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Goldman Releases First Three "Top Trades Of 2013"

Tyler Durden's picture




 

Toward the end of every year Goldman Sachs discloses what its top 10 or so thematic trades for the next year are. This is not to say that these trades perform better than others, or at all: the firm's top trades for 2011 and 2012 were largely a dud. But for those interested which way Goldman is axed (i.e., always the opposite of what it recommends by definition) here are the first Top Trades for 2013 as just released by the Squid.

From Goldman Sachs

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*

*we use the 4th month rolling to avoid occasional front month tightness

Near-term fundamentals remain very tight in crude oil, corn and copper, which reinforces our more positive view on near-term prices. In oil it is the combination of Iranian sanctions, low inventory cover and limited spare OPEC production capacity that drives the near-term tightness. In copper it is robust growth in Chinese construction completions, a pick-up in Chinese property sales, and a modest rebound in ex-Chinese demand that should underpin demand through mid-late 2013. While we also expect copper mine supply growth to accelerate to above-trend growth in 2013, this is unlikely to shift the market into a noticeable surplus until 2014.

For corn, our forecast for lower US production in the face of resilient demand requires prices to rise further to prevent inventories from falling to critically low levels. While the upside potential for soybeans is greater should weather in South America deteriorate further, we have a stronger conviction that corn prices are too low. Further corn price rises should follow a rally in soybean prices, as corn cannot afford to lose acreage ahead of next spring’s US planting season. Net, this near-term tightness in oil, corn and copper should support backwardation more broadly across these three commodities. Finally, our forecast is for aluminium to remain in surplus and trade in contango, with market specific price risks skewed to the downside; we have added this as a short to take some of the market risk out of the basket and take advantage of the persistent contango.

 

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Wed, 12/05/2012 - 08:43 | 3035051 GetZeeGold
GetZeeGold's picture

 

 

If they don't get you with the first one.....the other two are sure to work.

Wed, 12/05/2012 - 08:48 | 3035052 CPL
CPL's picture

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.

 

So GS is full of twinks that can't find an entry?  -6% to 12% is a bit...broad as an entry range.  Maybe they can further expand on their drivel.

Wed, 12/05/2012 - 09:28 | 3035132 idea_hamster
idea_hamster's picture

Google Translate [GS PR ---> cut-to-the-chase]

 

Don't close out of any of our earlier recommendations, all of which are currently flat or already underwater.

Wed, 12/05/2012 - 10:52 | 3035479 Dalago
Dalago's picture

This is most likely bait and the opposite trade should be considered.  ha!

Wed, 12/05/2012 - 09:35 | 3035159 French Frog
French Frog's picture

It's actually very well worded and intended for the careless traders:

. -6% SL & +12 TP (Target Point) gives you a RRR (Risk/Reward/Ratio) of 2 and that's always nice to hear but the careless trader will forget that you can set up your TP where you want (like cloud-cuckooland) to make your RRR look good or better.

.also using a SL on a Close makes that SL effectively much wider: the market could go to 93...92...91...85....intraday before rallying back up above 94 at the close and the extra drawdown would probably kill most accounts if panic hadn't already set in by then and the phone call to GS asking to "get me out at any price NOW" is made.

.still...their long term Short Aud/Nok makes sense.

Wed, 12/05/2012 - 08:47 | 3035054 Sudden Debt
Sudden Debt's picture

Oh why not... a bit of option trading never hurt anybody... what's the risk right?...

Wed, 12/05/2012 - 08:51 | 3035060 CPL
CPL's picture

JPM has some ideas in their prospectus e48158_fwp.pdf

MANY ECONOMIC AND MARKET FACTORS WILL IMPACT THE VALUE OF THE NOTES — In addition to the level
of the Index and the Exchange Rate on any day, the value of the notes will be impacted by a number of
economic and market factors that may either offset or magnify each other, including:

•the actual and expected volatility of the Index and the Exchange Rate;
•the time to maturity of the notes;
•the dividend rates paid on the equity securities underlying the Index;
•interest and yield rates in the market generally;
•correlation (or lack thereof) between the Index and the Exchange Rate;
•suspension or disruption of market trading in the European Union euro or the U.S. dollar;
•a variety of economic, financial, political, regulatory and judicial events; and
•our creditworthiness, including actual or anticipated downgrades in our credit ratings.

Wed, 12/05/2012 - 08:48 | 3035055 Alcoholic Nativ...
Alcoholic Native American's picture

May the truely productive rape and pillage the land.

Wed, 12/05/2012 - 08:48 | 3035057 Iam Yue2
Iam Yue2's picture

 

 

How well we remember some of those 2012 trades;

 

Short 10 year German Bunds

 

Target: 2.80%

Stop: 2.00%

Long EUR/CHF


Target: 1.35

Stop: 1.2

ETC .....

Wed, 12/05/2012 - 08:53 | 3035064 Downtoolong
Downtoolong's picture

In other words, please get involved in any paper markket or index that we control and manimpulate.We don't really care which one, and we've got as many options for you as you've got brain cells.

Wed, 12/05/2012 - 08:56 | 3035068 EscapeKey
EscapeKey's picture

I see anonymous hacked their servers, and located the following super-elite quant code:

 

int GoldmanRecommendation(int inputIdeaCount)
{
if(rand()==0) CrashHorribly();
else return rand()%inputIdeaCount;

 

Wed, 12/05/2012 - 09:56 | 3035221 GMadScientist
GMadScientist's picture

Warning: not all control paths return a value

Wed, 12/05/2012 - 09:02 | 3035076 ParkAveFlasher
ParkAveFlasher's picture

Thanks for the tips GS.  Will do the opposite.

Wed, 12/05/2012 - 09:03 | 3035079 darteaus
darteaus's picture

Line up Muppits!

Wed, 12/05/2012 - 09:08 | 3035085 q99x2
q99x2's picture

No one wants US corn except the pigs and cows. Rodents won't eat it and I won't eat US corn either. The new tumor research into Monsanto GMO should be available later in the year. The EU and Russia won't eat it either so I don't know who the heck they intend to sell it to.

Wed, 12/05/2012 - 09:11 | 3035089 CPL
CPL's picture

France is moving to have the bunch of them brought up on murder charges for any tumour in the last 20 years.

Wed, 12/05/2012 - 09:14 | 3035094 GACGB1000
GACGB1000's picture

Awesome! doing the opposite of every one of those trades right now ... thanks.

Wed, 12/05/2012 - 09:19 | 3035103 firstdivision
firstdivision's picture

Thanks Goldman, I'm now closing my long crude position.

Wed, 12/05/2012 - 09:22 | 3035112 forwardho
forwardho's picture

Stay long risk (sell protection) on the CDX High Yield on-the-run index,

Or, insert shell in breech.

Reverse weapon.

Place toe carefully on trigger

Await further instructions.

Oh my Jesus Lord.

Wed, 12/05/2012 - 09:51 | 3035199 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

If every instict you have is wrong, then the opposite would have to be right.

Wed, 12/05/2012 - 09:50 | 3035208 IPA
IPA's picture

Somewhat off topic.

I was talking to my brother, joking, told him that the NFL was rigged and he said "The NFL is not like the stock market, you can't rig it." The suprising thing; he doesn't trade or pay attention to any financial media and is still quite asleep. He just assumes the stock market it rigged.

Wed, 12/05/2012 - 10:14 | 3035283 GMadScientist
GMadScientist's picture

Your brother probably owes some bookie a fucking fortune.

Wed, 12/05/2012 - 09:55 | 3035218 GMadScientist
GMadScientist's picture

4) Convert to cash, then burn it

Wed, 12/05/2012 - 10:13 | 3035276 ElvisDog
ElvisDog's picture

Cool. Just do exactly the opposite of those three things and you'll do okay.

Do NOT follow this link or you will be banned from the site!