Goldman Closes "Top Trade For 2016" With 5.4% Loss Just 11 Days Into 2016, As US Banks Tumble
Less than two months ago, on November 19, Goldman released its list of top trades for 2016, #1 of which was the infamous long USDJPY, short EURUSD equial-weighted basket which has led to massive losses for anyone who had put it on. At the current rate of carry trade unwinds, we expect that trade will be closed out shortly, and may have been overnight when the USDJPY plunged to the lowest since the ETFlash crash.
But while we wait, here is a reminder what the #6 top trade for 2016 was:
Top Trade #6: Long large-cap US Banks relative to the overall S&P500
Go long large-cap US Banks through the BKX Index relative to the S&P500, indexed at inception to 100, with a target at 110 and stop loss at 95.
US banks tend to be mildly pro-cyclical and also benefit from a rising longer-dated yield environment (we forecast a steeper US term structure than the forwards discount), as the Fed tightening will lead to a progressive upward revision of expectations on terminal rates, while the ECB and BoJ’s efforts to boost inflation should restore bond premium across major markets. US banks are still relatively well-priced, trading just above book value and with a P/E below that of the overall market, and at about median levels compared with its own past history. Moreover, they remain off their recent highs, unlike other possible implementations of the domestic growth theme in the US stock market.
We bring it up because overnight, just 11 days into 2016, Goldman was stopped out of this "top trade" following a 5.4% loss on these "relatively well-priced, trading just above book value" assets.
Close long large cap US banks through the BKX Index relative to the S&P500 on 11 Jan 2016, opened on 19 November 2015 at 100, with a potential loss of 5.4%.
Which reminds us of what we said back on November 16 after laying out Goldman's "top trades":
... something tells us the best trades for 2016 will be to go short the Yuan, go short Oil, and short TSYs, while doing the opposite of the Top 6 trade recos.
As of this moment, less than 2 weeks into 2016, we could just close all these "anti recos" out and call it a 2016 up well in the double digits for the year.
(11 votes)
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You should always fade GS's Strategists. GS's own traders so. In fact, GS's Strategists know GS's traders will take the other side. The Strategists are talking people into the other side of the trade. GS's Strategists never get a trade right, and GS's traders never have a down day. And yet people hesitate to connect the dots.
They even bet against the products they sell
Holy moley, if the squid is getting fscked by its own machinations, the end is near.
It's almost like they make it seem people should be buying stock on fundamentals or something rediculous like that!?
'The Squid' isn't the on getting fucked here. It's thier clients. I'm sure 'The Squid' (actually their prop desk, or GS 401k desk if you will) made a healthy amount of money.
The squid is everywhere.
we all know Goldman cleared its inventory in december!
They will restock following a `go short` recommendation!
lol, the gamers gamed...
the squid never loses
every trading day a winner-lol...
Gods work.........
My favorite on the list is:
Top Trade #6: Long large-cap US Banks relative to the overall S&P500
Go long large-cap US Banks through the BKX Index relative to the S&P500, indexed at inception to 100, with a target at 110 and stop loss at 95.
HAHAHAHAHAHA
#1 on the list still makes me cringe at the site of it. I want no part with either side of #1.
Actually number 1 will be correct. The collapse is now getting started and those funds will move to the USD and TSY's before year end. The problem is being early. I'd go short US TBTF banks as I don't think they will get a bailout this time around.
Not saying you are wrong at all, but I know you are cringing with me at the thought of this play.
They were kind to their muppets. . . They suggested a -5% stop loss. That's a mere trim, NOT a buzzcut. Keep a little wool on the sheep . . . for the winter.
Some people will buy anything. What's GS recommending people do with their leftovers?
Well you can not plant it, because Monsanto will sue and win in any court in North America.
'Hope springs eternal'...especially the false variety. The markets can only keep this Potemkin Village facade going as long as that 'hope' remains. But reality is closing in, and with so many dirty players, it's just a matter of time before the 'Butterfly Effect' of so many factors, known and unknown, punctures the pretty balloon.
How many warnings do people need to realize it's time to GTFO? It's like an artillery shell in slow motion; everyone hears it coming, but only a few have dug PM-lined foxholes to duck the shrapnel when it lands and explodes. Everyone else is standing in the open, remarking at how pretty the incoming shell is...and will be shredded when it blows up.
But Bankster bonuses and salaries will increase over last year.
But then they do this: http://beanstockd.com/wells-fargo-wfc-upgraded-to-buy-by-goldman-sachs/2...
So i'm felling like this: https://www.youtube.com/watch?v=mrb2Oc6naDI
Is that Llord Bankfine that I see croaking and turning green?
No? Too bad.
Bank book value?? ROFLMAO ... you have to be kidding. What is book value in a bank? Are they marking assets and collateral to market? Do they use the historic price? No, they use whatever they want. Bank book value is pure fantasy.
Then there was Goldman's prediction that the new Star Wars movie would only come in 3rd as all time best movie releases....WRONG....Who's bright idea at Goldman was this?