1; display: inline-block !important; height: 0px !important; vertical-align: bottom; padding: 14px 14px 0px 0px; cursor: pointer; font-weight: bold; margin-right: 3px; margin-left: 10px; background-position: -42px 0px; background-repeat: no-repeat no-repeat;" title="Decrease font" href="http://www.cnbc.com/id/100256553"> http://fm.cnbc.com/applications/cnbc.com/staticcontent/img/sprite.png); background-color: transparent; line-height: 0 !important; zoom: 1; display: inline-block !important; height: 0px !important; vertical-align: bottom; padding: 14px 14px 0px 0px; cursor: pointer; font-weight: bold; margin-right: 10px; background-position: -57px 0px; background-repeat: no-repeat no-repeat;" title="Increase font" href="http://www.cnbc.com/id/100256553"> 

Published: Thursday, 29 Nov 2012 | 1:39 AM ET

 

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Share  

 

Asian shares opened 5 percent higher on Monday, following a surge in U.S. equities overnight after U.S. lawmakers reached a deal to avert a fiscal crisis.

 

Sun, 12/02/2012 - 19:19 | 3028508 LetThemEatRand
LetThemEatRand's picture

I love the elaborate myth perpetrated by GS that fundamentals have anything whatsoever to do with the stock market, bond market, real estate market, or any other market for that matter.   It is just beyond obvious to anyone who cares to look that central banks intentionally and dramatically affect the direction of them all, so why not just write a very short article telling us what the Fed and other central banks intend to do next.  GS controls most of them after all, so they presumably know.

Sun, 12/02/2012 - 19:19 | 3028510 knukles
knukles's picture

So?
Am I supposed to pass on my 5:00 Thorazine and Ativan enema after that lot of naught?

(good thing MythBusters, Boardwalk Empire and Walking Dead are on tonight... keeps the suicide rate down...)

Sun, 12/02/2012 - 22:29 | 3028763 August
August's picture

That's a yes on 1, no on 2.

Mon, 12/03/2012 - 00:55 | 3028940 Yen Cross
Yen Cross's picture

That was funny/  I just spat up my Fosters...

 Thanks for reminding me about the Walking Dead...

Sun, 12/02/2012 - 19:19 | 3028511 kill switch
kill switch's picture

 Housing stabilisation and private-sector healing in the US

 

You fucking guys NEVER give up!!!  Eat my shorts...

Sun, 12/02/2012 - 19:20 | 3028512 Being Free
Being Free's picture

Here, have another glass of cool-aid.

US 10yr yield rising slowly through 2016 with flat corn and soy.

Wow, that was good.  Can I have another?

Sun, 12/02/2012 - 19:26 | 3028522 PiratePawpaw
PiratePawpaw's picture

11) Unicorns shooting Skittles from their arses.

Sun, 12/02/2012 - 19:33 | 3028533 knukles
knukles's picture

12)  Timmy G is such a dick.

Sun, 12/02/2012 - 19:40 | 3028545 Wolferl
Wolferl's picture

Germany overheating? Don´t know what those GS guys are smoking but it´s not good for them.

Sun, 12/02/2012 - 19:44 | 3028553 Flatchestynerdette
Flatchestynerdette's picture

GS = Mouthpiece for the Administration = Make it So!

 

I'm curious about China. They NEVER give correct numbers (kinda like our Bureau of Labor Statistics and Bureau of Statistics that calculates inflation). With the vote in of hardliners to China's ruling Politburo - if they really are BROKE? Why not start selling US Treasuries just to yank our chain and make us hurt?

Heck - even Viet Nam just came out and said China shouldn't use economic warfare against Japan to settle territorial desputes.

 

If I were China? Time to flex muscle and Viet Nam is too small to make a point.

Just my opinion.

Long: China

Short: USA

Gossip: Tim Geither after leaving his post comes out of the closet as first Vampire US treasury secretary - which explains the ears.

Sun, 12/02/2012 - 20:23 | 3028598 Whoa Dammit
Whoa Dammit's picture

+1 for the ears :-).

Sun, 12/02/2012 - 20:03 | 3028580 chump666
chump666's picture

Goldman are irrelevant.

Sun, 12/02/2012 - 20:21 | 3028595 q99x2
q99x2's picture

Move Goldman Sachs out of the NYC buildings and convert them to free range chicken farms. Arrest them. Somebody call the police.

Sun, 12/02/2012 - 20:21 | 3028596 Whoa Dammit
Whoa Dammit's picture

Did Sylvia Browne write these predictions for GS? (especially housing starts increasing by 20% LOL.)

 

Sun, 12/02/2012 - 20:32 | 3028617 markar
markar's picture

Who gives a shit what Goldman says or thinks. I can't believe that have any clients other than the US govt and the other sovereigns they control.

Sun, 12/02/2012 - 21:12 | 3028663 Downtoolong
Downtoolong's picture

They don't. But, these days, that's the best kind of client you can have. When you run out of suckers and muppets, just convince their governments to step in and take over the joy stick for them. It's even easier this way. You only have to manipulate a handful of top level people, and the rest of the world can go to hell for all they care.

Sun, 12/02/2012 - 21:08 | 3028660 Why Not
Why Not's picture

Junk. Gundlach--no one knows the future.

Sun, 12/02/2012 - 21:44 | 3028694 foxmuldar
foxmuldar's picture

1. Global growth: A ‘hump’ to get over, then a clear road ahead - Are these guys smoking or riding Camels? Did they already forget the cliff. lol 

Sun, 12/02/2012 - 22:08 | 3028727 Hubbs
Hubbs's picture

I don't get it . You go on and on about Goldman being the evil blood sucking squid, and then then turn around and give byte space to their ten comandments.  What is it?  Bloodsucking pock marks all over our bodies or a belly full of kalamari?

I think the new (now old) rule of investing is to do the opposite of what the squid says. Or plan according to the opposite of their predicitions.

Sun, 12/02/2012 - 22:11 | 3028733 Hubbs
Hubbs's picture

Oh yeah, and I forgot, Gaziarelli was the one hit wonder if their ever was one. And throw that Abby Joseph Cohen into the compost pile too.  

Sun, 12/02/2012 - 22:45 | 3028775 Aurora Ex Machina
Aurora Ex Machina's picture

Goldman Sachs

Top Ten Market Themes for 2013

1) Fuck everyone else for profit and end of year bonuses

2) Fuck everyone else for profit and end of year bonuses

3) Fuck everyone else for profit and end of year bonuses

4) Fuck everyone else for profit and end of year bonuses

5) Fuck everyone else for profit and end of year bonuses

6) Fuck everyone else for profit and end of year bonuses

7) Fuck everyone else for profit and end of year bonuses

8) Fuck everyone else for profit and end of year bonuses

9) Fuck everyone else for profit and end of year bonuses

10) Fuck everyone else for profit and end of year bonuses and move to those islands we bought so we don't get strung up (see you on the Greek beaches, bitches!)

 

 

Hmm. Looks like the 2012 report to me.

Sun, 12/02/2012 - 22:57 | 3028795 marginnayan
marginnayan's picture

S&P 1575 by end of 2013 - Huh! Bet against or for it. 

Mon, 12/03/2012 - 07:43 | 3029151 samcontrol
samcontrol's picture

sure and use uvxy ! :)

Seriously hedge with sh but hedge....

Mon, 12/03/2012 - 07:44 | 3029153 samcontrol
samcontrol's picture

sure and use uvxy ! :)

Seriously hedge with sh but hedge....

Mon, 12/03/2012 - 01:17 | 3028933 Yen Cross
Yen Cross's picture

Free Chicken Wings over on 200 West Street.

    Bring your own baseball bats and gas cans.

Mon, 12/03/2012 - 01:40 | 3028978 SaveTheBales
SaveTheBales's picture

Nice to see Pangloss got work after all these years.

Mon, 12/03/2012 - 02:50 | 3029016 Bear
Bear's picture

2013 ... GS ... The Great ReModeration, Q2 = Happy Days are here again.

But who am I to object, they have been right for longer than I can remember ... since at least 03/2009

Mon, 12/03/2012 - 03:08 | 3029026 Yen Cross
Yen Cross's picture

You know your trade Bear/ You have certainly been around the "planet"... I'm just looking for an entry point<>

 

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